Tuesday, March 08, 2011

Real-estate developers reap huge tax breaks from metro-area land classified as agricultural

In a phenomenon that may be evident in rural areas across the country, and bears investigation, farmers are not always the main beneficiaries of tax breaks for land designated as agricultural for tax purposes.

In Douglas County, Colorado, south of Denver, about "one in six of the county's parcels taxed as agricultural are owned by subsidiaries of Denver home builder MDC Holdings Inc.," Christopher N. Osher and Eric Gorski report for The Denver Post. In Broomfield County, in the same metropolitan area, "a staggering 95 percent of the county's agricultural parcels are controlled by developer, commercial or investor interests," Osher and Gorski write.

"From Denver's outskirts to exclusive mountain communities, the story line is similar," the reporters write. "Developers and corporations more interested in bulldozing land for houses and strip malls than raising cattle or crops are saving millions of dollars in taxes by taking advantage of a state law meant to help struggling farmers." The Post's analysis of property-tax records reveals developers and firms with little ties to agriculture control over 40 percent of the almost 54,000 parcels classified for agriculture in eight Front Range counties. "The lenient tax structure saves developers, businesses and others who have no real mud on their boots an estimated $366 million a year in those counties," the reporters write.

In 10 mountain counties analyzed by the Post, groups that don't meet the traditional definition of "farmer" or "rancher" own more than 9 percent of the 23,244 agricultural parcels. "The constituencies that currently benefit from the tax break don't want a change," said state Rep. Matt Jones, D-Louisville. "And there's not a strong constituency for the average taxpayer." Or perhaps no well-organized constituency that lobbies.

Farm interests say the tax breaks keep good land in production, while real-estate companies and homebuilders say higher taxes on undeveloped land will lead to higher home prices, Osher and Gorski report. "I think it is a shame, and it adds to sprawl," Former Gov. Dick Lamm told the Post. "It is unfair, and it unjustly enriches people. It allows people to tie up land under so-called agriculture and use it as a speculator's device." (Read more) (Post graphic of Broomfield County land parcels)

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