Business

Ag Tax Exemption: Popular, Potentially Costly

Override of Crist's veto is assured; land speculators could be prime beneficiaries
By: Kenric Ward | Posted: November 11, 2010 4:05 AM
Florida Citrus Field
Hard-luck farmers, ranchers and citrus growers stand to benefit from the Legislature's impending override of Gov. Charlie Crist's veto of House Bill 981.

So might developers and speculators who have no intention of farming, ranching or growing on newly acquired ag land.

Crist vetoed HB 981, warning it could extend the state's agricultural tax exemption to properties that are no longer used for agricultural purposes.

“Rather than benefiting farmers as the greenbelt provision is intended, this bill could subsidize private real-estate speculation at the expense of taxpayers," Crist said in his veto message.

But the vetoed bill, which initially passed the House 112-1 and cleared the Senate 34-1, is headed for enactment after all, and incoming state Agriculture Commissioner Adam Putnam says that's a good thing.

"I strongly disagree with the governor's characterization," Putnam told Sunshine State News. "The greenbelt law is the single most important tool for protecting green space and agricultural lands in Florida."

Whatever the ultimate effect of HB 981, local property appraisers will remain the chief arbiters of agricultural tax exemptions.

"The law still says you have to be a bona fide agricultural operation," says David Nolte, property appraiser in citrus-rich Indian River County. But he acknowledges that "ag" isn't always a cut-and-dried definition.

"We'll give you a year or two," Nolte said of the leeway granted to property owners. "Agriculture is not a 12-month business, it's a 30- or 40-year business."

Florida citrus growers -- plagued by an onslaught of greening and blight -- know well the importance of time.

Since the state's real-estate boom went bust, agricultural tracts that had been snapped up by speculators remain fallow and uncultivated.

According to citrus industry estimates, 138,000 acres of former groves lay idle. More ominously, those abandoned tracts have turned into breeding grounds for the tiny Asian citrus psyllid, which causes deadly greening disease in trees.

Defunct groves are now spreading the scourge of greening and blight that threatens the state's $9 billion-a-year citrus industry.

Whether vacant lands are incubators for disease or tax havens for nonproductive land dealers -- or both -- there's no doubt that fewer acres are under cultivation.

Doug Bournique, spokesman for the Indian River Citrus League, reports that the league's membership has fallen from 1,600 in 1990 to 1,000 today. Statewide, orange production is expected to total 146 million boxes this year, down sharply from 242 million boxes in 2004.

In the go-go days of Florida's real-estate frenzy, growers were selling off tracts at $50,000 or more per acre.

"It was a nest-egg they never dreamed of," Bournique says. "Now, it's a catastrophe."

The Citrus League and Florida Citrus Mutual support HB 981 because it contains a provision enabling the industry to increase a self-imposed research assessment on growers to fight greening and blight.

Terry McElroy, spokesman for outgoing Agriculture Commissioner Charles Bronson, said the department also endorsed the bill.

"If someone is attempting to hide behind the (tax) exemption and has no intention of being a bona fide agricultural producer, that's something that needs to be looked at by county appraisers," McElroy said.

But, he adds, "Just because there's no growth now, doesn't mean there couldn't be in the future."

Despite widespread support for HB 981, a House Budget Committee analysis warns that the ag-exemption language in HB 891 comes at an unknown potential cost to counties.

"Clarifying that the act of offering land for sale does not, in and of itself, constitute a primary use of the land and cannot be the basis for denying classification as agricultural land has a negative, indeterminate recurring impact on local governments," the analysis states.

Comments (2)

Michelle Parks
4:33PM NOV 19TH 2010
I would like to know why we Floridians are going to have to bear the brunt of the dollar per box tax that our newly ensconced Legislature has just passed as its first order of business. Voters did not put them in office to start out raising taxes right out of the gate -- and this is a tax. I agree the greening research is needed, but why doesn't the Citrus Mutual and the other growers' associations just pay for the research themselves as part of their own business managment of the industry? Or just raise the price of OJ? Now that might be an issue too, since OJ costs more per gallon than gasoline! The tax for greening research needs to be a subject of discussion separate from the greenbelt exemption issue. They are not suficiently related and require legislators who might agree or disagree with one vote for both. The consequences of the greenbelt exemption issue are too far-reaching to be dealt with in this manner. Our new leadership has not shown leadership in its first days - just more politicking.
LDouglas
9:59AM NOV 11TH 2010
It should be agricultural exemptions for active agricultural use only. And to encourage those agricultural lands to remain in agriculture, Florida should enact a rollback tax on agricultural land rezoned for something else. For instance, if you rezone your ag land in NY to residential, they make you pay property taxes on it at the new zoning- five years back.

Anyway, this might be a good test for Rick Scott. We'll see if he's going to play along, or really be his own man.