PA 490: Not as Easy as It Looks

In late summer, few desserts tasted better than a slice of three-berry pie from Hilltop Orchards Inc., whose acreage stretched across four parcels of verdant land.  That business closed in 2004.  Yet the dust-up between Wayne Cooke, whose family owns the Hilltop property off East Main Street in Branford, and the town over the property’s farmland status dates back, in a way, to 1956. 

That year, just as Hilltop introduced its famous pies, Maryland became the first state to legislate farmland valuation based on its use rather than fair market value, according to Bob Wagner, a senior policy analyst with the American Farmland Trust. In response to the sale of open land to developers by farmers strained by taxes, the state of Connecticut passed its version of the Maryland legislation as Public Act 490 in 1963. 

In Connecticut, PA 490 allows municipalities to assess farm, forest or open space land based upon its use value rather than its fair market value.  As a result, landowners whose property holds PA 490 status pay substantially lower property taxes, while the state maintains an important preservation tool. 

Ron Olsen, a marketing and inspection representative with the Connecticut Department of Agriculture who provided an in the dispute between Cooke and the town, terms farmland the most important designation among the land classifications that PA 490 addresses. “Land that is lost to . . . farming is lost [to farming] forever,” he said.

Yet he also sees how the farmland determination, which rests in the hands of each municipality’s tax assessor, can become problematic.

“It’s problematic because the definition of farming and agriculture is so varied,” he said. Indeed, PA 490 acknowledges farmland activities as diverse as cultivation of the soil, raising agricultural or horticultural commodities that range from fur-bearing animals to bees, in addition to the active management of well-known farmland crops such as corn.

Olsen also pointed to a fundamental difference between the goals of the municipal tax assessor and PA 490. “It’s the assessors’ job to raise revenues for the town. The whole intent of 490 is to preserve farmland.”

He noted that PA 490 designations, broadly, become especially fraught during recessions, when a town’s revenues are down.  “Assessors are looking for money. They reappraise,” he said.

Olsen remarked that the most difficult determinations on whether land is farmland occur during transitional periods, before land is in active production.  This is true, he said, especially when farmers are just starting out.

“People who are just starting out in farming - the new farmers - apply for designation. The towns are reluctant to give it, because they want to see that they’re in it for the long haul,” he said. 

Olsen acknowledged that applications from new farmers might not receive farmland status the very first year. He encourages persons who fail to achieve PA 490 status one year to re-apply for the designation the next.

“After a couple of years, you pretty well know when a person is in it for the long haul,” he observed.  He said assessors should find out whether newcomers to farming are taking such steps as purchasing farm equipment or fencing in their property. 

He also advises new farmers to approach an assessor with a five-year farm plan so that town assessors can keep an eye on the progress they make.  He noted that, at times, farmers do not get commercial crops off the land for a number of years.  Christmas trees, for instance, can take five or six years to grow.

Another problematic determination takes place when a piece of land that has been farmed for a long time falls out of production farming, or only a portion of what was once farmland remains in production.  He said that deaths within families that own farmland also wreck havoc.  There, he said, survivors should approach town assessors to make their intentions as to the future use of the land clear.

“Each incident is unique.  Each piece of land is unique,” said the DOAG representative.  He added, “Nobody wants to go to court.”  Yet court, he conceded, is where applicants who do not receive PA 490 status from either a local assessor or a municipal board of assessment appeals often go. 

Both Olsen and the AFT’s Wagner emphasized that cost of community services or COCS studies demonstrate that PA 490 is not the losing proposition to a town’s coffers that many taxpayers think it is. 

On average, according to one COCS abstract, residential development generates substantial tax revenue but requires “costly public services that typically are subsidized by revenues from commercial and industrial land uses.”  COCS find that “tax and other revenues collected from farm, ranch and forest landowners more than covered the public service costs these lands incur.”

To avoid abuse of the public act in Connecticut, a 10-year conveyance tax penalizes anyone who sells land with PA 490 status for development. 

“I actually don’t want farmers to take advantage of that act,” Olsen said. “It puts farmers who need that act to stay in business at risk.”

In Connecticut, according to Olsen, the towns with the highest percentage of land with PA 490 status are typically in the Northern part of the state, with that percentage dropping sharply along shoreline communities.  In shoreline towns, Olsen put the percentage of land with PA 490 status at less than two percent.

The town in Connecticut with the highest agricultural landmass is Lebanon.  There, according to town planner Phillip Chester, the agricultural landmass exceeds 10,000 acres, and a full 50 percent of the town holds PA 490 designation of one kind or another.

Recently, Chester participated in the preparation by the Çonnecticut Farm Bureau Assoc. of a PA 490 Guide and Overview for a new generation of local officials and landowners who may not be familiar with the original legislation’s protocol.  The guide, which was released last year, emphasizes the need for communication between property owners and local assessors.  In Branford, which revoked Cooke’s farmland status in early 2009, that process went awry.

“It was nobody’s fault and everybody’s fault,” said Olsen of the rancor that emerged before a settlement conditionally restored farmland status to the Hilltop property this spring.