Don’t Mess With Agricultural Property Taxes

By Carl Luppens – in response to an article in the Denver Post regarding Ag Tax Reform.

There has been a lot of recent publicity dealing with Agricultural Property Taxes and wealthy landowners. The full story isn’t getting told. Ranching is a big part of Colorado’s heritage. Open ranch country provides much of the scenic vistas we all cherish. Colorado ranches are, collectively, major producers of beef and lamb. Most of our ranches are home to as much wildlife as cattle and sheep. We have had a wise policy of encouraging the preservation of ranch land and open space, especially in popular resort areas, by not burdening ranch owners with excessive property taxes when the land is still used as a ranch even though it has a higher value as resort property. Bona fide agricultural land is assessed on its Ag productive value, not its development market value.

The only way to keep ranching alive and to keep a few real cowboys and ranch families on the land, in the parts of Colorado both residents and tourists enjoy, is to have the ranches they live and work on owned by wealthy sponsors. Beside being fair (a concept that is rarely mentioned in these days of class warfare) since these ranches generally consume virtually no public services (with the remote cattle ranches we know – the fire department and sheriff may be over an hour away, so would never come, the kids go to public schools, the roads aren’t paved, public water and sewer are unheard of in the area – we just don’t use any local services, the low property taxes more than pay for the services we receive). Because of the scenic beauty and wildlife resources, people will pay millions of dollars for some of these ranches. But, ranches can’t survive on multi-million dollar land and ranch operations can’t pay sky-high property taxes. So, if taxes are high the alternative is to divide up the ranches into rural subdivisions – something that doesn’t provide ranch jobs, doesn’t produce food and everyone considers a blight on the land.

The current system does not need to be changed. If land is not used in bona fide agriculture (recreational horse properties have never counted as “ag”), then it should be taxed at market value, but, if it is ag under current standards, its ongoing agricultural use should be encouraged.

This fair property tax problem is compounded by the fact that, in Colorado, raw land, if not agricultural, is assessed at the commercial rates, just like a hotel or shopping center (29% of fair market value vs. residential which is less than 9%). Again, raw land (even residential land that does not yet have a house on it) consumes virtually no municipal services but it is taxed much higher than improved residential property, which consumes the bulk of the tax-supported services.

A final point, several of the properties featured in the Denver Post’s front page article on agricultural property tax “abuse” are part of much larger ranches. Most ranches are composed of several separate tax parcels, often with different owners, many times different members of the same old line ranch family. The fact that someone has a house on 35 acres does not mean that land is not part of a bona fide ranch. It may just be a part of a 5,000 acre working ranch – a ranch that would not survive without the support of people who want to live on a ranch and will pay to feed the cattle, hire the cowboys and water the land for the privilege.

If Colorado does away with the current fair property tax structure that taxes ranch land based on the ranch revenue it produces, which encourages the preservation of rural property and life styles, the state will loose many ranches and further devolve into just a big suburb without the pioneer character that made it a once great state.

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