Clean and Green provides for lower property tax assessments of land capable of producing wood products, agricultural land, and open space land open to the public.

Summary

The Pennsylvania Farmland and Forest Land Assessment Act, commonly known as “Clean and Green” or Act 319, provides for preferential tax assessment of land. To qualify, the land must fit into one of three categories: land capable of producing wood products, “forest reserve”; land in agricultural production or enrolled in a federal soil conservation program, “agricultural use”; or open space open to the public, “agricultural reserve”. The land must also be comprised of at least 10 acres or be anticipated to generate at least $2,000 annually from the production of an agricultural commodity.

Land enrolled in the Clean and Green program is taxed on the basis of its “use value” (i.e., its value for timber or agricultural production without considering any development potential) rather than its market value (i.e., the amount that a willing buyer would pay a willing seller). This generally results in a lower tax assessment value unless the county in which the property is located has not reassessed property values in many years.

Track Record

According to the 2010 Farmland Preservation Annual Report, conducted by the Pennsylvania Department of Agriculture, 175,810 parcels of land, 9,460,885 acres in total, were enrolled in Clean and Green as of 2010. The report indicates an average reduction of nearly 50% in assessed values.

When the use of a property in the program is changed to a non-eligible use, usually because it is being developed, seven years of rollback taxes and interest on the rollback taxes must be paid. In 2010, $5,216,439.97 were paid in rollback taxes and $840,535.14 in interest.

Typical End Users

Clean and Green is theoretically available to all owners of qualifying lands in all Pennsylvania counties. However, it is probably irrelevant if a county has failed to reassess property values in many years because the old market value assessment is likely less than the current use value assessment.

Clean and Green is relevant to nonprofit and local government entities only if these landowners have not qualified their land holdings as tax exempt.

Conservation Impact

With millions of dollars in rollback taxes paid by landowners removing their lands from the program each year, it is clear that Clean and Green does not deliver any kind of permanent protection to lands enrolled. Rather, it reduces property tax burdens that might otherwise compel a landowner to sell their land for development, temporarily keeping the land in its agricultural, forest or open space status.
By forestalling a landowner from selling for development, Clean and Green increases the window of opportunity for a conservation organization to work with the landowner to permanently protect the land.
If land enrolled in the Clean and Green program is put up for sale, a conservation organization could have a modest advantage over a developer, as development of the land would result in a financial penalty to the landowner and a sale to a conservation organization would likely not.

What You'll Need

Landowners should contact their county tax assessor’s office for an application. If the land in question fulfills the requirements of the Clean and Green program, the application will be approved.

Obstacles and Challenges

Because landowners who are not engaged in farming or timber production can receive preferential tax assessment, the Clean and Green program can encourage sprawling 10-acre mini-estates. This occurs mainly under the agricultural reserve designation, but can also occur under the forest reserve designation.

Contents of Main Description

INTRODUCTION
ELIGIBLE LANDS
APPLICATION
METHODS OF ASSESSMENT
LEAVING THE CLEAN AND GREEN PROGRAM
USE OF ROLLBACK TAXES
SALE OR DIVISION OF ENROLLED LAND
NON-AGRICULTURAL AND RECREATIONAL USE OF LAND
PUBLIC ACCESS TO CLEAN AND GREEN PROPERTY
FARMSTEADS
OPTION TO ACCEPT OR FORGIVE ROLL-BACK TAXES IN CERTAIN INSTANCES
MARCELLUS SHALE DRILLING
ALTERNATIVE ENERGY DEVELOPMENT
CONSERVATION CHALLENGES
HISTORY OF THE ACT

INTRODUCTION

Much of Pennsylvania’s land that is ideal for agricultural production, forestry and recreation is also well-suited for development purposes. As development pressures rise, well-drained soils, open space and convenient access to major roadways increase property values. When the market value of this land rises, the taxes also increase, creating a hardship for landowners. Real property taxes generally are unpopular with farmers because the value of their business is land-based (and thus more subject to the real property tax), unlike many other local businesses. Because the size of a property tax bill is based on the value of the land owned and not the amount of money earned on that land, it is not based on the landowners’ ability to pay. This can create special hardships for farmers and others with large amounts land but relatively low cash flow. Increased tax assessments can have a significant impact on a farmer’s bottom line, possibly tempting them to sell their land to take advantage of its increased value. To mitigate this problem, the Pennsylvania Farmland and Forest Land Assessment Act (Act 319), referred to as the Clean and Green Act, was signed into law in 1974. The intent of the act is to protect farmland, forestland and open space by allowing for land taxation according to its use-value rather than the prevailing market value. Act 319 applies to all counties in Pennsylvania. Each county assessor’s office is responsible for administering the program within its jurisdiction.

ELIGIBLE LANDS

The following are the land uses eligible for preferential assessment under Clean and Green:

Agricultural Use: Land that has been producing an agricultural commodity or has been devoted to a soil conservation program under an agreement with the federal government for at least three years preceding the application for preferential assessment, and is:

Comprised of 10 or more contiguous acres, including any woodlot; or
Has an anticipated yearly gross income of at least $2,000 from the production of an agricultural commodity.

Agricultural use land includes a woodlot and land that is rented to another person for producing an agricultural commodity.

Agricultural Reserve: Land that is comprised of 10 or more contiguous acres, including any woodlot, and

is noncommercial open space for outdoor recreation or enjoyment of scenic or natural beauty, and
is open to the public for such use, without charge or fee, on a nondiscriminatory basis.

Forest Reserve: Land, 10 acres or more, that is stocked by forest trees of any size and capable of producing timber or other wood products. Forest reserve land includes land that is rented to another person for the purpose of producing timber or other wood products.

APPLICATION

Landowners apply for the Clean and Green program through the assessor’s office of the county where the land is located. If the land is located in multiple counties, the application should be filed in the County to which the landowner pays property taxes. A standardized form is used across the state. Applications must be received by June 1 for the landowner to enroll in the program for the following tax year. A county board for assessment appeals may impose a fee of no more than $50 for processing an application.

Landowners are not required to reside on the land or live in the same county to which their Clean and Green application is sent. The person applying for preferential assessment must be an owner of all land listed in the application. A landowner seeking preferential assessment under the act may include contiguous tracts that would not, if considered individually, qualify for preferential assessment. A landowner cannot apply to have only a portion of the land in a single tract qualify for the Clean and Green program. However, there can be separate eligible land uses on one tract, as long as the acreage identified for each particular land use meets the minimum criteria for that land use category.

METHODS OF ASSESSMENT

Clean and Green enables eligible land to be assessed at its use value instead of market value. Use value is a property’s value based only on the income the land would typically generate if used for agricultural, woodland, or pastureland purposes; it does not consider all of the property’s potential uses. The Clean and Green law states that the use value must reflect the potential of the individual parcel to produce, based upon soil capability. Use value will likely result in a lower tax assessment value than valuation on a fair market value basis.

The Department of Agriculture annually supplies county assessment offices with county-specific use values. The county has the option of implementing these values, or using lower values. The Department of Agriculture uses the following system to determine use-values:

Agricultural use and agricultural reserve values are based upon the income approach for land appraisal. The formula takes into consideration the state crop profit margin percentage for corn production, an average value of crop receipts per acre by county, a Soil Index Factor, and an average capitalization rate.
Forest reserve values are based on the average value of timber in a particular county, or the average value of six timber types by county. The Pennsylvania Department of Conservation and Natural Resources calculates this value annually.

Based on annual reports conducted by the Pennsylvania Department of Agriculture (See Library Item), the average reduction in fair market assessed value for enrollees is nearly 50 percent.

LEAVING THE CLEAN AND GREEN PROGRAM

A landowner cannot voluntarily remove their land from Clean and Green without a land use change. If a land use change occurs, the landowner will be subject to seven years of rollback taxes at 6 percent interest per year. The rollback tax is the difference between what was paid under Clean and Green versus what would have been paid had the property not been enrolled, plus six percent simple interest per year. After a land use change takes place, and rollback taxes have been paid, the landowner has the option of removing the portion of land that remains eligible for the Clean and Green program. If they do not do so, the land that remains eligible will remain enrolled in the program.

Changing land from one Clean and Green classification to another should not trigger roll-back taxes.

USE OF ROLLBACK TAXES

Act 319 requires that all the interest received on rollback taxes shall be added to other local money appropriated by an eligible county for the purchase of agricultural conservation easements. If the county does not participate in the easement program, the interest shall be forwarded to the state agricultural conservation easement purchase program fund.

SALE OR DIVISION OF ENROLLED LAND

The Act allows for two types of divisions or conveyances: “Split-offs” and “Separations.”

Split-off: the division, by conveyance or other action of the owner, of land into two or more tracts. When a split-off tract meets the following criteria, roll-back taxes and interest are only due on the split-off tract, and are not due with respect to the remainder:
- Generally, no more than 2 acres may be split-off per year. Cumulative split-offs from subsequent years may never exceed the lesser of 10 acres or 10 percent of the total land originally enrolled.
- The remaining parcel must meet the Clean and Green requirements.
- The split-off tract may be used for agricultural, agricultural reserve or forest reserve use or for the construction of a residential dwelling to be occupied by the person to whom the land is conveyed.
Separation: the division, by conveyance or other action of the owner, of land into two or more tracts of land that continue to be in agricultural, agricultural reserve, or forest reserve use. The tracts must generally be 10 acres in size and continue to meet the requirements for Clean and Green eligibility. No rollback taxes would be due.

NON-AGRICULTURAL AND RECREATIONAL USE OF LAND

An owner of enrolled land may apply up to 2 acres of enrolled land toward direct commercial sales of agriculturally related products and activities, or toward a rural enterprise incidental to the operational unit. Only the acres used for this enterprise would be subject to rollback taxes and interest if both of the following apply:

The commercial activity or rural enterprise does not permanently impede or otherwise interfere with the production of an agricultural commodity on the remainder of the enrolled land.
The commercial activity is owned and operated by the landowner or persons who are Class A beneficiaries of the landowner for inheritance tax purposes, or by a legal entity owned or controlled by the landowner or persons who are Class A beneficiaries of the landowner for inheritance tax purposes.

Recreational activities or agritainment activities are allowed on forest reserve and agricultural land. Agritainment is farm-related tourism or farm-related entertainment activities for recreation or educational purposes. These activities are authorized by the landowner in return for a fee. Agritainment includes, but is not limited to, corn mazes, hay mazes, farm tours and hay rides. Recreational activity includes, but is not limited to:

Hunting
Fishing
Swimming
Access for boating
Animal riding
Camping
Picnicking
Hiking
Agritainment activities
Operation of nonmotorized vehicles
Viewing or exploring a site for aesthetic or historical benefit or for entertainment
Operation of motorized vehicles if the operation is:
- over an existing lane and incidental to an activity described above
- or necessary to remove an animal which has been hunted

PUBLIC ACCESS TO CLEAN AND GREEN PROPERTY

Land enrolled as agricultural reserve must remain open to the public for passive recreational uses free of charge on a nondiscriminatory basis. However, a landowner may place reasonable restrictions on this. For example, a landowner need not allow access after dark, the carrying of firearms, or the use of motorized vehicles.

FARMSTEADS

Farmstead land is any curtilage (the immediate, enclosed area surrounding a house or dwelling) and land situated under a residence, farm building, or other building that supports a residence, including a residential garage or workshop. Farmstead land located within an area enrolled as agricultural use qualifies for preferential assessment.

Farmstead land located within an area enrolled as agricultural reserve or forest reserve will be assessed at agricultural use value if either:

a majority of land in the application for preferential assessment is enrolled as agricultural use land; or
in the circumstance that noncontiguous tracts of land are enrolled under one application, a majority of land on the tract where the farmstead land is located is enrolled as agricultural use land.

County commissioners may adopt an ordinance to allow the preferential assessment of a farmstead on land that is enrolled in agricultural or forest reserve.

OPTION TO ACCEPT OR FORGIVE ROLL-BACK TAXES IN CERTAIN INSTANCES

If enrolled land is granted or donated to one of the following entities, the taxing bodywithin which the land is located may accept or forgive roll-back taxes:

A school district
A municipality
A county
A volunteer fire company
A volunteer ambulance service
A 501(c)3) not-for-profit corporation, if prior to accepting ownership of the land, the corporation enters into an agreement with the municipality where the land is located guaranteeing the land will be used exclusively for recreational purposes, all of which shall be available to the general public free of charge. If the corporation does not follow this agreement, it will be liable for all roll-back taxes and accrued interest previously forgiven.
A religious organization, if it uses the land only for construction or regular use as a place of worship, including meeting facilities, parking facilities, housing facilities and other facilities which further the religious purposes of the organization.

The taxing body may not forgive the interest on rollback taxes.

MARCELLUS SHALE DRILLING

Act 88 of 2010 protects landowners who participate in Pennsylvania's Clean and Green program from roll-back taxes due to the development of a gas well or pipeline on their property. Under Act 88, land subject to preferential assessment may be used for exploration for, and removal of, gas and oil. This includes the development of appurtenant facilities, including new roads and bridges, pipelines and other buildings or structures related to those activities. Roll-back taxes will be imposed upon only those portions of land actually devoted to these activities, excluding land devoted to subsurface transmission or gathering lines. A roll-back tax can be levied only on the portion of the land filed under the well restoration report and land which is incapable of being immediately used for agricultural use, agricultural reserve or forest reserve.

No roll-back tax will be imposed upon a landowner for activities related to the exploration for, or removal of, oil or gas, including the extraction of coal bed methane, when conducted by a party other than the landowner that hold the rights to conduct such activities. This applies if the transfer of rights occurred before the land was enrolled for preferential assessment and before 12/26/10 (the effective date of the act).

ALTERNATIVE ENERGY DEVELOPMENT

Act 88 also allows for the development and use of Tier I alternative energy on any land use category of Clean and Green to be kept under preferential assessment as long as more than half of the energy annually generated is used on the tract of land. Examples of Tier I include: solar photovoltaic, solar thermal, wind power, low impact hydropower, geothermal energy, biologically derived methane gas, fuel cells, biomass energy and coal mine methane.

Act 109 of 2010 allows landowners who participate in Pennsylvania's Clean and Green program to use their land for commercial wind production where more than half of the produced energy is sold and used off of the tract of land. The portions of the land used for wind production are subject to rollback taxes. This differs from the provisions of Act 88, which allows for wind power production with no rollback taxes, if more than half of the produced energy is used on the tract.

CONSERVATION CHALLENGES

Clean and Green does not require that the enrolled land will be kept in an eligible use in perpetuity. While there are financial penalties to removing land from the program, these penalties are generally insufficient to stop land conversions as development pressures rise.

Clean and Green allows those not engaged in farming to qualify for preferential assessment under agricultural reserve and forest reserve designations, which can incentivize the sprawling development of 10-acre “mini-estates”. Although the act addresses this by disallowing preferential assessment of farmsteads (often referred to as base acres) within agricultural and forest reserve lands, landowners can receive preferential assessment on the rest of their property. There is controversy as to whether or not this fits into the original intent of the Clean and Green Act. While inclusion of these parcels could be seen as incentivizing the preservation of open space, many would argue that enrolling 10 acre parcels of land in the program without careful planning of where they are located is not an effective method of open space preservation. Additional controversy over mini-estates is generated because other landowners must pick up the portion of tax burden that landowners enrolled in the Clean and Green program are reprieved of.

HISTORY OF THE ACT

Since it was first passed, the Act has been amended at various times, including significant amendments in 1998 and 2004. Act 156 of 1998 amended the Clean and Green Act to help bring about uniform interpretation of the law throughout the Commonwealth. The act was amended again in 2004 through Act 235. This act provides for the market value assessments of farmstead lands enrolled in the Agricultural Reserve and Forest Reserve categories. Counties retain the ability to adopt an ordinance to continue assessing agricultural reserve and forest reserve farmstead lands at use value. This change was caused because Act 156 apparently caused a significant reduction in the property tax bases in many rural taxing jurisdictions and also resulted in an increase of mini-estates. Act 235 also provides for the recreational leasing of enrolled land.

Comments

Allison Hamilton on 06-01-2010 03:30 PM

I frequently get questions from neighbors of land enrolled in 319 who believe the landowner is violating the act. This helps to clear up many of these questions.

Anonymous on 02-12-2012 03:43 AM

Here in Lehigh County landowner are paying about 2 percent, a 98 % reduction not an average 50 reduction ( I think you made up 50% average, show me some facts where people live not out in the no mams land ) Lehigh County has 223,000 total acres,96,000 are are receiving these hugh tax breaks .

Andy Loza on 02-12-2012 08:05 PM

The 50% figure is reported by the PA Department of Agriculture. There will be variation — potentially substantial — by county and market values in the vicinity of the property.

Anonymous on 02-06-2013 12:24 PM

66% reduction in Beaver County

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