Nevada farm preservation tax law might be outdated
More than 6 million acres of Nevada land have been taxed at low rates to help preserve farms, but some officials say the 1975 law that allowed the tax breaks no longer achieves its original goal in rapid-growth areas such as Reno.
Instead, ranchers and farmers have been joined by companies that meet the minimum requirements to receive the tax breaks but eventually could develop old farmland on the edge of urban areas into homes and business projects.
Washoe County Assessor Bob McGowan said the state law has been updated to plug loopholes but there’s “still potential for abuse.”
The big problem with farmland in areas such as Reno is “the land has become so valuable, and fewer people want to work the land,” McGowan said.
Ron Shane, rural lands appraiser for Washoe County, said Nevada’s law is better than similarly intended laws in many other states because it requires landowners who file plans to develop farmland to repay taxes at a higher rate going back seven years. Some states lack any sort of tax recapture, or don’t go back as far.
The tax recapture in recent years has added an average of about $1 million yearly in revenue to Washoe County, he said.
The Nevada law “is better than how bad it could be,” he said.
“But there may be better ways, if the intent is to preserve greenspace,” Shane said.
Conservation easements or outright purchases of land by local, state or federal governments might work better in saving open space from development, he said.
Officials try to prevent abuses of the tax break program through a combination of local and state government oversight. But problems still persist as landowners seek to reduce their taxes by tens and even hundreds of thousands of dollars.
Shane recalls a case in which the owner of land being ringed by development sought lower taxes because there was a century-old apple orchard on his property. But when the owner of the land, worth more than $1 million, was informed he had to meet a minimum requirement of $5,000 a year in gross agricultural production, the landowner dropped his request.
Meeting the minimum requirement is easier for larger spreads, such as the 1,015-acre Ballardini ranch just west of Reno. The ranch, purchased by Minnesota-based Evans Creek Ltd. in 1998 for $8.5 million, has been mentioned as a possible location for at least 1,000 homes.
Guards who have been keeping hikers off a road winding through the historic ranch say the owners want to run livestock there.
Bob Nash, who works on agricultural appraisals for the state Department of Taxation, said “hobby farmers” tend to be the biggest problem. The state agency reviews the applications for tax deferrals from owners of parcels 20 acres or less. Larger parcels are handled by local governments.
Nash said nearly half the requests handled by his office are rejected – although it’s not hard to meet the minimum production requirement in cases such as small-acreage greenhouse farms.
Sen. Bill Raggio, R-Reno, authored Nevada’s 1975 “greenbelt” law after it was mandated by voters in 1974. Raggio said the law “did serve some useful purposes over the years – but today we’re running out of greenbelt.”
In the Truckee Meadows area where Reno is located, “there really isn’t much out there that meets the qualifications” for deferred taxes, Raggio said.
Much of the 263,500 acres of agricultural land in tax-deferred status in Washoe County are north of Reno.
Washoe’s tax-deferred acreage is larger than the acreage in many other counties, including Clark where there’s only about 6,310 acres with the designation. In Clark County, there’s much less agricultural activity because of the harsh desert environment.
But Washoe is well under the acreage counts in outlying areas.
Elko County leads all others with 2.6 million acres of tax-deferred agricultural land. Humboldt County has more than 900,000 acres and Pershing County has nearly 763,000 acres. Eureka County has about 463,000 agricultural acres receiving tax breaks, Lander County 456,600 acres and Churchill County about 232,000 agricultural acres in tax-deferred status.