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CHARLESTON, S.C. - Laws meant to give tax breaks to farmers and timber
companies also unintentionally benefit developers, who pass on the tax
burden to other property owners. Owners of land designated for agricultural
use receive a huge reduction in their property taxes. The special assessment
can cut more than 99 percent of a property's taxable value.
For example, the tax bill on a wooded 5-acre beachfront lot on Kiawah
Island, worth an estimated $7 million, was $9.60. The scenario is unusual,
but not unique, officials say. "I just changed one (assessment) today where
the people would have paid around $15,000, and instead they paid $92," said
Dorchester County Assessor Greg Thacker. "I'm all for it, for true farmers.
Those people who abuse it are the problem."
To qualify for the tax break, a parcel must include five acres of trees or
10 acres of crops, in some cases less. County assessors say the broad
definition can be easy to meet. "Our hands are tied as long as that's the
use," said Charleston County Assessor Michael Huggins. "My response is: If
you want it done differently, change the law."
In his State of the State address last month, Gov. Mark Sanford said it's
time to look at the law. "Back home on the coast I know of a lot of folks
whose lands are taxed at agriculture rates, though the land is in fact
development land owned by developers - not farmers."
Many large developers with multimillion-dollar tracts of land paid less
property tax last year than the average homeowner, according to an analysis
by The (Charleston) Post and Courier. Criticism of the perceived abuse has
risen as state lawmakers debate changing the property tax system, because
tax breaks for one class of property mean higher taxes for everyone else.
"My whole view is that we can't legitimately look at property tax reform if
we don't look at all these things," said Rep. Richard Chalk, R-Hilton Head,
who introduced two bills to restrict which land tracts qualify for the tax
break. The bills have not been taken up.
Some assessors and the state Forestry Association say large developers
aren't the problem, due to a back-taxes requirement. They say abuse occurs
when small, valuable lots slip through loopholes in the law. If land
designated as agricultural is developed, the owner is supposed to pay five
years of interest-free back taxes on the property's true value.
"If someone is going to buy a large tract to invest, they are typically
going to turn it around quickly,' said Berkeley County Assessor Wilson
Baggett. "The developer is still going to pay the taxes." The law, however,
allows unconnected, undersized properties to be taxed at agricultural rates
if they're part of a "timber management system." "There's one man who buys
up little lots at tax sales and joins them under the same timber management
system," said Scottie Warren, who reviews and inspects agricultural
assessments for Charleston County.
Advocates for farmers fear the abuse could cause lawmakers to approve new
restrictions that hurt farmers, who consider the 30-year-old state program a
financial lifeline. "Without the agricultural exemption there's no way you
could pay the property tax with what you can make from farming," said Thomas
Legare, an owner of Legare Farms' more than 300 acres by the Stono River on
Johns Island. "I'm terrified that well-meaning politicians will do away with
the agricultural exemption and drive the farmers out."
Bob Scott, president of the Forestry Association, suggests lawmakers
increase the timber lot size to 10 acres and eliminate the loophole.
In Charleston County, the most valuable piece of land in the agriculture
program is Boone Hall Farms off U.S. Highway 17. The program reduces the
land's taxable value from an estimated $70.5 million to $110,000. The farm
is taxed separately from Boone Hall Plantation.
Kiawah Development Partners and its affiliates control the county's
second-most valuable collection of land listed for agricultural use - 11
parcels worth more than $65 million but together valued at $201,700.
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