I have thoroughly investigated the two most relevant Island County tax relief programs for us: the Public Benefit Rating System / Rural Stewardship Program and the Open Space Timber Land Program. And the winner is … drum roll … The Open Space Timber Land Program!
As part of the Open Space Taxation Act, administered through the Washington Department of Revenue, I will have 11 of our 15 acres reclassified as Open Space from its current residential (5 acre minimum lot size) zoning. The main reason: far better tax savings.
The PBRS / Rural Stewardship Program is a great option for property owners who do not have applicable forest or agricultural land, or who do not meet the minimum acreage requirements. It’s also great for someone who wants to ensure that Low Impact Development techniques are used on their property in the future. However, our plans will exceed the Low Impact Development techniques of the PBRS anyhow and yet the tax savings are not as much. We may even place a conservation easement on our property in the future, though there’s no need for us to do that yet since we control the property and its uses anyhow (got enough projects going on already!).
The process for reclassifying land into Open Space Timber includes a simple application that is obtained through the state Department of Revenue but is handled by the local Island County Assessor’s office. The relatively easy part is the $300 application fee. The hard part is including an approved professional Forest Management Plan. However, my completed Forest Stewardship Plan qualifies as a full Department of Natural Resources approved Forest Management Plan, which I knew well in advance and this was one of the many benefits of completing the plan, the associated course, and its overall creation process.
By placing the land in Open Space Timber, the taxes on the 11 acres will be extremely low. The other 4 acres will still be considered and taxed as residential property, and any structures placed on those 4 acres will be taxed as they normally would. The forested 11 acres must be maintained as forest / timber production. It can be removed from Open Space Timber classification, but the resulting difference in tax savings between Open Space taxes and regular zoning / residential land taxes would have to be paid retroactively to cover up to the prior 7 years in the program, plus there would be interest penalties on top of that.
The whole process takes over a year to get started, though (and that’s after all these months working on my Forest Stewardship Plan). I had to submit the application, fee, and Forest Management Plan by December 31 this year. It will be considered/approved next year in 2009, and then it will start reducing the taxes on those 11 acres for the 2010 tax year.