Important though obscure

It’s a state law that probably affects fewer people here than any other legislation. But it has the potential to impact millions of dollars in tax penalties.The 10 Mill Law is a relatively obscure one, because by its very nature it keeps large tracts of undeveloped land static, in terms of use and taxes. The goal in creating the law a half century ago was to offer property owners a monetary incentive to preserve forestland. Property owners could keep those large properties intact without bearing an increasing tax burden. Land could be passed down or sold undivided without a penalty. The classification remains with the land even if the owner changes.Properties in the program are taxed at 10 mills, no matter what rates apply to the rest of a municipality. As long as the use of the property does not change, the designation remains in place for 100 years, with a revaluation done at the 50-year mark.Two properties on Preston Mountain Road in Kent, totaling more than 1,082 acres, hit the 50-year mark this past February — the first in the state. The milestone prompted new legislation when it became apparent that none of the classified properties would be able to meet the legal requirements after revaluation.The problem is simple. In addition to a 25-acre minimum requirement, the land cannot have a value of more than $100 per acre. “None of the 10 mill properties in the state can be revalued for under $100 per acre,” said Barbara Bigos, the assessor for the towns of Salisbury and Cornwall.The technicality would take the development restriction off about 15,000 acres across the state. It could backfire by forcing some owners to sell to developers to recoup what could easily amount to hundreds of thousands of dollars in penalties on a single tract.The solution is just as simple. HB6263, An Act Concerning the Transition from the 10 Mill Program, passed unanimously in the House and Senate during the last legislative session. It offers two options. It allows 10 mill properties, as they hit the 50-year mark, to be revalued at the forestland rate, also known as the 490 program. Or, owners have the option of coming out of 10 mill without a penalty if they choose to put a permanent conservation easement on the land.Bigos called the approved legislation a compromise over an amnesty bill proposed last year and opposed by town officials across the state. The new law reflects input from property owners and town representatives seeking a workable solution.There are currently an estimated 137 10-mill properties in 37 Connecticut towns. They will all hit the 50-year mark between now and 2022. In the 1972-73 tax year, many landowners took advantage of an amnesty program and rolled property into the 490 program without penalty.Owners impacted by the change will now have to weigh conservation issues against financial ones. Bigos said taxes on the properties are not likely to rise by much. The state recommendation for taxing forest land is currently $130 per acre, well below the market value. But each town sets its own value. Cornwall, for instance, values forestland at $190 per acre. Properties in the 10 mill program have a statewide average assessment of $50 per acre.Bigos expects many landowners across the state will chose to stay in the 10 mill program — with the 490 value applied at the 50-year revaluation — because it will let them keep their options open. The same would not be true of conservation easements.Cornwall is second only to Ledyard with the highest number of 10 mill properties. The 17 properties include three state-owned parcels. The privately owned land totals about 1,450 acres. Figures calculated last year show accrued penalties that ranged from $13,781 to $429,199. The total is more than $1.6 million.“State statutes dictate a formula that takes into consideration that the property owners have been getting a big tax break over a long time,” Bigos explained.The penalty rises exponentially with the length of ownership. The formula subtracts the current fair market value from the 10 mill value. That is multiplied by the statutory rate of .005, which is then multiplied by the number of years the property was classified.While the penalties are steep, it is all relative. Its effectiveness in conserving undeveloped land depends on the owners.In Cornwall, a remaining 10 mill property was removed from the program during a recent sale. The new owner paid the $78,000 penalty. “It may seem like a lot, but when you’re talking about someone buying a $2 million property, it may not matter as much,” Bigos said. In 2007, a Cornwall landowner moved 250 acres from the 10 mill to the 490 program. The penalty was more than $260,000. The town collects $173,200 for each of five years.Another resident split off a lot to sell to a family member. The penalty nearly equaled the sale price, but profit was not likely a motivation in this case. More significantly, the 10 mill restriction is gone and the rest of the property is open for subdivision and/or development.Another property owner has been negotiating with the town on a five-year payment plan for a more-than-$91,000 penalty. His plan, Bigos said, was to rent a small portion of his property for a cell tower. “The rental income for five years would nearly cover that, he would continue to collect rent for the tower and then he could build on the rest of the land.”In this part of the state, towns with 10 mill property are Falls Village, with about 1,450 acres on three parcels; Colebrook, with two parcels and 463 acres; New Hartford with one 27-acre parcel; and Litchfield, with five parcels totaling 890 acres.