Did you know that in 2014, 50.7% of the acreage in San Juan County was taxed based upon fair market value? 21.5% was exempt from property tax altogether, 13.5% was taxed as “designated forest land,” and 14.3% was in an “open space” or “current use” program. This article addresses the 14.3% of property in San Juan County that is in an open space or current use program.
“Open space” and “current use” programs allow landowners of certain undeveloped lands, farm and agricultural lands, and timber lands to have their properties valued and taxed based upon a property’s “current use,” instead of its fair market value (or its “highest and best use”).
History. After an amendment to the State Constitution was approved in 1968, the Washington State Legislature passed the first version of Chapter 84.34 RCW, the Washington State Open Space, Agricultural, Timber Lands – Current Use statutes, in 1970. In this Chapter, the Legislature declared that it is in the best interest of the state to maintain, preserve, and conserve adequate open space lands for the production of food, fiber and forest crops, and to ensure the use and enjoyment of local natural resources and scenic beauty for the economic and social well-being of the state and its citizens. RCW 84.34.010. This is the overarching legal framework that provides for four taxing classifications frequently encountered and discussed in San Juan County:
(1) current use farm and agriculture
(2) current use timber land
(3) open space land, and
(4) farm and agricultural conservation land.
The San Juan County Assessor’s Office is responsible for overseeing and administering these programs in San Juan County. In the past, the Assessor’s Office did not regularly review the properties in these taxing classifications. Because of this lack of scrutiny, many landowners became complacent with their real property taxing classifications, and did not always follow the legal requirements of the classifications. In addition, many landowners did not realize that changes to the governing laws, or changes in the use of their properties, could affect their eligibility to remain in these special classifications. Recently, at the insistence of the Washington State Department of Revenue, the San Juan County Assessor’s Office has started to closely review classified lands in San Juan County, to ensure that enrolled land is properly classified. This has resulted in the Assessor’s Office notifying many landowners that their properties do not comply with the laws, and that they owe back taxes, interest, and a penalty, as a result.
Applicable Law. The laws governing these taxing classifications (Chapter 84.34 RCW) are complex, interrelated, and can be difficult to comprehend. Adding to this complexity, the Washington State Department of Revenue promulgates regulations that supplement the governing statutes. While these regulations are designed to assist those deciphering the governing statues, they tend to further muddy already unclear waters.
The Impact of Washington Law on Farm and Agricultural Land in San Juan County. San Juan County boasts a unique agricultural economy and heritage, of which many of its residents are proud and seek to preserve. But agriculture in the San Juan Islands has unique challenges that mainland Washington residents do not experience. For example, the price of land in San Juan County is generally far higher than the price of land in Eastern Washington, labor costs are higher in San Juan County than in many other parts of the state, and transportation costs (were one to take agricultural products off-island to sell, for example) are higher due to geography (e.g., ferry fares). Because many of the governing statutes and regulations were drafted with “mainland” agricultural practices in mind, for various reasons, those San Juan County landowners whose properties are classified as current use farm and agriculture land tend to encounter some difficulty when establishing and verifying eligibility for this classification with the San Juan County Assessor’s Office.
Wagner Law Offices P.C. has helped San Juan County landowners work with the San Juan County Assessor’s Office to verify and establish eligibility for these taxing classifications. If you are facing any issues regarding your property tax classification, please call us at (360) 378-6234. We are here to help you.