2021 -- S 0364 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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A N   A C T

RELATING TO TAXATION

     Introduced By: Senators Archambault, Euer, Lombardo, and Coyne

     Date Introduced: February 25, 2021

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-3-32.2 of the General Laws in Chapter 44-3 entitled "Property

Subject to Taxation" is hereby amended to read as follows:

     44-3-32.2. Cities and towns -- Tax exemption for farmland, forestland or open space

land.

     (a) Cities and towns in the state of Rhode Island may, by ordinance, exempt from taxation

any real property situated in the town classified and utilized as farmland, forestland or open space

land pursuant to the provisions of chapter 27 of this title. The amount of the exemption shall be

provided for by ordinance. Cities and towns may, from time to time, by amendment to the

ordinance, make those changes in the amount of exemption granted.

     (b) Cities and towns in the state of Rhode Island shall exempt in full from taxation real

property utilized in the production of dairy products by a licensed dairy in Rhode Island, current

and future, pursuant to the department of health rules and regulations, including cow, sheep and

goat dairies. Said real property shall include, grazing land, cropland, outbuildings and any other

facility used in the direct production and processing of dairy products.

     (b)(c) Cities and towns of Rhode Island are authorized by ordinance to provide that any

person who obtains an exemption pursuant to the ordinance to which the person is not entitled, by

the filing or making of any false statement, or the proffering of any document or other writing

known by the person to have been altered, forged, or to contain any false or untrue information, is

liable for an amount equal to double the amount of reductions in taxes resulting from the exemption,

which amount is recoverable by the city or town in a civil action.

     (c)(d) Cities and towns in the state of Rhode Island are authorized by ordinance to exempt

from taxation any real property situated in the town classified and utilized as farmland on which

the development rights have been sold or donated and will remain farmland in perpetuity. The

amount of the exemption shall be provided for by ordinance. Cities and towns may, from time to

time, by amendment to the ordinance, make those changes in the amount of exemption granted.

     SECTION 2. Section 44-5-39 of the General Laws in Chapter 44-5 entitled "Levy and

Assessment of Local Taxes" is hereby amended to read as follows:

     44-5-39. Land use change tax.

     (a) After May 15, 1980, when land classified as farm, dairy farm, forest, or open space land

and assessed and taxed under the provisions of § 44-5-12 is applied to a use other than as farm,

dairy farm, forest, or open space, or when the land owner voluntarily withdraws that classification,

it shall be subject to additional taxes, subsequently referred to as a land use change tax. The tax is

at the following rate:

     (1) Ten percent (10%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the first six (6) years of classification.

     (2) Nine percent (9%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the seventh (7th) year of classification.

     (3) Eight percent (8%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the eighth (8th) year of classification.

     (4) Seven percent (7%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the ninth (9th) year of classification.

     (5) Six percent (6%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the tenth (10th) year of classification.

     (6) Five percent (5%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the eleventh (11th) year of classification.

     (7) Four percent (4%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the twelfth (12th) year of classification.

     (8) Three percent (3%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the thirteenth (13th) year of classification.

     (9) Two percent (2%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the fourteenth (14th) year of classification.

     (10) One percent (1%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the fifteenth (15th) year of classification. No tax shall be imposed

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by the provisions of this section following the end of the fifteenth (15th) year of classification.

     (b) Owners of land classified as farmland or dairy farmland who have held title to the land,

and where the land has been farmed or used as a dairy farm for five (5) years previous to

classification, are liable for a land use change tax of:

     (1) Ten percent (10%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the first (1st) year of classification.

     (2) Nine percent (9%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the second (2nd) year of classification.

     (3) Eight percent (8%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the third (3rd) year of classification.

     (4) Seven percent (7%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the fourth (4th) year of classification.

     (5) Six percent (6%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the fifth (5th) year of classification.

     (6) Five percent (5%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the sixth (6th) year of classification.

     (7) Four percent (4%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the seventh (7th) year of classification.

     (8) Three percent (3%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the eighth (8th) year of classification.

     (9) Two percent (2%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the ninth (9th) year of classification.

     (10) One percent (1%) of the then fair market value of the land if the use is changed or

classification is withdrawn during the tenth (10th) year of classification. No tax shall be imposed

by the provisions of this section following the end of the tenth year of classification.

     SECTION 3. Section 44-27-3 of the General Laws in Chapter 44-27 entitled "Taxation of

Farm, Forest, and Open Space Land" is hereby amended to read as follows:

     44-27-3. Classification of farmland. Classification of farmland or dairy farmland.

     (a) An owner of land may file a written application with the director of environmental

management, for its designation by the director as farmland or as dairy farmland. When the

application is made and after a filing fee of ten dollars ($10.00) is paid, the director shall examine

the land and, if the director determines that it is farmland or as dairy farmland, the director shall

issue a certificate in his or her office, furnish a copy to the owner of the land, and file one copy in

the office of the assessor of the city or town in which the land is located.

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     (b) When requested to do so by the assessor or whenever the director deems it necessary,

the director of environmental management shall re-examine land designated by the director as

farmland or as dairy farmland. If the director finds that this land is no longer farmland or dairy

farmland, the director shall send a notice to the landowner that the landowner has thirty (30) days

either to bring the land into compliance or to request a formal hearing before the director. If after

the thirty (30) days or after the hearing, the director confirms that the land is no longer farmland or

dairy farmland, the director shall issue a certificate canceling his or her designation of the land as

farmland or dairy farmland, and shall furnish one copy to the owner and file one in the office of the

assessor. Loss of designation by action of the director of environmental management makes the

land subject to the land use change tax provided for in § 44-5-39.

     (c)(1) An owner of land designated as farmland or dairy farmland by the director of

environmental management may apply for its classification as farmland or dairy farmland on any

assessment list of the city or town where it is located by filing a written application for that

classification with the assessor of the city or town not earlier than thirty (30) days before nor later

than thirty (30) days after the date of assessment, except that in years of revaluation not later than

thirty (30) days after written notice of revaluation or in its absence after receipt of the tax bill, and

if the director has not cancelled his or her designation of that land as farmland or dairy farmland as

of a date at or prior to the date of the assessment, the assessor shall classify the land as farmland or

dairy farmland and include it as farmland or dairy farmland on the assessment list.

     (2) In order to maintain this classification, each year thereafter, the property owner shall

submit to the assessor a certificate on a form prescribed by the assessor confirming that the land is

still used in farming or dairy farming. The assessor shall in the first notification mail the forms by

first class mail not later than the thirtieth of November and if a second notification is needed, it

shall be mailed certified. Failure to submit the certificate by thirty (30) days after the date of

assessment is construed as voluntary withdrawal of the classification, except that the assessor may

waive this requirement for good cause.

     (3) Notwithstanding the preceding subsections, whenever the owner of land designated and

classified as farmland or dairy farmland is a municipal land trust, municipal conservation

commission, or private nonprofit land trust, annual certification is not required, and the

classification continues until the voluntary withdrawal of the classification by the owner, or the

transfer of the land by the owner in fee simple.

     (d) Application to the director of environmental management for designation as farmland

or dairy farmland shall be made upon a form prescribed by the director and shall present a

description of the land and any other information that he or she may require to aid the director in

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determining whether the land qualifies for that designation. An application to an assessor for

classification of land as farmland or dairy farmland shall be made upon a form prescribed by the

assessor and shall present a description of the land and the date of issuance by the director of

environmental management of his or her certificate designating it as farmland or dairy farmland.

     (e) Failure to file an application for classification of farmland or dairy farmland within the

time limit prescribed in subsection (c) of this section and in the manner and form prescribed in

subsection (d) of this section shall be construed as a waiver of the right to that classification on the

assessment list.

     (f) Any landowner aggrieved by: (1) the cancellation of a designation under subsection (b)

of this section or the denial of an application, filed in accordance with the provisions of subsections

(c) and (d) of this section, by the assessor of a city or town for a classification of land as farmland

or dairy farmland; or (2) the use value assessment placed on land classified as farmland or dairy

farmland by the assessor; has the right to file an appeal within ninety (90) days of receiving notice,

in writing, of the denial or the use value assessment with the board of assessment review of the city

or town. Should the city or town not have a board of assessment review, the city or town council

reviews the appeal. The assessor shall be given the opportunity to explain either his or her refusal

to classify the land or the assessment placed on the classified land. The board of review, or city or

town council, shall also consider the testimony of the landowner and the city or town's planning

board and conservation commission, if they exist. They shall also seek and consider the advice of

the office of state planning, the department of environmental management, the dean of the college

of resource development, and the conservation district in which the city or town is located.

     (g)(1) The board of assessment review, or city or town council, shall not disturb the

designation of the director issued pursuant to subsection (a) of this section, unless the tax assessor

has shown by a preponderance of the evidence that that designation was erroneous.

     (2) The board of assessment review, or city or town council, shall render a decision within

forty-five (45) days of the date of filing the appeal. Decisions of the board of assessment review,

or city or town council, may be appealed to the superior court pursuant to § 44-27-6.

     SECTION 4. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION

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     This act would entitle dairy farms to the exemptions from taxation granted to farmland,

forestland, or open space.

     This act would take effect upon passage.

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