COMMON CURRENCY: County's PILT is not on par with metro counties'
Question: What is an acre of natural resources land worth?
Answer: Probably not as much as you think.
I have been thinking about this question in an amorphous sort of way over the last several months, as an ongoing thread of articles in the Enterprise has scribed the perennial tension between the desire for greater local development and the desire to preserve natural resources here in Hubbard County.
Just some of the issues that were reported: a PUD resort conversion, a lawsuit over the granting of a shoreline variance, a new power line route, several articles on sewer and water projects, controversy regarding a new storm water utility, rising nitrate levels in ground water, contamination issues with old land fills, and just recently, the sale of 1,000 acres of undeveloped land to the DNR.
This is the one that really got my attention and brought the issue into focus for me: 40 percent of Hubbard County is managed as natural resources land, or otherwise owned by the public.
This fact was reported in the context of a land sale to the DNR that will take away a very significant chunk of the property tax revenue of a poor rural township already struggling with a very limited tax base.
If you are a township supervisor with miles and miles of roads to maintain and no way to pay for it, I am sure it gets your attention.
So what is the answer? How do we reconcile the desire to preserve the natural environment with the fact that public land pays no taxes? (Here is a side bar: There is almost a direct inverse correlation between the per capita income of counties in Minnesota and the percentage of public lands. The greater is the percentage of publicly owned land, the lower the per capita income. Does living near public land make you poor?)
In the development-versus-preservation debate there is usually a balancing of equities that takes place between the private land owner and the public interest, the most volatile contact point usually being where public water meets private land. Just ask COLA.
But where is the balancing of equity when public land is created for all to enjoy, but it shifts the tax burden for local government to a smaller base of fewer local property owners?
Most property owners and seasonal residents who enjoy the Park Rapids area consider our natural resources a precious legacy worthy of protection and preservation, and many people, me included, consider it a priceless gift.
But the truth is we actually do put a price on it. It is called PILT.
Payment-In-Lieu-Taxes is money the state sends to rural counties to help offset the property tax burden caused by the lack of revenue generated on public land.
Natural resources land in Hubbard County is worth $722,270. This is the amount of the calculated PILT payment from Minnesota Revenue to Hubbard County in 2010 to offset lost tax revenue from publicly owned natural resources land.
Sounds like a pretty good deal doesn't it? Not too bad, right?
Actually, I think we're getting short changed. Hubbard County's PILT payment works out to about $3 an acre for the 225,933 acres of publicly owned natural resource land in the county.
By comparison, citified Hennepin County got $298,870 in PILT money on a measly 2,186 acres. That works out to about $137 an acre. What makes natural resource land in Hennepin County worth over 40 times as much as natural resource land in Hubbard County? After all, isn't natural resource land owned by all of the public anywhere in the state, for the benefit of everyone?
If Hubbard County's PILT was on parity with the deal Hennepin County is getting, the state would owe the county over $30 million. Under the current budget austerity conditions which the county is operating under, I think we should go ask the "public" to pay up!
Alan Zemek is a Park Rapids area developer and author of "Generation Busted: How America Went Broke in the Age of Prosperity." You can follow his blog, or comment on this article on his website, www.generation busted.com.