Why New York’s RPTL §480a Does Not Encourage Forest Stewardship

by David J. Colligan
June 16, 2014

“Don’t tax you, don’t tax me. Tax that fellow behind the tree,” Newsweek columnist George Will quipped. Chances are that fellow behind the tree is a private forest owner.

Woodland owners are increasingly feeling pressure due to property taxation and urban sprawl. Over the last century, large industrial forest tracts have been broken up and marginal farms have been abandoned. These lands have been sold for amenity values, recreational use and, in some cases, timber production. At the same time, the perception of modern forest owners has evolved toward stewardship of the land with responsibility to enhance future enjoyment and use of the forests.

Quietly, but steadily, this forest stewardship evolution has caused or coincided with a revolution in the state taxation of forests. A vast majority of the states have changed their ad valorem (by the value) tax rules in hopes of encouraging the forest owner to perpetuate forestland and develop forest management plans utilizing sound silvacultural practices.

Former Governor of New York, Teddy Roosevelt, was the first President of the United States to recognize the importance to the nation of its privately owned forests. Roosevelt’s Conservation Commission report in 1909 included an observation by the Director of the United States Department of Agriculture, Fred Rogers Fairchild that criticized the traditional wisdom of applying the ad valorem taxation methods to forestland. Essentially, Fairchild concluded that ad valorem taxation acted as a disincentive to long-term timber management.

A quick review of the ad valorem theory of taxation explains why Fairchild criticized the system as it applied to forest ownership. In a theoretically perfect ad valorem taxation system, a person who owns land served by the community pays taxes to the community based upon the “highest and best use” of the land owned. “Highest and best use” means the use that would maximize the value of the property, including uses such as hotels and shopping malls, if practical. In theory, those who own the most valuable property pay the most tax. Often the property’s current use as forestland is not the highest and best use, and as suburban development spreads, the amount of forestland that could be subject to higher valued uses increases. Further, the full timber value is often added to the raw land’s highest and best value for assessment purposes, further exacerbating the tax burden on forest owners.

New York’s Response: 480 and 480-a

Not long after Fairchild made his observations and criticisms of the ad valorem taxation system as applied to forestland, New York passed one of the first forest tax incentive statutes in the nation in the form of Real Property Tax Law (RPTL) Section 480 in 1926. This law is also known as the “Fisher Forest Act” in honor of one of its early sponsors. This progressive statute recognized the inappropriateness of ad valorem taxation as applied to forested parcels and sought to promote private ownership of forest parcels by incentivising forest owners to enroll their properties to take advantage-of a limited tax exemption. Upon enrollment, the landowner received a benefit in the form of a frozen assessed value, which could not be changed unless a district wide re-evaluation occurred within the taxing district where the land was located. In exchange, the forest owner in New York agreed to pay six (6%) percent of the stumpage value as determined by the assessor thirty (30) days prior to any harvest. The six (6%) percent stumpage payment (also called the “yield tax”) was also due if the owner either withdrew from the program or failed to comply with the program’s requirements. This revolutionary new statute was deemed unsatisfactory for a variety of reasons and eligibility for the RPTL 480 Program ended on August 31st, 1974.

The RPTL 480 Program was replaced by the RPTL 480-a Program, which had many similarities to the previous program such as private ownership eligibility and the requirement that the property be certified as containing potential for timber production. However, additional requirements were added which have proven to disincentivize participating in the new program. One of these additional requirements is a commitment under severe penalty by the landowner to continue forest crop production for ten (10) years from the date of enrollment and to actively manage the property pursuant to a written management plan. Due to health and time considerations, this active management requirement has become an obstacle for many forest owners when considering participation in this program. Additionally, the new law requires a minimum fifty (50) or more contiguous forest acres rather than the fifteen (15) acres in the original RPTL 480 Program with no allowance for open land or wetlands.

The benefit to the landowner for enrolling in RPTL 480-a is a reduction of eighty (80%) percent of the assessed value of the eligible acreage (or a lesser amount calculated by taking the assessed value less $40.00 multiplied by the latest equalization rate times the number of acres, go figure!). While the benefit of this formula appears attractive, assessors throughout the state have been using every method possible to blunt the benefit of the forest tax exemption. Frequently, assessors will change the tax assessment classifications of enrolled property from “abandoned agriculture” and other low assessment categories to “forestland” and/or “prime lot” classification, thereby effectively raising the assessed value of the property and reducing or even eliminating the benefit of the RPTL 480-a Program. To add insult to injury, under the 480-a Program, the landowner, upon harvest, must pay a six percent (6%) stumpage payment to the County Treasurer who, in turn, reimburses the municipality from which the stumpage was cut. Therefore, the same town assessor who minimized or eliminated the benefit of enrolling in the RPTL 480-a Program can be the direct recipient of the yield tax created by the program!

To top it off, the new RPTL 480-a Program created a whole series of penalties, which greatly discouraged participation in the New York Program. If, for any reason, property once certified is converted to a use which precludes forest management, the owner fails to comply with the management plan, the owner fails to make a harvest prescribed by the DEC, or some other violation of the strict letter of the law occurs, the owner is liable for a severe penalty. The penalty is a multiple of the taxes that have been saved and varies depending on whether there was an entire or partial withdrawal from the Program. If it is an entire withdrawal, the penalty is 2.5 times the amount of taxes for the previous ten (10) years. If it is a partial withdrawal, the amount is 5 times the taxes saved for the previous ten (10) years. Either penalty is subject to interest compounding annually. Put another way, if someone enrolled in the RPTL 480-a Program for a period of ten (10) years decides to remove their property from the program, they will pay a penalty of at least twenty-five (25) times the current year’s taxes saved if they remove the entire eligible tract or at least fifty (50) times the current year’s taxes saved if they remove a part of the eligible tract!

In many respects, New York State is a victim of its own enlightenment. By creating one of the first statutory schemes in the nation to incentivize forest ownership, the state was sailing in unchartered waters. As problems developed, New York was forced to replace RPTL 480 with a new law designed to address inadequacies of the previous law without full consideration of the probable effects on the program itself. This piece-meal approach to curing a statutory scheme has caused the New York forest incentive program to be the lowest subscribed program in the nation at five (5%) percent!


There are currently 46 other states with forest incentive programs. The salient feature of each of the programs is explained in the chart at the end of this article. A review of the seven (7) headings that follow will give the reader an idea of how other states have created stewardship incentive programs that do not rely on traditional notions of ad valorem taxation. The variety of ways other states have incentivized forestland ownership hopefully provides some insight into what is good and bad about the New York Law. By breaking it out on a chart, one can see that there is a wide range of variability among the individual states’ programs. By understanding other states treatment of similar issues,it is hoped that a dialogue can be created whereby New York’s forestland tax incentive statute can be eventually improved to the point where people will begin to enroll under the statutory scheme and New York can achieve the public policy it setout to achieve almost 80 years ago!

Below you will find a review of each column on the attached chart as well as this author’s personal view of what problems New York encounters as well as suggested reforms. There is no doubt that there will be some controversial positions taken by the author but hopefully it will engender constructive discussions as to what should or should not be changed about the New York statutory scheme. My take on New York statute is as follows:

COLUMN 1 “FOREST CLASS OR CURRENT USE” – Virtually all of the 47 states that have forest tax incentive statutes have a special classification that applies to forestland. States -such as New York will often designate all forestland using a single classification. In contrast, some states differentiate based upon forestland productivity by using a “current use” designation which evaluates the productivity of the land being taxed in a way similar to New York’s Agriculture Tax Incentive Program whereby the most fertile farmlands have the highest tax classification while the least fertile farmlands have the lowest tax classification.

New York Problems: By broadly characterizing all forested property as “forestland” for the purposes of RPTL 480-a, New York allows assessors to increase the assessed valuation on property eligible for the RPTL 480-a Program by changing its designation, prior to applying the statutory tax abatement!

Suggested reform: New York should prohibit the reclassification and resulting change in assessed value of any property enrolled in the RPTL Program. If necessary, such property could be designated as “RPTL 480-a land” (or new statute RPTL 480-b?). New York should also investigate whether forestland productivity considerations can be applied to forestland as it does to agricultural land.

COLUMN TWO: “SEVERANCE TAX” – Recognizing that a majority of states impose some form of tax that is timed to coincide with the harvest of timber products from the property, this column indicates whether the tax is calculated as a percentage of the removed wood products (yield tax) or calculated by multiplying the number of units (cord or board foot) times a set fee per unit. Interestingly, states such as Alabama apply a fifty (50%) penalty to the yield tax on units of wood exported from the state in raw log form thereby discouraging the performance of value-added operations outside the state borders. No doubt, this could be a solution to the rising log export problem from New York’s timber rich areas.

New York Problems: Local towns that have property signed up in the RPTL 480-a Program must go without significant property tax revenues, until such time as the property is harvested for timber and the yield tax is paid. This places tremendous strains on local budgets.

Suggested Reform: New York’s yield tax should continue to be paid to the state, upon harvest, but the state should reimburse localities for tax abatement losses under the RPTL 480-a Program each and every year regardless of the timing of the harvest on individual tracts within the towns. Governor Pataki’s proposed 2004 budget calls for a state reimbursement to localities for tax base loss greater than one (1 %) percent.

COLUMN THREE: “FOREST OWNER OPTION” – Indicates whether individual states require the landowner to enroll in a program or leave it as a landowner option. With the exception of the three (3) states that have no programs (Alaska, Arizona and South Dakota), any “no” in this column means that state requires all forestland to be included in their forestland incentive program.

New York Problems: Without a major shift in public policy, it seems reasonable to permit optional enrollment by landowners.

Suggested Reforms: None.

COLUMN FOUR: “MANAGEMENT PLAN REQUIRED” – Indicates whether states require a management plan to be in effect prior to enrollment in the Program. Clearly, states have a strong interest in good management of the forestry resource by trained individuals guiding landowners through their forest management decision process. By requiring management plans as a condition to enrollment in a tax savings program, states can achieve these objectives Again, with the exception of the three (3) states not participating, a “no” answer in this column indicates no management plan is required.

New York Problems: Our statute requires management plans that are too labor intensive, require intensive re-inspections and are inflexible with respect to unforeseen future events and circumstances. This is often a prohibitive burden for one considering entry’ into the Program since decertification and the incumbent penalties can result from failure to follow precisely the management plan’s requirements. Further, with continuing cutbacks in the Department of Environmental Conservation service forestry program, a tremendous strain is placed on the DEC forestry personnel with even small program increases straining finite resources.

Reform Suggested: Continue to require a management plan but reduce the mandatory timber stand improvement (to voluntary TSI) or tie into FLEP or other cost share program, reduce re-inspections to mandatory harvest times or other minimal standard.

COLUMN FIVE: “MINIMUM TERM” – Indicates whether or not states require a minimum term of years for participation in their forestry program.

New York Problems: A minimum term is not unreasonable if withdrawal penalties are reasonable.

Suggested Reforms: None if penalties are lessened and risk of accidental withdrawal reduced

COLUMN SIX: “ACREAGE REQUIREMENTS” – Indicates whether there is a minimum or maximum acreage requirement to participate in the program.

New York Problems: New York now requires a fifty (50) acre contiguous fully forested parcel to participate. According to the chart, this is the highest minimum acreage total required. Some states have as low as one acre as a requirement. Many states have no requirement whatsoever. When compared to the higher assessed-value parcel designation of “forestland” as recommended by the Office of Real Property Services in the–State of New York of forest parcels starting at twenty-five (25) acres, it is unfair that you can be taxed at higher assessment but not be “eligible for New York’s forest tax abatement program!

Reforms Suggested: Reduce minimum acreage requirements to twenty-five (25) acres or less.

COLUMN SEVEN: “CHANGE OF USE PROGRAM” – Indicates if states have a change of use penalty. While many states do impose a penalty for change of use, normally the penalties are in the nature of rollback penalties designed to recapture previously saved taxes under the enrollment program.

New York Problems: Without a doubt, New York has the most draconian penalties of any state which is the primary reason the enrollment under our forest tax incentive law is the lowest in the country.

Reforms Suggested: Greatly reduce the penalties for withdrawal from the Program. Possible suggested penalties would be a requirement to pay back taxes, dollar for dollar for each tax dollar saved or perhaps a three (3) year rollback, plus an additional amount equal to six (6%) percent of the yield tax on the standing timber that would have gone to the communities had the property stayed within the Program. This would provide an equal balance between incentivising continued forest stewardship and redUcing the incentive to land bank forestland with tax abatements while waiting for land values to appreciate.


When we fit the New York statutory scheme into what other states are doing, it is clear that many of the same features we have in New York are utilized by other states. However, the excesses of the New York statute become more apparent when we compare them to the majority of other states’ statutory schemes. In addition, the extremely low enrollment rate for the New York Program clearly shows that it is not an effective incentive to the preservation of forestlands. Hopefully, this article and the attached chart will provide guidance as to how we might change, for the better, our forest tax incentive statute.

This article wad prepared by David J. Colligan, a partner in the Buffalo law firm, Colligan Law LLP., who has based this article on an earlier article he wrote for the Denver University Law Review, Volume 78, Number 3, published in 2001, entitled “Forestland Taxation in the New Millennium: Stewardship Incentivized”. Comments may be sent to the author at dcolligan@colliganlaw.com or he can be reached at 716-885-1150.