On April 14, 2016, Governor Scott Walker signed into law Wisconsin Senate Bill 434, a bill that significantly amends the Managed Forest Law (Sections 77.80 to 77.91, Wis. Stats.), thereby enacting the 2015 Wisconsin Act 3581 (the Act). Wisconsin legislators created the Managed Forest Law (MFL) Program, as administered by the Wisconsin Department of Natural Resources (DNR), to encourage private forestland owners to institute sustainable forest management practices and apply those practices to their forestlands. In return for participating in the MFL Program, MFL forestland owners receive significant tax reductions and other benefits. Forestland owners interested in applying to the MFL Program must submit an application to the DNR, accompanied by a forest management plan. The forestland owner must enroll its property in the MFL Program for either 25 or 50 years.
As a result of the Act, the following changes are in effect as of April 16, 2016, unless otherwise specified:
- The Act increases the minimum acreage required to enroll forestlands into the MFL Program from 10 acres to 20 acres. (Section 77.82(1)(a)1., Wis. Stats.)
- Under the new law, if there is a building or an improvement associated with a building on the land, the property will not be accepted into the MFL Program. (Section 77.82(1)(b)3., Wis. Stats.)
“Closed” Land: The Act increases the minimum acreage threshold required to designate any MFL land as “closed” to the public from 160 acres to 320 acres in each municipality. (Section 77.82(1)(am), Wis. Stats.)
Damage to Land: Following a natural disaster (defined by the MFL as fire, ice, snow, wind, flooding, insects, drought or disease) under the Act, the DNR is now authorized to allow an MFL forestland owner a period of time, as determined by the DNR, to restore productivity of the forestland to become compliant with the MFL Program guidelines. (Section 77.88(2m), Wis. Stats.)
DNR Enrolling Orders: The Act creates protections for MFL Program participants by prohibiting the DNR from retroactively modifying an order (an order enrolls forestland into the MFL Program) on account of laws enacted or rules promulgated after the issuance of an order. (Section 77.82(11), Wis. Stats.)
Activities on “Closed” Land: The Act permits MFL forestland owners to grant land management professionals access to “closed” land and to lease “closed” land to persons for recreational activities. These two activities were prohibited on “closed” land prior to the Act. (Section 77.83(2), Wis. Stats.)
Cutting Notices: Pursuant to the Act, the DNR is no longer permitted to determine the amount of timber a forestland owner may cut and remove from MFL land. The Act also provides that if the DNR receives a notice to cut MFL forestland timber from a forestry professional with specific credentials and/or a satisfactory forestry background (as detailed in the Act), the DNR should permit the proposed timber cut and removal. (Section 77.86(1)(b), Wis. Stats.).
Withdrawing MFL Forestland from the MFL Program: The Act allows an MFL forestland owner to voluntarily withdraw forestland from the MFL Program in the following circumstances:
- With respect to a partial withdrawal, upon an MFL forestland owner’s request to withdraw a portion of its MFL lands from the MFL Program, the DNR must issue an order withdrawing the land provided that (i) it is either (y) all of the MFL forestland owner’s MFL land within a quarter-quarter section or (z) all of the MFL forestland owner’s land within a government lot or fractional lot; and (ii) the remaining MFL land is in compliance with the MFL Program requirements. (Section 77.88(3)(b), Wis. Stats.)
- With respect to a withdrawal for a sale or for a construction site, MFL land may be withdrawn provided that (i) the withdrawn property is a minimum of one acre and not more than five acres, and (ii) the remaining MFL forestland owner’s land is in compliance with the MFL Program requirements. Property may be withdrawn from the MFL Program, as described above, only once for MFL forestland with a term of 25 years and twice for MFL forestland with a term of 50 years. (Sections 77.88(3j)(a)) and 77.88(3j)(b), Wis. Stats.)
Withdrawal Tax: The Act creates the following two calculations for the withdrawal tax imposed when withdrawing property from the MFL Program, depending on whether the property is a portion of a “large property” (defined by the MFL as one or more parcels under the same ownership containing 1,000 or more acres):
- MFL forestland is a portion of a “large property”: The higher of (i) past tax liability multiplied by the number of years the land was in the MFL Program, and (ii) 5% of the stumpage value of the merchantable timber on the property (Section 77.88(5)(af), Wis. Stats.*)
- MFL forestland is not a portion of a “large property”: The total net property tax rate imposed by the municipality in which the MFL land is located in the year prior to the withdrawal year multiplied by the assessed value of the land being withdrawn for the year that the MFL land is withdrawn. The result is then multiplied by 10 years or the number of years the MFL land was designated as MFL land, whichever is fewer. (Section 77.88(5)(ae), Wis. Stats.*)
“Closed” Land Fee Collection: Instead of the DNR collecting and disbursing fees paid by MFL forestland owners for a “closed” land designation to the state conservation fund, the Act requires the DNR to distribute the fees as follows: 80% to the local municipality and 20% to the county in which the property is located. (Section 77.89, Wis. Stats.*)