Property Tax Post: San Francisco is the Latest City to Encourage Urban Farming


Do you want to save money for growing tomatoes in the city? Or for reducing urban blight? Reducing transportation emissions? Next week you can do just that if you live in San Francisco.

Beginning on September 8, San Francisco will become the first city to take advantage of a 2013 California law that allows cities and counties to provide property tax breaks to residents who put their vacant, blighted lots to use as urban farms.

The Urban Agriculture Incentive Zones Act (2013 A.B. 551) allows municipalities to lower the assessed value of property, based on the per-acre value of irrigated cropland in California, if it is dedicated to urban gardening for at least five years. The bill applies only to urban areas as defined by the U.S. census, which includes 175 California cities.

To qualify for the tax break, the lot needs to be at least one-tenth of an acre and no more than 3 acres, with no permanent structures. These Urban Agricultural Incentive Zones must be built on vacant, unimproved, or blighted land.

Other Jurisdictions

California and San Francisco are not the first jurisdictions to experiment with laws encouraging urban agriculture, but not many have used property tax laws to directly encourage urban farming. States have enacted laws that set up committees to explore the benefits of urban gardening (Colorado, Illinois, Louisiana, North Carolina, and Oklahoma) or created incentive programs that can include loans and financing (Hawaii and Texas). 

States That Use Property Tax Incentives

A handful of states have taken a route similar to California by using various property tax incentives, such as tax credits, to encourage urban farming. In 2014 Maryland enacted a law that provides tax credits on city and county property taxes for property that is exclusively used for urban agriculture. New Jersey passed a law exempting land that is used for urban gardens from property taxes, but only if the property is leased or sold to, and operated by, a nonprofit organization.

In 2013 Missouri implemented a program most similar to San Francisco by establishing Urban Agricultural Zones on blighted areas that are exempt from property taxes for 25 years. Utah has also enacted a law that became effective in May of this year, which allows urban land to be assessed as agricultural land if it is between two and five acres and is used for urban farming for two years.

Denser urban areas such as New York City, Washington, D.C., and Chicago have also begun offering tax incentives to encourage green rooftops, which have the added benefit of rainwater absorption, insulating buildings and cutting down on electricity use. 

Why Now?

Many converging factors make this an ideal time for states and municipalities to begin experimenting with urban farming on a much larger scale. The ever-increasing concentration of people in cities and surrounding suburbs are further removing people from the source of their food, causing them to rely on food that is grown and transported from hundreds or thousands of miles away. This long-distance food distribution contributes to global warming, and combined with commodity price volatility, makes food unnecessarily expensive and inaccessible, which in turn has been a significant factor in the obesity epidemic. Urban agriculture addresses a multitude of other modern urban concerns as well, as Columbia University’s Urban Design Lab observes in a report, such as green space, air and water quality, economic development, and community engagement. 

Available space within urban areas also presents a great opportunity for states to begin encouraging urban farming. The Urban Design Lab has also identified 5,000 acres of cultivatable space in New York City, and points out that urban gardens have been most popular in Rust Belt cities that have experienced long-term economic decline due to the flight of the manufacturing industry. Cleveland, as Representative Marcia Fudge notes, has 7,000 vacant lots and 33,000 acres of land that is available to convert to urban farms. 

Most of these laws are so new that their impact on urban farming has yet to be determined. All states, however, should keep their eye on California, Missouri, Utah, Maryland, and New York City and consider which programs are more successful at encouraging urban dwellers to take up gardening in their own neighborhoods. And cities should not stop at property tax incentives. Zoning ordinances that create restrictions on selling produce grown in urban areas, establishing community gardens, and keeping animals have also hampered the growth of urban farming. For urban farming to really flourish, cities and states must make a concerted effort to integrate agriculture into urban settings that are in much need of fresh, real food.

What else may you get from supporting urban gardening in your community? It may even hasten the development of vegetables that actually taste good.

   

By: George Lynch

Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page:  What do you think would be the best methods to encourage urban farming? Do you think urban farms will be welcome in major urban areas?


Sign up for a free trial of the Bloomberg BNA Premier State Tax Library and see a detailed discussion on state property taxes.

Follow us on Twitter: @BBNAtax