Bill would let owners donate managed or reserved forest land to state without land-use-change tax

A short-form bill presented to the Agriculture, Food Resiliency, & Forestry committee would allow owners of managed or reserved forest land held in fee simple to donate those parcels directly to the Department of Forests, Parks and Recreation (FPR) without triggering the land use change tax, according to committee discussion.

Mac, a staff member, said the proposed amendment would add a section to the current-use statute allowing an owner of managed or reserved forest land in fee simple to donate the land to FPR “without having to enter into a conservation agreement and without being subject to the land use change tax if they were donating land to the state.” He noted the bill would also amend the definition of “development” to exclude such gifts under the new section 3763b and said the act would take effect July 1, 2025.

Why it matters: the change would remove a current discretionary acceptance step by the governor and require the commissioner of FPR to accept an absolute, unconditional gift that meets specified criteria, potentially increasing state-held forest parcels in priority forest blocks while creating a revenue impact for local taxing jurisdictions.

Key provisions and qualifying conditions

- Fee simple ownership: The bill applies only to land owned in fee simple; parcels with mortgages, divided ownership, or other non–fee-simple interests would not qualify.

- Enrollment: The land must already be enrolled in current use as either managed forest land or reserved forest land.

- Adjacency and priority: The parcel must be adjacent to existing state lands managed by FPR and located within a “high priority forest block” used in the department’s conservation planning.

- No conditions or encumbrances: Donations must be absolute and not subject to conditions, reservations on use, or encumbrances such as utility easements or rights-of-way; the presence of easements or similar interests would disqualify a parcel from donation under the proposal.

- Department management and tax documentation: Upon acceptance, FPR would manage accepted parcels as state forest land or part of a state park, and the department would provide donors an assessment of value for federal charitable income tax purposes.

Statutory and fiscal context

The draft refers to existing statutory authority under 10 V.S.A. §2606, currently giving the governor discretion to approve acceptance of donated land. The bill would make acceptance mandatory for qualifying, unconditional donations by directing the commissioner of FPR to accept such gifts. Committee members noted the Legislature’s Joint Fiscal Office (JFO) will analyze the revenue impact: donations would remove land from current-use rolls, and the state’s acceptance would extinguish any land-use-change-tax lien the sale or transfer would otherwise trigger. Mac summarized the implications: “So there would be a revenue impact because you'd be taking land out of current use, not paying the land use change tax, releasing the lien,” and added that JFO would quantify the net effect.

Questions and clarifications raised in the hearing

Committee members and staff asked about transfers where a private buyer briefly takes title and then conveys a parcel to the state, whether federal conditions on parcels would affect eligibility, and how common qualifying parcels are statewide. Panelists and staff said:

- A sale to an intermediary who then donates to the state would be possible if the original owner or buyer met the bill’s fee-simple and enrollment requirements, but details such as whether a transfer would trigger other taxes (for example, property transfer tax) would require further review.

- Parcels that carry federal or other preexisting conditions could be ineligible if those conditions mean the gift is not “absolute” or remains subject to reservation on use.

- The committee was told the initial practical focus for donations under the bill would likely be areas on the state’s west side where larger tracts exist that are more likely to be free of encumbrances; the prevalence of eligible parcels statewide was not specified.

Committee next steps and timing

The bill was presented as a short-form or statement-of-intent measure during the session; no committee vote or formal adoption was recorded in the hearing record. Mac and other staff indicated they would work with the sponsor and committee to refine statutory language and allow JFO to estimate fiscal impacts before the bill proceeds.

Ending

The committee concluded the discussion and planned follow-up work; staff said they would return with language and fiscal analysis for later consideration. No formal action was taken during the hearing.