Retired from a 37-year corporate management career, Mac Peden knows what it takes for an investment to be profitable and he understands the burden that property tax can be to the long-term viability of owning forestland. Thanks to the recent passage of House Resolution 51, a constitutional amendment, and House Bill 85, its enabling legislation, much-needed uniformity and equity will be delivered to landowners across the state in terms of property taxation.

Peden lives in Atlanta with his wife Susanne. His sons, Michael and Benjamin, also live in the metro region with their families. Any weekend he can go, Peden travels to his second home in Hancock County, a cabin nestled in a 2,500-acre tree farm he has acquired over the past 25 years. His family has farmed the land since it was acquired by an original
land grant in 1784.

Since inheriting a small portion of the land from his father in 1993, Peden has taken an active role in managing and acquiring land as an investment. In addition to timber harvests, he has hunting leases spread out across the property to offset the property’s annual tax bill. Thankfully, hunting leases in the region are competitive enough to be profitable for landowners like Peden. Additionally, to lower the overall tax burden on the land, he has enrolled the entirety in a covenant through the state’s ConservationUse Value Assessment (CUVA) program.
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“In order for forest land to remain profitable, the tax system must take into account the longterm investment nature of owning and actively managing timberland,” Peden said. “If it weren’t for the hunt leases and CUVA, I’m not sure that we would be able to continue acquiring and managing forestland like we do currently.”

Passed as a constitutional amendment in 1991, CUVA allows non-industrial private landowners with 10-2,000 acres of agricultural land, timber land or environmentally sensitive land to enter a 10-year conservation covenant. Land enrolled in the program is taxed on 40 percent of the current use value.

Seventeen years later, the Forest Land Protection Act (FLPA) was passed as an expansion of CUVA. The legislation, which has no acreage cap, allows both non-industrial property owners and corporations to put their property into a covenant for at least 15 years and to receive a lower tax burden for as long as the land is kept in forestry.

Today, land enrolled in CUVA and FLPA makes up nearly 80 percent of the 18.4 million acres of forestland on local property tax rolls in Georgia. According to Steve McWilliams, former Georgia Forestry Association president and veteran of several campaigns to improve and simplify taxation of privately owned timberland, increasingly more favorable property tax policy for forestland is one reason that Georgia has more timberland than it did 50 years ago.

​“Unlike most other crops and other business types, forestland may not produce significant income for several years until timber is mature enough to be cut — even longer if markets for timber are weak,” he said. “But the property tax
bill comes every year regardless.”

McWilliams continued: “Changes in forestland tax policy in the past 30 years have gone a long way toward creating
fairness for landowners and encouraging them to keep their land in trees.”

And that’s a good thing. Georgia’s 22 million acres of commercially available timberland are largely owned by private,
non-industrial landowners like Peden. They use their own resources to manage the land for clean air, clean water,
wildlife habitat and several ecosystem services that benefit every Georgian. Not to mention, they employ more than
140,000 Georgians and contribute over $35 billion to the economy.

“Investments in forestry, no matter the size or the objective of the land, have a big downstream impact on Georgia’s
environment and economy,” Peden said. “Private forests make Georgia a better place to live, work and play. So we should be doing everything we can to make our forests competitive and profitable for the average private landowner.”

Mac Peden’s family land is located in Hancock County. His family has farmed the land since it was originally acquired through a land grant in 1784. (Courtesy of Forest Landowners Association)

​A Competitive Disadvantage

Both CUVA and FLPA have been monumental for the 450,000 forest landowners like Peden across the state; however, even with those two programs, Georgia landowners are at a competitive disadvantage when the average property tax rate is​compared to surrounding states.

According to a study from the Warnell School of Forestry and Natural Resources and commissioned by the Georgia Forestry Foundation’s Center for Forest Competitiveness, Georgia’s forestland property tax is among the highest in the South at an average of $6.65 per acre. Average property tax elsewhere in the South isn’t close. Of
eight surrounding states, the lowest average rate is Arkansas at $1.25 per acre and the highest next to Georgia is $3.07
per acre in Virginia. Alabama, Louisiana, Mississippi, North Carolina and South Carolina fall between the two.

In addition, conservation programs such as CUVA and FLPA don’t work for every forest landowner. Land enrolled in
CUVA must be owned by an individual or a family partnership — corporate ownerships or non-family partnerships do not qualify. Corporate and non-family owners do qualify for FLPA, but if the land is less than 200 consecutive acres,
they cannot qualify.

The result is 4.7 million acres of “rural woodland” in Georgia that are not covered by one of the conservation programs. Those landowners pay up to $15.42 per acre on average.

Inequity from Improper Valuations

Each of the 159 counties in Georgia has its own board of tax assessors. Despite uniform guidance from the state on how timberland values are appraised, the guidance is interpreted differently by each county, resulting in a very wide range of timberland values for landowners. Many smaller rural counties are also at a disadvantage because they do not have the budget to employ trained staff to perform the complicated process in valuing timberland. In fact, according to The Department of Audits, only one out of four counties has properly extracted the value of standing timber from the land as required by the Constitution of the State of Georgia.

Inaccurate valuation has also impacted counties with land enrolled in FLPA. Each year, the state is required to provide local assistance grants to counties, school boards and cities to offset a portion of the property tax revenue lost from FLPA. The current law provides a specific formula for calculating the assistance grant payments to the counties by requiring the use of 2008 as the base year for fair market value of forestland. This provision essentially would have worked well if all 159 counties had revalued land in 2007 or 2008. But that did not happen and the formula ended up locking in assistance grants for nearly all of Georgia’s counties at rates that were either below or above what they should have been. There were even some counties that were overpaid more than $1 million a year — money that should have gone to other counties.

​Voters to Approve Legislation in November

To address the issues with uniformity for land not enrolled in a conservation program, as well as land enrolled in CUVA and FLPA, the Georgia Forestry Association championed the passage of HR 51 and HB 85, which were approved by both chambers of the Georgia General Assembly and signed by the Governor in early May. Because the legislation is a constitutional amendment, voters will have the opportunity to vote on the legislation on the general election ballot in November.

​If approved by Georgia voters, the legislation will be the most significant update to the ad valorem tax law since the passage of the Forest Land Protection Act in 2008. House Ways & Means Chairman Rep. Jay Powell (R-Camilla) was the primary sponsor of the bill.

“Our private forest owners are consistently supporting our state’s economy and environment, using their own resources,” Rep. Powell said. “This legislation helps to address several issues in the conservation use assessment of timberland to create a fair system for forest landowners while maintaining funding for counties throughout the state.”

Richard Royal, 30-year veteran of the Georgia General Assembly, former chair of the House Ways & Means Committee and a policy consultant to the Association, was the author and primary sponsor of FLPA in 2008. Royal agrees that the bill will be critical for Georgia landowners.

​“This tax legislation is imperative to keeping Georgia the number one forestry state in the nation,” Royal said. “The Department of Revenue, with trained professionals, will now establish fair market values for the new classification of qualified timberland, which will result in uniform and accurate land valuations. In addition, the correct extraction of timber values from the land values will provide much-needed property tax relief to the timberland owners not enrolled in CUVA or FLPA.”

Perhaps the most important aspect of this legislation is that it keeps forestland as a viable, and profitable, investment
for all forest landowners while maintaining the funding for rural communities. According to an analysis from the ​University of Georgia, some counties, like Hancock County, are set to gain a significantly larger amount from the change in the FLPA formula.

“Hancock County and the City of Sparta are my ancestral home, and the community here is important to me,” Peden said. “I am glad this bill takes a step in the right direction to give private forest owners some tax relief while maintaining the funding for our county schools and public services.”

Illustration by Brett Brooks

Richard Royal: A True Statesman

March 23 was a day of victory for the Georgia Forestry Association’s government affairs team. For more than two years, the team has worked with membership and the Georgia legislature to update the valuation process for timberland, and the legislation passed both chambers just two days before sine die, the last day of the legislative session.
One person was key to the success of the two-year effort — Richard Royal.
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Royal is a 26-year veteran of the Georgia General Assembly and former Chair of the House Ways & Means Committee. Retired from public service, he now serves as a consultant to the Georgia Forestry Association and to other agricultural and forestry interests in the state. Royal is a native of Camilla, GA, and well known as the authority on timberland taxation and the legal ins-and-outs of state property taxes.

He is usually all business, but on this day, he cuts up with his colleagues in celebration. “Well, boys, it looks like we can quit early today,” he says with a soft smile. Royal has worked on this particular legislation for the last two years, and he celebrated just like you would expect a Georgian to do — with a Chick-fi l-a sandwich and a Coke. Royal is a Georgian, through-and-through, and, most of all, he is a statesman.

During his time under the Gold Dome as a legislator, Royal was instrumental in developing the Conservation Use Valuation Assessment (CUVA) law and the Forest Land Protection Act (FLPA).

“Richard cares deeply about the future of the state, and he understands the value of forestry and agriculture to the people and the economy,” said Andres Villegas, Royal’s colleague and president and CEO of the Georgia Forestry Association. “He could be doing anything now, but he chooses to advocate for our natural resources, and we’re all better because of it.”

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Matt Hestad is a writer and public relations strategist focused on issues working forests, agriculture, economic development and poverty.