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Sustainable Forest Incentive Act Fact Sheet What is the program?
Legislation passed in 2001—the Sustainable Forest Incentive Act (SFIA)—allows annual payments to be made to enrolled owners of forested land as an incentive to practice long-term sustainable forest management. Who is eligible? To enroll in the sustainable forest incentive program, you must meet all of the following requirements:
When to file Once a covenant has been recorded with the county, complete Form TH1, Sustainable Forest Incentive Act Enrollment Application, to enroll in the program. Applications are also available at many county and DNR forestry offices. When you file, be sure all the requested information on your application is provided—including each parcel’s covenant number and number of eligible acres. If all the information is not provided, your application will be delayed or denied. Your application and all required attachments must be postmarked no later than September 30 to receive an incentive payment the following year. Applications mailed after September 30 will be denied for that year. If all the required information is not provided, your application will be delayed or denied. The department will send an approval or a denial letter within 90 days after receiving your application. Signatures Both you and your approved plan writer must sign the application form. If the land is owned by a business entity or group, an authorized representative of the entity or group must sign. An unsigned application is considered incomplete. By signing the application, you are attesting to the accuracy of the information provided. Criminal and/or civil penalties may apply for filing a false or fraudulent application. Required attachments You must attach the following to your application:
Annual certification letters By July 1 of every year, the department will send a certification letter to each enrolled participant. In the letter, you’ll be asked to:
If you fail to return the certification letter as required, you will not receive an incentive payment for that year. How payments are determined Each year, the department will determine a statewide payment-per-acre rate using three formulas based on the average property tax for timberland. The formula that provides the largest payment-per-acre will be used. The minimum amount per acre is $7.00. The amount each participant will receive is determined by multiplying the payment-per-acre by the number of enrolled acres. Please note: The payment you receive is taxable income. If you owe delinquent taxes on property not enrolled in SFIA— or if you owe criminal fines or a debt to a state or county agency, district court, qualifying hospital or public library, state law may require the Department to apply your incentive payment to the amount you owe (including penalty and interest on the taxes). Your Social Security number may be used to identify you as the correct debtor. If your debt is less than your incentive payment, you will receive the difference. Removal for property tax delinquency on enrolled land If you owe delinquent taxes on any enrolled land, your land will be removed immediately from the program. The department will notify you of the removal and you’ll have 60 days from the notice date in which to pay the delinquent taxes. If you pay the delinquent taxes within the 60-day period, your lands will be reinstated without penalty. Lands terminated from the SFIA program due to delinquent property taxes are not entitled to any payments and are subject to removal penalties. The covenant will remain on the land for the remainder of the eight years. Use of information To enroll in the SFIA program, you must file Form TH1. All information on Form TH1, including your Social Security number, is required by M.S. 290C.04 to properly identify you and determine if you qualify to receive an incentive payment. If all the information, other than your phone number, is not provided, your application may be delayed or denied. If you provide a phone number where you can be reached during the day, the department can save time if questions arise. Your Social Security number is private information and cannot be disclosed to others without your consent. Your federal ID number and date of birth are also private or nonpublic information, but can be disclosed to county assessors for tax administration purposes and to county treasurers for purposes of Revenue Recapture. All other information is public. Frequently asked questions If I have more than one parcel of land, do I record a separate covenant for each? No, but you must record a covenant with each county in which your land is located. The covenant includes all your parcels in the county that will be enrolled in the SFIA program, even if the parcels are not contiguous. Once recorded, the county will assign a covenant recording number. Where do I find the covenant recording number? You can find the covenant recording number on the front page of your covenant after it is recorded by the county recorder. What items must be included in the forest management plan? The plan must include the landowner’s goals for the property, the parcel identification number (PID), a legal description, an inventory of the forest cover types, a map of the vegetation and boundaries, the proposed future conditions, a calendar of management activities, and other information pertinent to the management of the forest. The DNR will work with the claimant and the plan writer to determine what is acceptable. Do I have to follow the plan to remain eligible for a payment? Yes. Each plan will include a calendar of management activities. To remain eligible for payment, you must follow the timetable to a reasonable degree. Can I enroll only a portion of the eligible acres included in the parcel? Yes, but if you want to enroll the remaining acres in the future, your county must first assign a new PID to the remaining acres. For example, if your parcel of land includes 100 eligible acres but you only want to enroll 75 acres at this time, you can. However, before you can enroll the remaining 25 eligible acres in the future, your county must assign a new PID to the 25 acres. You cannot enroll additional acres using the same covenant and PID numbers of a parcel that is already enrolled. Do I have to own the land for the entire eight years? No. You may sell acres or the entire parcel of land at any time during your enrollment, but the covenant remains in effect. This means the new owner must abide by the covenant. What types of land are not eligible? Land that is not eligible in SFIA includes:
A building or structure used exclusively for management activities may be included. An example would be a shed or building that only houses equipment used during management activities. If the building also is used as a temporary or permanent dwelling or is used for storage of items not regularly used for management purposes, the land must be excluded. If the parcel includes nonqualifying improvements, is the land still eligible? It depends. Any portion of a parcel of land that has improvements that are not necessary for sustainable forest management must be deducted from the plan’s total acres. The minimum deduction is three acres for each area excluded. After deductions for exclusions there must be a minimum of 20 contiguous acres to be eligible. What if I have nonforested land that is not used for agriculture? Open water, including rivers, that are less than three acres in size can be included as part of the forested land. Larger areas must be excluded. Marshes and other wetlands not capable of growing trees, but due to its existence has a significant impact on forested land, is eligible for SFIA. This also includes land that may have been an agricultural field in the past, but has recently been planted for reforestation. What happens if I decide to develop part or all of my enrolled land? Before you complete the covenant, exclude any area you might develop in the future. If you violate the covenant by developing or constructing part or all of your enrolled land, all of your land will be removed from the program and you will be assessed a penalty. The penalty is the total payments you received on all of your land —not just the part in violation—for the previous four years, plus interest. Please note: The SFIA Covenant remains on the land. You cannot pay a penalty to remove the covenant. Are there any limitations on the number of acres? There is no maximum, but any ownerships greater than 1,920 acres must allow year-round, nonmotorized public access to fish and wildlife resources, except in areas within one-fourth mile of a permanent dwelling or during periods of high fire danger. (High fire danger is determined by the DNR.) Can I decide after I’m enrolled to leave the program? All enrolled land must remain in the program for a minimum of eight years. You may choose to cancel enrollment from the program after four years by filing a written request with the Department of Revenue. Once filed, the cancellation will take effect January 1 of the fifth calendar year that begins after receipt by the commissioner of the termination notice. You will continue to receive incentive payments during the four-year waiting period. Once you withdraw, the land cannot be reenrolled in the program for at least three years. I have been notified that the land I am buying is enrolled in the SFIA program. Do I have to reenroll? Yes. If you want to receive annual incentive payments, you must complete and submit an application, Form TH1. Keep in mind that even if you do not apply for payments, your land will remain in the program. Therefore, you must abide by the covenant and not develop the land until it is withdrawn from the program. I purchased enrolled lands. Can I request to withdraw and still receive the incentive payment while waiting to be removed from the program? Yes. You need to complete an application Form TH1, and send an intent to withdraw. You will receive payments until the land is released. I am the personal representative of an estate in which the decedent was enrolled in the SFIA program. Will the estate continue to receive payments? It depends if you chose to terminate or continue enrollment. You have up to one year to notify the department to either:
Can my land’s classification change? Yes. This is at the discretion of the county in which the land is located. In a timber program, your land’s classification would most likely change to timber. I recently purchased land already in SFIA. Who will receive the incentive payment for the upcoming year? This is a determination made between buyer and seller. It may be written in the purchase agreement. In the case of property sold or transferred, the former owner and the purchaser or grantee must determine between them which person is eligible to claim the payments provided under sections 290C.01 to 290C.11. The owners, transferees or grantees must notify the commissioner in writing which person is eligible to claim the payments. Can I remove just a portion of a parcel? No. The whole parcel must be removed. Should you decide to re-enroll the removed parcel, you will need to wait an additional three years to do so. Questions? Need forms? Call 651-556-6088. TTY: Call 711 for Minnesota Relay. Form TH1 and the covenant form are available on our website. It is also available at many county and DNR forestry offices.
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