Tax-based tools designed to promote and preserve access may be rooted in federal, state, or municipal tax provisions, or a coordinated effort among these authorities. Taxation can be used to encourage public access by:
- Providing targeted tax relief for certain, more desired uses. Particular uses deemed socially or economically important can be encouraged through either property tax relief or income tax incentives.
- Increasing the cost of less desired uses. Taxes could be levied to discourage uses that would inhibit coastal access.
- Raising revenues to invest in waterfront and coastal access. Taxes on the sale of land, or fees levied on certain activities at places where the public enjoys the beach or shore, can raise money for the acquisition of additional access rights.
How can taxes be used to generate funding for access?
Taxes can be used as a means of raising funds that the public can invest in the acquisition of public access through voluntary conveyance/acquisition tools or through eminent domain. A land gains tax, real estate transfer tax, impact fees, or tax increment financing are examples of these strategies, some of which are already used for access and purposes, others are potential new tools that would currently require legislative action to enable their use for these purposes.
How can tax incentives be used for access?
Reductions in a landowner’s taxes can be used as an incentive for allowing public access, or to discourage uses that inhibit access. Tax incentives may include income tax deductions, reduced property taxes, reduced estate taxes, avoidance of capital gains taxes, and gained investment interest. They might also include a current use taxation structure for open space, or for waterfronts that provide access for commercial fishing activities.
How can current use taxation be used for waterfront access?
Many states have restricted tax assessments on certain kinds of property, like farmland, by restricting the basis of property valuation to its current use, rather than its “just” value (full market value), or “highest and best use” value, (developed to its fullest potential). In 2008, the Florida Waterfront Property Tax Assessment (also known as “Amendment 6”) was passed, which modified the Florida Constitution to provide for the assessment of certain waterfront properties based upon their current use (Art. VII, Sec. 4(j), Fla. Const.). Similar to Florida’s agricultural “Greenbelt Law,” this is a use-value assessment affecting the valuation of a property that is dedicated for a particular use. Current use provisions allow for a reduction in just value, and thus taxes on that value, for select uses that are deemed to have public benefit. Reducing this just value results in a reduction in property taxes that may make it affordable for owners to retain the property in its current use, potentially reducing development pressure on the property.
The Florida legislature initially enacted “current use taxation” to provide an incentive for property owners to keep their property as open space, farmland, or forestry. The Florida Waterfront Property Tax Assessment law is designed to prevent the forced conversion of open space beachfront property to more intensive developed uses as a result of economic pressure. Parcels enrolled as Open Space, Agricultural, or specified Waterfront Property are assessed at current use with additional reductions possible for those parcels allowing public access.
What impediments to waterfront preservation exist in state and federal tax law?
The obvious tax-related impediments to protection of waterfronts are those which increase the costs of sustaining water-dependent uses on the waterfront: ever-increasing personal and business income taxes, and property taxes that rise with population pressure. Specifically, property taxes across the country are typically levied based on market value, which can pose a threat to less immediately profitable marine industries located on high-demand waterfront property. Logically, then, tax-based efforts to improve working waterfront preservation will aim to reduce the income and property tax burdens for water-dependent enterprises. More subtly, some of these tax tools, if not implemented and coordinated well with other tax tools, may reduce their overall effectiveness. For example, an overlay of current use taxation, a working waterfront covenant, a water dependent use zone, and tax increment financing on a single parcel or area of waterfront property, may lead one tactic to reduce, or even eliminate, the benefits of the other.