After tax bills hit farms that branched into being venues, lawmakers intervene

SNOHOMISH — A wedding at a farm can be the perfect backdrop, but those farms that converted their barns into regularly booked wedding spaces or other uses got put on the back foot this summer.
The barn’s not agricultural anymore, so the land around it is not allowed to be given a special lowered property tax rate named Open Space. The tax fee for changing the land use out of Open Space is seven years of back taxes plus a 20% penalty.
At least a handful of farms in the Snohomish River Valley received sizable tax bills last summer.
Local lawmakers noticed. They have a new bill to clarify the rules, and the county assessor is on board.
A goal of House Bill 1261 is consistency in applying the rules.
State Reps. Sam Low (R-Lake Stevens) and April Berg (D-Mill Creek) collaborated to write the bill after hearing from affected farmers.
Assessors are working off of a state Department of Revenue training on how to decide what counts as “Open Space” and what doesn’t.
County Assessor Linda Hjelle said corn mazes, U-pick operations and pumpkin patches weren’t any trigger. It was finding farm structures modified into event spaces that prompted the letters, she said.
Eight farms received tax bills in a first wave last summer, Hjelle said. County auditors check on properties every six years, and made stops around the Snohomish River Valley last year.
Tara Luckie, the president of the Snohomish County Farm Bureau, said she’s talked with upwards of 20 farms that received letters saying they were not in compliance. Many are prominent Snohomish farms. (Her farm sailed through. She isn’t in the wedding venue business but would like to utilize a barn on her farm to get into event hosting, she testified in Olympia.)
The bill protects agritourism activities by clarifying that things a farm might add to host crowds of visitors, such as a gravel parking lot or small buildings such as a farm stand, would no longer be Open Space violation triggers depending on interpretation.
Luckie said she recognizes the assessors were doing their job, but if the rules aren’t clarified, she said farms might not know where they stand.
The Open Space designation is a tax relief program for space being farmed, used for forestry or two other categories. The state Department of Revenue sets the rules, and assessors administer it, Hjelle said.
Hjelle said her office verified with Revenue before removing these properties from Open Space designation.
Hjelle said that technically, if the use changes, the property owner is supposed to notify the county assessor. Some do, others hadn’t.
Being found out, though, sets off a 30-day window to pay up. If not paid, it becomes a lien on the property. The only recourse is to appeal the decision before county boards.
Luckie said she understands some of the tax bills were more than $30,000.
“When an assessor involuntarily removes a property from an Open Space program, that penalty is tremendous and it is due immediately and it can create very difficult cashflow problems for the property owners,” Brad Tower, a lobbyist for the Christmas tree growers industry, testified to legislators in January.
Low and Berg visited farmers last summer. “We determined we wanted to clean up that part of the law,” Low said.
“A majority of farms, from my perspective, are not doing anything incorrect,” Low said. This will be “correcting this going forward.”
Agriculture is worth more than $280 million annually to the county’s economy. It’s only surpassed in volume by aerospace.
Agritourism — the corn mazes, the U-picks — is a change in business model that’s helped keep farms afloat, farmers said. The commodities business, for comparison, has pitfalls. One lost contract blows a huge hole.
The state is losing two farms a day.
In January, multiple Snohomish County farmers and elected leaders testified for the bill at the House Finance Committee on this concern.
Agritourism gives “experiences that cannot be replicated in the classroom or on the Internet,” Luckie testified, and it strengthens the public’s connection to farming.
It is “the device to make connections and make a living,” Bob Ricci testified.
Agritourism, in name, was deleted in a revision to the bill last week. It was pulled to avoid muddling anything because counties each set definitions as to what is agritourism, Berg said.
For example, Skagit County’s ag board in 2023 proposed redlining that event spaces on ag land don’t equal agritourism and set a temporary moratorium. High Country News magazine reported Skagit’s moratorium on events isn’t yet hashed out. The story’s headline asks plainly: “Is a farm that hosts weddings still a farm?”
The bill’s makers point out the penalty for changing the land use being reduced. Instead of seven years of back taxes, the bill makes it four years.
There also appears to be a mechanism attempting to get a free pass. “The bill allows an assessor to waive or a county treasurer to refund” the additional taxes charged from being removed from Open Space, a state fiscal note said.
Kate Armstrong, a legislative liaison at the state Department of Revenue, advised that refunds might run afoul of laws against the gifting of public funds.
It’s murkier on whether the farms that received Open Space violation bills in summer already would ever have their bills retroactively frozen.
The bill advanced Feb. 18 in the House Fiscal Committee, who passed it and referred it to the Rules committee.
A tandem bill in the Senate, SB 5479, passed through the Senate Committee on Agriculture and Natural Resources Feb. 20, and was forwarded to the Senate’s Ways and Means committee.
“I hope it goes all the way through,” Hjelle said.