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Introduced by Senator Kitchel of Caledonia District, Senator Cummings of Washington District and Senator Doyle of Washington District

Referred to Committee on


Subject:  Taxation; use value; enrollment of municipal watershed land

Statement of purpose:  This bill proposes to allow current use enrollment of watershed land owned by one municipality and located in another municipality.


It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  10 V.S.A. § 6301a(4) is added to read:

(4)  “Watershed property” means land, but not structures, owned in fee simple by a municipality, situated within that municipality’s water supply drainage basin, and located in another municipality, which is used for preservation of the owner’s municipal water supply.

Sec. 2.  10 V.S.A. § 6306 is amended to read:

§ 6306.  Exemption from taxation

(a)  The rights and interests in real property acquired by a municipality or state agency under the authority of this chapter shall be considered as municipal or state-owned land, as the case may be, with respect to taxation and state reimbursement in lieu of taxes.

(b)(1)  The commissioner of the department of taxes may certify that real watershed property or property acquired by a qualified organization under this chapter is being held and maintained for the purposes expressed in section 6301 of this title.  As a condition of that certification, the commissioner may require that the qualified organization or municipality provide adequate assurances that the property is being so held and maintained, including but not limited to written agreements with the department of taxes, deeds, covenants or other conveyances.  Property which is so certified:

(A)  if in the nature of an interest in fee simple, shall be assessed on the basis of its actual use, or may be enrolled by the qualifying organization or municipality in a current use program under chapter 124 of Title 32; or

(B)  shall be exempt from assessment and taxation, if owned by a qualified organization in the nature of an interest other than fee simple.

(2)  For purposes of this section, where a qualified organization holds a lease in the property for a term greater than ten years, including renewal terms, or holds such other interests as the commissioner shall determine to be substantially equivalent to an interest in fee simple, the organization shall be deemed to hold an interest in fee simple.

(c)  After acquisition by a municipality, state agency or qualified organization of a right or interest in real property under the authority of this chapter, the owner of any remaining right or interest therein not so acquired shall be taxed, under the applicable provisions of chapter 123 of Title 32, only upon the value of those remaining rights or interests to which he the owner retains title.  The state agency or qualified organization, and the department of taxes, shall cooperate with that owner, and with the town assessing such tax, in the determination of the fair market value of any such remaining right or interest.

(d)  Property held by a qualified organization or municipality and taxed or exempted under subsection (b) of this section shall be subject to a conversion tax if the commissioner determines that it is no longer being held and maintained for the purposes expressed in section 6301 of this title.  The amount of the conversion tax shall be five times the amount of the taxes avoided by reason of the exemption in the most recent year.  The conversion tax shall be paid to the municipality in which the property is located. 

Sec. 3.  32 V.S.A. § 3752(10) is amended to read:

(10)  “Owner” means the person who is the owner of record of any land, provided that a municipality shall not be an owner for purposes of this subchapter, other than a municipality which enrolls watershed property certified under 10 V.S.A. § 6306(b).  When enrolled land is mortgaged, the mortgagor shall be deemed the owner of the land for the purposes of this subchapter, until the mortgagee takes possession, either by voluntary act of the mortgagor or foreclosure, after which the mortgagee shall be deemed the owner.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont