What is the Sustainable Forest Incentive Act?
The Sustainable Forest Incentive Act (SFIA) is a program overseen by the MN Department of Revenue that provides direct incentive payments to property owners to encourage sustainable use of woodlands.
Property owners can receive a payment for each acre of qualifying forest land they enroll in SFIA. In return, property owners agree not to develop the land and to follow a Stewardship Plan while they are in the program. All enrolled land must remain in SFIA for a minimum of 8, 20, or 50 years, depending on the covenant length chosen.
What is a covenant?
A covenant is an official document that the landowner signs, promising to limit use of the property to forest management activities. A covenant is filed with the county in which the land is located. Covenants are bound to your land for a minimum of 8, 20, or 50 years.
Who is the program for?
The SFIA program is beneficial both in terms of environmental impact and financial incentive for landowners, and as such can be beneficial for any landowner in Minnesota with eligible land who would like to preserve and enhance the natural state of their land and generate extra income from their properties.
What are the payment rates?
Payment amounts vary based on the length of your covenant and your total number of acres enrolled in SFIA. The payment rates are adjusted each year based on statewide average market values and tax rates, but will not increase or decrease by more than 10% per year. For land held in a conservation easement, see the note after the table.
The 2023 payment rates are:
For new applications in 2023 and land that is in a conservation easement, the payment is $3.88 per acre.
Note: If your land was enrolled in SFIA in 2017 and also has a conservation easement, the payment rate is $7.00 per acre and that land is limited to an 8-year covenant.
All payments received are treated as taxable income.
What are the qualifications?
Qualifying properties must:
Be current on property taxes
Have 20 or more contiguous acres
Be at least 50% forest land as defined in Minnesota Statute 88.01, subdivision 7
Have a registered forest management plan in place
Have a covenant in place limiting the property’s use to forest management activities
Qualifying properties cannot be:
Classified as 2c Managed Forest Land by the assessor or enrolled in:
Reinvest in Minnesota (RIM)
Conservation Reserve Enhancement Program (CREP)
Conservation Reserve Program (CRP)
Green Acres
Agricultural Preserves
Rural Preserves
Used for residential or agricultural purposes
Improved with a structure, pavement, sewer, campsite, billboards, cell towers or roads used for purposes that are not in the forest management plan
Covered under a Lessard-Sams Outdoor Heritage Council easement or similar easement granted after May 30, 2013
When will I get paid?
As long as your SFIA enrollment is completed by October 31 of the current year, you will receive your first payment the following year. Each Spring you are enrolled in the SFIA, you will receive a Certification Letter from the MN Department of Revenue that you must fill out and return by July 1 in order to receive your payments each year (payments usually arrive in September or October). Watch for this Certification Letter to come in the mail early to mid-May. If you do not receive this letter by June, call the MN Dept. of Revenue at 651-556-6088 to ensure they have your correct mailing address on file.
Are there any penalties for non-compliance?
Yes. If a landowner enrolls in the SFIA and files a covenant on their land, they agree to the terms listed therein. If a violation occurs, there are penalties to be aware of. Violations include not paying your property taxes, adding a building or other improvement not accounted for in SFIA acreage exclusions, and changing the use of the property. You can read more about the penalties for removing your land from compliance here (Minnesota Statutes 290C.11).
Note: Violating the terms of a covenant does not remove the covenant from the land.
How do I withdraw from the program?
To withdraw from the program, you must first complete half of the covenant duration (example: 4 years into an 8-year covenant). You then have your first opportunity to request withdrawal by completing the SFIA Withdrawal Application. You must then fulfill the final duration of your covenant length. The MN Department of Revenue will send you a confirmation letter with the date your land will be released.
Example: You have a 20-year covenant on your property. You may request termination at year 10 and must remain in the program until year 20, you will then be released from the program. If you wait until year 20 to request termination, you will need to fulfill another half of the covenant length (10 years) before termination is granted.
During the waiting period, the covenant is still binding, and you can continue to receive payments as long as you complete your annual Certification Letter. Once you have withdrawn, you cannot re-enroll in SFIA for at least three years.
How do I get started?
To enroll in the SFIA, you will first need to obtain a Stewardship Plan, file a covenant on your land, and then fill out the SFIA application. Click here for detailed enrollment instructions.
information found on this page is provided by the Minnesota Department of Revenue.
© 2023 Minnesota Department of Revenue
https://www.revenue.state.mn.us/sustainable-forest-incentive-act