Use-Value Conversion Charge
Sec. 74.485, Wis. Stats.

  1. How is the Conversion Charge calculated?
  2. If a parcel is split, how is the size calculated in determining which Conversion Charge to apply?
  3. Who issues the Conversion Charge?
  4. When will the values used in the Conversion Charge calculation be available?
  5. Are there any exceptions to a Conversion Charge?
  6. If land converts to 'undeveloped', 'agricultural forest', 'productive forest lands' or 'other' for one year, and then converts to 'residential', is it then liable for a Conversion Charge?
  7. What is the definition of 'other' as a category on the roll?
  8. Would 'other' include a residential home built on 5 acres split off a tilled 40 acres parcel as a separate parcel and the ownership changed to the name of the farm operator's children, parents, or grandparents before the change in use took place?
  9. Does the assessor have to reclassify to 'Other' residential parcels belonging to children, parents, or grandparents of farm operators?
  10. An existing farm operation with the majority of its land in agricultural use-value tears some buildings down; adds some additional buildings, and changes the total area used for the site. Would a Conversion Charge apply?
  11. A parcel was classified as nine (9) acres 'Agricultural' and one (1) acre of land and buildings classified as 'Other' on the 1/1/2012 assessment roll. The parcel had new construction during 2012. Three (3) additional agricultural acres were converted to site acres, and the improvement's highest and best use changed to 'Residential'. The Assessor did not discover the changes until after the 2013 assessment was completed. The 2013 taxes reflected the value of only the original 'Other' site and improvements from 2012. For the January 1, 2014 assessment, the parcel was re-classified as 'Residential', with a significantly higher improvement value. Does a Conversion Charge apply? Does a Conversion Charge apply?
  12. What should an Assessor do when they discover land has been misclassified?
  13. Is land previously classified as 'agricultural', which is left fallow, subject to a Conversion Charge?
  14. If the property was classified agricultural on January 1 and was entered in the Managed Forest Law (MFL) program during that year, becoming exempt on the assessment roll, is a Conversion Charge due?
  15. What if I disagree with the change in classification of the use of the property?
  16. When is the Conversion Charge payment due?
  17. If a change in use takes place, and a Conversion Charge would be due, but no Conversion Charge is issued, can a County Treasurer issue the Conversion Charge in subsequent years?
  18. Who owes the Conversion Charge?
  19. How are buyers being made aware of the potential liability for a Conversion Charge?
  20. What if it's not paid?
  21. Can the county subtract the administrative costs of collection from the Conversion Charge amount returned to the taxation districts?
  22. Does the 1% per month added interest payment get shared 50/50 with the community, or does the county keep that income?
  23. Once a Conversion Charge becomes a special charge on the tax bill, can a county add their ½% tax to the bill, as they do with other special charges?
  24. Do the overlying taxation jurisdictions share in the Conversion Charge?
  25. Are exempt entities such as churches and benevolent associations subject to the Conversion Charge?
  26. Are governmental entities subject to the use value Conversion Charge provisions found in sec. 74.485, Wis. Stats.?

  1. How is the Conversion Charge calculated?

    The number of acres converted is multiplied by a value per acre for each converted acre. That value per acre is a two part calculation. First the difference between the average fair market value of agricultural land in the county (based on previous year sales of land over 38 acres, and intended to be used as agricultural) and the average equalized value per acre of agricultural land (the use-value) in the same county is calculated. Then a "conversion size" factor is applied. If more than 30 acres are converted, the difference is multiplied by 5% to arrive at the conversion charge per acre. If 10 to 30 acres are converted the difference is multiplied by 7 1/2%; and if less than 10 acres are converted, the difference is multiplied by 10%.

    Example: If the county average market value per acre of land sold for agricultural use is $2,000 an acre, and the county average use value per acre of agricultural land is $300 an acre, the difference is $1,700 an acre.  The conversion charge amount per acre is $85 an acre if more than 30 acres are converted; $128 an acre if 10 to 30 acres are converted, and $170 an acre if less than 10 acres are converted.

    Example: If 1.33 acres are converted (less than 10 acres) the Conversion Charge amount is $226 ($170 x 1.33 ac.). When calculating the number of converted acres, all acres owned by the same entity, in the same municipality, in that year should be added together. At http://www.revenue.wi.gov/slf/useval/uvindx.html you will find the charges per acre, which are based on the number of acres converted. The is no Conversion Charge if the Conversion Charge per acre would be less than $25.00.

  2. If a parcel is split, how is the size calculated in determining which Conversion Charge to apply?

    The conversion charge and number of acres is based on the total number of acres converted by the same owner in the same municipality. For example, if a 40 acre parcel on the January 1, 2013 roll was subdivided into 8-5 acre parcels, and the person subdividing the land also converted all its use, that person would be liable for a conversion of 40 acres at the 5% conversion charge rate. If those parcels were sold before changing use, and a new owner who purchased and converted 1-5 acre parcel, the conversion charge would be calculated at the higher rate (i.e. less than 10 acres or a 10% conversion charge).

  3. Who issues the Conversion Charge?

    The County Treasurer is responsible for administering the Conversion Charge, based on reporting by the local Assessor that certain land has changed use. The assessor needs to identify the person who made the change, and the number of acres which were previously assessed as agricultural that changed use. The Treasurer will assess (issue) a conversion charge to the person who changed the use.

  4. When will the values used in the conversion charge calculation be available?

    The conversion charges are posted to the Department of Revenue web site in February each year, and used to calculate the conversion charge for land use changes that occurred in the prior year. Even though estimates can be calculated, Conversion Charges will not be issued until the change in use is reflected on the current year assessment roll and the property owner has the opportunity to appeal that classification change at the Board of Review.

  5. Are there any exceptions to a Conversion Charge?

    Yes. If the assessor determines the land should be classified and assessed as 'undeveloped' (s.70.32(2)(a)5), 'agricultural forest' (s.70.32(2)(a)5m), 'productive forest lands' (s.70.32(2)(a)6), or 'other' (s.70.32(2)(a)7) the owner is not subject to a Conversion Charge. There is no Conversion Charge if the charge per-acre would be less than $25.

  6. If land converts to 'undeveloped', 'agricultural forest', 'productive forest lands' or 'other' for one year, and then converts to 'residential', is it then liable for a Conversion Charge?

    No. If a conversion is to Classes 5, 5m, 6 or 7, there is no conversion charge. Subsequent conversions are not relevant.

  7. What is the definition of 'other' as a category on the roll?

    Sec. 70.32 (2) (c) 1m (2001 Wisconsin Act 109) defines 'other' as the "buildings and improvements; including any residence for the farm operator's spouse, children, parents, or grandparents; and the land necessary for the location and convenience of those buildings and improvements". The residences of eligible relatives should have been part of a parcel that the farm operator actually farmed prior to the change (statutes refer to 'the farm operator', not 'a farm operator') We interpret this to include the residence of the retired land owner if they had been farm operators. It is not necessary that the approved persons residing in the house work on the farm.

  8. Would 'other' include a residential home built on 5 acres split off a tilled 40 acres parcel as a separate parcel and the ownership changed to the name of the farm operator's children, parents, or grandparents before the change in use took place?

    Yes, as long as the new parcel was part of the acreage previously classified as 'agricultural'.

  9. Does the Assessor have to reclassify to 'other' all residential parcels belonging to children, parents, or grandparents of farm operators?

    No. The primary intent of this definition was to allow for residential homes of certain farm operator relatives to be built without incurring a Conversion Charge. The existing homes, whether classified 'residential' or 'other', would not be subject to the use change, and would be valued at market value in any event. If requested by a property owner, there would be no significant reason not to reclassify those properties as 'other', but we suggest the Assessor explain that there would be no impact to the market value analysis.

  10. An existing farm operation with the majority of its land in agricultural use-value tears some buildings down; adds some additional buildings, and changes the total area used for the site. Would a Conversion Charge apply?

    No. The Assessor should review what acreage was treated as 'agricultural,' and what had been 'other'. If additional acreage should now be classified as other, the Assessor should make the adjustment, however no Conversion Charge is due if the new classification is 'other', due to the Conversion Charge 'exception' for changes into this class.

  11. A parcel was classified as nine (9) acres 'Agricultural' and one (1) acre of land and buildings classified as 'Other' on the 1/1/2012 assessment roll. The parcel had new construction during 2012. Three (3) additional agricultural acres were converted to site acres, and the improvement's highest and best use changed to 'Residential'. The Assessor did not discover the changes until after the 2013 assessment was completed. The 2013 taxes reflected the value of only the original 'Other' site and improvements from 2012. For the January 1, 2014 assessment, the parcel was re-classified as 'Residential', with a significantly higher improvement value. Does a Conversion Charge apply?

    The Department's guidance regarding the missed improvements is that there can be no omitted property if an improvement assessment was assessed on the parcel and the property owner has a paid tax receipt. Since the change in use is first reflected on 2014 assessment roll, it is recommend that the Conversion Charge be issued after the Board of Review, allowing the property owner an opportunity to challenge the change in classification reflected on the roll. The Conversion Charge itself should be based on the year the actual change took place, in this case 2013 (which effectively should have been when the residential classification was placed on the roll).

  12. What should an Assessor do when they discover land has been misclassified?

    The current use-value Conversion Charge is based on land 'used' as 'agricultural', and which undergoes a change in use. In this instance, the use has not changed (although the classification will). No Conversion Charge is due.

  13. Is land previously classified as 'agricultural', which is left fallow, subject to a Conversion Charge?

    Not if the Assessor determines the proper new classification is 'undeveloped'. There would be a Conversion Charge if the Assessor's determination that the classification should be 'residential' or 'commercial'. Remember, however, that as of 1/1/2004, the fallow 'undeveloped' acreage should be valued at 50% of market value (adjusted for the assessment ratio).

  14. If the property was classified agricultural on January 1 and was entered in the Managed Forest Law (MFL) program during that year, becoming exempt on the assessment roll, is a Conversion Charge due?

    The Assessor needs to determine what the proper classification for the acreage would be if the land were still on the roll. If that would be 'undeveloped', 'forest' or 'other', no Conversion Charge would be due, even though the use has changed out of the agricultural classification. There may also be instances where some of the acreage remains in agricultural use, and no Conversion Charge would be due.

  15. What if I disagree with the change in classification of the use of the property?

    You can appeal the Assessor's classification regarding agricultural use and changes in use affecting the Conversion Charge by appealing to that year's Board of Review.

  16. When is the Conversion Charge due?

    No later than 30 days after the Conversion Charge is assessed (issued) by the County Treasurer.

  17. If a change in use takes place, and a Conversion Charge would be due, but no Conversion Charge is issued, can a County Treasurer issue the Conversion Charge in subsequent years?

    Yes. If the property was classified as agricultural, and the use and classification changed to a use where a Conversion Charge was due, the statute provides no time limits in issuing a Conversion Charge to the owner at the time of the change.

  18. Who owes the Conversion Charge?

    The person who owned the property when the conversion (change in use) took place will be assessed the Conversion Charge.

  19. How are buyers being made aware of the potential liability for a Conversion Charge?

    The statutes require that persons owning land assessed as agricultural land must notify the buyer of the following (Sec. 74.485(7), Wis. Stats.): (1) that the land was assessed under 70.32(2r), (2) whether a Conversion Charge has been assessed, and (3) whether a Conversion Charge deferral has been granted. The current tax bill states, "Any parcel benefiting from use value assessment may be subject to a Conversion Charge under sec. 74.485, Wis. Stats., if the use of the parcel changes."

    Effective January 1, 2008, 2007 Wisconsin Act 210 requires the Assessor to provide the property owner with a notice that a Conversion Charge may be due when land changes classification from agricultural to residential, commercial, or manufacturing.

    • The notice shall be in writing and sent by ordinary mail at least 15 days before the meeting of the Board of Review. If the owners address is not known, the Assessor shall provide the notification to the occupant of the property.
    • When a property has sold and the property owner who may be subject to a Conversion Charge and the current owner are different, the Assessor must provide the Notice of Assessment and Notice of Conversion Charge to both the previous owner and the current owner
    • An example of the use-value Conversion Charge notice is available at http://www.revenue.wi.gov/forms/govasst/pr-298f.pdf.
  20. What if it's not paid?

    If payment is not made within 30 days of issuance by the County Treasurer, interest will accumulate @ 1%/month from the issuance date. The county can collect the unpaid Conversion Charge as a special charge against the land (this is why notice to any purchaser of the property is so important).

  21. Can the county subtract the administrative costs of collection from the Conversion Charge amount returned to the taxation districts?

    No. Sec. 74.48(5), Wis. Stats., states "A county that collects a Conversion Charge...shall distribute 50% of the amount...
    to the taxation district ". There are no provisions for subtracting collection costs first.

  22. Does the 1%/month added interest payment get shared 50/50 with the community, or does the county keep that income?

    Any collected interest must be shared with the municipality.

  23. Once a Conversion Charge becomes a special charge on the tax bill, can a county add their ½% tax to the bill, as they do with other special charges?

    Yes. The statute says the bill will be collected as a special charge. That means all provisions for collecting special charges should apply, including fees and interest.

  24. Do the overlying taxation jurisdictions share in the Conversion Charge?

    No. The statutes provide for a 50/50 split of the Conversion Charge between the county and the taxation district (town, village or city). The taxation district's portion is split between communities in the event of an annexation (this should be coordinated by the gaining community).

  25. Are exempt entities such as churches and benevolent associations subject to the Conversion Charge?

    Yes. There is no express statutory provision in sec. 74.485, Wis. Stats., that excuses an exempt entity from paying a use value Conversion Charge if one is due.

  26. Are governmental entities subject to the use value Conversion Charge provisions found in sec. 74.485, Wis. Stats.?

    Yes. Governmental entities are generally subject to such provisions.

    In a recent court case (Town of Janesville v. Rock County, 153 Wis. 2d 538, 544, 451 N.W.2d 436(Ct. App. 1989)), the court used a two part test to determine the applicability of a statute to a governmental body. The test included the following demonstrative questions:

    • Can the objective of the statute be reached without including government?
    • Does inclusion in the provision of the law vitally interfere with the process of government?

    The objective of sec. 74.485, Wis. Stats., cannot be reached without including the numerous governmental entities in Wisconsin. The purpose of the use value law is to preserve agricultural land. Agricultural land is no less destroyed if taken by a government than if taken by a private developer. Preservation is best achieved by universal application.

    Generally inclusion in this law will not vitally interfere with the process of government. Government may still develop land; it simply must pay the same Conversion Charge that any developer would for such conversion. There are certain rare situations in which an imposition of a conversion charge may vitally interfere with the processes of government, such as Department of Transportation acquisition of land for highway use. Public safety, route, geography, and cost can require the use of farmland as opposed to other land for highway use. Imposing a conversion charge on such purchases could result in the Department of Transportation elevating cost factors to avoid a conversion charge over route and safety factors such as choosing the highest, flattest, safest route for highway. Note that this result would not necessarily apply to Department of Transportation land acquisition for other purposes, such as office space

For more questions concerning Use-Value Conversion Charge, please contact the appropriate equalization district supervisor listed below.
District Supervisor Counties
MADISON DISTRICT OFFICE (76)
JIM YOUNG
PO BOX 8909 MS 6-301
MADISON WI 53708-8909

Phone: (608) 266-8184
Fax: (608) 267-1355
Email: eqlmsn@revenue.wi.gov
Columbia, Crawford, Dane, Dodge, Grant, Green, Green Lake, Iowa, Jefferson, Lafayette, Marquette, Richland, Rock, Sauk, Vernon
MILWAUKEE DISTRICT OFFICE (77)
PAT CHANESKE
819 N 6TH ST RM 530
MILWAUKEE WI 53203

Phone: (414) 227-4455
Fax: (414) 227-4071
Email: eqlmke@revenue.wi.gov
Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington, Waukesha
EAU CLAIRE DISTRICT (79)
DIANE FORREST
610 GIBSON ST STE 7
EAU CLAIRE WI 54701

Phone: (715) 836-2866
Fax: (715) 836-6690
Email: eqleau@revenue.wi.gov
Barron, Bayfield, Buffalo, Burnett, Chippewa, Douglas, Dunn, Eau Claire, Jackson, La Crosse, Monroe, Pepin, Pierce, Polk, Rusk, St. Croix, Sawyer, Trempealeau, Washburn
WAUSAU DISTRICT OFFICE (80)
ALBERT ROMPORTL
730 N THIRD ST
WAUSAU WI 54403-4700

Phone: (715) 842-5885
Fax: (715) 848-1033
Email: eqlwau@revenue.wi.gov
Adams, Ashland, Clark, Iron, Juneau, Langlade, Lincoln, Marathon, Oneida, Portage, Price, Taylor, Vilas, Wood
GREEN BAY DISTRICT OFFICE (81)
MARY GAWRYLESKI
200 N JEFFERSON ST STE 126
GREEN BAY WI 54301-5100

Phone: (920) 448-5195
Fax: (920) 448-5207
Email: eqlgrb@revenue.wi.gov
Brown, Calumet, Door, Florence, Forest, Kewaunee, Manitowoc, Marinette, Menominee, Oconto, Outagamie, Shawano, Waupaca, Waushara, Winnebago

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Division of State and Local Finance
Equalization Bureau
P.O. Box 8971, MS 6-97
Madison, WI 53708-8971
Fax: (608) 264-6897

Page last updated July 10, 2014