MICHIGAN SOCIETY
OF AMERICAN FORESTERS
Upper Peninsula & Lower Peninsula Chapters

  FORESTRY ASSISTANCE
  IN MICHIGAN

   Michigan Forest Resource Alliance

FINANCIAL ASSISTANCE

	Forest Incentives Program
	Conservation Reserve Program
	Watershed Protection Program
	WHIP & WRP
	Forest Stewardship Program
	Stewardship Incentive Program
	Tax Laws

The Farm Service Agency administers the following federal cost-share programs.  Contact your local FSA office or locate Conservation District office to sign up for a particular program.  For more information, contact the FSA or Conservation District in your area, or the nearest DNR Private Forest Management forester or the Natural Resources Conservation Service.

The Forestry Incentives Program (FIP) was first authorized in 1978 with the primary objective to increase the Nation’s supply of sawtimber. Secondary benefits of the FIP are increased watershed and water quality protection through sediment and erosion control, and improvement of wildlife food and habitat through reforestation and retention of forestland. Since its inception in Michigan, over 30,000 acres of land have been reforested to trees and nearly 40,000 acres of existing stands of timber have been improved through the FIP. Although the FIP has been considered to be an effective program, funding levels for the FIP in Michigan have decreased steadily from a high of $200,000 annually to a current level of $43,000 in 1998.

The Conservation Reserve Program (CRP) provides landowners up to 50 percent cost sharing to establish erosion control practices to improve water quality and convert highly erodible cropland to permanent cover over a 10 year (15 year for hardwood tree planting) contract period. An annual rental payment is made to participants during the contract period. The CRP is administered by the Farm Service Agency (tree planting practices only) and by the USDA-NRCS for all other cost-shared practices. Both hardwood and softwood tree plantings are eligible for cost-share under the CRP at the 50 percent rate. The landowner is required to develop and follow a basic conservation plan to carry out the planned practice installation. Eligibility requirements for the CRP tree planting practices are specific to meet the program objectives of erosion control and water quality improvement. Funding for the CRP has remained fairly steady in Michigan with nearly 2,100 acres of tree planting applications (hardwood and softwoods) accepted in 1997 and 1,200 acres accepted in 1998.

The PL-566 Watershed Protection Program is administered by the USDA Natural Resources Conservation Service to improve water quality and protect the resource base in small watersheds of less that 250,000 acres in size. Applications for PL-566 are submitted to the Chief of the NRCS and must have approval of the governor as well as be sponsored by the local Conservation District and County Board of Commissioners prior to becoming authorized. Cost-share dollars for the PL-566 program are made available annually through legislative appropriation and are administered similarly to those of other federal cost-share programs. Specific practices eligible for funding are geared toward erosion control, sediment reduction and water quality improvement. Tree plantings for erosion control may be eligible for cost-share to landowners in watersheds authorized for funding by Congress.

Wildlife Habitat Incentive Program (WHIP)

The Wildlife Habitat Incentive Program (WHIP) was authorized by the 1996 Farm Bill and provides 50 percent cost-sharing in Michigan for approved wildlife habitat conservation practices. Participants in the WHIP prepare a wildlife habitat development plan with the NRCS and the local Conservation District. The participant then enters into a multi-year agreement with the USDA for a minimum of 5 years and a maximum of 10 years to carry out the wildlife development plan. Practices eligible for cost-share include: grassland establishment; wildlife corridors of tree and/or shrub plantings; streambank stabilization and fish cover structures; and establishment of habitat for threatened and endangered species. While the primary objective of the WHIP is to promote wildlife habitat, secondary benefits of water quality improvement and soil erosion and sedimentation accrue from tree, grass and shrub establishment under this program.

The Wetland Reserve Program (WRP) is administered by the USDA Natural Resources Conservation Service (NRCS) with primary objectives to restore and protect wetlands and their associated values. Secondary benefits include water quality and flood protection, erosion and sediment control and aquifer recharge. The program in Michigan offers three easement options to participants: (1) Permanent easements. NRCS pays 100% of restoration costs; (2) 30 year easements. NRCS pays 75% of what would be paid on a perpetual easement and 75% of restoration costs; and (3) Restoration easements. Minimum of 10 years and restoration cost-shared at a 75% rate. In all cases the landowner controls access to the land.

Timber and other crops such as hay or grazing may be permitted if they do not negatively impact the restoration of other values being protected. NRCS is responsible for the management of 30 year and perpetual easements. To be eligible a landowner must have owned the land for 12 months (unless it was inherited) and the land must be restorable for wildlife benefits.

There are five categories of eligible land: 1) Agricultural land with restorable wetlands; 2) Land adjacent to wetlands - these cannot exceed 50% of the total easement and must include uplands and non-cropped natural wetlands; 3) Wetlands restored under federal or state programs - this land is only eligible if it has fewer than 30 years remaining on its easement; 4) Conservation Reserve Land - only eligible if the land is likely to return to production after the CRP contract expires and the land was not established to trees or alley cropping; and 5) Riparian Areas – areas along waterways that link two or more protected wetlands are eligible if the area averages less than 300 feet wide on each side of the waterway and is less than 1 mile long. Waivers for additional widths and lengths may be granted.

The Forest Stewardship Program encourages the active management of forest resources owned by non-industrial private landowners.   The purpose of the program is to help landowners increase the benefits they derive from their land while conserving it for the future.  This plan serves as a "road map" for landowners by documenting landowner objectives for the land and recommending sound management practices needed to accomplish these objectives.  The FSP assists landowners in having a Forest Stewardship Management Plan written by a professional forester or wildlife biologist.  The FSP may reimburse up to 75% of the cost of a written plan if funds are available.  The program is administered and coordinated by the MDNR Forest Management Division.

As a companion, the Stewardship Incentive Program (SIP) offers financial assistance to landowners on a cost share basis for specific management practices. The purpose of the Stewardship Program is to help landowners increase the benefits they derive from their land while conserving it for the future.

Once a landowner has a Forest Stewardship Management Plan written and approved by the DNR Forest Management Division, he/she may qualify for cost-share incentives to implement some of the management recommendations written in the plan.  Depending on the practice, SIP may reimburse up to 65% of the costs if funds are available.  Some of the practices that are cost-shared include reforestation, timber stand improvement, soil and water protection and improvement, fisheries habitat enhancement, and wildlife habitat enhancement.  This program is also administered and coordinated by teh DNR Forest Management Divison, with assistance from the Farm Service Agency, Natural Resource Conservation Service, and Conservation Districts.

A comprehensive manual titled Timber Tax Management for Tree Farmers (FNR-80) is available from the American Tree Farm organization. Written by professor Bill Hoover, it is 130 pages of easy to understand explanations, examples and worksheets of federal tax applications. Call (202) 463-2462 or write The American Tree Farm System, 111 19^th St. N.W., Washington D.C. 20036. 1998 cost was $24.95.  MSU Extension also has an April, 2000 publication entitled "Minimizing Federal Income Tax for Forest Landowners," NCR-343 written by Karen Potter-Witter (MSU) nad Bill Hoover (Purdue).

Michigan has three acts pertaining to ownership taxes and forest land & open space. In general, all three acts have the objective of preserving forests and open space so that the land is not developed for housing, commercial, or industrial use.

1) The Commercial Forest Act (CFA)

The Commercial Forest Act is an incentive to private landowners to retain and manage their forestland for long-term timber production by property tax relief. Listed forestlands to not pay ad valorem property taxes, instead a specific tax of $1.10/acre is paid annually. Enrolled lands must be a minimum of 40 acres and are required to be open to public hunting and fishing without permission of the owner. Most of the lands enrolled under the act is owned by forest industry. The Commercial Forest Act is administered by the MDNR.

2) The Private Forest Reserve Act (PFRA)

Revisions are currently under consideration by the Legislature. The act applies to woodlands (no more than 25% of the total acreage) in farm parcels of no more than 160 acres of which 50% must be in active agriculture. Land stays on the ad valorem tax roll but is assessed at $1.00/acre. No grazing is allowed and the wooded acreage must be well stocked with specified numbers of seedlings, saplings, or trees. Administration of this program is handled by County or Township officials. When timber is harvested, a yield tax of 5% of the harvest value applies.

3)  PA II 6, the Farmland & Open Space Preservation Act

Applies primarily to farms. Owners pay taxes in the normal manner and receive tax credits on their state income tax, depending on their income.

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This website is maintained by Bill Cook, Michigan State University Extension Forester in the Upper Pensinsula. 
Comments, questions, and suggestions are gratefully accepted. Editorial issues can be addressed to Eric Thompson.

Last update of this page was 04 April 2001.