A suit before an Anne Arundel County judge threatens a state forest-conservation program that has preserved thousands of woodland acres in the past 30 years, program advocates say.
"It concerns us because of the potential for abuse of the program and the potential loss of forestland," said Donald Van Hassent, supervisor of forest stewardship for the state Department of Natural Resources.
The suit, filed by an Annapolis couple and argued last week, seeks to strike down tax penalties assessed violators of Maryland's Forest Conservation and Management Program.
The program, which started in the booming 1960s, is aimed at slowing runaway development by rewarding with property-tax breaks anyone who agrees to keep at least 5 acres of forest undeveloped.
It has prompted thousands of property owners to sign 15- and 20-year contracts to lock up a total of 148,650 acres as forest in exchange for having tax assessments frozen on the properties.
But a 1988 amendment hits anyone who withdraws land prematurely from the program with retroactive property taxes. Kenneth and Sondra Read of the 400 block of Ferry Point Road in Annapolis have asked Judge Bruce C. Williams to declare the change unconstitutional.
They say the amendment has cost them $20,000 and could cost them an estimated $300,000.
"It's just an enormous penalty," said Alan R. Legum, their attorney.
The Reads agreed in 1972 to put their 34 acres of woodland along Crab Creek south of Annapolis into a state-approved, forest-management plan. In 1986, they renewed the contract for 20 years, agreeing to keep the tract undeveloped and forested until 2006.
But in 1989, the Reads sold 1.2 acres of the parcel for $184,078, court records show.
Using the retroactive tax formula, state assessors took the $184,078 price and computed the 1.2-acre tract's worth for each of the 18 years it was part of the forest-management plan. The result was a $26,000 tax bill, Mr. Legum said. The Reads
would have had to pay about $6,000 if the old rules applied, he said.
Now, the family plans to sell the property piecemeal for a community to be known as Cherrystone. Court records show plans for five lots, but the tract could have as many as 15 lots, Mr. Legum said.
"The Reads don't have any problem with paying taxes they legitimately owe, taxes they otherwise would have had to pay. But they don't want to be penalized unfairly because they were in this program," Mr. Legum said.
Mr. Read, a professor of mechanical engineering at the Naval Academy, wrote to state officials three years before the law was amended, insisting they keep him informed of any changes in the program rules. But he said he never was told about the amended tax law and would have withdrawn from the forest plan if he had been warned.
"I feel like I've been taken to the cleaners, really taken to the cleaners," he said.
The Reads' suit is an appeal of a decision by the Maryland Tax Court, which upheld the law.
In the suit, Mr. Legum argues that the state changed the rules in 1988 without warning those affected and that the change unconstitutionally impaired Mr. Read's contract with the state.
State officials say a ruling negating the 1988 amendment would strike at the heart of the program by killing a major incentive for property owners to keep their land forested.
Mr. Van Hassent, the state forest supervisor, said property owners could sign up for 15 years, enjoy a frozen assessment for 14 years and then withdraw, paying taxes only on the value of the land for the final year.
He said he does not anticipate an exodus from the program if the judge rules against the state because "most of the people philosophically believe in the program and probably wouldn't withdraw."
But he said there may be some withdrawals because a large number of property owners in the program have land where prices are highest and pressures to develop are greatest -- Frederick, Harford, Anne Arundel, Carroll, Calvert and Baltimore counties.
There were 812 property owners with a total of 135,000 acres in the program when the tax amendment was adopted in 1988, according to court records.
Now, 1,136 property owners have committed to keeping 148,650 acres in woodland in exchange for frozen tax assessments, Mr. Van Hassent said.
Former Del. John S. Arnick, a Dundalk Democrat who sponsored the 1988 bill, said he could recall no cases of abuse that prompted it.
"I'm pretty sure it was just a case of the Department [of Natural Resources] saying there's a potential for abuse and then saying, 'Let's shut the potential off,' " Mr. Arnick said.
The bill was approved unanimously by the House and Senate, and no one signed up to oppose it in legislative hearings, according to a review of its history filed with the state Department of Legislative Reference.
But Mr. Read said he would have expressed opposition if he had known about it. He anticipates taking his fight through the Maryland court system and into U.S. District Court.
"It's a mess, and I don't know when it'll ever be straightened out," he said.