26-26-407. Valuation of different types and uses of property.

(a) Residential property used solely as the principal place of residence of the owner shall

be assessed in accordance with its value as a residence, so long as the property is used as

the principal place of residence of the owner and shall not be assessed in accordance with

some other method of valuation until the property ceases to be used for the residential

purpose.

(b) (1) (A) Agricultural land, pasture land, and timber land valuation shall be based on

the productivity of the agricultural land, pasture land, or timber land soil.

(B) Agricultural land, pasture land, and timber land guidelines shall be

developed based on the typical or most probable use of the soils for agricultural land,

pasture land, and timber land in the region.

(2) Land that is enrolled in the Wetland Reserves Program of the Natural

Resources Conservation Service of the United States Department of Agriculture or in the

Conservation Reserve Program of the Natural Resources Conservation Service of the

United States Department of Agriculture shall be treated as agricultural land, pasture

land, or timber land for purposes of valuation.

(c) (1) Commercial land and residential land that are vacant shall be valued on their

typical use.

(2) The county assessor shall determine what the typical use of vacant

commercial land or residential land is by considering the primary current use of adjacent

lands.

(d) (1) For real property in which the mineral estate and surface estate are severed, if a

surface estate owner's use and enjoyment of the surface estate are adversely affected by a

severed mineral estate owner's use and enjoyment of the severed mineral estate, or a

surface estate owner's utility of the surface estate interest is adversely affected by a

severed mineral estate owner's use and enjoyment of the severed mineral estate, the

assessment of the surface estate is as follows:

(A) For agricultural land, pasture land, or timber land, a well drilled for

the purpose of extracting minerals from a severed mineral estate creates a presumption of

diminished utility of the surface estate, and the assessed value of the affected surface

estate shall reflect the minimum productivity value of the surface estate and shall be

reduced accordingly.

(B) For residential property and commercial property, a well drilled for

the purpose of extracting minerals from a severed mineral estate creates a presumption of

diminished utility of the surface estate, and the assessed value of the affected surface

estate shall reflect the diminished utility of the surface estate and reduced accordingly.

(2) Unless market evidence indicates an increase in land area value or an increase

in value of the surface estate, the portion of the surface estate for which a presumption of

diminished utility exists under subdivision (d)(1) of this section shall not exceed one (1)

acre per well, and the value of the surface estate for that one (1) acre shall be assessed in

an amount not to exceed twenty-five percent (25%) less than surrounding comparable

property.

(e) (1) The county equalization board may reclassify land upon proof of change in use

of the land or upon proof that the land is not eligible for classification under the

provisions of this section.

(2) The owner may appeal the decisions of the county assessor and county

equalization board as provided by law for other appeals from the county assessor or

county equalization board.

(f) (1) In devising and developing methods of assessing and levying the ad valorem

property tax on real property, the Assessment Coordination Department shall annually

develop and publish valuation tables and other data that shall be used by county assessors

for assessing lands qualifying under this subchapter.

(2) (A) Each year the Assessment Coordination Department shall update the

valuation tables for assessing lands qualifying as agricultural land, pasture land, and

timber land in time for counties to use the updated tables when they finish their

countywide appraisals.

(B) When there is a countywide reappraisal, a county shall assess

agricultural land, pasture land, and timber land based upon the updated land values in the

valuation tables issued for the assessment year.

(3) (A) The Assessment Coordination Department by rule shall develop

appropriate formulas reflecting the productivity valuation of the land based upon income

capability attributable to agricultural land, pasture land, and timber land soils.

(B) Each year the Assessment Coordination Department shall develop and

calculate capitalization rates by using appropriate long-term federal security rates, risk

rates, management rates, and other appropriate financial rates.

(C) However, the capitalization rate developed under subdivision

(f)(3)(B) of this section shall not be less than eight percent (8%) nor more than twelve

percent (12%).

(4) By October 15 of each year, the Assessment Coordination Department shall

report to the Legislative Council any changes to any part of the formula used to

determine the value of land or the capitalization rate.

(g) (1) Whenever land that has qualified for valuation on use or productivity under

subsection (b) of this section is converted to another use, the person converting the land

to another use shall notify, immediately and in writing, the county assessor of the change

in use.

(2) At the appropriate time, the county assessor shall extend the taxes on the land

based on the change in use and shall certify to the county collector the amount to be

collected.

(h) (1) If any person shall fail to give written notice of a change in use of land as

required in subsection (g) of this section, the person shall be subject to a penalty in an

amount equal to three (3) years of taxes on the land at the value in the new use or

conversion use.

(2) Any penalty so assessed shall be included in the taxes on the land for the year

in which the failure is discovered and shall be a lien on the land to the same extent as any

other taxes levied on the land.

(i) Any funds derived from penalties assessed pursuant to subsection (h) of this section

shall be deposited into the county general fund to be used for the purposes prescribed by

law.

History. Acts 1981, No. 848, 6; A.S.A. 1947, 84-493.5; Acts 2005, No. 1432, 1;

2007, No. 660, 1; 2007, No. 994, 1; 2009, No. 655, 2, 3.