§ 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 timberland valuation shall be based on the productivity of the agricultural land, pasture land, or timberland soil. (B) Agricultural land, pasture land, and timberland guidelines shall be developed based on the typical or most probable use of the soils for agricultural land, pasture land, and timberland in the region. (2) Land that is enrolled in the Wetlands Reserve 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 timberland 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 timberland, 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; and (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 Division 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 division 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 timberland based upon the updated land values in the valuation tables issued for the assessment year. (3) (A) The division by rule shall develop appropriate formulas reflecting the productivity valuation of the land based upon income capability attributable to agricultural land, pasture land, and timberland soils. (B) Each year the division 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 division 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 fails 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.

Legislative 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.