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Montana Administrative Register Notice 42-2-794 No. 12   06/26/2008    
    Page No.: 1181 -- 1181
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BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

In the matter of the proposed amendment of ARM 42.20.620, 42.20.625, and 42.20.680 relating to real property and agricultural land
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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO: All Concerned Persons

 

1. On July 18, 2008 at 9:00 a.m., a public hearing will be held in the Director's Office (Fourth Floor) Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the amendment of the above-stated rules.

 

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

 

2. The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Revenue no later than 5:00 p.m., July 7, 2008, to advise us of the nature of the accommodation that you need. Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail canderson@mt.gov.

 

3. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

42.20.620 CRITERIA FOR AGRICULTURAL LAND VALUATION FOR LAND TOTALING LESS THAN 20 ACRES (1) through (7) remain the same.

(8) If the land is used primarily to raise and market livestock, the land must be capable of sustaining a minimum number of animal unit months of carrying capacity. The minimum number of animal unit months of carrying capacity must equate to $1,500 in annual gross income as determined by the Montana State University-Bozeman's Department of Agricultural Economics and Economics currently support 30 or more animal unit (AU) months of grazing carrying capacity, with cattle as the base.

(a) Beef cows are owned to produce calves, usually one calf per year.

(b) The calf is the annual product produced from the grazing land via the beef cow.

(c) Calf prices have averaged approximately $1.00 per pound. Weaning weights for calves are typically 500 pounds. The average revenue produced by one cow/calf pair is $500. Three sold calves from three cow/calf pairs would generate $1,500 in income.

(d) Based on a 10 month grazing season (typical), 30 AUM are required to generate $1,500 (3 cow/calf pair X 10 months = 30 AUM).

(e) For the reappraisal cycle ending December 31, 2008, the Montana State University-Bozeman's Department of Agricultural Economics and Economics determined the minimum number of animal unit months of carrying capacity to be 30 animal unit months. For subsequent reappraisal cycles, the minimum number of animal unit months of carrying capacity needed to equate to $1,500 in annual gross income for each cycle will be determined by the Montana State University-Bozeman's Department of Agricultural Economics and Economics for the base year for each cycle. The base year for each cycle will be established by administrative rule.

(f) One animal unit (AU) is assumed to consume 915 pounds of dry herbage production per month from native grazing land. The carrying capacity may be based on information obtained from the United States Natural Resource and Conservation Service (NRCS) soil survey. If a soil survey does not exist, the carrying capacity may be based on an estimate by the NRCS, the local county agricultural extension agent, or the department. Based on the manner in which the NRCS measures dry herbage production and the lost forage consumption due to grazing livestock and other causes, the per-acre per-year dry herbage production consumed is 25% of the NRCS estimate for an unfavorable precipitation year on nonirrigated grazing land. On nonirrigated domestic grazing land, the department shall increase the estimated nonirrigated native grazing land carrying capacity by 50% (1.5). The department shall use the following formula, based on NRCS soil survey information, to calculate the carrying capacity for nonirrigated native grazing land, which does not exhibit significant overgrazing or weed infestation:

(a) (i) per-acre per-year dry herbage production multiplied by 0.25 equals the per-acre per-year dry herbage production consumed by livestock;

(b) (ii) per-acre per-year dry herbage production consumed by livestock divided by 915 pounds of dry herbage production consumed per-month per-animal unit equals the animal unit months per acre (AUMs/acre); and

(c) (iii) livestock acres grazed multiplied by AUMs/acre equals the total AUMs.

(9) and (10) remain the same.

(11) If the consumption was from livestock, or the livestock was consumed by humans, the land must support 30 or more animal unit months of grazing carrying capacity be capable of sustaining the minimum number of animal unit months of carrying capacity described in (8), with cattle as the base.

(12) Acceptable proof of production shall include:

(a) a statement from the United States Farm Services Agency (FSA) indicating estimated yield if crops are the basis for income;

(b) if livestock is the basis for income, information the taxpayer or their agent obtains from the NRCS web site, or a statement from the NRCS or the county agricultural extension agent indicating that the parcel(s) is/are capable of producing in its current state a the minimum of 30 AU months of grazing capacity number of animal unit months of carrying capacity described in (8); and

(c) a confirmation by the department.

(13) and (14) remain the same.

(15) Land qualifying in (14) (13) and (15) (14) will be graded and assessed as continuously cropped farm land, grade 1A4.

(16) remains the same.

(17) A parcel or parcels of land less than 20 acres that meet all of the following criteria will remain classified and valued as agricultural land or as nonqualified agricultural land as defined in 15-6-133 and 15-7-202, MCA. The criteria that must be met are:

(a) the parcels are contiguous or noncontiguous parcels of land under one ownership;

(b) the parcel or parcels previous to a reduction in acreage as defined in (17)(c) totaled 20 acres or more in size and qualified as agricultural land or as nonqualified agricultural land under 15-6-133 and 15-7-202, MCA;

(c) a portion of the parcel or parcels was taken by or given without compensation, or sold for a public use as described in 70-30-102, MCA, to the federal government, the state, a county, or a municipality, and that action reduced the number of acres in the parcel or parcels to less than 20 acres; and

(d) since the reduction in acreage occurred, the parcel or parcels have not been further divided or devoted to a residential, commercial, or industrial use, and there are no covenants or other restrictions that effectively prohibit agricultural use.

(18) A parcel or parcels of land that meet the criteria in (17)(a) through (17)(d) are eligible for the classification determination identified in (17) regardless of when the acreage reduction occurred. However, taxpayers must notify the department of their eligibility in writing by the first Monday in June or within 30 days after receiving an assessment notice from the Department of Revenue, whichever is later.

(19) No refunds of taxes resulting from a reclassification of parcels under this part will be allowed for any tax year prior to the tax year in which the taxpayer notifies the department of their eligibility in (18).

(17) (20) For contiguous and noncontiguous parcels of land under one ownership as defined in ARM 42.20.601 totaling less than 20 acres in size, any acreage in excess of that stated in the forest land classification in ARM 42.20.705 is classified as agricultural provided the acreage is actively devoted to qualifying agricultural use.

 

AUTH: 15-1-201, MCA

IMP: 15-7-201, 15-7-202, 15-7-203, 15-7-206, 15-7-207, 15-7-208, 15-7-209, 15-7-210, 15-7-212, MCA

 

REASONABLE NECESSITY: The department is proposing the amended language in section (15) to correct the reference to the proper sections stated in the text. The department is also proposing the amended language added in 42.20.620(17) to comply with the provisions of SB 316 and the intent of the bill as supported in an August 24, 2007 letter to the bill's sponsor, Senator Jim Elliott, from Gregory J. Petesch, Director of Legal Services, Legislative Services Division. The bill provides that certain land parcels now totaling less than 20 acres in size will continue to be classified and valued as agricultural land or as nonqualified agricultural land as defined in 15-6-133 and 15-7-202, MCA. In order for land parcels to qualify under the provisions of this bill, the land parcels must have (a) qualified as agricultural land or as nonqualified agricultural land in a prior year, (b) were over 20 acres in size, but the acreage was reduced to less than 20 acres for a public use described in 70-30-102, MCA, and (c) since that reduction in acres, have not been further divided or devoted to a residential, commercial, or industrial use, and there are no covenants or other restrictions that effectively prohibit agricultural use. Section (17) is renumbered as section (18) to accommodate the new language added as section (17), and the word "qualifying" is added before the words "agricultural use" to clarify when acreage meets the criteria to be classified as agricultural land.

 

Further, the department is proposing to amend ARM 42.20.620 because the 60th Legislature passed Senate Bill 549 which clarifies the criteria the department staff must use to determine eligibility for valuation of land as agricultural. The amendments to the rule clarify when grazing lands are considered eligible as agricultural land.

 

42.20.625 CRITERIA FOR AGRICULTURAL LAND VALUATION FOR LAND TOTALING 20 TO 160 ACRES IN SIZE (1) through (10) remain the same.

(11) If the land is used primarily to raise and market livestock, the land must be capable of sustaining a minimum number of animal unit months of carrying capacity. The minimum number of animal unit months of carrying capacity must equate to $1,500 in annual gross income as determined by the Montana State University-Bozeman's, Department of Agricultural Economics and Economics currently support 30 or more animal unit (AU) months of grazing carrying capacity, with cattle as the base.

(a) Beef cows are owned to produce calves, usually one calf per year.

(b) The calf is the annual product produced from the grazing land via the beef cow.

(c) Calf prices have averaged approximately $1.00 per pound. Weaning weights for calves are typically 500 pounds. The average revenue produced by one cow/calf pair is $500. Three sold calves from three cow/calf pairs would generate $1,500 in income.

(d) Based on a 10 month grazing season (typical), 30 AUM are required to generate $1,500 (3 cow/calf pair X 10 months = 30 AUM).

(e) For the reappraisal cycle ending December 31, 2008, the Montana State University-Bozeman's Department of Agricultural Economics and Economics determined the minimum number of animal unit months of carrying capacity to be 30 animal unit months. For subsequent reappraisal cycles, the minimum number of animal unit months of carrying capacity needed to equate to $1,500 in annual gross income for each cycle will be determined by the Montana State University-Bozeman's Department of Agricultural Economics and Economics for the base year for each cycle. The base year for each cycle will be established by administrative rule.

(f) One animal unit (AU) is assumed to consume 915 pounds of dry herbage production per month from native grazing land. The carrying capacity may be based on the information obtained from the NRCS soil survey. If a soil survey does not exist, the carrying capacity may be based on an estimate by the NRCS, the county agricultural extension agent, or the department. Based on the manner in which the NRCS measures dry herbage production and the lost forage consumption due to grazing livestock and other causes, the per-acre per-year dry herbage production consumed is 25% of the NRCS estimate for an unfavorable precipitation year on nonirrigated grazing land. On nonirrigated domestic grazing land, the department shall increase the estimated nonirrigated native grazing land carrying capacity by 50% (1.5). The department shall use the following formula, based on NRCS soil survey information, to calculate the carrying capacity for nonirrigated native grazing land, which does not exhibit significant overgrazing or weed infestation:

(a) (i) per-acre per-year dry herbage production multiplied by 0.25 equals the per-acre per-year dry herbage production consumed by livestock;

(b) (ii) per-acre per-year dry herbage production consumed by livestock divided by 915 pounds of dry herbage production consumed per-month per-animal unit equals the animal unit months per acre (AUMs/acre); and

(c) (iii) livestock acres grazed multiplied by AUMs/acre equals the total AUMs.

(12) and (13) remain the same.

(14) If the consumption was from livestock, the land must support 30 or more AU months of grazing carrying capacity be capable of sustaining the minimum number of animal unit months of carrying capacity described in (11), with cattle as the base.

(15) Acceptable proof of production shall include:

(a) a statement from the United States Farm Services Agency (FSA) indicating estimated yield if crops are the basis for production; or

(b) if livestock is the basis for income, information the taxpayer or their agent obtains from the NRCS web site, or a statement from the NRCS or the county agricultural extension agent indicating that the parcel(s) is/are capable of producing in its current state, a the minimum of 30 AU months of grazing capacity number of animal unit months of carrying capacity described in (11) if livestock is the basis for production; and

(c) a confirmation by the department.

(16) through (21) remain the same.

 

AUTH: 15-1-201, MCA

IMP: 15-6-133, 15-6-134, 15-7-201, 15-7-202, MCA

 

REASONABLE NECESSITY: The department is proposing to amend ARM 42.20.625 for the same reasons described in the reasonable necessity to ARM 42.20.620.

 

42.20.680 GRAZING LAND (1) The following is the schedule for the grazing land productive values for each year of the reappraisal cycle beginning January 1, 2003:

(a) remains the same.

(b) The department will apply a phase-in percentage as defined in 15-7-111, MCA, and ARM 42.20.503 to the full reappraisal productive capacity values for grazing land for the reappraisal cycle beginning January 1, 2003.

 

GRAZING LAND

 

 
Acres Per
2003
2004
2005
 
Animal
Assessed
Assessed
Assessed
GRADE
Unit Month
Value/AC
Value/AC
Value/AC

 

The table for 2003 through 2005 remains the same.

 

 
Acres Per
2006
2007
2008
 
Animal
Assessed
Assessed
Assessed
GRADE
Unit Month
Value/AC
Value/AC
Value/AC

 

The table for 2006 through 2008 remains the same.

 

AUTH: 15-1-201, MCA

IMP: 15-7-103, 15-7-201, MCA

 

REASONABLE NECESSITY: The department is proposing to amend ARM 42.20.680 to add the word "month" to the second column in (1)(b) so it will read "acres per animal unit month", which is the correct representation for the information contained in this column. All other information contained in the table remains the same.

 

4. Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-3696; or e-mail canderson@mt.gov and must be received no later than July 25, 2008.

 

5. Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

6. An electronic copy of this Notice of Public Hearing is available through the department's site on the World Wide Web at www.mt.gov/revenue, under "for your reference"; "DOR administrative rules"; and "upcoming events and proposed rule changes." The department strives to make the electronic copy of this Notice of Public Hearing conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

7. The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters. Such written request may be mailed or delivered to the person in 4 above or faxed to the office at (406) 444-3696, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

8. The bill sponsor notice requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor of Senate Bill 549, Senator Robert Story, was notified on August 10, 2007 and June 2, 2008, by regular mail. Senator Jim Elliott, bill sponsor of Senate Bill 316 was notified on June 2, 2008.

 

 

/s/ Cleo Anderson                                                             /s/ Dan R. Bucks

CLEO ANDERSON                                                          DAN R. BUCKS

Rule Reviewer                                                                    Director of Revenue

 

Certified to Secretary of State June 16, 2008

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