Montana Administrative Register Notice 42-2-998 No. 21   11/02/2018    
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In the matter of the amendment of ARM 42.20.681 pertaining to agricultural land valuation






TO: All Concerned Persons


1. On November 26, 2018, at 1:30 p.m., the Department of Revenue will hold a public hearing in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, located at 125 North Roberts, Helena, Montana, to consider the proposed amendment of the above-stated rule. The conference room is most readily accessed by entering through the east doors of the building.


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, please advise the department of the nature of the accommodation needed, no later than 5 p.m. on November 9, 2018. Please contact Todd Olson, Department of Revenue, Director's Office, PO Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or todd.olson@mt.gov.


3. The rule as proposed to be amended provides as follows, new matter underlined, deleted matter interlined:



(1) Commodity prices for the 2017 2019-2020 appraisal cycle used for the determination of income are calculated using a 10-year Olympic average of prices from Montana Agricultural Statistics for the years 2006-2015 2008-2017An The department's Olympic average throws out the high and low years removes the highest price and the lowest price and averages the remaining eight years prices. The commodity prices used for valuing agricultural land for the 2017 2019-2020 appraisal cycle are as follows:

(a) Spring wheat price used in the valuation of nonirrigated summer fallow and nonirrigated continuous cropped farm lands = $6.67 is $6.50 per bushel.

(b) Alfalfa hay price, reduced by 20 percent as required by 15-7-201, MCA, used in the valuation of irrigated and nonirrigated hay lands = $86.20 is $98.20 per ton.

(c) Private grazing fees used in the valuation of grazing lands = $19.53 is $20.93 per Animal Unit Month (AUM).

(2) The minimum value of irrigated land as determined by the methodology detailed in ARM 42.20.675 = $599.26 is $583.98 per acre.

(3) The statewide average grazing productivity average = is .21 AUMs per acre, and is used in calculating the values of:

(a) and (b) remain the same.

(4) For the 2017 2019-2020 appraisal cycle the capitalization rate for Class 3 agricultural land, which is used to convert an ongoing income stream into an estimate of value = is 6.4 percent.

(5) For the 2017 2019-2020 appraisal cycle the highest productivity of nonirrigated continuously cropped farmland is 60 bushels per acre, and is used in calculating the values of specialty crop land.

(6) For the 2017 2019-2020 appraisal cycle, the value of the one acre beneath a residence on agricultural land is $2,302 $2,144.

(7) For the 2017 2019-2020 appraisal cycle, the minimum carrying capacity for grazing land to be eligible for agricultural classification is 31 AUMs as determined by the Montana State University - Bozeman, College of Agriculture, Department of Agricultural Economics and Economics, in accordance with ARM 42.20.620.


AUTH: 15-1-201, MCA

IMP: 15-6-133, 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 NECESSITYThe department proposes amending ARM 42.20.681 to update year, price, and valuation references from the adopted 2017 appraisal cycle data to the data determined for the 2019-2020 appraisal cycle. The proposed year, price, and valuation amendments are necessary for the department to comply with its appraisal duties provided in 15-7-201, MCA, where the department is required to obtain current commodity price and production data for the base period described in 15-7-201(5)(d), MCA, for its use in the valuation of Montana taxpayers' agricultural land. The department obtains this data, as directed by 15-7-201(5)(b)(i), MCA, from the Montana Agricultural Statistics Bulletin, as published by the USDA National Agricultural Statistics Service (NASS).

Specifically, the department finds it necessary to propose:  replacing 2017 appraisal cycle references in (1), (4), (5), (6), and (7) with 2019-2020; amending the commodity prices referenced in (1)(a) through (c); amending (2) to update the minimum value of irrigated land; and updating (6) with the value of one acre beneath a residence on agricultural land to more accurately reflect the appraisal cycle.

Further, as a result of the department's periodic review of its rules, the department finds it necessary to revise the Olympic average language in (1) to verbiage more accurate and appropriate for department rules, and add the Department of Agricultural Economics and Economics name in (7) to specify the department within the Montana State University College of Agriculture required by 15-7-202, MCA, to determine animal unit months (AUMs).

Finally, it is necessary for the department to propose striking implementing citations for 15-7-203, 15-7-207, 15-7-208, 15-7-209, and 15-7-212, MCA, because they are obsolete or are unrelated references to this rule.


            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: Todd Olson, Department of Revenue, Director's Office, PO Box 7701, Helena, Montana 59604-7701; telephone (406) 444-7905; fax (406) 444-3696; or e-mail todd.olson@mt.gov and must be received no later than 5:00 p.m., December 4, 2018.


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


6. 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 e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notice regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. A written request may be mailed or delivered to the person in number 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.


7. An electronic copy of this notice is available on the department's web site at revenue.mt.gov, or through the Secretary of State's web site at sosmt.gov/ARM/register.


8. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.


9. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment of the above-referenced rule will not significantly and directly impact small businesses.



/s/ Todd Olson                                              /s/ Gene Walborn                                        

Todd Olson                                                   Gene Walborn

Rule Reviewer                                             Director of Revenue


Certified to the Secretary of State October 23, 2018.

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