Responsibility of the County Appraiser concerning Agricultual land values
The County Appraiser is responsible for discovering, listing, classifying and valuing all taxable property within the county in accordance with the applicable state laws in a uniform and equal manner. However, as it relates to agricultural land, the County appraiser does not value this type of property but is responsible for listing each property's correct current usage and acreage.
Valuation of Agricultural Land in Kansas
By law, the Director of the Division of Property Valuation of the State of Kansas is required to make a determination of agricultural land values annually and establishes the appraised use value of agricultural land.
The appraised value of agricultural land is based on the productive potential directly attributed to the natural capabilities of the land, not fair market value. Cultivated land is valued using an eight-year average of the landlord share of net income, with soil types used to recognize land productivity potential. For grassland an eight-year average of the landlord share of the net rental income is used. In the case of grassland, productivity is established by use of the grazing index assigned to each soil type. In either case the resulting eight-year average landlord net income is divided by a capitalization rate to arrive at the appraised value.
Agricultural land is classified in the following usage categories:
- Dry cultivated land
- Irrigated land
- Tame grassland
- Native grassland
Inherent productive capability of agricultural land determination
According to K.S.A. 79-1476, "valuations shall be established for each parcel of land devoted to agricultural use upon the basis of the agricultural income or productivity attributable to the inherent capabilities of such land. A classification system for all land devoted to agricultural use shall be adopted by the director of property valuation using criteria established by the United State department of agriculture soil conservation service." That system, developed by the now Natural Resource Conservation Service (NRCS), is the Soil Rating for Plant Growth (SRPG) index for each soil map unit. The SRPG index is a numerical rating system developed by NRCS soil scientists. The index is not tied to yields, which removes management variables. It is designed to rate each soil map unit based on its potential for supporting plant growth and indexed based on the soil's properties.
Capitalization Rate for Agricultural Land
The capitalization rate is used to convert the landlord share of agricultural net income into an agricultural value. The following four components make up the capitalization rate:
The five-year average of the Federal Land Bank interest rate on new loans in Kansas as of July 1 of each year.
An "add on" of not less than .75% nor more than 2.75% determined by the Director of Property Valuation.
As of property tax year 2003, the capitalization rate shall not be less than 11% nor more than 12% as mandated by the 2002 Kansas Legislature.
The county average agricultural property tax rate. This accounts for property taxes on agricultural land as an expense.
The sum of these four components is the capitalization rate percentage that is divided into the landlord net income (LNI) to arrive at the agricultural value. The higher the capitalization rate, the lower the agricultural value. For example, a higher county average agricultural property tax rate (expense) means the final agricultural value will be lower (all other things being equal).
Net rental income for grassland
The landowners share of gross rental income is based on stocking rates (measurement of productivity) and cash rental rates developed from regional studies performed by Kansas Agricultural Statistics, the Natural Resources Conservation Service and Kansas State University. The landlord shares of expenses are based on survey information collected by Kansas Agricultural Statistics and Kansas State University. Expenses included are; fencing and fence maintenance, pasture spraying and maintenance and watering cost. The landlord share of gross rental income less the landlord share of expenses (including a 10% management fee) equals the landlord share of net rental income.
Net rental income for dryland
Using information from Kansas Agricultural Statistics, the landlord share of gross income is based upon the yields and prices of the primary crops grown in the county or region. Yields are based on planted acres and adjusted for summer fallow where applicable. Prices are based on the monthly average price weighted by the amount crop sold per month. Each of the primary crops are then weighted within the county to determine crop composition or "crop mix". The landlord share of expenses are weighted by the crop mix factors within the county. The expense data is based on planted acres and survey information collected by Kansas Agricultural Statistics and Kansas State University. The landlord share of gross income less the landlord share of expenses (including a 10% management fee) equals the landlord net income. The eight-year average of the landlord net incomes are capitalized into value.
Net rental income for irrigated land
Using information from Kansas Agricultural Statistics the landlord share of gross income is based on yields of primary crop harvested acres. Each of the primary crops is then weighted within the district to determine crop mix. The landlord share of expenses is based on planted acres and is also weighted within the district. Kansas Agricultural Statistics and Kansas State University collect the expense data. Expenses are also weighted by the crop mix. The landlord share of gross income less the landlord share of expenses (including a 10% management fee) equals the landlord net income. Well depths are taken into consideration through irrigation equipment and fuel pumping costs. A water ratio table is used to adjust for water limitations.
Irrigated Changes Beginning 2014
- Change in methodology from Gallons per Minute to Acre Feet per Acre.
Acre Feet per Acre directly captures the amount of water available for crop production whereas using GPM was only a way to estimate quantity of water.
- Updated Water Ratio Table
The Water Ratio Table increases or decreases land values based on an individual's water use. It has been over 10 years since the Water Ratio Table has been modified and the update reflects changes in the regional crop mix.
Adjustments applied to Agricultural Land
There are a few adjustments that can be applied to agricultural use values in the case of
Adjustments for Frequent Flooding a factor may be applied per the Director of Property Valuation.
Other adjustments that are permitted to be made to agricultural land by the Director, including Canopy Cover, Salinity and Alkalinity, Water Table Fluctuation, and for Newly Constructed Drainage and Flood Control Areas as outlined in a memo from the director found here: Adverse Influences .
K.S.A. 79-1476 is a bill passed the legislature that specifically spells out adjustments that can be made to agricultural land that is in the Federal Wetlands Program.
The most common adjustment that is made to the agricultural use value land is detailed in a memo from the Director pertaining to Non-Productive Wasteland Within the Agricultural Class