BP BHEAD INT S [atlas:bill]

AN ACT Relating to current use taxation; amending RCW 84.34.065; reenacting and amending RCW 84.40.030; adding a new section to chapter 84.34 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 84.34 RCW to read as follows:

(1) When a county has adopted a comprehensive plan under chapter 36.70A RCW and has zoned certain land not within an urban growth area as agricultural land or has designated land as agricultural land under RCW 36.70A.170, the county legislative authority shall promptly notify the assessor that the land has been zoned or designated accordingly.

(2) Within thirty days of receiving a notice under subsection (1) of this section, the assessor shall notify owners of land within these areas that the owners may participate in the open space taxation program, also known as the current use program, in the farm and agricultural classification and have the land valued as provided in this chapter. This notice must include an explanation of all requirements imposed on land classified as farm and agricultural land. The assessor shall include an application for the farm and agricultural classification with this notice.

(3) If the landowner wants to participate in the current use program, the owner must return the completed application and all other required documentation to the assessor within forty-five days of the date the assessor mailed the original notice about eligibility for the current use program. Because the land was designated or zoned as "agricultural land" under chapter 36.70A RCW, an application for classification under these circumstances is presumed approved unless the land is not being used for commercial agricultural purposes. If the land does not qualify for classification, the assessor shall notify the owner of this fact and the owner may appeal the denial of classification to the county board of equalization. This appeal must be submitted to the board within thirty days of the date the notice is mailed. If the land has been classified as farm and agricultural land under this chapter, it must be valued in accordance with that chapter.

(4) If the landowner chooses not to participate in the current use program, the land must be valued in accordance with chapter 84.40 RCW.

Sec. 2. RCW 84.34.065 and 1997 c 429 s 33 are each amended to read as follows:

The true and fair value of farm and agricultural land ((shall be determined by consideration of the earning or productive capacity of comparable lands from crops grown most typically in the area averaged over not less than five years, capitalized at indicative rates. The earning or productive capacity of farm and agricultural lands shall be the "net cash rental", capitalized at a "rate of interest" charged on long term loans secured by a mortgage on farm or agricultural land plus a component for property taxes. The current use value of land under RCW 84.34.020(2)(d) shall be established as: The prior year's average value of open space farm and agricultural land used in the county plus the value of land improvements such as septic, water, and power used to serve the residence. This shall not be interpreted to require the assessor to list improvements to the land with the value of the land.

In valuing any tract or parcel of real property designated and zoned under a comprehensive plan adopted under chapter 36.70A RCW as agricultural, forest, or open space land, the appraisal shall not be based on similar sales of parcels that have been converted to nonagricultural, nonforest, or nonopen-space uses within five years after the sale.

~~For the purposes of the above computation:~~

(1) The term "net cash rental" shall mean the average rental paid on an annual basis, in cash, for the land being appraised and other farm and agricultural land of similar quality and similarly situated that is available for lease for a period of at least three years to any reliable person without unreasonable restrictions on its use for production of agricultural crops. There shall be allowed as a deduction from the rental received or computed any costs of crop production charged against the landlord if the costs are such as are customarily paid by a landlord. If "net cash rental" data is not available, the earning or productive capacity of farm and agricultural lands shall be determined by the cash value of typical or usual crops grown on land of similar quality and similarly situated averaged over not less than five years. Standard costs of production shall be allowed as a deduction from the cash value of the crops.

The current "net cash rental" or "earning capacity" shall be determined by the assessor with the advice of the advisory committee as provided in RCW 84.34.145, and through a continuing internal study, assisted by studies of the department of revenue. This net cash rental figure as it applies to any farm and agricultural land may be challenged before the same boards or authorities as would be the case with regard to assessed values on general property.

(2) The term "rate of interest" shall mean the rate of interest charged by the farm credit administration and other large financial institutions regularly making loans secured by farm and agricultural lands through mortgages or similar legal instruments, averaged over the immediate past five years.

The "rate of interest" shall be determined annually by a rule adopted by the department of revenue and such rule shall be published in the state register not later than January 1 of each year for use in that assessment year. The department of revenue determination may be appealed to the state board of tax appeals within thirty days after the date of publication by any owner of farm or agricultural land or the assessor of any county containing farm and agricultural land.

(3) The "component for property taxes" shall be a figure obtained by dividing the assessed value of all property in the county into the property taxes levied within the county in the year preceding the assessment and multiplying the quotient obtained by one hundred)), including land granted classification under RCW 84.34.020(2) (e) and (f), shall be determined by consideration of the earning or productive capacity of comparable lands from crops grown most typically in the area averaged over not less than five years, capitalized at indicative rates. The earning or productive capacity of farm and agricultural lands shall be the "net cash rental," capitalized at a "rate of interest" charged on long-term loans secured by a mortgage on farm or agricultural land plus a component for property taxes. The current use value of land under RCW 84.34.020(2)(d) shall be established as the prior year's average value of open space farm and agricultural land used in the county plus the value of land improvements such as septic, water, and power used to serve the residence. This section shall not be interpreted to require the assessor to list improvements to the land with the value of the land.

Sec. 3. RCW 84.40.030 and 1997 c 429 s 34 (Referendum Bill No. 47), 1997 c 134 s 1, and 1997 c 3 s 104 are each reenacted and amended to read as follows:

All personal property shall be valued at one hundred percent of its true and fair value in money and assessed ((~~on the same basis~~)) as provided in RCW 82.40.0305 unless specifically provided otherwise by law.

((~~All real property shall be appraised at one hundred percent of its true and fair value in money and assessed as provided in RCW 84.40.0305 unless specifically provided otherwise by law.~~))

Taxable leasehold estates shall be valued at such price as they would bring at a fair, voluntary sale for cash without any deductions for any indebtedness owed including rentals to be paid.

The true and fair value of real property for taxation purposes (including property upon which there is a coal or other mine, or stone or other quarry and all land that falls within the definition farm and agricultural land under RCW 84.34.020(2) (e) and (f) for which the landowner has chosen not to or that is not eligible to participate in the current use program) shall be based upon the following criteria:

(1) Any sales of the property being appraised or similar properties with respect to sales made within the past five years. The appraisal shall be consistent with the comprehensive land use plan, development regulations under chapter 36.70A RCW, zoning, and any other governmental policies or practices in effect at the time of appraisal that affect the use of property, as well as physical and environmental influences. ((~~An assessment may not be determined by a method that assumes a land usage not permitted, for that property being appraised, under existing zoning or land use planning ordinances or statutes.~~)) The appraisal shall also take into account: (a) In the use of sales by real estate contract as similar sales, the extent, if any, to which the stated selling price has been increased by reason of the down payment, interest rate, or other financing terms; and (b) the extent to which the sale of a similar property actually represents the general effective market demand for property of such type, in the geographical area in which such property is located. Sales involving deed releases or similar seller-developer financing arrangements shall not be used as sales of similar property.

(2) In addition to sales as defined in subsection (1) of this section, consideration may be given to cost, cost less depreciation, reconstruction cost less depreciation, or capitalization of income that would be derived from prudent use of the property. In the case of property of a complex nature, or being used under terms of a franchise from a public agency, or operating as a public utility, or property not having a record of sale within five years and not having a significant number of sales of similar property in the general area, the provisions of this subsection ((~~(2)~~)) shall be the dominant factors in valuation. When provisions of this subsection ((~~(2)~~)) are relied upon for establishing values the property owner shall be advised upon request of the factors used in arriving at such value.

(3) In valuing any tract or parcel of real property, the true and fair value of the land, exclusive of structures thereon shall be determined; also the true and fair value of structures thereon, but the appraised valuation shall not exceed the true and fair value of the total property as it exists. In valuing agricultural land, growing crops shall be excluded.

(((4) In valuing any tract or parcel of real property designated and zoned under a comprehensive plan adopted under chapter 36.70A RCW as agricultural, forest, or open space land, the appraisal shall not be based on similar sales of parcels that have been converted to nonagricultural, nonforest, or nonopen-space uses within five years after the sale.))

NEW SECTION. Sec. 4. This act is effective for taxes levied for collection in 1999 and thereafter.