AN
ACT Relating to current use valuation; amending RCW 84.34.070, 84.34.020,
84.34.065, and 36.70B.230; reenacting and amending RCW 84.40.030; adding a new
section to chapter 36.70A RCW; adding a new chapter to Title 84 RCW;
recodifying RCW 36.70B.230; and repealing RCW 35.63.240, 35A.63.260, and
36.70.495.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. This
chapter creates a new system of classifying agricultural land for property tax
purposes as agricultural land with long-term commercial significance where the
true and fair value of the land is based upon its current use. This new
current use valuation program applies to eligible land automatically and is in
addition to the voluntary farm and agricultural land valuation program under
chapter 84.34 RCW.
NEW
SECTION. Sec. 2. (1)
Land shall be classified as agricultural land with long‑term commercial
significance if: (a) The land is designated as agricultural land under RCW
36.70A.170(1) by a county, city, or town planning under RCW 36.70A.040; (b) the
land is devoted primarily to agricultural uses specified under RCW
36.70A.030(2) and not used for residential purposes, industrial purposes, or
other commercial purposes; and (c) the county, city, or town has adopted its
development regulations under RCW 36.70A.060 conserving agricultural land designated
under RCW 36.70A.170(1).
(2)
The assessor shall automatically classify or reclassify land meeting the
requirements of this section based upon information submitted to the assessor
by counties, cities, and towns under RCW 36.70B.230 (as recodified by this
act). The manifest error provisions of RCW 84.48.065 apply to the
classification or reclassification of land as agricultural land with long‑term
commercial significance.
(3)
The true and fair value of agricultural land with long‑term commercial significance
for property tax purposes shall be the current use value of the land determined
in the same manner as the current use value of land classified as farm and
agricultural land is determined under chapter 84.34 RCW.
(4)
The owner of any land eligible for classification or reclassification as
agricultural land with long‑term commercial significance that is not so
classified or reclassified by the assessor under subsection (2) of this section
may submit a written request to the assessor requesting the land be classified
or reclassified as agricultural land with long‑term commercial
significance together with proof that the land meets the requirements of this
section. The assessor shall investigate the request and either deny or approve
the request within thirty days of the date the request was received. The
assessor shall give written notice of the denial or approval to the owner
requesting the classification or reclassification. A denial may be appealed to
the board of equalization of the county in which the property is located, in
accordance with RCW 84.40.038, within thirty days of the date the notice of
denial is mailed.
(5)
Eligible land classified as farm and agricultural land under chapter 84.34 RCW
shall be reclassified as agricultural land with long‑term commercial
significance. Land classified or designated as forest land under chapter 84.33
RCW shall not be classified as agricultural land with long‑term
commercial significance, even if it meets the requirements of this section.
Land classified as open space land or timber land under RCW 84.34.020 (1) or
(3) shall not be classified as agricultural land with long‑term
commercial significance, even if it meets the requirements of this section.
However, the owner of open space farm and agricultural conservation land under
RCW 84.34.020(1)(c) may submit an application requesting the land be
reclassified as agricultural land with long‑term commercial significance
and the assessor shall so reclassify this land if it meets the requirements of
this section.
NEW
SECTION. Sec. 3. (1)
The classification or reclassification of land as agricultural land with
long-term commercial significance shall be removed if either: (a) The county,
city, or town removes the designation of the land under RCW 36.70A.170(1); or
(b) the use of the land changes to a use not permitted for designation as
agricultural land with long-term commercial significance.
Land
removed from classification as agricultural land with long-term commercial
significance shall be valued at its true and fair value under RCW 84.40.030
unless it is reclassified under another current use valuation program under
chapter 84.33 or 84.34 RCW.
(2)
Land classified as agricultural land with long-term commercial significance
that was not reclassified to that status from farm and agricultural land or
open space farm and agricultural conservation land under chapter 84.34 RCW is
not subject to any additional tax, penalty, and interest if removed from
classification as agricultural land with long-term commercial significance.
(3)
However, land classified as agricultural land with long-term commercial
significance that was reclassified to that status from farm and agricultural
land or open space farm and agricultural conservation land under chapter 84.34
RCW is subject to additional tax, penalty, and interest, if the land is removed
from classification as agricultural land with long-term commercial significance
as follows:
(a)
The additional tax, penalty, and interest shall be calculated in the same
manner as set forth under RCW 84.34.108 and 84.34.080 for removing land from
classification as farm and agricultural land or open space farm and
agricultural conservation land under chapter 84.34 RCW, except for each year
the land remains classified as agricultural land with long-term commercial
significance one year of the additional tax, penalty, and interest shall be
abated. Additional tax, penalty, and interest shall not be imposed if the
reclassified land remains classified as agricultural land with long-term
commercial significance for at least seven years.
(b)
Additional tax, penalty, and interest under this subsection is not due if the
land is reclassified as farm and agricultural land or open space farm and
agricultural conservation land under chapter 84.34 RCW immediately upon being removed
from classification as agricultural land with long-term commercial
significance.
NEW
SECTION. Sec. 4. The
provisions of RCW 84.34.300 through 84.34.380, relating to exemptions from
special benefit assessments, apply to agricultural land with long-term
commercial significance.
NEW
SECTION. Sec. 5. The
department shall adopt rules consistent with this chapter as are necessary or
desirable to permit the effective administration of this chapter.
Sec.
6. RCW
84.34.070 and 1992 c 69 s 10 are each amended to read as follows:
(1)
When land has once been classified under this chapter, it shall remain under
such classification and shall not be applied to other use except as provided by
subsection (2) of this section for at least ten years from the date of
classification and shall continue under such classification until and unless
withdrawn from classification after notice of request for withdrawal shall be
made by the owner. During any year after eight years of the initial ten-year
classification period have elapsed, notice of request for withdrawal of all or
a portion of the land may be given by the owner to the assessor or assessors of
the county or counties in which such land is situated. In the event that a
portion of a parcel is removed from classification, the remaining portion must
meet the same requirements as did the entire parcel when such land was
originally granted classification pursuant to this chapter unless the remaining
parcel has different income criteria. Within seven days the assessor shall
transmit one copy of such notice to the legislative body which originally
approved the application. The assessor or assessors, as the case may be,
shall, when two assessment years have elapsed following the date of receipt of
such notice, withdraw such land from such classification and the land shall be
subject to the additional tax and applicable interest due under RCW 84.34.108.
Agreement to tax according to use shall not be considered to be a contract and
can be abrogated at any time by the legislature in which event no additional
tax or penalty shall be imposed.
(2)
The following reclassifications are not considered withdrawals or removals and
are not subject to additional tax under RCW 84.34.108:
(a)
Reclassification between lands under RCW 84.34.020 (2) and (3);
(b)
Reclassification of land classified under RCW 84.34.020 (2) or (3) or chapter
84.33 RCW to open space land under RCW 84.34.020(1);
(c)
Reclassification of land classified under RCW 84.34.020 (2) or (3) to forest
land classified under chapter 84.33 RCW; ((and))
(d)
Reclassification of farm and agricultural land classified under RCW
84.34.020(2), or open space farm and agricultural conservation land classified
under RCW 84.34.020(1)(c), to agricultural land of long-term commercial
significance under section 2 of this act; and
(e)
Reclassification of land classified as open space land under RCW
84.34.020(1)(c) and reclassified to farm and agricultural land under RCW
84.34.020(2) if the land had been previously classified as farm and
agricultural land under RCW 84.34.020(2).
(3)
Applications for reclassification shall be subject to applicable provisions of
RCW 84.34.037, 84.34.035, 84.34.041, and chapter 84.33 RCW.
(4)
The income criteria for land classified under RCW 84.34.020(2) (b) and (c) may
be deferred for land being reclassified from land classified under RCW
84.34.020 (1)(c) or (3), or chapter 84.33 RCW into RCW 84.34.020(2) (b) or (c)
for a period of up to five years from the date of reclassification.
Sec.
7. RCW
84.34.020 and 1997 c 429 s 31 are each amended to read as follows:
As
used in this chapter, unless a different meaning is required by the context:
(1)
"Open space land" means (a) any land area so designated by an
official comprehensive land use plan adopted by any city or county and zoned
accordingly, or (b) any land area, the preservation of which in its present use
would (i) conserve and enhance natural or scenic resources, or (ii) protect
streams or water supply, or (iii) promote conservation of soils, wetlands,
beaches or tidal marshes, or (iv) enhance the value to the public of abutting
or neighboring parks, forests, wildlife preserves, nature reservations or
sanctuaries or other open space, or (v) enhance recreation opportunities, or
(vi) preserve historic sites, or (vii) preserve visual quality along highway,
road, and street corridors or scenic vistas, or (viii) retain in its natural
state tracts of land not less than one acre situated in an urban area and open
to public use on such conditions as may be reasonably required by the
legislative body granting the open space classification, or (c) any land
meeting the definition of farm and agricultural conservation land under
subsection (8) of this section. As a condition of granting open space
classification, the legislative body may not require public access on land
classified under (b)(iii) of this subsection for the purpose of promoting
conservation of wetlands.
(2)
"Farm and agricultural land" means:
(a)
Any parcel of land that is twenty or more acres or multiple parcels of land
that are contiguous and total twenty or more acres:
(i)
Devoted primarily to the production of livestock or agricultural commodities
for commercial purposes;
(ii)
Enrolled in the federal conservation reserve program or its successor
administered by the United States department of agriculture; or
(iii)
Other similar commercial activities as may be established by rule;
(b)
Any parcel of land that is five acres or more but less than twenty acres
devoted primarily to agricultural uses, which has produced a gross income from
agricultural uses equivalent to, as of January 1, 1993:
(i)
One hundred dollars or more per acre per year for three of the five calendar
years preceding the date of application for classification under this chapter
for all parcels of land that are classified under this subsection or all
parcels of land for which an application for classification under this
subsection is made with the granting authority prior to January 1, 1993; and
(ii)
On or after January 1, 1993, two hundred dollars or more per acre per year for
three of the five calendar years preceding the date of application for
classification under this chapter;
(c)
Any parcel of land of less than five acres devoted primarily to agricultural
uses which has produced a gross income as of January 1, 1993, of:
(i)
One thousand dollars or more per year for three of the five calendar years
preceding the date of application for classification under this chapter for all
parcels of land that are classified under this subsection or all parcels of
land for which an application for classification under this subsection is made
with the granting authority prior to January 1, 1993; and
(ii)
On or after January 1, 1993, fifteen hundred dollars or more per year for three
of the five calendar years preceding the date of application for classification
under this chapter.
Parcels
of land described in (b)(i) and (c)(i) of this subsection shall, upon any
transfer of the property excluding a transfer to a surviving spouse, be subject
to the limits of (b)(ii) and (c)(ii) of this subsection.
Agricultural
lands shall also include such incidental uses as are compatible with
agricultural purposes, including wetlands preservation, provided such
incidental use does not exceed twenty percent of the classified land and the
land on which appurtenances necessary to the production, preparation, or sale
of the agricultural products exist in conjunction with the lands producing such
products. Agricultural lands shall also include any parcel of land of one to
five acres, which is not contiguous, but which otherwise constitutes an
integral part of farming operations being conducted on land qualifying under
this section as "farm and agricultural lands"; or
(d)
The land on which housing for employees and the principal place of residence of
the farm operator or owner of land classified pursuant to (a) of this
subsection is sited if: The housing or residence is on or contiguous to the
classified parcel; and the use of the housing or the residence is integral to
the use of the classified land for agricultural purposes((;
(e)
Any parcel of land designated as agricultural land under RCW 36.70A.170; or
(f)
Any parcel of land not within an urban growth area zoned as agricultural land
under a comprehensive plan adopted under chapter 36.70A RCW)).
(3)
"Timber land" means any parcel of land that is five or more acres or
multiple parcels of land that are contiguous and total five or more acres which
is or are devoted primarily to the growth and harvest of forest crops for
commercial purposes. A timber management plan shall be filed with the county
legislative authority at the time (a) an application is made for classification
as timber land pursuant to this chapter or (b) when a sale or transfer of
timber land occurs and a notice of classification continuance is signed.
Timber land means the land only.
(4)
"Current" or "currently" means as of the date on which
property is to be listed and valued by the assessor.
(5)
"Owner" means the party or parties having the fee interest in land,
except that where land is subject to real estate contract "owner"
shall mean the contract vendee.
(6)
"Contiguous" means land adjoining and touching other property held by
the same ownership. Land divided by a public road, but otherwise an integral
part of a farming operation, shall be considered contiguous.
(7)
"Granting authority" means the appropriate agency or official who
acts on an application for classification of land pursuant to this chapter.
(8)
"Farm and agricultural conservation land" means either:
(a)
Land that was previously classified under subsection (2) of this section, that
no longer meets the criteria of subsection (2) of this section, and that is
reclassified under subsection (1) of this section; or
(b) Land that is traditional farmland that is not classified under
chapter 84.33 or 84.34 RCW, that has not been irrevocably devoted to a use
inconsistent with agricultural uses, and that has a high potential for
returning to commercial agriculture.
Sec.
8. 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, including land classified
under section 2 of this act, 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.
Sec.
9. 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 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) 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.))
Sec.
10. RCW
36.70B.230 and 1996 c 254 s 6 are each amended to read as follows:
By
July 31, ((1997, a local government)) 1998, every county or city
planning under RCW 36.70A.040 shall provide to the county assessor a copy of ((the
local government's)) its comprehensive plan and development
regulations in effect on July 1st of that year and shall thereafter provide any
amendments to the plan and regulations that were adopted before July 31st of
each following year. The plans and regulations provided to the assessor
must include the agricultural land designated under RCW 36.70A.170 and the
regulations adopted under RCW 36.70A.060 conserving the designated land.
A
county or city that initially plans under RCW 36.70A.040 after the effective
date of this section shall provide a copy of its comprehensive plan and development
regulations to the county assessor by July 31st of the year immediately
following the year the county or city initially became subject to RCW
36.70A.040.
NEW
SECTION. Sec. 11. The
following acts or parts of acts are each repealed:
(1) RCW
35.63.240 and 1996 c 254 s 3;
(2) RCW
35A.63.260 and 1996 c 254 s 4; and
(3) RCW
36.70.495 and 1996 c 254 s 5.
NEW
SECTION. Sec. 12. RCW
36.70B.230, as amended by this act, is recodified as a new section in chapter
36.70A RCW.
NEW SECTION. Sec. 13.
Sections 1 through 5 of this act constitute a new chapter in Title 84 RCW.
