68th OREGON LEGISLATIVE ASSEMBLY--1995 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1503
House Bill 2266
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of House Interim Committee on
Revenue and School Finance for the Oregon State Association of
County Assessors)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Provides method of determining local tax rate component of
capitalization rate used to determine farm values.
Authorizes owner to withdraw land in exclusive farm use zone
from special assessment as farmland.
A BILL FOR AN ACT
Relating to taxation, including but not limited to special
assessment as farm use land; amending ORS 308.345, 308.382,
308.391 and 308.397.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 308.345 is amended to read:
308.345. (1) Many farm properties throughout the state are
being valued for ad valorem purposes based upon market data
information which does not represent the sale of comparable
property for comparable uses and the particular sales which are
utilized as indicators of the value of other farm properties,
upon independent investigation, have been shown to represent
sales for investment or other purposes not connected with bona
fide farm use. It is the legislative intent that bona fide
properties shall be assessed at a value that is exclusive of
values attributable to urban influences or speculative purchases.
(2) Notwithstanding the provisions of ORS 308.205, agricultural
lands, when devoted exclusively to farm use as defined in ORS
215.203, shall be valued upon the basis of such farm use whether
zoned for exclusive farm use under existing statutes or whether
constituting farmlands not within an exclusive farm use zone
under ORS 308.370, and when comparable sales figures are utilized
in arriving at assessed values of agricultural lands, the county
assessors and the Department of Revenue shall make sufficient
investigation to ascertain that the sales so utilized in fact
represent sales for bona fide farm use. The sales so used, when
the potential operation of the agricultural land is examined
under accepted agricultural accounting procedures and typical
agricultural practices and land use in the county, shall be under
conditions that justify the purchase of such agricultural land by
a prudent investor for farm use.
(3) { + (a) + } When comparable sales figures cannot be
utilized in arriving at assessed values of agricultural lands as
provided in subsection (2) of this section by reason of
insufficient sales meeting the criteria set forth in subsection
(2) of this section, the assessed values of agricultural lands
shall be arrived at by utilizing an income approach.
{ + (b)(A) + } In utilizing the income approach, the
capitalization rate shall be the effective rate of interest
charged in Oregon by the Federal Land Bank at the time of closing
on loans for farm properties estimated as an average over the
immediate past five calendar years, plus a component for the
local tax rate. { +
(B) + } The Department of Revenue annually shall determine and
specify { - such - } { + the interest + } rate according to
the best information available, and shall certify { - such - }
{ + the interest + } rate to the county assessors. { + Each
county assessor annually shall determine the component for the
local tax rate based on the current tax rates for each code area
or as an average tax rate, whichever is appropriate. + }
(4) For purposes of this section, a 'prudent investor for farm
use' is a person who purchases agricultural lands with the
reasonable expectation that the person will be able to realize an
average annual return on capital not less than the current rate
of interest charged by the Federal Land Bank on first mortgages
of farmland in the county in which the agricultural lands are
located.
SECTION 2. ORS 308.397 is amended to read:
308.397. (1) The county assessor shall assess land within an
exclusive farm use zone established under ORS 215.010 to 215.190
and 215.402 to 215.438 or 227.215 to 227.300, and which is used
exclusively for farm use as defined in ORS 215.203 (2), at the
special assessment provided in ORS 308.370 (1) and also shall
enter on the assessment and tax roll the notation 'potential
additional tax liability,' until the land becomes disqualified
for such assessment.
(2) Land within an exclusive farm use zone shall be
disqualified by:
{ + (a) Notification by the taxpayer to the assessor to
remove the special assessment; + }
{ - (a) - } { + (b) + } Removal of the special assessment
by the assessor upon the discovery that the land is no longer
being used as farmland; or
{ - (b) - } { + (c) + } Removal of the land from any
exclusive farm use zone.
(3) Notwithstanding subsection { - (2)(a) - }
{ + (2)(b) + } of this section, the county assessor shall not
disqualify land that has been receiving special assessment if the
land is not being farmed because of:
(a) The effect of flooding that substantially precludes normal
and reasonable farming during the year; or
(b) Severe drought conditions are declared under ORS 536.700 to
536.780.
SECTION 3. ORS 308.382 is amended to read:
308.382. (1) When land lying within an exclusive farm use zone
and specially assessed at its value for farm use under ORS
308.370 (1) or sections 1 to 4, chapter 174, Oregon Laws 1987,
becomes subject to disqualification, after December 31, 1986, and
before January 1, 1997, for such special assessment under ORS
308.397 (2)(a) { + or (b) + } or section 4 (2), chapter 174,
Oregon Laws 1987, because it is not being used as farmland, and
if, in addition, the reason that the land is not being used as
farmland is other than that the land is being used for
industrial, commercial, residential or other use or uses
inconsistent with a purpose to return the use of the land to use
as farmland, then:
(a) For the tax year for which disqualification under ORS
308.397 or section 4, chapter 174, Oregon Laws 1987, would
otherwise occur and, subject to subsections (2) and (3) of this
section, for each tax year thereafter, the land shall be assessed
at real market value under ORS 308.205 and 308.232;
(b) The additional tax imposed under ORS 308.399 or 321.960,
whichever is applicable, shall not be collected but shall remain
as potential additional tax liability for the property; and
(c) The notation on the roll required under ORS 308.397 shall
be continued as a notation on the assessment and tax roll.
(2) If land that is returned to assessment at real market value
under subsection (1) of this section thereafter becomes
disqualified for special assessment at its value for farm use
because it is used for industrial, commercial, residential or
other purposes inconsistent with a purpose to return the land to
farm use, or because it is removed from an exclusive farm use
zone, then any additional taxes due under ORS 308.399 or 321.960,
whichever is applicable, shall be determined and added to the
next general property tax roll to be collected and distributed in
the same manner as other real property tax. However, in computing
the additional tax, the following shall apply:
(a) The amount of the additional tax due for each year to which
the additional tax applies shall be the difference between the
taxes assessed against the land in that year and the taxes that
would otherwise have been assessed against the land had the land
not been in farm use; and
(b) The number of years for which the additional tax shall be
collected shall be the total number of years (whether or not
continuous) that the special assessment was in effect for the
land, not to exceed the applicable maximum number of years
specified under ORS 308.399 or 321.960.
(3) If the land that becomes subject to subsection (1) of this
section thereafter requalifies or qualifies for any of the
special assessments listed in ORS 321.960, then for purposes of
determining any additional taxes due upon a later
disqualification, the following shall apply:
(a) The amount of the additional tax due for each year to which
the additional tax applies shall be the difference between the
taxes assessed against the land, and the taxes that would have
been assessed against the land in that year had the land not been
in special assessment; and
(b) The number of years for which the additional tax shall be
collected shall be the total number of years (whether or not
continuous) that the special assessment was in effect for the
land, not to exceed the applicable maximum number of years
specified under ORS 308.399 or 321.960.
(4) This section shall not apply to a homesite to which ORS
308.377 and 308.378 apply or to a parcel described under ORS
215.236 (4) except in the circumstances described under ORS
215.236 (5).
SECTION 4. ORS 308.391 is amended to read:
308.391. (1)(a) Notwithstanding ORS 308.210, 308.370 (3),
311.405 or 311.410 but subject to paragraph (b) of this
subsection, disqualification by the county assessor of land for
special assessment as farmland for the reason that the land is no
longer in farm use as described under ORS 308.390 (2)(c) or
308.397 { - (1) - } { + (2)(b) + } shall occur as of the July
1 assessment date of the tax year in which the county assessor
discovers that the land is no longer in farm use or being used as
farmland.
(b) Paragraph (a) of this subsection shall apply only if notice
of disqualification is mailed by the county assessor prior to
August 15 of the tax year for which the disqualification of the
land is asserted.
(2) Notwithstanding ORS 321.960 (3), if, pursuant to subsection
(1) of this section, land is disqualified for special assessment
as farmland for a tax year, application may be made for purposes
of ORS 321.960 at any time within 30 days after the date on the
notice of disqualification.
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