Use of land sales, township boundaries flaw county ag assessments, former lawmaker says

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By Shannon Marvel

One man’s trash is another man’s treasure.

That fluctuating mentality is why legislators changed the way agriculture land in South Dakota is valued from market sales to productivity, said Jim Hundstad, a former legislator who owns farmland in the Bath area.

Two people might be willing to pay drastically different prices for the same piece of ag land for various reasons, he said.

That was the flaw with the market system and a big reason for the switch to productivity about a decade ago.

Hundstad, a Democrat who served as state lawmaker from 2001 to 2012, said he doesn’t take issue with the fact that state law allows county assessors to make adjustments on the values of agriculture land under the productivity model. But, he said, doing so based on land sale prices is wrong.

Other lawmakers, however, have said they are confident the county can use the map.

The productivity model requires counties to assess ag land values using a per-acre acre. That total is determined by the state Department of Revenue based on gross revenue per acre during the previous eight years. The number is different from county to county and crunched each year by the state.

The law also allows directors of equalization to make adjustments that increase the accuracy of the land’s productivity by using the following factors: the capacity of the land to produce ag products, location, size, soil survey statistics, terrain, climate accessibility and surface obstructions of the land.

Data from comparable sales of ag land may be used to document productivity for any of those factors, according to state law.

Just what that means is the source of a county scuffle of sorts.

In January, former director of equalization Michael Hauke Jr. claimed that the county has been overtaxing 15 Brown County townships by millions of dollars for the last five years. He said a map that splits the county into three ag land “neighborhoods” is improper because it was designed so that land that would likely sell for more would have higher property taxes.

Nobody disputes that. The only question is whether the philosophy behind the map is allowed under state law.

Hauke was fired during the Jan. 9 commission meeting.

The 15 townships Hauke referenced are in the south-central part of the county and are assessed at 118 percent of top productivity, as determined by the state. Other townships in Brown County are assessed at either 97 or 87 percent of top productivity.

Under the county’s assessment plan this year, top productivity this year is $3,620. In Brown County, some ag land is assessed above that total and some below.

During the Jan. 9 commission meeting, Gene Loeschke, a county assessor, said the townships in which ag land is being assessed at 118 percent of top productivity were adjusted up because the land would sell for more than land in other parts of the county. The market can indicate topography, soil quality and more, he said.

It’s not a matter of Brown County collecting more than it should in property taxes on ag land. It’s about just how the total is distributed.

Commissioners sent a letter to the state Department of Revenue requesting a review of the county’s agriculture land assessment plan. A decision is expected in the next few days, Loeschke said.

Dennis Jones is a landowner in the Bath area who claims his ag land has been taxed $6 more per acre in one area and $5 more in another than it would have without the county neighborhood map. He didn’t expect such a large amount per acre.

“I think everybody thought this is the way it is and this is the way it should be, and everybody is treated the same,” Jones said as to why he never appealed his ag assessment notices.

Hundstad said Brown County is allowed by state law to use neighborhoods, but he believes mapping them by township boundary is wrong.

“Why is it more productive to be on this side of the road?” Hundstad said.

He believes the county should use a soil survey map crafted by the U.S. Department of Agriculture. Different soil qualities and topographies are defined in the map.

According to the USDA map, Brown County ag land east of the James River and Moccasin Creek has a higher soil rating than the land to the west.

“The eastern two-thirds of the county is a nearly flat plain that is between 1,290 and 1,310 feet above sea level. The plain is the former bed of an extensive but shallow and short-lived glacial lake known as Lake Dakota. This lake was about 90 miles long and 27 miles wide,” according to the USDA survey.

The townships taxed at 118 percent of top productivity are largely in the flat plain, but Hundstad thinks the map itself should be used.

Townships west of the plain contain glacial deposits, boulders and potholes that can decrease the soil ratings, according to the survey map.

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Jim Hundstad thumbs through the pages of a Brown County soil survey. Farm Forum photo by Shannon Marvel
Jim Hundstad rolls out a soil rating map from a publication titled “Soil Survey of Brown County.” The book was published by the Soil Conservation Service with the U.S. Department of Agriculture. Farm Forum photo by Shannon Marvel
Former state legislator Jim Hundstad of Bath sorts through ag assessment documents at his home. American News photo by Shannon Marvel