Bill Summary – FastDemocracy

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                                    _____________ BILL NO. _____________
                                          (Primary Sponsor)
                           INTRODUCED BY _________________________________________________
                            BY REQUEST OF THE REVENUE INTERIM COMMITTEE
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 A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING THE ELIGIBILITY FOR CLASSIFICATION
 OF PROPERTY AS AGRICULTURAL FOR PROPERTY VALUATION PURPOSES; REQUIRING AN
 APPLICATION PROCESS FOR AGRICULTURAL PROPERTY; PROVIDING FOR A REVIEW PROCESS FOR
 PROPERTIES CLASSIFIED AS AGRICULTURAL PROPERTY; REVISING INCOME REQUIREMENTS FOR
 CERTAIN PROPERTY TO QUALIFY AS AGRICULTURAL PROPERTY; REMOVING THE NONQUALIFIED
 AGRICULTURAL PROPERTY CLASSIFICATION; PROVIDING FOR AN IDLE LAND PROPERTY
 CLASSIFICATION AND TAX RATE; REQUIRING A REALTY TRANSFER CERTIFICATE TO INCLUDE THE
 SALES PRICE FOR CERTAIN AGRICULTURAL AND TIMBER PROPERTY; PROVIDING RULEMAKING
 AUTHORITY; AMENDING SECTIONS 15-6-133, 15-7-202, 15-7-206, 15-7-307, 15-10-420, AND 15-30-2660,
 MCA; AND PROVIDING A DELAYED EFFECTIVE DATE AND AN APPLICABILITY DATE.”
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 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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         Section 1. Section 15-6-133, MCA, is amended to read:
         "15-6-133.   Class three property -- description -- taxable percentage. (1) Class three property
 includes:
         (a)      agricultural land as defined in 15-7-202;
         (b)      nonproductive patented mining claims outside the limits of an incorporated city or town held by
 an owner for the ultimate purpose of developing the mineral interests on the property. For the purposes of this
 subsection (1)(b), the following provisions apply:
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            (i)     The claim may not include any property that is used for residential purposes, recreational
 purposes as described in 70-16-301, or commercial purposes as defined in 15-1-101 or any property the
 surface of which is being used for other than mining purposes or has a separate and independent value for
 other purposes.
            (ii)    Improvements to the property that would not disqualify the parcel are taxed as otherwise
 provided in this title, including that portion of the land upon on which the improvements are located and that is
 reasonably required for the use of the improvements.
            (iii)   Nonproductive patented mining claim property must be valued as if the land were devoted to
 agricultural grazing use.
            (c)     contiguous parcels of land of 20 640 acres or more but less than 160 acres under one
 ownership that are not eligible for valuation, assessment, and taxation as agricultural land under 15-7-202(1),
 which are considered to be nonqualified agricultural idle land. Nonqualified agricultural Idle land may not be
 devoted to a commercial or industrial purpose. Nonqualified agricultural Idle land is valued at the average
 productive capacity value of grazing land.
            (2)     Subject to subsection (3), class three property is taxed at 2.16% of its productive capacity
 value.
            (3)     The taxable value of idle land described in subsection (1)(c) is computed by multiplying the
 value of the land by seven 20 times the taxable percentage rate for agricultural land."
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            Section 2. Section 15-7-202, MCA, is amended to read:
            "15-7-202. Eligibility of land for valuation as agricultural -- exclusions -- rulemaking. (1) (a)
 Contiguous parcels of land totaling 160 acres or more under one ownership are eligible for valuation,
 assessment, and taxation as agricultural land each year that none of the parcels is devoted to a residential,
 commercial, or industrial use.
            (b)     (i) Contiguous parcels of land of 20 acres or more but less than 160 acres under one ownership
 that are actively devoted to agricultural use are eligible for valuation, assessment, and taxation as agricultural
 land if:
            (i)     the land is used primarily for raising and marketing, as defined in subsection (1)(c), products
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 that meet the definition of agricultural provided in 15-1-101 and if, except as for grazing land as provided in
 subsection (3) (4), the owner or the owner's immediate family members, agent, employee, or lessee markets
 not less than $1,500 in annual gross income from the raising of agricultural products produced by the land not
 less than $4,000 in annual gross income for contiguous parcels of less than 640 acres or $4,000 plus $6 an
 acre for each acre above 640 acres in annual gross income for contiguous parcels of 640 acres or more; or
         (ii)     the parcels would have met the qualification set out in subsection (1)(b)(i)(A) (1)(a)(i) were it
 not for independent, intervening causes of production failure beyond the control of the producer or a marketing
 delay for economic advantage, in which case proof of qualification in a prior year will suffice suffices.
         (ii)     Noncontiguous parcels of land that meet the income requirement of subsection (1)(b)(i) are
 eligible for valuation, assessment, and taxation as agricultural land under subsection (1)(b)(i) if:
         (A)      the land is an integral part of a bona fide agricultural operation undertaken by the persons set
 forth in subsection (1)(b)(i) as defined in this section; and
         (B)      the land is not devoted to a residential, commercial, or industrial use.
         (b)      Noncontiguous parcels of land under one ownership that are actively devoted to agricultural
 use are eligible for valuation, assessment, and taxation as agricultural land if each noncontiguous parcel is
 actively devoted to agricultural use and the noncontiguous parcels collectively meet the annual gross income
 requirements for contiguous parcels in subsection (1)(a).
         (c)      For the purposes of determining annual gross income under this subsection (1), "marketing":
         (i)      means the selling of agricultural products produced by the land; and
         (ii)     for parcels of land of 20 acres or more, includes:
         (A)      rental or lease of the land if the land is actively used for grazing livestock or for other
 agricultural purposes; and
         (B)      rental payments made under the federal conservation reserve program or a successor to that
 program.
         (2)      Parcels of land that are part of a family-operated farm, family corporation, family partnership,
 family limited liability company, sole proprietorship, or family trust that is involved in Montana agricultural
 production consisting of 20 acres or more but less than 160 acres that do not meet the income requirement of
 subsection (1)(b)(i) may also be valued, assessed, and taxed as agricultural land (1)(a)(i) are eligible for
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 valuation, assessment, and taxation as agricultural land if the owner:
          (a)      applies to the department requesting classification of the parcel as agricultural;
          (b)      verifies that the parcel of land is greater than 20 acres but less than 160 acres and that the
 parcel is located within 15 air miles of the family-operated farming entity referred to in this subsection (1)(b)(iii)
 (C) (2)(c); and
          (c)      verifies that:
          (i)      the owner of the parcel is involved in agricultural production by submitting proof that 51% or
 more of the owner's Montana annual gross income is derived from agricultural production; and
          (ii)     (A) property taxes on the property are paid by a family corporation, family partnership, family
 limited liability company, sole proprietorship, or family trust that is involved in Montana agricultural production
 and 51% of the entity's Montana annual gross income is derived from agricultural production; or
          (B)      the owner is a shareholder, partner, owner, or member of the family corporation, family
 partnership, family limited liability company, sole proprietorship, or family trust that is involved in Montana
 agricultural production and 51% of the person's or entity's Montana annual gross income is derived from
 agricultural production.
          (c)      For the purposes of this subsection (1):
          (i)      "marketing" means the selling of agricultural products produced by the land and includes but is
 not limited to:
          (A)      rental or lease of the land as long as the land is actively used for grazing livestock or for other
 agricultural purposes; and
          (B)      rental payments made under the federal conservation reserve program or a successor to that
 program;
          (3)      land Land that is devoted to residential use or that is used for agricultural buildings and is
 included in or is contiguous to land under the same ownership that is classified as agricultural land, other than
 nonqualified agricultural idle land described in 15-6-133(1)(c), must be classified as agricultural land, and the
 land must be valued as provided in 15-7-206.
          (2)      Contiguous or noncontiguous parcels of land totaling less than 20 acres under one ownership
 that are actively devoted to agricultural use are eligible for valuation, assessment, and taxation as agricultural
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 each year that the parcels meet any of the following qualifications:
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         (a)      except as provided in subsection (3), the parcels produce and the owner or the owner's agent,
 employee, or lessee markets not less than $1,500 in annual gross income from the raising of agricultural
 products as defined in 15-1-101 ;
         (b)      the parcels would have met the qualification set out in subsection (2)(a) were it not for
 independent, intervening causes of production failure beyond the control of the producer or marketing delay for
 economic advantage, in which case proof of qualification in a prior year will suffice; or
         (c)      in a prior year, the parcels totaled 20 acres or more and qualified as agricultural land under this
 section, but the number of acres was reduced to less than 20 acres for a public use described in 70-30-102 by
 the federal government, the state, a county, or a municipality, and since that reduction in acres, the parcels
 have not been further divided.
         (4)      For grazing land of less than 640 acres to be eligible for classification as agricultural land under
 subsections (1)(b) and (2) subsection (1), the land must be capable of sustaining a minimum number of animal
 unit months of carrying capacity. The minimum number of animal unit months of carrying capacity must equate
 to $1,500 in annual gross income as determined by the Montana state university-Bozeman college of
 agriculture. Grazing land of more than 640 acres must be capable of sustaining a minimum number of animal
 unit months of carrying capacity equal to $1,500 in annual gross income plus $6 an acre for each acre above
 640 acres.
         (4)      The grazing on land by a horse or other animals kept as a hobby and not as a part of a bona
 fide agricultural enterprise is not considered a bona fide agricultural operation.
         (5)      (a) Upon application by the property owner, the following parcels of land are eligible for
 provisional agricultural classification for 5 years to allow crops to reach salable maturity:
         (i)      a fruit orchard consisting of a minimum of 100 live fruit trees maintained using accepted fruit
 tree husbandry practices, including pest and disease management, fencing, and a watering system;
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         (ii)     a vineyard containing a minimum of 120 live vines maintained using accepted husbandry
 practices, including weed and grass maintenance, pest and disease management, pruning, and trellising and
 staking; and
         (iii)    property containing a minimum of 2,000 live Christmas trees cultivated according to accepted
 husbandry practices, including regular shearing.
         (b)      Following the 5th year of provisional agricultural classification, the property owner shall submit
 an application for agricultural classification. The application must include documentation proving that the
 property continues to meet the requirements of subsection (5)(a) and that the income requirements of
 subsection (2)(a) (1)(a)(i) have been met.
         (6)      The department may not classify land less than 160 acres as agricultural unless the owner has
 applied to have land classified as agricultural land. The owner shall periodically reapply for agricultural
 classification as provided in subsection (7). Land of 20 640 acres or more but less than 160 acres for which no
 application for agricultural classification has been made is idle land and is valued as provided in 15-6-133(1)(c)
 and is taxed as provided in 15-6-133(3). If land has been valued, assessed, and taxed as agricultural land in
 any year, it must continue to be valued, assessed, and taxed as agricultural until the department reclassifies the
 property. A reclassification does not mean revaluation pursuant to 15-7-111.
         (7)      The department shall administer a program for the periodic review of property classified as
 agricultural land under this section. The department may require reapplication to determine whether land is still
 actively devoted to agricultural use and shall notify a property owner who is required to reapply. A property
 owner who fails to reapply in the required timeframe may provide the application within 30 days following the
 date on the classification and appraisal notice.
         (8)      For the purposes of this part, growing timber is not an agricultural use "agricultural use"
 excludes activities related to agriculture that are not generally considered agricultural use, including activities
 conducted for commercial purposes as defined in subsection (10) or otherwise conducted for the production of
 income. Excluded activities include but are not limited to:
         (a)      hobby farms and personal gardens that involve growing crops or raising animals for personal
 enjoyment or consumption;
         (b)      agritourism, including corn mazes, pumpkin patches, farm tours, and petting zoos;
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          (c)      equestrian activities, such as keeping horses to ride for personal pleasure or competition.
 However, the primary use of land for breeding or training horses for sale may be considered agricultural use.
          (d)      commercial activities unrelated to agriculture, such as operating a store, restaurant, or other
 business on agricultural land if the business is not directly related to the production of agricultural products;
          (e)      recreational use primarily for leisure, enjoyment, and outdoor activities, including but not limited
 to:
          (i)      hiking, nature walks, birdwatching, picnicking, camping, photography, stargazing, fishing,
 hunting, boating, swimming, horseback riding, off-road vehicle use, snowmobiling, skiing, and snowboarding;
          (ii)     team sports on designated fields, courts, or facilities; and
          (iii)    commercial recreation opportunities, such as privately operated campgrounds, dude ranches,
 resorts, theme parks, or other facilities offering recreational amenities;
          (f)      growing timber; and
          (g)      (i) except as provided in subsection (8)(g)(ii), conservation activities involving the use of land
 primarily for protecting and preserving nature, biodiversity, and ecological functions of land. Conservation
 activities include but are not limited to:
          (A)      maintaining or restoring diverse ecosystems to support native plants, animals, and
 microorganisms;
          (B)      protecting habitats for endangered or threatened species;
          (C)      implementing measures to enhance biodiversi