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LEGISLATURE OF NEBRASKA
ONE HUNDRED EIGHTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 820
Introduced by Albrecht, 17; at the request of the Governor; Briese, 41;
Clements, 2; Linehan, 39; Sanders, 45.
Read first time January 25, 2023
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 19-2428, 46-294.03, 76-710.04, 77-103.01, 77-1327, 77-1359, 77-1371,
3 77-1507.01, 77-5007, and 77-5022, Reissue Revised Statutes of
4 Nebraska, and sections 77-201, 77-1363, 77-4212, 77-5023, 79-1016,
5 79-1036, and 86-1403, Revised Statutes Cumulative Supplement, 2022;
6 to adopt the Agricultural Valuation Fairness Act; to change and
7 eliminate provisions relating to the valuation of agricultural land
8 and horticultural land; to change the Tax Equalization and Review
9 Commission Act; to harmonize provisions; to provide operative dates;
10 to repeal the original sections; to outright repeal sections
11 77-1343, 77-1345, 77-1345.01, 77-1346, and 77-1347.01, Reissue
12 Revised Statutes of Nebraska, and sections 77-1344 and 77-1347,
13 Revised Statutes Cumulative Supplement, 2022; and to declare an
14 emergency.
15 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 9 of this act shall be known and may be
2 cited as the Agricultural Valuation Fairness Act.
3 Sec. 2. Pursuant to Article VIII, section 1, subdivisions (4) and
4 (5) of the Constitution of Nebraska, the Legislature finds and declares
5 that:
6 (1) The agricultural industry is a vital part of the economy of this
7 state;
8 (2) The nature of the agricultural industry and commodity prices
9 affect the value of agricultural land and horticultural land;
10 (3) All agricultural land and horticultural land in Nebraska has an
11 actual value as defined in section 77-112 reflecting purposes or uses
12 other than agricultural or horticultural purposes or uses;
13 (4) Market influences to use agricultural land and horticultural
14 land for purposes other than agricultural or horticultural purposes are
15 present throughout the state and cause the prices paid for agricultural
16 land and horticultural land to exceed the value such land has for
17 agricultural or horticultural purposes;
18 (5) The best and most uniform way to exclude any value that
19 agricultural land and horticultural land has for purposes other than
20 agricultural or horticultural purposes is to rely on the income-producing
21 characteristics of the land; and
22 (6) Agricultural land and horticultural land should be assessed at
23 its agricultural use value using an income approach that complies with
24 professionally accepted mass appraisal techniques.
25 Sec. 3. For purposes of the Agricultural Valuation Fairness Act:
26 (1) Agricultural land and horticultural land means a parcel of land,
27 excluding land associated with a building or enclosed structure located
28 on the parcel, which is primarily used for agricultural or horticultural
29 purposes, including wasteland lying in or adjacent to and in common
30 ownership or management with other agricultural land and horticultural
31 land;
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1 (2) Agricultural or horticultural purposes means used for the
2 commercial production of any plant or animal product in a raw or
3 unprocessed state that is derived from the science and art of
4 agriculture, aquaculture, or horticulture. Agricultural or horticultural
5 purposes includes the following uses of land:
6 (a) Land retained or protected for future agricultural or
7 horticultural purposes under a conservation easement approved as required
8 by section 76-2,112 except when the parcel or a portion thereof is being
9 used for purposes other than agricultural or horticultural purposes; and
10 (b) Land enrolled in a federal or state program in which payments
11 are received for removing such land from agricultural or horticultural
12 production;
13 (3) Agricultural use value means the value of land for agricultural
14 or horticultural purposes or uses without regard to the value of such
15 land for other purposes or uses as determined pursuant to the
16 Agricultural Valuation Fairness Act;
17 (4) Farm home site means land contiguous to a farm site which
18 includes an inhabitable residence and improvements used for residential
19 purposes and which is located outside of urban areas or outside a platted
20 and zoned subdivision; and
21 (5) Farm site means the portion of land contiguous to land actively
22 devoted to agriculture which includes improvements that are agricultural
23 or horticultural in nature, including any uninhabitable or unimproved
24 farm home site.
25 Sec. 4. Section 77-1359, Reissue Revised Statutes of Nebraska, is
26 amended to read:
27 77-1359 (1) Agricultural The Legislature finds and declares that
28 agricultural land and horticultural land shall be a separate and distinct
29 class of real property for purposes of assessment.
30 (2) The assessed value of agricultural land and horticultural land
31 shall not be uniform and proportionate with all other real property, but
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1 the assessed value shall be uniform and proportionate within the class of
2 agricultural land and horticultural land based on the income potential of
3 the land.
4 (3) Agricultural land and horticultural land shall be valued at its
5 agricultural use value as determined pursuant to the Agricultural
6 Valuation Fairness Act regardless of any value which such land might have
7 for purposes other than agricultural or horticultural purposes.
8 (4) Agricultural use value shall be determined each year as of
9 January 1. If land qualifying for agricultural use value becomes
10 disqualified on or before December 31 of that year, it shall continue to
11 receive agricultural use value until January 1 of the year following.
12 For purposes of this section and section 77-1363:
13 (1) Agricultural land and horticultural land means a parcel of land,
14 excluding land associated with a building or enclosed structure located
15 on the parcel, which is primarily used for agricultural or horticultural
16 purposes, including wasteland lying in or adjacent to and in common
17 ownership or management with other agricultural land and horticultural
18 land;
19 (2)(a) Agricultural or horticultural purposes means used for the
20 commercial production of any plant or animal product in a raw or
21 unprocessed state that is derived from the science and art of
22 agriculture, aquaculture, or horticulture;
23 (b) Agricultural or horticultural purposes includes the following
24 uses of land:
25 (i) Land retained or protected for future agricultural or
26 horticultural purposes under a conservation easement as provided in the
27 Conservation and Preservation Easements Act except when the parcel or a
28 portion thereof is being used for purposes other than agricultural or
29 horticultural purposes; and
30 (ii) Land enrolled in a federal or state program in which payments
31 are received for removing such land from agricultural or horticultural
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1 production; and
2 (c) Whether a parcel of land is primarily used for agricultural or
3 horticultural purposes shall be determined without regard to whether some
4 or all of the parcel is platted and subdivided into separate lots or
5 developed with improvements consisting of streets, sidewalks, curbs,
6 gutters, sewer lines, water lines, or utility lines;
7 (3) Farm home site means land contiguous to a farm site which
8 includes an inhabitable residence and improvements used for residential
9 purposes and which is located outside of urban areas or outside a platted
10 and zoned subdivision; and
11 (4) Farm site means the portion of land contiguous to land actively
12 devoted to agriculture which includes improvements that are agricultural
13 or horticultural in nature, including any uninhabitable or unimproved
14 farm home site.
15 Sec. 5. Section 77-1363, Revised Statutes Cumulative Supplement,
16 2022, is amended to read:
17 77-1363 (1) The county assessor shall use an income-approach
18 calculation to determine the agricultural use value for each assessment
19 year. The income-approach calculation shall be consistent with the
20 Agricultural Valuation Fairness Act and any rules and regulations adopted
21 and promulgated by the Tax Commissioner pursuant to the act and shall
22 comply with professionally accepted mass appraisal techniques.
23 (2) For purposes of assessing agricultural land and horticultural
24 land using the income-approach calculation, agricultural Agricultural
25 land and horticultural land shall be divided into classes and subclasses
26 of real property under section 77-103.01, including, but not limited to,
27 irrigated cropland, dryland cropland, grassland used for grazing,
28 grassland used for hay, wasteland, nurseries, feedlots, and orchards, so
29 that the categories reflect uses appropriate for the valuation of such
30 land according to law. Classes shall be inventoried by subclasses of real
31 property based on soil classification standards developed by the Natural
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1 Resources Conservation Service of the United States Department of
2 Agriculture as converted into land capability groups by the Property Tax
3 Administrator. Land capability groups shall be Natural Resources
4 Conservation Service specific to the applied use and not all based on a
5 dryland farming criterion.
6 (3) County assessors shall use the values for the class of
7 agricultural land and horticultural land and the capitalization rates
8 determined by the Agricultural Land Valuation Committee in determining
9 the agricultural use value of agricultural land and horticultural land.
10 utilize soil surveys from the Natural Resources Conservation Service of
11 the United States Department of Agriculture as directed by the Property
12 Tax Administrator. Nothing in this section shall be construed to limit
13 the classes and subclasses of real property that may be used by county
14 assessors or the Tax Equalization and Review Commission to achieve more
15 uniform and proportionate valuations.
16 Sec. 6. (1) Beginning October 1, 2023, the Agricultural Land
17 Valuation Committee is created. The committee's purpose shall be to
18 develop income and expense estimates for all agricultural land and
19 horticultural land in Nebraska and capitalization rates necessary to
20 produce uniform and proportionate assessed valuations. The committee
21 shall consist of the following five persons:
22 (a) A representative of county assessors appointed by the Tax
23 Commissioner. Such representative shall be skilled in the valuation of
24 agricultural land and horticultural land and shall hold a certificate
25 issued under section 77-422;
26 (b) A representative of the agricultural and horticultural industry
27 appointed by the Tax Commissioner. The appointment shall be based on
28 recommendations made by not less than three industry groups designated by
29 the Tax Commissioner;
30 (c) The Property Tax Administrator or a designee of his or her
31 staff. Such person shall serve as the chairperson of the committee;
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1 (d) An appraiser from the private sector appointed by the Tax
2 Commissioner. Such appraiser must hold either a valid credential as a
3 certified general real property appraiser under the Real Property
4 Appraiser Act or an MAI designation from the Appraisal Institute; and
5 (e) A representative from the faculty of one of the research
6 universities in the state specializing in agricultural economics.
7 (2) The committee shall meet annually in November to establish
8 assessed values for agricultural land and horticultural land based on
9 information available to the committee from the United States Department
10 of Agriculture, the University of Nebraska Institute of Agriculture and
11 Natural Resources, the Nebraska Investment Finance Authority, the
12 Department of Revenue, and any other sources determined necessary by the
13 committee. The Department of Revenue shall electronically publish notice
14 of such meeting no less than thirty days in advance.
15 (3) Agricultural land and horticultural land shall be valued based
16 on the agricultural use value, reflected in a capitalized income approach
17 developed pursuant to the Agricultural Valuation Fairness Act and
18 professionally accepted mass appraisal techniques. The assessed values
19 for agricultural land and horticultural land shall be determined on the
20 basis of the land's value in use for agricultural or horticultural
21 purposes, by capitalizing the net income by a rate that reflects the
22 agricultural use value in the ordinary course of trade. The difference
23 between the market value of agricultural land and horticultural land and
24 its agricultural use value shall be expressly exempt from taxation.
25 (4) Gross income shall be determined by multiplying the average
26 yield for each county by the prior year average commodity price for each
27 major crop type harvested in each county. For irrigated cropland, dryland
28 cropland, and grassland used for hay, the average yield information shall
29 be determined based on the eight prior years published by the United
30 States Department of Agriculture for those commodities appropriate for
31 each land capability group, with the highest and lowest yields for that
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1 period excluded. The average commodity price shall be based on an average
2 of the most recent eight years, excluding the highest and lowest prices
3 of that period.
4 (5) For grassland used for grazing, the average yield shall be based
5 on the carrying capacity in terms of animal unit months and the current
6 rental value per animal unit month for each land capability group.
7 Carrying capacity, by land capability group, shall be based on
8 productivity estimates published by the Natural Resources Conservation
9 Service of the United States Department of Agriculture or other state or
10 federal agencies as determined by the committee. Rental values per animal
11 unit month shall be based on an average of the most recent eight years,
12 excluding the highest and lowest values of that period.
13 (6) The gross income shall be established as a dollar per acre
14 value, by weighting the major crop types harvested in each county by the
15 number of acres harvested in the previous year. Such crops may include
16 continuous cropland wheat, summer fallow wheat, corn for grain, dry