1998 Legislation
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HOUSE BILL NO. 771, As Amended – Property tax, forest lands, rate

HOUSE BILL NO. 771, As Amended

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Daily Data Tracking History

H0771aa.............................................by REVENUE AND TAXATION
PROPERTY TAX - FOREST LANDS - Amends existing law to provide that from
January 1, 1999, until January 1, 2001, the capitalization rate for forest
lands taxation shall be the interest rate for the farm credit bank district
serving Idaho, plus .85%, plus a component for the local tax rate.

02/25    House intro - 1st rdg - to printing
02/26    Rpt prt - to 2nd rdg
02/27    2nd rdg - to 3rd rdg
03/02    Rpt out - to Gen Ord
03/04    Rpt out amen - to engros
03/05    Rpt engros - 1st rdg - to 2nd rdg as amen
03/06    2nd rdg - to 3rd rdg as amen
03/09    3rd rdg as amen - PASSED - 64-0-6
      AYES -- Alltus, Barraclough, Barrett, Bieter, Bivens, Black(15),
      Black(23), Boe, Bruneel, Campbell, Chase, Clark, Cuddy, Deal, Denney,
      Ellsworth, Field(20), Gagner, Geddes, Gould, Hadley, Hansen, Henbest,
      Hornbeck, Jaquet, Jones(9), Jones(22), Judd, Kellogg, Kempton,
      Kendell, Kjellander, Kunz, Lake, Linford, Loertscher, Mader, Marley,
      McKague, Meyer, Miller, Mortensen, Newcomb, Pischner, Pomeroy,
      Reynolds, Richman, Ridinger, Robison, Sali, Schaefer, Stevenson,
      Stoicheff, Stone, Stubbs, Taylor, Tilman, Tippets, Trail, Watson,
      Wheeler, Wood, Zimmermann, Mr Speaker
      NAYS -- None
      Absent and excused -- Bell, Callister, Crane, Crow, Field(13),
    Floor Sponsor - Cuddy
    Title apvd - to Senate
03/10    Senate intro - 1st rdg as amen - to Loc Gov
03/12    Rpt out - rec d/p - to 2nd rdg as amen
03/13    2nd rdg - to 3rd rdg as amen
03/18    3rd rdg as amen - PASSED - 34-0-1
      AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
      Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes,
      Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
      Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
      Sweeney, Thorne, Twiggs, Wheeler, Whitworth
      Absent and excused--Hansen
    Floor Sponsor - Wheeler
    Title apvd - to House
03/19    To enrol - rpt enrol - Sp signed
    Pres signed - to Governor
03/20    Governor signed
         Session Law Chapter 198
         Effective: 01/01/99

Bill Text


 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998

                             IN THE HOUSE OF REPRESENTATIVES

                              HOUSE BILL NO. 771, As Amended

                            BY REVENUE AND TAXATION COMMITTEE

 1                                        AN ACT

 6    Be It Enacted by the Legislature of the State of Idaho:

 7        SECTION  1.  That  Section 63-1705, Idaho Code, be, and the same is hereby
 8    amended to read as follows:

 9        63-1705.  TAXATION OF LARGE-SIZE FOREST TRACTS. (1) In order to  encourage
10    private forest landowners to retain and improve their holdings of forest lands
11    and  to  promote  better forest management, large-sized forest tracts shall be
12    appraised, assessed and taxed as real property under the  provisions  of  this
13    section.
14        (2)  The  inventory  of timber and other forest products growing on large-
15    sized forest tracts shall not be included as a part of the total forest asset.
16    The forest value shall be determined by an income approach  which  capitalizes
17    the value of the average annual net wood production over a reasonable rotation
18    period  plus  other  agricultural-related  income,  if  any,  less  annualized
19    expenses including, but not limited to, the establishment, protection, mainte-
20    nance, improvement and management of the crop over the rotation period.
21        (3)  The  market  value for assessment purposes shall be determined by the
22    county assessor under rules prescribed by the state tax  commission.  In  pre-
23    scribing such rules, the tax commission shall:
24        (a)  Divide  the  state into appropriate forest valuation zones, with each
25        zone designated so as to recognize the uniqueness of marketing areas, tim-
26        ber types, growth rates, access, operability, and other pertinent  factors
27        of that zone; and
28        (b)  Establish  a  uniform system of forest land classification which con-
29        siders the productive capacity of the soil to  grow  forest  products  and
30        furnish other associated agricultural uses.
31        (4)  The  state  tax commission shall by March 1 of each year, furnish the
32    county assessor for each value zone the capitalization rate,  stumpage  value,
33    agricultural-related  income,  if  any,  and  expense  component to be used in
34    determining the forest value.  From January 1,  1999,  until  January  1,
35    2001,  the  capitalization rate shall be the interest rate for the farm credit
36    bank district serving Idaho, as set forth in the most current  revenue  ruling
37    made  pursuant  to  section 2032A(e)(7)(A) of the Internal Revenue Code and 26
38    CFR 20.2032A-4(e), plus eighty-five one hundredths percent (.85%), plus a com-
39    ponent for the local tax rate.   The capitalization rate  shall  be
40    determined in accordance with the procedures prescribed for the determining of
41    the capitalization rate for agricultural lands by section 63-602K, Idaho Code.
42     Stumpage values shall be based upon the preceding five (5) year rolling

 1    average value of timber harvested within the forest value zone from state tim-
 2    ber  sales  and/or  the best available data for the same five (5) year period.
 3    Average agricultural-related income and the average expense component for each
 4    forest value zone shall be determined for the same time period as  the  period
 5    used to determine average stumpage values.
 6        (5)  Forest lands upon which, at any time after January 1, 1982, the trees
 7    are  destroyed  by fire, disease, insect infestation or other natural disaster
 8    such that the lands affected will not meet minimum stocking requirements under
 9    rules adopted pursuant to chapter 13, title 38, Idaho Code, shall be  eligible
10    for  a  reduction in value for the first ten (10) property tax years following
11    the loss. The amount of reduction shall be determined by dividing the  average
12    age  of  the trees destroyed by the rotation age for the specific forest value
13    zone in which the property is located. In no instance shall the annual  reduc-
14    tion  exceed  eighty  percent  (80%) of the original forest value per year. In
15    order to obtain a reduction, the landowner shall on or before January  1  fol-
16    lowing  the  destruction,  make written application to the assessor indicating
17    the legal description of the lands  in  question  and  stating  all  pertinent
18    facts.  The assessor may investigate the facts and may request assistance from
19    the state tax commission in performing such investigations.  If  the  require-
20    ments  are  met,  such forest lands shall be assessed and taxed on the reduced
21    basis herein provided.
22        (6)  Buildings and other improvements, other than roads, located on forest
23    lands shall be appraised, assessed and taxed as provided  by  applicable  laws
24    and rules.

25        SECTION  2.  This act shall be in full force and effect on and after Janu-
26    ary  1, 1999.

Statement of Purpose / Fiscal Impact


                          STATEMENT OF PURPOSE
                                RS 08146
    This legislation removes an obsolete provision in the Idaho 
    Code that establishes the capitalization rate component in the 
    statutory formula used to establish the value of forest lands for 
    property tax purposes. The legislation establishes as the new 
    capitalization rate to be used in the existing formula the five 
    year rolling average rate set annually pursuant to Internal 
    Revenue Code section 2032A plus a small premium and component for 
    the local tax rate.
                               FISCAL NOTE
    This legislation has no impact on state revenues. Compared 
    with the procedure now in use, this legislation reduces the rate 
    of growth in the property tax paid by owners of timber tracts. It 
    will result in a small loss of tax revenue for some school 
    districts together with a minimal property tax shift to other 
    taxpayers in some areas beginning in 1999.
    CONTACT: Rep Donna Jones
             Rep Chuck Cuddy
             Phone 332-1000
    Bill No. H 771