Property Tax

The Utah Farmland Assessment Act

The Utah Farmland Assessment Act (FAA, also called the Greenbelt Act) allows qualifying agricultural property to be assessed and taxed based upon its productive capability instead of the prevailing market value. This unique method of assessment is vital to agriculture operations in close proximity to expanding urban areas, where taxing agricultural property at market value could make farming operations economically prohibitive.

How is productive value determined?

Productive values are established by the Utah State Tax Commission with the assistance of a five member Farmland Evaluation Advisory Committee and Utah State University. Productive values apply county-wide. These are based upon income and expense factors associated with agriculture activities. These factors are expressed in terms of value per acre for each land classification. For more information, see Where do the FAA values come from?

How is land classified?

Land is classified according to its capability of producing crops or forage. Capability is dependent upon soil type, topography, availability of irrigation water, growing season, and other factors. The county assessor classifies all agricultural land in the county based on SCS Soil Surveys and guidelines provided by the Tax Commission. The general classifications of agricultural land are: irrigated, dryland, grazing land, orchard, and meadow. If you disagree with your land classification, you can appeal to your county board of equalization for re-classification.

What does it take to qualify?

Private farmland can qualify for assessment and taxation under the Farmland Assessment Act if the land is at least five contiguous acres in area. Land less than five acres may qualify where devoted to agricultural use in conjunction with other eligible acreage under identical legal ownership. Land used in connection with the farmhouse, such as landscaping, etc. cannot be included in the acreage for FAA eligibility. Land must be actively devoted to agricultural use, and the operation managed in such a way that there is a reasonable expectation of profit. Land must have been devoted to agricultural use for at least two successive years immediately preceding the tax year in which application is made and meet the average annual (per acre) production requirements.

Production Requirement Defined

To qualify for the Farmland Assessment Act land must produce in excess of 50 percent of the average agricultural production per acre for the given type of land and the given county or area. To determine production levels the county assessor will use the following sources: the most recent publication of Utah Agricultural Statistics; crop and enterprise budgets published by Utah State University; or standards established by the Tax Commission. Examples: (1) A farmer grows alfalfa. The average annual production of alfalfa in his area is four tons per acre per year. To qualify he must produce more than two tons per acre per year. (2) A rancher has 10 acres of irrigated pasture which would reasonably carry 10 cows or 50 sheep through the grazing season. To qualify he will need to graze more than five head of cattle or 25 sheep.

Exceptions

The acreage requirement may be waived if the owner can show that 80 percent or more of the owner’s, purchaser’s, or lessee’s income is derived from agricultural products produced on the land. The production requirement may be waived if the owner shows that the property has been in agricultural use for the previous two years and that failure to meet the production requirement in a particular year was due to no fault or act of the owner, purchaser, or lessee. The production requirement may be waived if the land is involved in a bona-fide range improvement program, crop rotation program, or other similarly accepted agricultural practice which does not give reasonable opportunity to satisfy the production level requirement.

Application Deadlines

New applications for assessment and taxation under the Utah Farmland Assessment Act must be filed by May 1. Applications necessary because of ownership change, legal description change, assessor request or similar reasons must be filed within 120 days of a change.

How do I apply?

An application for assessment and taxation of agricultural land under the FAA can be obtained from your county assessor. This application should be completed and returned to the county assessor before May 1, of the year in which the preferential assessment is desired. Supporting documentation may be required such as federal tax returns, affidavits, lease agreements, sales receipts, production records, etc. which show the production requirement has been met for the preceding two years.

Who may apply?

Any owner of agricultural land may apply for assessment and taxation under the Farmland Assessment Act.

Can leased land qualify?

Leased land can qualify for assessment and taxation under the FAA if the acreage requirement is met and the production requirement is satisfied. A purchaser or lessee may qualify the land by submitting, along with the application from the owner, documents certifying that the production levels have been satisfied.

What happens when land is withdrawn from FAA?

When land becomes ineligible for farmland assessment (such as when it is developed or goes into non-use), the owner becomes subject to what is known as a rollback tax. The rollback tax is the difference between the taxes paid while on greenbelt and the taxes which would have been paid had the property been assessed at market value. In determining the amount of rollback tax due, a maximum of five years preceding the change in use will be used. The tax rate and market value for each of the years in question will be applied to determine the tax amount.

Where do the FAA values come from?

Tax Commission Decision

Each year the Utah State Tax Commission selects new values to be applied to qualifying parcels of land under the Farmland Assessment Act (FAA). The FAA values do not reflect real estate market values, but instead only the value the land has for agricultural production. As a result, FAA values are often significantly lower than for other competing uses such as residential or commercial. The values are published annually in Utah Administrative Code R884-24P-53.

Committee Recommendation

The Tax Commission receives recommendations for FAA values from a committee with broad expertise and representation. The State Farmland Evaluation Advisory Committee is created by statute (Utah Code Section 59-2-514) and consists of one member appointed by each of the following organizations:

• Tax Commission (acts as chairman)
• Utah State University
• Utah Department of Agriculture and Food
• Utah Assessors’ Association
• One member active in farming or ranching appointed by the other members of the committee.

Though not included in statute, a representative of the Utah Farm Bureau has traditionally been invited to participate as a non-voting member.

Utah State University Research

The committee relies on research currently provided by the Applied Economics Department of Utah State University. A new report is furnished annually to the committee, along with a thorough presentation of current and past agricultural economic conditions.

Methods and Measures

The university’s report concludes with value recommendations for each individual class of land within each individual county. The values are supported by analysis of current and past trends in individual crop and livestock markets. They reflect any changes in supply and demand, prices, costs, crop yields, and crop mix. Partial budgeting of income and expense is used to determine net returns for each crop or land use. Then the individual county’s climate, growing season, crop mix and land classes are factored into the final values.

It is important to note that a full year of data collected for Year 1 is analyzed and reported during Year 2, then adopted into law for assessment in Year 3. As a result, values reflect conditions that occurred 2 years prior to the actual assessment of FAA land. Therefore, assessed values could be up slightly in a year of drought or down slightly in a year of agricultural prosperity due to the two-year lag in implementaion. In order to lessen the impact of this lag and the sometimes drastic economic changes from year to year, a five-year rolling average is used for both prices and crop yields.