(1) The assessment of city and town lots and the assessment of rural and urban improvements shall be at market value as determined by an appraisal using one or more of the three accepted approaches to determine value:

(a) the cost approach, where the department's Appraisal Guide and national cost service manuals, as indicated in ARM 42.18.122, are used;

(b) the sales comparison approach; and

(c) the income approach.

(2) Said appraisals shall be made in the same manner as provided in 15-7-101 through 15-7-103, MCA, and 15-8-112, MCA.

(1) A property owner of record, their agent, or a federally recognized tribe who seeks a property tax exemption authorized under 15-6-201, 15-6-203, 15-6-209, 15-6-221, and 15-6-227, MCA, must submit a department property exemption application form (application) and provide the department with the documents and information specific to the property type and the exemption sought, as required by this rule and ARM 42.20.102A. 

(2) All applications submitted to the department for property owned by an applicant as of January 1 must be postmarked no later than March 1 of the year in which the exemption is sought. 

(3) All applications postmarked after March 1 will be considered for the following tax year only, except as provided in (a) and (b).

(a) If an applicant acquires ownership of the property after January 1 but before March 1, the application must be submitted and postmarked no later than 30 days after the acquisition date. For example, an applicant who acquires ownership of property on February 15, must submit an application postmarked no later than March 17.

(b) If an applicant is applying for an exemption in response to the department's written notification that the property will be placed on the tax roll for the current tax year, the application must be postmarked no later than 30 days after the date of the department's notice. For example, an applicant who is notified by the department on February 15 of the property's placement on the tax roll, must submit an application postmarked no later than March 17.

(4) The department may extend the March 1 deadline to June 1 if:

(a)  the applicant was unable to apply before March 1 due to an infirmity that existed between January 1 and June 1; or 

(b) there is new construction on the property, which was exempt in a prior year, in which case the applicant must:

(i) submit a written statement, plus any supporting documentation, explaining any circumstances that prevented timely filing of the application; and

(ii) provide a completed application, including all applicable supporting documentation in accordance with this rule.

(5) For each application submitted, the applicant must:

(a) identify each parcel by geocode, assessor code, legal description, or physical address;

(b) state the specific and actual use of the real or personal property;

(c) provide a copy of a recorded deed, or a contract for deed, or other legally sufficient document identifying ownership if the application is for a real property exemption;

(d) provide a photograph of the property;

(e) provide a copy of the title of motor vehicle or mobile home, or, if title is not applicable, a letter identifying ownership, if the application is for a personal property exemption; and

(f) include the additional documents required for the specific property type described in ARM 42.20.102A.

(6) Unless the applicant is a federally recognized tribe, the applicant must also provide:

(a) in the case of an entity applicant, a copy of the applicant's organization documents, such as articles of incorporation, articles of organization, or partnership agreement;

(b) verification of tax-exempt status by the Internal Revenue Service or a written statement explaining why the exemption verification is not available.

(7) A federally recognized tribe must include a tribal resolution that:

(a) identifies the fee land, by legal description;

(b) states the type of exemption the tribe is requesting; and

(c) states the specific and exclusive use of the real or personal property.

(8) Upon receipt of the application and the documents and information required by this rule and ARM 42.20.102A, the department will perform a field evaluation. The department approves or denies the application and notifies the applicant and the county treasurer of its decision, in writing, as provided in 15-6-235, MCA.

(9) Approved exemptions apply to ad valorem (general) taxes only; organizations are responsible for any special fees or assessments charged by local taxing jurisdictions.

(10) If property is owned by a governmental entity (such as city, county, or state), the federal government (unless Congress has passed legislation allowing the state to tax property owned by a federal entity), tribal government, nonprofit irrigation districts organized under Montana law, municipal corporations, public libraries, or rural fire districts and other entities providing fire protection under Title 7, chapter 33, MCA, the following exemption criteria apply:

(a) property must be assessed and taxed from the date of change from a nontaxable status to a taxable status, as required under 15-16-203, MCA;

(b) if the property is tax-exempt as of January 1 of the current tax year and is sold to a nonqualifying purchaser after January 1 of the current tax year, it becomes taxable upon the date of transfer of the property to the nonqualifying purchaser. The tax is prorated according to 15-16-203, MCA;

(c) if a property is tax-exempt, as in (b), and is sold as tax-deed property to a nonqualifying purchaser after January 1 of the current tax year, it becomes taxable on January 1 following the execution of such contract or deed as provided in 7-8-2307, MCA; and

(d) if a tribal government is requesting an exemption of an essential government service, as provided in 15-6-201, MCA, that service must be identified in the application.

(1) In addition to the property tax exemption application requirements of ARM 42.20.102, a property owner of record, the property owner's agent, or a federally recognized tribe must submit with its application the additional documentation provided in (2) through (17), as applicable, based on the specific use of the property.  

(2) For property used for religious purposes:

(a) proof that the buildings and furnishings are owned by a church and are used for actual religious worship or for the residences of the clergy;

(b) proof that the church's land parcel does not exceed 15 acres or one acre for a clergy residence if the land and improvements are used for educational or youth recreational activities, and are available for public use; and

(c) proof the resident of the parsonage is a member of the clergy, such as a certificate of ordination or license.

(3) For property owned by a federally recognized tribe and used for religious purposes, a copy of the tribal resolution that designates the land and the improvements upon the land, not to exceed 15 acres, as sacred land to be used exclusively for religious purposes.

(4) For property owned and used exclusively for agricultural and horticultural societies, documentation verifying the property is not operated for gain or profit.

(5) For property used exclusively for educational purposes, including dormitories and food service buildings for the use of students in attendance and other structures necessary for the operation and maintenance of an educational institution:

(a) proof the property does not exceed 80 acres;

(b) verification that the organization is not operated for gain or profit;

(c) a copy of the applicant's attendance policy and curriculum with systematic instruction; and

(d) a copy of the lease agreement if the property is not owned by the educational organization.

(6) For property of any acreage used for educational purposes and owned by a tribal corporation created for the sole purpose of establishing schools, colleges, and universities, the documentation stated in (5).

(7) For property used exclusively for nonprofit healthcare facilities:

(a) a copy of the healthcare facility's license from the Department of Public Health and Human Services; and

(b) a copy of the lease agreement if the property is not owned by the non-profit organization.

(8) For property used solely in connection with cemeteries:

(a) documentation of a permanent care and improvement fund as provided in Title 35, chapter 20, part 3, MCA; and

(b) verification that the property is not maintained or operated for gain or profit.

(9) For property owned by a purely public charity with acreage not exceeding 160 acres, or where the applicant is requesting an 8-year exemption for up to 15 acres:

(a) a copy of the lease agreement if leasing the property from a governmental organization; and

(b) verification the property is directly used for purely public charitable purposes.

(10) For property owned by public museums, art galleries, zoos, and observatories:

(a) verification that the property is not operated for gain or profit;

(b) verification that the real and personal property is reasonably necessary for use in connection with the public display or observatory use; and

(c) if the property is owned by individuals, documentation verifying the property is actually used by the governmental entity or nonprofit organization as a part of its public display, held for future display, or used to house or store a public display.

(11) For property owned by an organization that operates facilities exclusively for the care of persons with developmental disabilities, persons with mental illness, or persons with physical or mental impairments that constitute or result in substantial impediments to employment, verification that the organization is not operated for gain or profit.

(12) For property owned by an organization that operates facilities for the care of retired, aged, or chronically ill:

(a) verification that the organization is not operated for gain or profit; and

(b) verification that the residents meet the age and gross household income requirements provided in 15-30-2338, MCA.

(13) For property used for parks and recreational facilities:

(a) verification that the park or recreational facility is open to the public;

(b) verification that the property consists only of land - with no buildings - and is leased to a municipality or taxing unit for less than $100 a year;

(c) verification that the property, not to exceed 10 acres, is used exclusively as a public park, for recreation, or for landscape beautification purposes; and

(d) if the applicant is a federally recognized tribe, a copy of a tribal resolution that designates the property as park land, not to exceed 640 acres, or to be used exclusively for recreational facilities.

(14) For property used by a veterans' society or organization, as provided in 15-6-203, MCA, and the applicant is other than the society or organization, the applicant must provide a copy of the lease verifying the savings from the property tax exemption is realized by the society or organization.

(15) For property owned by a nonprofit community service organization, the applicant must provide verification that the organization has been an active community service continuously from January 1, 1981, in accordance with 15-6-209(2), MCA.

(16) For property used for low-income housing, as provided in 15-6-221, MCA:

(a) verification that the property is dedicated to providing affordable housing to low-income tenants; and

(b) a copy of the hearing minutes or newspaper notification, that a public hearing was held to consider whether the property meets a community housing need.

(17) For property used for low-income housing and is owned and operated by an entity with the ownership structure described in 15-6-221(1)(a)(i), MCA:

(a) a copy of the IRS tax exemption status letter, if a limited partnership, stating the general partner is a nonprofit corporation with an IRS 501(c)(3) exemption;

(b) a copy of the Montana Board of Housing letter allocating low-income tax credits;

(c) a copy of the deed or other legally binding document that restricts the property's usage;

(d) verification that at least 20 percent of the residential units are rent-restricted and rented to tenants whose household incomes do not exceed 50 percent of the median family income for the county, or at least 40 percent of the residential units are rent-restricted to persons whose household incomes do not exceed 60 percent of the median income for the county;

(e) a letter stating that the property meets a public purpose in providing housing to an underserved population; and

(f) a copy of the owner's partnership or operating agreement, or other documentation, that provides that at the end of the compliance period, as that term is defined in 26 U.S.C. 42, the ownership of the property may be transferred to the nonprofit corporation or housing authority general partner.

(18) For property used for low-income housing and owned and operated by a nonprofit corporation, as described in 15-6-221(1)(b), MCA, the applicant must provide verification that the property was constructed using a home investment partnership program grant.

(2) Applications from the local governing body must be received by the department for review before April 1 of the tax year for which the benefits are sought. The department will attempt to perform a field evaluation within 30 days of receipt of the application and provide that information to advise the local governing body whether the remodeling, reconstruction, or expansion of the existing building or structure increases the taxable value of that structure or building by at least 2.5%.

(3) The local governing body shall review the application and information from the department to determine whether to approve or to deny the application. A copy of the processed application form reflecting the governing body's decision shall be sent to the local department office in the county in which the property is located.

(4) Sufficient quantities of application forms (AB-56) will be provided to all local governing bodies by the department. Additional application forms will be made available upon request. The application form shall require the submission of the following information by the applicant:

(a) property owner's name;

(b) description of property;

(c) location of property;

(d) legal description of property;

(e) mailing address of owner of property, including:

(i) city;

(ii) state; and

(iii) zip code;

(f) taxable value increase due to remodeling;

(g) starting date of the remodeling, reconstruction, or expansion; and

(h) owner's signature.

(5) For purposes of determining the eligibility for tax benefits, the construction period for a specific project may not exceed 12 months with the following exception. If it is determined to the satisfaction of all affected local governing bodies that the construction period for a specific project will exceed 12 months, an extension may be granted, at the time of application, by approval of all affected local governing bodies. The length of the extension granted must be indicated on the application form.

(6) The computation of tax benefits will be dependent upon the approval of the application by all affected governing bodies.

(7) For projects that are entirely, physically located outside the boundaries of incorporated cities or towns, the governing body of the affected county has sole authority to approve the tax benefits for the project. If approved, the tax benefits will apply only to the number of mills levied and assessed for high school district and elementary school district purposes and to the number of mills levied and assessed by the county governing body. The tax benefits do not apply to statewide levies.

(8) If the project is entirely, physically located within an incorporated city or town, both the governing body of the affected county and the governing body of the incorporated city or town must approve the application by resolution before all available tax benefits may be extended to the project. If the city approves the application and the county rejects the application, the tax benefits will apply only to the number of mills levied and assessed for high school district and elementary school district purposes within the incorporated city or town and to the number of mills levied and assessed by the incorporated city or town. The number of mills levied and assessed by the county governing body will not be affected nor will any tax benefits be extended by the county to the project.

(9) Tax benefits will never include any relief from statewide levies.

(10) Except as provided in (1) , only additional value created after an application has been filed may be considered for tax benefits according to this rule.

This rule has been repealed.

(1) It is the intention of the department to employ an appraisal methodology for condominiums and townhouse/townhomes (as defined in 70-23-102, MCA) which is consistent with 15-8-111 and 15-8-511, MCA. The terms "townhouse" and "townhome" are interchangeable and, therefore, reference to one term incorporates the other term. The methodology must provide for a separate assessment of each condominium/townhome unit, and allocation of the percentage interest of common elements must meet the market value standard. The methodology must include the consideration, use, and where applicable, the reconciliation of the cost approach, the sales comparison approach, and the income approach to valuation using accepted appraisal treatises and manuals. This rule relates solely to the administration of revenue laws, and nothing in this rule should be construed to affect the legal requirements of any other purpose.

(2) The department will employ the following appraisal and assessment methodology for condominiums/townhomes, except for condominiums/townhomes situated on qualified tax-exempt community land trust property, as set forth in (6), and time-share condominiums, as set forth in (7).

(a) The preferred approach for the appraisal of residential condominium/townhome units is the sales comparison approach, where comparable sales are available. The common elements of residential condominiums/townhomes are inherent in the individual unit values when the sales comparison approach is employed. When comparable sales are not available, the cost approach must be used. In that instance, the condominium/townhome declaration's percentage of ownership interest required by 15-8-511, 70-23-301, and 70-23-403, MCA, should be used to allocate the value. Allocation of value for each condominium/townhome unit will be determined by multiplying the percentage, expressed as a decimal, by the appraised value of the entire condominium/townhome project or by adding the individual unit cost to the individual unit's allocation of those elements deemed common. The common elements are deemed to be inherent in the individual unit's declaration percentage when the cost approach to value is determined and allocated as specified in this subsection.

(b) The preferred approach for the appraisal of commercial condominium units is the income approach where reliable condominium income and expense data are available. The common elements of income-producing condominiums are inherent in the individual unit values when the income approach is employed. When reliable income and expense data are not available, the cost approach must be used. In that instance, the condominium declaration's percentage of ownership interest required by 15-8-511, 70-23-301, and 70-23-403, MCA, should be used to allocate the value. Allocation of value for each condominium/townhome unit will be determined by multiplying the percentage, expressed as a decimal, by the appraised value of the entire condominium/townhome project. The common elements are deemed to be inherent in the individual unit's declaration percentage when the cost approach to value is determined and allocated as specified in this subsection.

(3) Unit owners seeking conversion from a condominium property type to a townhome property type will require changing the legal ownership of the land for the entire complex, on which the unit is located. Therefore, all unit owners of the complex shall acknowledge, consent, and attest to the validity of the property type change.

(4) The unit owner or unit owner's designated entity must file an application for a property type change on a form available from the local department office before January 1 of the year for which the property change is sought. Applications received after January 1 will be considered for the following tax year. For tax year 2012 only, the deadline is October 1.

(5) The department requires the following information before changing a property type from a condominium to a townhome:

(a) a description of the size in square footage or acreage of land associated with each townhome unit;

(b) the amount of remaining square footage or acreage of land associated with each townhome unit;

(c) if a designated entity, documentation authorizing the designated entity to represent the unit owners; and

(d) signatures of all unit owners of the complex in which the property type change is located.

(6) The department will appraise and assess condominiums/townhomes situated on qualified tax-exempt community land trust property using the cost approach method. The cost approach method is appropriate in this situation because it utilizes national cost service manuals and does not factor in the land.

(7) The department will employ the following appraisal and assessment methodology for time-share condominiums.

(a) The entire condominium project will be appraised using accepted appraisal techniques or methods and, as appropriate, the cost replacement manuals identified in rule. The use of accepted techniques or methods means the consideration, use, and where applicable, the reconciliation of the cost approach, the sales comparison approach, and the income approach to valuation.

(b) Any units in a condominium project that are not owned and operated as time-share condominium units will be valued pursuant to the methodology set forth in (2)(a) or (b).

(c) The total appraised value for all time-share condominium units comprising a condominium project will be calculated and assessed to the owner of record (time-share association). Thereafter, it will be incumbent upon the association to allocate its total tax liability among the various parties having interest in the time-share condominiums.

The following definitions apply to this subchapter:

(1) "Abstraction" also referred to as extraction, means a method of estimating land value in which the depreciated cost of the improvements on the improved property is estimated and deducted from the total sale price to arrive at an estimated sale price for land.

(2) "Allocation" means a method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of site value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.

(3) "Attached" as it applies to a manufactured or mobile home means being bolted or cable anchored to the permanent foundation in accordance with Housing and Urban Development standards.

(4) "Breaks in the chain of title" means that the grantor (seller) on the realty transfer certificate (RTC) is not the same as the owner of record reflected on the most recent property tax record.

(5) "Comparable properties" means properties that have similar utility, use, function, and are of a similar type as the subject property. Comparable properties must be influenced by the same set of economic trends, and physical, economic, governmental, and social factors as the subject property. Comparable properties must have the potential of a similar use as the subject property. For any property that does not fit into this definition, the department will rely on the definition of comparable property contained in 15-1-101, MCA.

(a) Within the definition of comparable property, the following types of property are considered comparable:

(i) single-family residences with ancillary improvements are comparable to other single-family residences with ancillary improvements;

(ii) multifamily residences are comparable to other multifamily residences;

(iii) mobile homes are comparable to other mobile homes;

(iv) residential city and town lots are comparable to other residential city and town lots;

(v) commercial city and town lots are comparable to other commercial city and town lots;

(vi) residential tract land is comparable to other residential tract land;

(vii) commercial tract land is comparable to other commercial tract land;

(viii) improvements and outbuildings necessary to the operation of a qualified agricultural property are comparable to other improvements and outbuildings on qualified agricultural properties;

(ix) one-acre sites beneath improvements on land classified as nonqualified agricultural or forestland are comparable to residential tract land;

(x) condominiums are comparable to other condominiums;

(xi) townhomes are comparable to other townhomes;

(xii) industrial improvements are comparable to other industrial improvements;

(xiii) industrial land is comparable to other industrial land; and

(xiv) manufactured homes are comparable to other manufactured homes.

(6) "Complex structure" means improvements that have an intricate or complicated association or assemblage of related parts or units. Some examples include, but are not limited to:

(a) an office building where only a portion of the building is exempt;

(b) a multi-floor hospital; or

(c) an apartment complex used for low-income housing.

(7) "Concrete stringer" as it applies to a manufactured or mobile home means concrete pad poured in place and embedded on firm soil of adequate bearing capacity to support upright posts.

(8) "Construction period" means a period of time that commences with the issuance of a building permit and which concludes when the county appraiser determines that the structure is substantially completed. If more than one building permit is issued, the date on the earliest building permit issued will constitute the commencement of the construction period. In those cases where building permits are not issued, the commencement of the construction period is that time determined by the department to be the start of construction. That determination will coincide with the date the contract is let, the date the application is approved by the governing body, or when site work begins, whichever occurs first.

(9) "Cost approach" means the value of a taxpayer's building(s) is/are developed using construction cost information obtained from across the state.

(10) "Embedded" as it applies to a manufactured or mobile home means to fix securely in and below the surface of the surrounding ground.

(11) "Footing" as it applies to a manufactured or mobile home means the projecting base of a foundation, which transmits the building load to the ground.

(12) "Income approach" means the value of a taxpayer's building(s) is/are developed by using income and expense information obtained from commercial businesses across the state.

(13) "Mass Appraisal" is the process of valuing a group of properties as of a given date, using standardized methods, employing common data, and allowing for statistical testing.

(14) "Mass Appraisal Model" is a mathematical expression of how supply and demand factor interact in a real property market.

(15) "Multiple Regression Analysis (MRA)" means the value of a property is determined using statistical analysis. The statistical analysis helps to define the relationship between the various characteristics of sold properties and those properties' sale prices.

(16) "Perimeter foundation" as it applies to a manufactured or mobile home means the supporting structure, running the total length of all exterior walls of the manufactured home, which transmits the load of the home resting upon it to the earth.

(17) "Permanent foundation" as it applies to a manufactured or mobile home (for taxation purposes) means concrete, concrete block, or wood pier, any of which rests on embedded concrete or concrete block footings. Foundation for this purpose does not include mud sill, pier, and post, wood blocks, concrete block, or other types of temporary support, any of which rests on the ground.

(18) "Property type" is the general description of each parcel's present use.

(19) "Residence" includes all conventionally constructed homes, as well as all mobile homes and manufactured housing.

(20) "Running gear" as it applies to a manufactured or mobile home means axles, tires and wheels, and hitch.

(21) "Sales comparison approach" means that a property's value is developed by comparing sale prices of similar properties (comps) to the taxpayer's property (subject property).

(22) "Single-family residence with ancillary improvements" means:

(a) a structure originally constructed or converted for use and occupancy by a single-family unit and whose primary use is currently one of occupancy by a single-family unit; and

(b) all supportive structures integral to the use of a single-family residence such as attached garages, sheds, and site improvements.

(23) "Subject property" is the property being appraised.

(1) When determining the market value of commercial properties, department appraisers will consider, if the necessary information is available, an income approach valuation.

(2) When the department uses an appraisal method that values land and improvements as a single unit, the department shall establish a combined appraised value of land and improvements. The single unit value method includes, but is not limited to, the comparable sales method for residential condominiums and the income method for commercial property. The assessment notice must contain a single combined appraised value of the land and improvements.

(3) If the department is not able to develop an income model with a valid capitalization rate based on the stratified direct market analysis, the band-of-investment method, or another accepted method, or is not able to collect sound income and expense data, the final value chosen for ad valorem tax purposes will be based on the cost approach or, if appropriate, the market approach to value. The final valuation is that which most accurately estimates market value.

(4) The International Association of Assessing Officers' (IAAO) standards for choice of method guide the department's appraisal decisions. The generally preferred method is the income method to valuation. The department will document in the official record the reason(s) for choosing an alternative method.

(a) "V" is the value of the property to be determined by the department;

(b) "I" is the typical property net income which shall reflect market rents, not investment value income or other rents, for the type of properties being appraised; and

(c) "R" is the capitalization rate determined by the department as provided in ARM 42.20.109.

(2) Market rent is the rent that is justified for the property based on an analysis of comparable rental properties, and upon past, present, and projected future rent of the subject property. It is not necessarily contract rent, which is the rent actually paid by a tenant.

(3) The department will periodically request gross rental income and expense information from commercial property owners. Standard forms, developed by the department, will be used to collect the information statewide. Additional methods of obtaining income and expenses information may consist of personal or telephone contacts with owners, tenants, renters or lessees, knowledgeable lending institution officials, real estate brokers, fee appraisers, or any other sources the appraiser deems appropriate including summarized data from recognized firms who collect income and expense information, and appeal or court actions.

(4) The department will review and analyze all annual rental income and expense data collected. As necessary, that data will be adjusted to reflect average conditions and management before entering the data into the computer assisted mass appraisal system. The process must result in defensible estimates of potential gross rents, effective gross incomes, normal operating expenses, and normal net operating incomes.

(5) The department will follow established procedures for validating commercial sales information for the development of income models. Only valid sales will be used for the income and expense module of the computer assisted mass appraisal system.

(6) The department will use generally accepted procedures as outlined by the International Association of Assessing Officers in their text titled "Property Assessment and Appraisal Administration" when determining normal net operating income. The following is an example of the format that will be used:

(a) potential gross rent

(i) - vacancy and collection allowance

(ii) + miscellaneous income

(iii) = effective gross income

(iv) - normal operating expenses

(v) = normal net operating income.

(b) Normal and allowable expenses include:

(i) the cost of property insurance;

(ii) heat, water, and other utilities;

(iii) normal repairs and maintenance;

(iv) reserves for replacement of items whose economic life will expire before that of the structure itself;

(v) management; and

(vi) other miscellaneous items necessary to operate and maintain the property.

(c) Items that are not allowable expenses are:

(i) depreciation charges;

(ii) debt service;

(iii) property taxes; and

(iv) business expenses other than those associated with the property being appraised.

(d) An effective tax rate will be included as part of the overall capitalization rate.

(7) Depending on data availability, the department may develop income models for various income use groups.

(a) Use groups may be, but are not restricted to:

(i) apartments;

(ii) hotels/motels;

(iii) general retail stores;

(iv) offices;

(v) regional malls;

(vi) multiuse offices;

(vii) warehouses/light manufacturing;

(viii) mini warehouses;

(ix) department stores;

(x) medical buildings;

(xi) auto service buildings;

(xii) manufacturing buildings;

(xiii) parking garages;

(xiv) multiuse sales;

(xv) banks;

(xvi) restaurants;

(xvii) storage buildings;

(xviii) apartment spaces in commercial buildings;

(xix) discount stores/super markets; and

(xx) franchise restaurants.

(b) Location groupings for each use type will be developed by combining the income and expense data in the following sequential order until a statistically significant amount of income and expense data and capitalization rate data is obtained:

(i) commercial intracounty neighborhoods as determined by the department to be economically and demographically homogeneous. In making the commercial neighborhood determinations, the department will consult with real estate and fee appraisal professionals; and

(ii) commercial intercounty neighborhoods the department determines to be economically and demographically homogeneous.

(c) The department may analyze the following information in addition to other appropriate information to ensure economic and demographic homogeneity:

(i) population;

(ii) employment;

(iii) income;

(iv) service availability and infrastructure;

(v) multiple listing service designations;

(vi) zoning and planning board designations;

(vii) proximity to employment/business centers; and

(viii) proximity to federal parks and reservations.

(d) The department may further group data based on the age of improvements if that is determined to be statistically significant.

(2) If there are insufficient sales to implement the provisions of (1) , the department will consider using a yield capitalization rate. The rate shall include a return of investment (recapture) , a return on investment (discount) , and an effective tax rate. The discount is developed using a band-of-investment method for types of commercial property. The band-of-investment method considers the interest rate that financial institutions lend on mortgages and the expected rate of return an average investor expects to receive on the equity. This method considers the actual mortgage rates and terms prevailing for individual types of property.

(3) A straight-line recapture rate and effective tax rate will be added to the discount rate to determine the yield capitalization rate.

(a) will be made on a form available from the county commissioners of the affected county or, if the construction will occur within an incorporated city or town, on a form available from the city commission or the local governing body; and

(b) must be made prior to completion of a building permit or prior to commencement of construction.

(2) Failure to make application prior to completion of a building permit or prior to commencement of construction will result in the waiver of all construction period tax exemptions.

(3) Additionally, all subsequent tax reductions, if approved, will be calculated as of the date the building permit was completed, or as of the date construction began, whichever is earlier.

(4) Applications from the local governing body must be received by the department for review before April 1 of the tax year for which the benefits are sought. The department will attempt to perform a field evaluation within 30 days of receipt of the application and provide that information to advise the local governing body whether the remodeling, reconstruction, or expansion of the existing building or structure increases the taxable value of that structure or building by at least 5%.

(5) The local governing body shall review the application and information from the department to determine whether to approve or to deny the application. A copy of the processed application form reflecting the governing body's decision shall be mailed to the local department office in the county in which the property is located.

(6) The department shall provide application forms (AB-56A) to all local governing bodies. The applicant shall provide the following information on the application form:

(a) property owner's name;

(b) description of property;

(c) location of property;

(d) legal description of property;

(e) mailing address for the owner of property including:

(i) city;

(ii) state; and

(iii) zip code;

(f) taxable value increase due to remodeling;

(g) starting date for the remodeling, reconstruction, or expansion; and

(h) owner's signature.

(7) The computation of tax benefits will be dependent upon the approval of the application by all affected governing bodies.

(8) For projects which are entirely, physically located outside the boundaries of incorporated cities or towns, the governing body of the affected county has sole authority to approve the tax benefits for the project.

(9) If the project is entirely, physically located within an incorporated city or town, both the governing body of the affected county and the governing body of the incorporated city or town must approve the application by resolution before all available tax benefits may be extended to the project. If the city approves the application and the county rejects the application, the tax benefits will apply only to the number of mills levied and assessed by the incorporated city or town. The number of mills levied and assessed by the county governing body will not be affected, nor will any tax benefits be extended by the county to the project.

(10) Except as provided in (1) , only an additional value created after an application has been filed may be considered for tax benefits according to this rule.

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(2) The only time the department will require the owner of record of a manufactured home, or his agent, to provide the department with a copy of either of the documents in (1) is when they are formally requesting a change in the tax status of a manufactured home from real to personal property or from personal to real property. The owner shall provide a copy of the final document which identifies that the process has been completed for surrendering the title or restoring the certificate of origin or certificate of title. For purposes of this section, the classification of the manufactured home as real property is dependent on it meeting the requirements of this section and (5) .

(3) The owner of a mobile home, or his agent, may request a change in the tax status of a mobile home from real to personal property or from personal to real property, by completing a “Property Adjustment Form” (AB-26) . The form must be returned to the local department office.

(4) If in the normal course of business, the department field staff identifies a manufactured home or mobile home that meets the requirements of (5) , it will be classified as real property.

(5) Manufactured or mobile homes will be valued and classified as real property when the home meets all of the following guidelines:

(a) the running gear is removed; and

(b) the manufactured or mobile home is attached to a permanent foundation, which cannot feasibly be relocated. Two possible foundation types exist:

(i) a concrete, concrete block, or wood perimeter foundation setting on a concrete or concrete block footing;

(ii) concrete stringers with footings or concrete columns with attachment points and the manufactured or mobile home is anchored and permanently blocked and skirted; and

(c) it is placed on land that is owned or being purchased by the owner of the manufactured home or mobile home or, if the land is owned by another person, it is placed on the land with the permission of the landowner.

(6) For tax purposes, any classification change from personal property to real property made by the department that occurs after January 1 will become effective for the succeeding tax year.

(7) For tax purposes, any classification change from real property to personal property made by the department that occurs after January 1 will take immediate effect for the current tax year.

(1) A federally recognized tribe in Montana is eligible for a temporary property tax exemption of tribal fee land as provided in 15-6-230, MCA.

(2) A federally recognized tribe in Montana must apply for a temporary tribal property tax exemption on an application form available from the department, on or before March 1 of the year for which the exemption is sought. Applications postmarked after March 1 will be considered for the following tax year.

(3) The following documents must be submitted with the tribe's application to the department:

(a) United States Department of Interior Bureau of Indian Affairs (BIA) documentation stating that the initial written request or trust application submitted by the tribe was complete prior to January 1 of the year for which the exemption is sought;

(b) a tribal resolution identifying the fee land, by legal description, for which the tribe has applied for federal trust title; and

(c) a deed, contract for deed, or notice of purchaser's interest that verifies ownership.

(4) The department will provide the following to the county treasurer:

(a) prior to approving an exemption application, written notification that an application is received; and

(b) after the department approves an application, a copy of the approved application.

(5) If a tribe's written request or trust application is denied by the BIA or the five-year exemption period expires while a trust application remains pending before the BIA, the department will:

(a) return the property to the tax rolls and value the property as of January 1 of the year after the tribe's written request or trust application is denied or the five-year exemption period expires; and

(b) provide the county treasurer with the taxable values for each property for each year there was a temporary exemption approved for applications received on or after May 7, 2021.

(6) A tribe shall annually certify to the department, by March 1, that its written request or trust application is still under consideration by the BIA and has not been denied.

(7) A tribe must certify to the department when any property has been taken into trust and is under the management of the United States, and provide the specific date that each property was taken into trust. Upon receipt of the certification, the department will contact the county treasurer and remove the parcel(s) from the tax rolls.

(1) A federally recognized tribe in Montana is eligible for a temporary property tax exemption of tribal fee land as provided in 15-6-230, MCA.

(2) A federally recognized tribe in Montana must apply for a temporary tribal property tax exemption on an application form available from the department, on or before March 1 of the year for which the exemption is sought. Applications postmarked after March 1 will be considered for the following tax year.

(3) The following documents must be submitted with the tribe's application to the department:

(a) United States Department of Interior Bureau of Indian Affairs (BIA) documentation stating that the initial written request or trust application submitted by the tribe was complete prior to January 1 of the year for which the exemption is sought;

(b) a tribal resolution identifying the fee land, by legal description, for which the tribe has applied for federal trust title; and

(c) a deed, contract for deed, or notice of purchaser's interest that verifies ownership.

(4) The department will provide the following to the county treasurer:

(a) prior to approving an exemption application, written notification that an application is received; and

(b) after the department approves an application, a copy of the approved application.

(5) If a tribe's written request or trust application is denied by the BIA or the five-year exemption period expires while a trust application remains pending before the BIA, the department will:

(a) return the property to the tax rolls and value the property as of January 1 of the year after the tribe's written request or trust application is denied or the five-year exemption period expires; and

(b) provide the county treasurer with the taxable values for each property for each year there was a temporary exemption approved for applications received on or after May 7, 2021.

(6) A tribe shall annually certify to the department, by March 1, that its written request or trust application is still under consideration by the BIA and has not been denied.

(7) A tribe must certify to the department when any property has been taken into trust and is under the management of the United States, and provide the specific date that each property was taken into trust. Upon receipt of the certification, the department will contact the county treasurer and remove the parcel(s) from the tax rolls.

(1) The property owner of record or the property owner's agent must file an application, on a form provided by the department, for a property tax exemption for the manufacture of ammunition components, as defined in 30-20-203, MCA. The exemption applies only to property taxes levied on class eight personal property and to the mills levied on real property for state educational purposes, as described in 30-20-204, MCA. The application filing deadline for each tax year for which the exemption is being sought is March 1.

(2) Applications postmarked after the dates in (1) will be considered for the following tax year unless the department determines, on a case-by-case basis, that the applicant can demonstrate that unusual or personal circumstances existed in the tax year for which the application is being submitted that prevented timely filing of the application.

(3) The following criteria must be met in order to qualify for the exemption:

(a) the person or business entity must engage in the manufacture of ammunition components, in Montana, as their primary business as defined in 30-20-203, MCA;

(b) the products of the business are and must remain available to commercial and individual consumers in the state;

(c) the business entity must sell its products to in-state commercial and individual consumers for a price no greater than that for out-of-state purchasers, including any products that leave the state regardless of destination or purchaser; and

(d) the business entity must not enter into any agreement or contract that could actually or potentially command or commit all of its production to out-of-state consumers or interfere with or prohibit sales and provision of products to in-state consumers.

(4) The exemption applies only to:

(a) class eight personal property;

(b) improvements used to:

(i) manufacture ammunition components; or

(ii) store products manufactured onsite; and

(c) land owned by the person or business entity of any improvement used to either manufacture or store ammunition components. The property to be exempted is measured from each corner of a structure used for the manufacture or storing of ammunition components to a distance of 500 yards. Property owned by the person or business entity that is not used for the manufacture of ammunition components is not subject to the exemption.

(5) The department will verify eligibility requirements once the application form is received. The department may request additional information from the applicant during the application review process to verify property use and ownership.

(6) Upon receipt of the application and supporting documents, the department will perform a field evaluation. The department will approve or deny the application, and notify the applicant, the local department office, and the county treasurer of its decision in writing.

(1) The department will determine the market value of golf courses using one of the following three valuation methods: income approach to value, sales comparison approach to value, and cost approach to value. The method used will be dependent upon whether sufficient data is available.

(2) When using the income approach, the department will determine market value using a gross income multiplier (GIM). For the purposes of this rule, GIM means the ratio between the sales price of similar properties with respect to location, golf course classification, condition, length of time the golf course is open, and the gross income of the subject property.

(3) When using a GIM, market value is derived by multiplying the gross income (GI) by the GIM. For the purposes of this rule, GI means the anticipated income from all operations of the real property before subtracting vacancy and operating expenses. Golf course gross income is from all sources including, but not limited to, green fees, cart path fees, cart rentals, lease income, pro shop income, and food and beverage income.

(4) Use of a GIM is preferred if:

(a) the highest and best use of the property will not change over the remaining economic life of the property;

(b) the subject property and comparable sales are similar; and

(c) enough sales and gross income data exists to determine an accurate market value.

(5) A taxpayer owning or operating a golf course must submit yearly gross income from all aspects of the golf course operation, including, but not limited to: greens fees, cart rentals, and food and beverages.

(6) If a taxpayer fails to provide yearly gross income information, the department will estimate the total gross income based on the potential number of rounds that can be played in a typical season, multiplied by the average cost per round, and adding an estimate of income generated by all other golf course operations.

(7) The department will not reduce the estimated value of the property if the taxpayer fails to submit the information required by (5).

(8) When using the sales comparison approach, the department will determine market value by comparing arm's-length sales of similar golf courses from realty transfer certificates, realtors, fee appraisers, multiple listing services and/or nationally recognized publications. The sales comparison approach is preferred if enough recent sales of similar properties exist to determine an accurate market value.

(9) If the department uses the sales comparison approach in (8), the department will look for golf course sales from the subject's market area. If sufficient, relevant information does not exist within the market area the department will seek golf course sales statewide. If sufficient, relevant information does not exist statewide, the department will seek golf course sales in surrounding states and/or regional areas.

(10) When using the cost approach, the department will determine the market value of the golf course improvements such as bunkers, tees, fairways, roughs, drainage and irrigation systems, and course design using the cost tables identified in the Marshall & Swift Valuation Service Manual for the year of reappraisal as well as industry-established guides such as National Golf Course Owners Association, Club Managers Association of America, or American Society of Golf Course Architects to establish the total replacement cost new less depreciation. The Marshall & Swift Valuation Service Manual is published by Marshall & Swift Valuation Service, 777 South Figueroa St., 12th Floor, Los Angeles, California 90017.

(11) If the department uses the cost approach, land will be valued using the sales comparison approach to value. The department will analyze sales of similarly situated parcels, in the subject golf courses market area, that occur within a specific time frame.

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(1) The department will change the classification of land from class three, as defined in 15-6-133, MCA, or class ten, as defined in 15-6-143, MCA, to class four, as defined in 15-6-134, MCA, when the following land use change criteria are met:

(a) restrictive covenants, easements, deed restrictions, servitudes, conservation easements, or other legal encumbrances that exist and are enforced to prohibit forest or agricultural use of the land;

(b) the land no longer meets the definition of forest land in 15-44-102, MCA, the forest land classification requirements in ARM 42.20.705, and subsequently does not meet the agricultural land classification requirements of 15-7-202, MCA;

(c) the land contains three or more of the following physical site improvements:

(i) a city or community sewer system;

(ii) a city or community water system;

(iii) street curbs and gutters;

(iv) a paved or all-weather gravel road that meets county standards;

(v) a storm sewer system;

(vi) underground or aboveground utilities that may include gas, electricity, telephone, or cable television;

(vii) streetlights;

(viii) a fire hydrant; or

(ix) landscaping developed for the aesthetic benefit or security of all the landowners;

(d) the land contains a commercial or industrial structure or is used in direct support of commercial or industrial activities.

(i) Examples of a commercial or industrial structure include, but are not limited to:

(A) an apartment building;

(B) an office building;

(C) a mobile home park;

(D) a warehouse;

(E) a lumber mill;

(F) a sugar beet processing plant;

(G) a refinery;

(H) a power generation facility;

(I) a greenhouse where the product is sold to the public;

(J) a storage tank; and

(K) a cellular communication tower.

(ii) Examples of land being used for commercial or industrial activity include, but are not limited to:

(A) a parking lot;

(B) a lumber company log yard;

(C) land used as a buffer for an industrial facility from adjoining land uses;

(D) land used to store sugar beets, potatoes, or other cash crops until those crops can be transported to a manufacturing facility; and

(E) land that is used to store horticultural crops for sale where the roots of the crop are placed in a container or other material and that container is either placed in the ground or on a platform.

(2) When the criteria in (1) are met, the department will value land at 100% of market value under class four, as provided in 15-8-111, MCA.

(3) Examples of land use criteria change not considered for a change in land classification include utility lines that cross a property or easement access roads provided for the benefit of a third party and not for access or the benefit of the property owner. 

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(1) The valuation cycles for class three, four, and ten property are provided in 15-7-111, MCA. The department will accept Requests for Informal Classification and Appraisal Reviews, Form AB-26, for both years of the two-year valuation cycle for class three and four property and for all six years of the valuation cycle for class ten property.

(2) Class three and four property taxpayers dissatisfied with the department's appraised value of their property may submit a Form AB-26 one time per valuation cycle. To be considered for both years of the two-year valuation cycle, the Form AB-26 must be submitted to the local department field office within 30 days from the date on the classification and appraisal notice.

(3) If taxpayers of class three or four property miss the 30-day deadline in (2), they may object to the department's appraised value of their property for the second year of the valuation cycle by submitting a completed Form AB-26 by June 1 of the second year.

(4) Class ten property taxpayers dissatisfied with the department's appraised value of their property may submit a Form AB-26 one time per valuation cycle. To be considered for all years of the six-year valuation cycle, the Form AB-26 must be submitted to the local department field office within 30 days from the date on the classification and appraisal notice.

(5) If taxpayers of class ten property miss the 30-day deadline in (4), they may object to the department's appraised value of their property for any remaining years of the six-year valuation cycle by submitting a completed Form AB-26 by June 1 of any subsequent year of the valuation cycle.

(6) As provided in 15-7-102, MCA, taxpayers may also request an informal review by checking a box found on their classification and appraisal notice and returning the request to the department. For this purpose, the department has incorporated the check box request into a detachable coupon on the classification and appraisal notice. Upon receipt of the taxpayer's returned coupon, the department will mail a Form AB-26 to the taxpayer with a cover letter stating the Form AB-26 must be postmarked or hand-delivered to the department within 15 business days of the date on the letter or within 30 days of the date shown on the taxpayer's classification and appraisal notice, whichever is later.

(7) There will be no retroactive adjustments to the taxable value for prior years. Any adjustments to taxable value will be applied in the tax year for which the Form AB-26 was timely filed and for the remaining year(s) of the valuation cycle. If the property taxpayer submits a Form AB-26 after June 1 of the last year of the valuation cycle, their request shall be deemed untimely with the department.

(8) Taxpayers may file a Form AB-26 in any year of a valuation cycle, but only one time during the cycle, unless a new classification and appraisal notice is generated due to a change in property ownership, classification, or value. Taxpayers will then have 30 days from the date on the new classification and appraisal notice to submit a completed Form AB-26.

(9) During the informal review process, department staff may attempt to contact the property owner by telephone, email, and/or a property site visit to schedule an appointment or request additional documentation. If attempts to contact the property owner are unsuccessful, department staff will send a written request to the taxpayer who will then have 15 business days from the date on the letter to respond. If the taxpayer does not contact the department within the allowed 15 business days, the department will deny the Form AB-26 and send a determination letter to the taxpayer. 

(1) As provided in 15-6-241, MCA, certain mobile homes, manufactured homes, or housetrailers are exempt from taxation.

(2) An owner of three or more mobile homes, manufactured homes, or housetrailers that meet the criteria for the exemption may only receive the exemption on two units with the lowest appraised values, as determined by the department. All non-exempt units remain taxable according to 15-6-134, MCA.

(3) For purposes of determining ownership in (2), the department shall aggregate properties with similar names and addresses as one owner when the properties reasonably appear to be owned by the same individual(s) or entities. Examples of when similar names and addresses would be aggregated as one owner include properties held under:

(a) an individual's current legal name;

(i) a former legal name, maiden name, and married name;

(ii) an abbreviated or derivative of a legal name (e.g., Bob for Robert);

(iii) nicknames; and

(iv) an individual's assumed business name, if applicable; and

(b) a business entity's name and assumed business name.

(4) Unique or unusual circumstances of similar ownership will be evaluated by the department on a case-by-case basis.

(5) This rule is effective for tax years beginning after December 31, 2019.

(2) It is not the intent of the Act to apply sales information obtained to each sold parcel. Instead, sales of similar properties are grouped so that the market indicator of value will reflect current trends, and sales that are uncharacteristically high or low will have an offsetting effect.

(2) In an instance when the department is notified of a Tribal patent, or a letter of conveyance issued by the Bureau of Land Management, that is not recorded with the Clerk and Recorder's Office, the department will change to whom the real property is assessed.

(3) In order to effect changes in the property tax record, all transfers, including exempt transfers, must be filed with a certificate, giving the names of the parties to the transfer, a description of the property and, if applicable, the reason for exemption from the provisions relating to sales information.

(2) The name of the grantee (buyer) reflected on the RTC must be identical to the name of the grantee (buyer) reflected on the deed.

(3) Breaks in the chain of title must be corrected. Until the break in the chain of title is corrected through the filing of reliable information, the property will be carried on the property tax record in the name of the previous owner, in care of the new owner (grantee) . RTCs that bridge the break in the chain of title must be filed. After the RTC(s) is filed, which bridges the break in title, the new owner's name (grantee) will be placed on the property tax roll in place of the previous owner's name. Name identification and name abbreviation inaccuracies in (1) and (2) may be corrected through the submission of an affidavit available at the department. If, in the judgment of the local department office, there is sufficient evidence to suggest the RTC is inaccurately completed or that a transaction is not exempt from reporting sales information, the department will return the RTC to the filer. The inaccurate information will be identified and the filer will be required to correct the inaccuracy and to resubmit the RTC.

(1) The property owner of record or the property owner's agent must make application to the department to secure classification of the owner's land as a nonproductive, patented mining claim. To be considered for the current tax year, an application must be filed on a form available from the department within 30 days after receiving a classification and appraisal notice from the department. The form must be filed with the department.

(2) The department will review the application and may conduct a field review. The department will approve or deny the application and will return a copy of the form to the property owner or the owner's agent.

(3) An annual application is not required. An application is required only if the department reclassifies the property and the taxpayer disagrees with the department's reclassification action. The taxpayer will be notified in writing if the department acts to reclassify the taxpayer's property.

The following definitions apply to this subchapter:

(1) "Has a separate and independent value for such other purposes" means the land has a demonstrated capacity for recreation, commercial, industrial, or agricultural/timber use. That capacity is demonstrated by one of the following criteria:

(a) the filing of a certificate of survey that creates a division of the mining claim;

(b) the growth of agricultural commodities on the mining claim;

(c) the construction of a recreational or residential structure such as a summer home or commercial structure on the mining claim; or

(d) the lease of any portion of the surface area for a recreational, commercial, residential, industrial, or agricultural use.

(e) The requirements of (c) may be waived when the topography of the property is so severe that it precludes development for any purpose other than mining.

(2) "Incorporated city or town" means any municipality or county area in which the government body has complied with all incorporation provisions outlined in Title 7, MCA.

(3) "Mineral interests of the mining claim have not been depleted" means that the minerals located within the boundaries of the parcel are a vein, lode, or ledge of rock-in-place bearing gold, silver, cinnabar, lead, tin, copper, or other valuable deposits, or a placer deposit of gold or other deposit of minerals having a commercial value.

(4) "Nonproductive land" means nonfertile land that is incapable of supporting animals or producing plant matter in commercially salable quantities.

(5) "Owner" means that the applicant and owner of record are the same individual, corporation, or partnership.

(6) "Patented" means land purchased from the federal government for the sole purpose of developing a mining operation.

(a) is nonproductive;

(b) is patented;

(c) has not been depleted of mineral deposits;

(d) is outside the limits of an incorporated city or town, or in the case of a county-municipal consolidation, outside the limits of the municipalities prior to the date of consolidation;

(e) has no separate and independent value other than as a mining claim; and

(f) is being held by the owner for the sole purpose of developing the mineral interests on the property.

(2) The applicant for class three property tax treatment is required to demonstrate ownership of the patented mining claim for which classification is sought. If, on the date of application, the applicant is presently carried on the tax rolls of the county as the owner of the mining claim, the department will presume that the applicant is the owner of record of the mining claim.

(3) If, on the date of application, the applicant is not carried as the owner of record of the mining claim on the tax rolls of the county, the applicant will be required to fulfill criteria set forth in (4) .

(4) Proof of the criteria set forth in (1) must consist of the following:

(a) submission of a copy of the United States patent issued in the name of the owner of record or a written certificate from the Bureau of Land Management certifying the ownership of the patented mining claim;

(b) submission of a copy of the RTC, if provided for by law as of the date of patent issuance, completed by the owner of record or the owner's representative or agent; and

(c) submission of copies of the most recent deeds or security agreements evidencing ownership and a copy of the last assessment on the patented mining claim.

(5) In the event that class three property tax treatment is sought for a patented mining claim which is owned by multiple parties, the criteria set forth in (2) and (3) must be fulfilled by a majority of the parties or entities currently paying the taxes on the claim or by the single party or entity paying taxes on the claim.

(6) If the department denies the application for class three property tax treatment, and if the applicant/taxpayer disagrees with the department's determination, the taxpayer shall be entitled to exercise the rights set forth in 15-7-102 , MCA.

(2) Land shall not be classified or valued as a class three mining claim after mining activity begins. Once mining activity begins, ARM 42.20.645 will apply.

(2) The acreage defined in (1) shall be appraised according to market value consistent with that of comparable land.

(a) In no case will the market value of mining claim acreage be lower than the lowest market value assigned to improved tracts within the county.

(b) No specific site improvement values for water systems and septic systems will be added to the land values determined according to (2) (a) .

(3) All mining claim acreages determined according to (1) and (2) shall be classified and valued as class four property.

(1) All land contained in an eligible mining claim except that land described in ARM 42.20.305 shall be valued as class three grazing land. The appropriate grazing land productivity and valuation determination will be based on the statewide average productivity value of grazing land.

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(1) The department shall compile sales information from RTCs. The department shall review sales evidenced by an RTC to determine whether a sale was a valid, arm's-length transaction. For the purposes of this rule, "valid, arm's-length transaction" means a sale of real estate not affected by unreasonable or unusual personal influence or control, as defined in literature prepared by the international association of assessing officers.

(2) Unless there is convincing evidence to the contrary, the following sales transactions shall be considered non-arm's-length transactions:

(a) a sale of agricultural or timber land;

(b) a sale in which the purchaser or seller is the United States of America, a state, a county, a municipality, or an instrumentality, agency, or political subdivision thereof, or a public utility;

(c) a sale that is recorded to confirm, correct, modify, or supplement a previously recorded instrument;

(d) a sale pursuant to a court decree;

(e) a sale pursuant to a merger, consolidation, or reorganization of a corporation, partnership, or other business entity;

(f) a sale between affiliated corporations or between shareholders and the corporation;

(g) a sale of a decedent's estate;

(h) a sale constituting a gift;

(i) a sale between a husband and wife or a parent and child or other family member with only nominal actual consideration;

(j) a sale transferring property to the same party or parties;

(k) a sale of delinquent taxes, sheriff's sale, bankruptcy sale, mortgage foreclosure, or premature liquidation of property;

(l) a sale made in contemplation of death;

(m) a sale of tax-exempt property; and

(n) royalty interest or an assignment of interest.

(3) The department shall consider the following sales in distressed markets if the following foreclosure related transactions comprise more than 20 percent of sales in a specific market area for model calibration and ratio studies, in accordance with the International Association of Assessing Officers (IAAO) standards:

(a) Real Estate Owned (REO) sales involving financial institutions as seller if:

(i) represented and marketed as an REO listing with a real estate listing service;

(ii) exposed for sale in the open market for a reasonable amount of time; and

(iii) verified as an REO sale.

(iv) the sales comprise more than 20 percent of sales in a specific market area; and

(v) changes in property characteristics are accounted for in model calibration and ratio studies.

(b) auction sales if:

(i) the auction was well advertised;

(ii) the auction was well attended;

(iii) the seller had a minimum bid or the right of refusal on all bids; and

(iv) the sales are not from absolute auctions that do not have a low bid clause or right of refusal and are advertised as such type of auctions.

(c) short sales if:

(i) represented and marketed as a short sale with a real estate listing service;

(ii) exposed for sale in the open market for a reasonable amount of time; and

(iii) verified as a short sale.

(4) The following sales will not be considered in distressed markets:

(a) vandalized property; and

(b) forced sales resulting from a judicial order, i.e., when the seller is either a sheriff, receiver, or other court officer.

(5) The department may verify sales information by submitting to the parties participating in a sale transaction the sale verification form. Completion of the sales verification form may be accomplished during on-site discussions with the buyer or seller, or through telephone conversation or written correspondence with the buyer or seller, or their representatives. Additionally, the department may secure information from the lending institution involved in the sale for purposes of verifying the terms and conditions of the sale

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) When considering any objection to the appraisal of property, the department may consider the actual selling price of the property as evidence of the market value of the property. For the actual selling price to be considered, a taxpayer or the taxpayer's agent must:

(a) submit a completed Request for Informal Classification and Appraisal Review, Form AB-26, as set forth in ARM 42.20.173, to the local department office in the county where the property is located;

(b) submit an accurately completed Realty Transfer Certificate;

(c) complete and sign a sales verification form that includes the sales price of the property;

(d) provide a signed affidavit completed by at least one party or person who is not the buyer or seller and that identifies the conditions, terms, and sales price of the property;

(e) provide an executed buy/sell agreement; and

(f) provide evidence of two comparable sales of similar property in the same general geographic area where the taxpayer's property is located. The property sales must have occurred within six months of the valuation date adopted by the department in its reappraisal plan administrative rules, as set forth in ARM Title 42, chapter 18. The department will:

(i) use its sales records to identify the sale prices and determine if the sales were valid, arm's-length sales; and

(ii) permit taxpayers to examine the sales information for the comparable property if they agree to keep the information confidential.

(2) For the actual selling price of the property to be considered, the department must:

(a) analyze and maintain the information and requirements in (1)(a) through (f) as a part of the file supporting the value placed on the property for tax purposes;

(b) verify the subject sale is a valid arm's-length transaction as defined in 15-8-111, MCA;

(c) verify the comparable sales are valid arm's-length transactions as defined in 15-8-111, MCA;

(d) adjust the actual selling price of the property to a value that is consistent with the valuation date adopted by the department in its reappraisal plan administrative rules, located in ARM Title 42, chapter 18; and

(e) adjust the sales price of the property to account for changes in market conditions that may have occurred between the time of sale and the valuation date.

(3) After making a determination regarding use of the adjusted selling price as an indication of market value for tax purposes, the department shall respond in writing to the taxpayer stating clearly the reasons for accepting or rejecting the use of the sales price and, if appropriate, what adjustments were made to the actual selling price and why the adjustments were made.

(4) If the appraised value is adjusted by the department or the tax appeal board and the department files no further appeal within the time period allowed by law, the adjusted value becomes the value for assessment and taxation purposes until such time as changing circumstances with respect to the property requires a new valuation and assessment, or upon an updated valuation occurring in subsequent property valuation cycles.

(1) When considering any objection to the appraisal of property, the department may consider independent fee appraisals of the property as evidence of the market value of the property. For an independent fee appraisal to be considered, the taxpayer or the taxpayer's agent must submit the following documents to the local department office in the county where the property is located:

(a) a Request for Informal Classification and Appraisal Review, Form AB-26, as set forth in ARM 42.20.173; and

(b) a copy of the independent fee appraisal that meets the following requirements and was conducted:

(i) by an appraiser licensed or certified by the Montana Board of Real Estate Appraisers, under Title 37, chapter 54, MCA;

(ii) in accordance with current uniform standards of professional appraisal practice (USPAP), as set forth for licensed or certified real estate appraisers under 37-54-403, MCA; or completed for federally related transactions or commercial lending institutions; and

(iii) within six months of the valuation date provided for in 15-7-102, MCA, and ARM 42.18.121. This six-month requirement may necessitate that a fee appraiser conduct a retroactive appraisal, in accordance with USPAP. In this situation, the effective date of the appraisal may be prior to the date of the Appraisal Report. If an appraisal has already been conducted, and it was conducted prior to the valuation date, then:

(A) a recertification or update of value may be required as an addendum to the original appraisal; and

(B) the recertification or update of value must be completed by the same appraiser who conducted the original appraisal.

(2) After making a determination regarding use of the independent fee appraisal value as market value for tax purposes, the department shall respond in writing to the taxpayer stating clearly the reasons for accepting or rejecting the use of the fee appraisal and, if appropriate, what adjustments were made to the department's appraised value and why.

(3) If the appraised value is adjusted by the department or by the tax appeal board, and the department files no further appeal within the time period allowed by law, the adjusted value becomes the value for assessment and taxation purposes, until such time as changing circumstances with respect to the property requires a new valuation and assessment, or upon an updated valuation occurring in subsequent property valuation cycles.

This rule has been repealed.

This rule has been repealed.

The following definitions apply to this subchapter:

(1) "2014 tax year value" means the market value of a property which appears on the 2014 property tax record of that property.

(2) "Annual appraisal trend factor class five" means a factor used to annually reappraise class five qualifying air and water pollution control property, new industrial property, gasohol facilities, qualifying research and development firms, and electrolytic reduction facilities real property by trending their cost values up or down based on accepted cost indices.

(3) "CDU rating" means a composite rating of the overall condition, desirability, and usefulness of a structure, used nationally as a simple, direct, and uniform method of estimating accrued depreciation.

(4) "Current year phase-in value" is the difference between the reappraisal value and the value before reappraisal (VBR) times the phase-in percentage, added to the VBR. The current year phase-in value is the amount subject to tax each year, and is determined by the following formula:

Current year phase-in value =

[(Reappraisal (REAP) value - VBR) x phase-in %] + VBR

(5) "Destruction" means the removal or deletion of improvements, buildings, living areas, garages, and out-buildings caused by burning, razing, or natural disaster.

(6) "Dwelling unit" is defined as a building or portion of a building that contains living facilities with provision for sleeping, eating, cooking, and sanitation for one or more persons.

(7) "Full reappraisal to taxable value conversion factor for class four commercial property" is the total taxable value of class four commercial property divided by the total reappraisal value of the same class four commercial property.

(8) "Full reappraisal to taxable value conversion factor for class four residential" is the total taxable value of class four residential property divided by the total reappraisal value of the same class four residential property.

(9) "Improvement grade change" means a change in the quality of construction of an improvement. Each improvement grade signifies a different level of construction quality. Examples of improvement grades include, but are not limited to, the following:

(a) 1F-1 = cheap construction;

(b) 1F-5 = average construction; and

(c) 1F-9 = superior construction.

(10) "Land productivity change (grade change)" means a change in the productive capacity or yield of agricultural or forest land. In a land productivity change, the land use does not change; rather, the land as currently used simply becomes more or less productive. For example, a productivity change in grazing land may occur when it is discovered that the productivity potential has decreased due to a new saline seep on the land. Because the land continues to be used as grazing land, the department shall continue to classify the land as agricultural grazing land, but the grade of the grazing land may be changed to reflect its lessened productivity.

(11) "Land reclassification" means changing the use of land from one type of agricultural use to a different type of agricultural use. For example, a land reclassification occurs when agricultural land that was previously used as grazing land is converted to irrigated land. In a land reclassification, the land is dedicated to agricultural purposes both before and after the change in land use. It is this characteristic that distinguishes a land reclassification from the more general land use change.

(12) "Land split" means the division of a single property into two or more properties for the ultimate purpose of conveying one or more of the properties to a new owner or owners.

(13) "Land use change" means the conversion of a current use of land to a different, alternate use. Land splits shall be considered land use changes. Examples of land use changes contained in this definition include, but are not limited to, the following:

(a) agricultural land converted to tract land;

(b) forest land converted to tract land;

(c) forest land converted to agricultural land; or

(d) land that is converted to another use due to a subdivision of real property.

(14) "Living area" means any room or group of rooms designed as the living quarters of one family or household, equipped with cooking and toilet facilities, and having an independent entrance from a public hall or from the outside.

(15) "Neighborhood (NBHD) group percentage" means the percent of change in value from the total 2014 tax year value of the year before reappraisal to the total 2015 reappraisal value, excluding properties with new construction, for those homogeneous areas within each county or between counties that have been defined as a neighborhood group. The neighborhood group percentage is determined by using the following formula:

Neighborhood Group Percentage =

(Total 2008 NBHD REAP Value - Total 2015 NBHD Tax Year Value)

                                Total 2014 NBHD Tax Year Value

(a) Individual neighborhood group percentages will be determined for residential land, commercial land, residential improvements, and commercial improvements.

(16) "New construction" means the construction, addition, or substitution of improvements, buildings, living areas, garages, and outbuildings; or the extensive remodeling of existing improvements, buildings, living areas, garages, outbuildings, land reclassification, and land use changes.

(17) "New construction trend factor for industrial property" means a factor used to adjust reappraisal values and VBRs (values before reappraisal) in instances where the property has new construction or destruction. The factor will be derived from nationally accepted cost indices.

(18) "Phase-in percentage" for tax years 2015 through 2020 is 16.6 percent per year. The phase-in percentage accumulates annually.

(19) The "previous year tax revenue" means the product of multiplying the previous tax year total taxable value for each taxing jurisdiction by the previous year mill levy for that taxing jurisdiction.

(20) "Reappraisal (REAP) value" means the full 2015 value determined for the current reappraisal cycle pursuant to 15-7-111, MCA, adjusted annually for new construction or destruction. The 2015 reappraisal value reflects a market value of the property on January 1, 2014. A current year REAP value is the same as the 2015 reappraisal value of the property if there is no new construction, destruction, land splits, land use changes, land reclassifications, land productivity changes, improvement grade changes, or other changes made to the property during 2015 or subsequent tax years.

(21) "Subdivision of real property" means the first sale of a land parcel that results in the land being taxable as class four as described in 15-6-134, MCA, or nonagricultural land as described in 15-6-133(1)(c), MCA.

(22) "Taxable market value" means that portion of the total market value subject to taxation after the total market value has been adjusted, if applicable, for the phase-in of value.

(23) "Value before reappraisal (VBR)" means the 2014 tax year value adjusted for any new construction or destruction that occurred in the prior year. The VBR for the 2015 tax year and subsequent years is the same as the 2014 tax year value if there is no new construction, destruction, land splits, land use changes, land reclassifications, improvement grade changes, or other changes made to the property during 2014 or subsequent tax years.

This rule has been repealed.

This rule has been repealed.

(1) The following criteria will be used to identify new construction and destruction:

(a) all residential or commercial structures, out-buildings, and mobile homes that were built, remodeled, or destroyed in the preceding year;

(b) properties with new, attached garages built in the preceding year;

(c) properties which had any land reclassification or land use changes;

(d) properties with out-buildings built in the preceding year; or

(e) properties with a physical change to the improvements.

(2) The following will not be considered new construction or destruction:

(a) properties with square footage changes due to correction of measurements or sketch vectoring, or due to coding corrections for story heights, such as story with full finished attic to 1.5 stories;

(b) properties with improvement grade changes;

(c) properties with condition, desirability, and utility (CDU) rating changes;

(d) properties with changes in heat or air conditioning; or

(e) properties with changes in effective year.

This rule has been repealed.

This rule has been repealed.

(1) All valuation reductions allowed for under the property tax assistance program or other property tax relief programs will be applied against the current year taxable market value.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) Qualifying air and water pollution control property, gasohol facilities, qualifying research and development firms, and electrolytic reduction facilities real property included in class five will be revalued annually. The department will apply an annual appraisal trending factor to the qualifying property to arrive at the market value. An annual appraisal trend factor will be calculated, using the January cost indices from the Marshall & Swift Valuation Service Guide (Marshall & Swift Guide), for the current tax year. If the Marshall & Swift Guide is not available, other accepted cost manuals or indices may be used.

(2) The annual appraisal trend factor will be applied to the previous year's market value to arrive at the current year's market value.

(1) The department shall annually appraise locally assessed electric and telephone cooperatives' and locally assessed telecommunications companies' property using the methods described in ARM Title 42, chapter 22. The methods described are used in appraising other property with similar characteristics.

(1) The department will calculate the value attributable to newly taxable property that is classified as class four, five, seven, eight, nine, twelve, thirteen, fourteen, fifteen, and sixteen for each taxing jurisdiction annually.

(2) For the 2014 tax year and subsequent years, the department will calculate the taxable value attributable to newly taxable property in each of the classes of property listed in (1) for each taxing jurisdiction as follows:

(a) The value attributable to newly taxable property will be calculated by subtracting the prior year adjusted taxable value from the current year adjusted taxable value to determine the total value of newly taxable property in a jurisdiction by tax class.

(b) The current and prior year adjusted taxable values will be calculated by adjusting the current and prior year taxable values by an effective rate. The effective rate will be calculated from the current year taxable value and the current year market value, with the exception of class four, which will use the current year taxable value and the current year phase-in value to reduce the impact that a change in phase-in value has on the effective rate.

(c) The current year adjusted taxable value will be calculated by multiplying the current year market value by the effective rate determined in (b).

(d) The prior year adjusted taxable value will be calculated by multiplying the prior year market value by the effective rate determined in (b).

(3) The total taxable value attributable to all of the newly taxable property in a taxing jurisdiction will be calculated by summing the taxable value attributable to newly taxable property in all classes of property listed in (1).

(4) If the newly taxable value, as calculated according to (2) and (3), for any class of property in any taxing jurisdiction is less than zero, then the newly taxable value for that class of property in that taxing jurisdiction is zero.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

The following definitions apply to this subchapter:

(1) "Agricultural products produced by the land" means crops or forage raised directly in the land's soil and used to support livestock. Agricultural products produced by the land does not mean land that is used as a platform for agricultural use such as the feeding of livestock from external sources that allow stocking rates to exceed the carrying capacity.

(2) "Ancillary improvements," as provided in 15-1-101, MCA, means improvements necessary for the production and storage of raw agricultural commodities. These improvements do not include improvements that are used to process, treat, or package raw agricultural commodities into a value-added product, or improvements designed to accommodate and serve the public.

(3) "Animal unit" means a cow/calf pair, including a mature cow of approximately 1,200 pounds and a calf as old as 6 months, or their equivalent.

(4) "Animal unit month" means one animal unit grazing for one month. One animal unit month represents the amount of forage needed to properly nourish one animal unit for one month without injurious effect to vegetation on the land.

(5) "Biological control insect" means an insect that is used to reduce or eliminate noxious weeds by interference with the weed's ecology.

(6) "Bona fide agricultural operation" means an enterprise in which the land actually produces agricultural products provided under the term, agricultural, defined in 15-1-101, MCA, that directly contribute agricultural income.

(7) "Carrying capacity" means the amount of grazing that a pasture will sustain without injurious effect to vegetative growth due to the quality of the soil and the environment where it occurs.

(8) "Conservation reserve program (CRP)" means a federal farm program administered by the Farm Service Agency (FSA) that pays agricultural landowners to remove land from crop production on highly erodible soils for a specified period of time.

(9) "Contiguous parcels of land" means separately described parcels of land under one ownership that physically touch one another or would have touched one another were the acreages not separated by:

(a) deeded roads and highways;

(b) rivers and streams;

(c) railroad lines; or

(d) federal or state land that is leased from the federal or state government by the owner whose land is physically touching the federal or state land.

(10) "Denied access or DA land" is a term used by the United States Department of Agriculture Natural Resource Conservation Service (NRCS) to describe lands where they were prohibited from conducting a soil survey by the owner of the land.

(11) "Domestic grazing land" means all lands devoted to the production of forage from introduced plants that are not part of the original flora of an area that are harvested directly by grazing animals.

(12) "Income from agricultural production" means the gross amount of income received from the sale of food, feed, fiber commodities, livestock, poultry, bees, biological control insects, fruits, vegetables, and also includes sod, ornamental, nursery, and horticultural crops that are raised, grown, or produced for commercial purposes, income from farm rental, the sale of draft, breeding, dairy, or sporting livestock, the share of partnership or family corporation gross income received from a farming or ranching business entity, or the taxpayer's share of distributable income from an estate or trust involved in an agricultural business. When the income from agricultural production is used to qualify land for agricultural land classification, it must be reportable income for income tax purposes. Wages received as a farm employee or received from a farm corporation are not gross income from farming.

(13) "Land use" means the utilization of land which directly relates to its classification, in accordance with 15-7-103, MCA.

(14) "Lease" means an agreement transferring certain rights to a lessee (tenant), including possession, while still allowing the lessor (landlord) to retain fee ownership.

(15) "Livestock" means the same as it is defined in 15-1-101, MCA.

(16) "Native grazing land" means all lands devoted to the production of forage from native or naturalized plants that are harvested directly by grazing animals.

(17) "Nonqualified agricultural land" means parcels of land of 20 acres or more but less than 160 acres under one ownership that are not eligible for classification as agricultural land under 15-7-202(1), MCA.

(18) "Not completed or NOTCOM land" is a term used by the Natural Resource Conservation Service to describe lands where they have not completed a soil survey or have completed the soil survey but the results have not been published for public use.

(19) "Parcel" means a tract or plot of land distinguishable by ownership boundaries.

(20) "Pertinent" means scientific, verifiable information relating directly to a specific geographical area that could affect the productive capacity of the land.

(21) "Poultry" means the same as it is defined in 15-1-101, MCA.

(22) "Productivity" means the ability of a soil to produce crops or forage at the location, and under the environment and a specified system of management. Productivity can change over time due to changes in soil fertility or more efficient farming practices and equipment.

(23) "Productivity value" means the per-acre value of the agricultural land based on its productivity. The productivity value is determined using the formula provided in 15-7-201, MCA, and described in the subchapter.

(24) "Residence" means all conventionally constructed homes, as well as all mobile homes and manufactured housing, that may serve as living quarters for one or more individuals or a family, regardless of actual occupancy.

(25) "Residential" means land used for the purpose of family housing.

(26) "Residential use only" means land that allows buildings for the purpose of family housing and restricts commercial or industrial buildings.

(27) "Site-specific" means data associated within a defined geographic area, usually composed of similarly situated parcels of land characterized by reoccurring patterns of soils, geology, climate, water resources, and land use. Site-specific data may refer to one continuous area or several separate nearby areas. Site-specific data rarely references an individual ownership or an individual parcel of land.

(28) "Sole proprietorship" for the purposes of qualifying land for agricultural land classification under the provisions of 15-6-133 and 15-7-202, MCA, and ARM 42.20.682, means an ownership of agricultural land in the name of one or more individuals which can be any of the following: grandparent(s), parent(s), spouse, sibling(s), children, stepchildren, aunt(s), uncle(s), and first generation cousin(s).

(29) "Under one ownership" means when two or more parcels of land are deeded under an owner's identical name or when an owner has obtained department recognition of parcels under one ownership through the affidavit process described in ARM 42.20.620.

(1) Steps in the agricultural classification process may include the use of:

(a) department land use maps;

(b) internal desktop land use classification, using the criteria for each agricultural land use;

(c) on-site field reviews, operator and land owner interviews, and inspection by local department appraisal staff; and

(d) a Geographic Information System (GIS) to digitally identify each producer's agricultural land use.

(1) Denied access (DA) lands and not completed (NOTCOM) lands do not currently have any agricultural use productivity information associated with them from a published soil survey.

(2) When DA and NOTCOM lands are encountered in the department's efforts to assign a productivity to an agricultural use, the department will use Geographic Information System (GIS) technology to determine the average level of productivity in the same agricultural use from the surrounding soils within one mile of the DA or NOTCOM land and will assign the average level of productivity to the DA lands.

(3) Where an inadequate number of acres within the same use class with productivity information are not identified in the one-mile buffer routine, the buffer routine is expanded to include all acres with the same use and productivity information within five miles of the property. On occasion the buffer routine is expanded to 20 miles to ensure that an adequate number of acres with soils productivity information and in the same use are identified.

(1) Productivity is determined using the Natural Resource Conservation Service (NRCS) soil surveys. The productivity determination is specific to the agricultural land use classification under typical management practices.

(2) Productivity is adjusted to reflect, as near as possible, typical management practices for an area using the following procedures:

(a) for lands whose productivity is based on bushels of spring wheat per acre, the soil survey productivity in the following counties is adjusted on a regional basis by multiplying the soil survey productivity by the regional adjustment. The county designations and regional adjustments are as follows:

(i) Region 1: Beaverhead, Broadwater, Deer Lodge, Flathead, Gallatin, Granite, Jefferson, Lake, Lewis and Clark, Lincoln, Madison, Mineral, Missoula, Powell, Ravalli, Sanders, and Silver Bow is 0.86;

(ii) Region 2: Big Horn, Blaine, Carbon, Carter, Cascade, Chouteau, Custer, Fallon, Fergus, Garfield, Glacier, Golden Valley, Hill, Judith Basin, Liberty, Meagher, Musselshell, Park, Petroleum, Phillips, Pondera, Powder River, Prairie, Rosebud, Stillwater, Sweet Grass, Teton, Toole, Treasure, Wheatland, and Yellowstone is 0.77; and

(iii) Region 3: Dawson, Daniels, McCone, Richland, Roosevelt, Sheridan, Valley, and Wibaux is 0.70;

(b) for irrigated lands, the soil survey productivity for tons of irrigated alfalfa hay per acre is adjusted on a county-by-county basis;

(c) for grazing land, the production for the amount of air-dry herbage grown in "unfavorable" condition years is used to determine the land's productivity in animal unit months based on the requirements to sustain a 1,200-pound animal unit;

(d) the department will use the following formula to calculate the carrying capacity for nonirrigated native grazing land:

(i) per-acre per-year dry herbage production multiplied by 0.25 equals the per-acre per-year dry herbage production consumed by livestock;

(ii) per-acre per-year dry herbage production consumed by livestock divided by 1,098 pounds of dry herbage production consumed per-month per-animal unit equals the animal unit months per acre (AUMs/acre); and

(iii) livestock acres grazed multiplied by AUMs/acre equals the total AUMs; and

(e) for nonirrigated hay land, the midpoint production of the amount of air-dry herbage grown between "unfavorable" condition years and "normal' condition years divided by 2,000 pounds is used to determine the land's productivity in tons per acre.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) Road, irrigation ditch, or power line easements that do not transfer title to such rights-of-way are taxable and will be classified as adjoining agricultural land.

(2) A deeded right-of-way that is conveyed through a deed or other instrument, from a private owner to a government agency or other tax-exempt entity is not taxable and the acreage is deducted from the ownership. If the deeded right-of-way splits two or more ownerships, such as along a deeded county road, the department will deduct proportional amounts of acreage from each ownership. A record of the conveyance must be available in the local county clerk and recorder's office.

This rule has been repealed.

(1) Multiple parcels of land totaling less than 160 acres, both contiguous and noncontiguous, under one ownership, actively devoted to agricultural use and part of a bona fide agricultural operation may be classified as agricultural land for the current tax year if the property owner submits an Agricultural Land Classification Application (application) to the department by March 1 and the land meets all of the production and income requirements provided in this rule, ARM 42.20.682, and ARM 42.20.683 for agricultural land classification. The department's application review process may include a field evaluation, additional information requests, and will conclude with the approval or denial of an application.

(2) A person who owns contiguous parcels of land deeded in non-identical names may file an affidavit with the department attesting that the names are one and the same person, for the department's determination of under one ownership.

(3) Noncontiguous parcels of land that are an integral part of the agricultural operation may combine agricultural production income and livestock carrying capacity of the parcels of land to meet agricultural land classification requirements. Each noncontiguous parcel of land that is not part of a larger agricultural operation, must individually meet the agricultural land classification requirements set forth in this rule.

(4) The land must produce an agricultural product provided under the term "agricultural" found in 15-1-101, MCA.

(5) The property owner must submit documentation to verify $1,500 annual gross income or more in sales of agricultural products, other than livestock, marketed by the property owner, the property owner's family members, or the property owner's agent, employee, or lessee. Acceptable income documentation includes:

(a) sales receipts, cancelled checks, copies of income tax statements, or other written evidence of sales transactions;

(b) annual rental or lease payments of at least $1,500, if the land is in an agricultural use and capable of sustaining that agricultural use; or

(c) annual rental payments of at least $1,500, from the CRP or a similar program.

(6) For parcels of land under 20 acres, (5)(b) and (c) are not considered eligible agricultural income sources.

(7) Land used to raise livestock must have the capacity to produce forage based on the United States Department of Agriculture, Natural Resources and Conservation Service (NRCS), soil survey to support a minimum carrying capacity expressed in animal unit months, as provided in 15-7-201, MCA, and ARM 42.20.681. The department calculates the carrying capacity for:

(a) non-irrigated native grazing land from the NRCS soil survey information;

(b) non-irrigated domestic grazing land by increasing the estimated non-irrigated native grazing land carrying capacity in (a) by 50 percent; and

(c) grazing land from site-specific and pertinent information provided by the property owner.

(8) For land other than grazing land used to raise crops for consumption by livestock, poultry, or other animals in the agricultural operation rather than for market, the property owner must prove that the land produced the annual equivalent of $1,500 in gross agricultural income from these crops. Income documentation must include a written record of the weight or quantity of agricultural crop produced and the current commodity price. The crop value is determined by multiplying the quantity by the commodity price. Receipts from the sales of agricultural products from livestock, domestic animals, and wildlife, provided in 15-1-101, MCA, are not eligible for meeting the $1,500 annual gross income requirement but may be submitted to prove a commercial purpose of operation.

(9) Non-irrigated summer fallow farmland must meet the income requirements in (5) and (6) in the year it is cropped.

(10) Annual gross income documentation from the prior year may be submitted if:

(a) the land experienced a production failure in the current year that was beyond the control of the property owner from drought, fire, hail, insect infestation, frost, flood, or excessive rain. The department does not allow the results of overgrazing and other management practices as sources of production failure;

(b) the property owner; the property owner's family members; or the property owner's agent, employee, or lessee delayed marketing agricultural products they grew, raised, or produced from the land, to take advantage of future economic conditions. The marketing delay must not exceed 12 months from the initial date of application for agricultural land classification.

(11) Land previously classified as agricultural land or nonqualified agricultural land in a prior year which is now reduced to less than 20 acres as the result of eminent domain, authorized under 70-30-102, MCA, maintains its classification unless the land has been further divided or is devoted to a residential, commercial, or industrial use, as provided in 15-7-202, MCA. The property owner must notify the department of the land's eligibility to maintain its agricultural land classification by submitting a Request for Informal Classification and Appraisal Review, Form AB-26.

(12) For land less than 20 acres under one ownership with a portion of the land classified as forest land, the remainder of the acres are classified as agricultural land if the land meets the requirements of agricultural land classification.

(13) The department may change an agricultural land classification if the:

(a) property changes ownership;

(b) property is subdivided; or

(c) department believes the property no longer meets the agricultural land requirements provided in the subchapter.

(14) Land classified as agricultural land will remain classified as agricultural land until the department determines the land use has changed.

(15) If the property owner disagrees with the department's reclassification action, the owner must submit an Agricultural Land Classification Application, within 30 days of the date on their reclassification notification.

(16) If a property owner owns personal property related to the bona fide agricultural operation, and the market value of the personal property is above the threshold provided in 15-6-138, MCA, then the property owner must submit to the department each year a completed personal property reporting form in accordance with the requirements provided in 15-8-301, MCA, and ARM 42.21.158.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) In accordance with the provisions of 15-7-202, MCA, contiguous parcels of land with 160 acres or more and under one ownership as defined in ARM 42.20.601 shall be classified as agricultural land, provided that no portion of the land meets the requirements for forest land classification and other restrictions described in ARM 42.20.156.

(2) Land under the CRP, the Integrated Farm Management (IFM) program, or any similar program shall remain classified as it was prior to enrollment in the program.

(1) Any portion of any parcel of land that is used as a residential, commercial, or industrial site (except for the one-acre area beneath the residence on agricultural land, which is valued as agricultural land according to 15-7-206 , MCA) , shall not be classified as agricultural land, nonqualified agricultural land, or forest land.

(2) Land in contiguous ownerships less than 160 acres in size that do not meet agricultural, nonqualified agricultural land, or forest land eligibility requirements will be valued as class 4 property.

(1) Parcels of land that meet the criteria as nonqualified agricultural land under ARM 42.20.601 are valued at the statewide average productivity value of grazing land.

(2) Parcels of land not qualifying for forest land under ARM 42.20.705 and that qualify as nonqualified agricultural land under ARM 42.20.601 are valued at the statewide average productivity value of grazing land.

(1) Each one-acre of land beneath any residences located on agricultural land is classified as agricultural land and valued according to the highest productivity value of agricultural land, in accordance with 15-7-206, MCA.

(2) Each one-acre of land beneath any residences located on nonqualified agricultural land is classified as class four land and valued according to the market value of comparable land.

(a) If the one acre of land is located on a nonqualified agricultural parcel of land that is many miles from a suburban area, the market value assigned to the land will be consistent with the market value of comparable land. In no case will the market value be lower than the lowest market value assigned to improved tracts within the county.

(b) If the one acre of land is located on a nonqualified agricultural parcel of land that is near a suburban area, the market value assigned to the land will be consistent with the market value of surrounding suburban land.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) The department calculates productivity per acre values for irrigated farm land using the formula provided in 15-7-201, MCA. However, the department applies the formula per industry standard as I/R=V.

(2) The department calculates net income per acre (I) by:

(a) multiplying the land's soil productivity by the average commodity price provided in ARM 42.20.681 to determine the gross income per acre;

(b) multiplying the gross income per acre by the land owner's typical crop share percentage for irrigated farm land which is 25%; and

(c) subtracting the $50.00 allowable water cost per acre of irrigated farm land from the value determined in (2)(b).

(3) The department calculates the minimum value of irrigated farm land by determining net income per acre (I) by:

(a) multiplying a productivity of 23 bushels of spring wheat per acre by the commodity price provided in ARM 42.20.681 to determine gross income per acre; and

(b) multiplying the gross income per acre by the land owner's typical crop share percentage for non-irrigated continuously cropped farm land which is 25%.

(4) Pursuant to 15-7-201, MCA, the department assigns the irrigated farm land the higher per acre value as calculated in (2) and (3).

(1) The department calculates productivity per acre values for non-irrigated agricultural land subclasses described in (3) and (4) using the statutory formula provided in 15-7-201, MCA. However, the department applies the formula per industry standard as I/R = V.

(2) The department calculates net income per acre (I) for the land subclasses in (3) by:

(a) multiplying the land's soil productivity by the average commodity price provided in ARM 42.20.681 to determine the gross income per acre; and

(b) multiplying the gross income per acre by the land owner's typical crop share percentage.

(3) The land owner's typical crop share percentage for non-irrigated summer fallow farm land is 12.5% and for non-irrigated continuously cropped farm land and non-irrigated continuously cropped hay land is 25%.

(4) For grazing land, the department determines net income per acre by deducting the land owner's expenses of 25% from the gross income per acre value.

This rule has been repealed.

(1) Commodity prices for the 2023-2024 appraisal cycle used for the determination of income are calculated using a 10-year Olympic average of prices from Montana Agricultural Statistics for the years 2012-2021. The department's Olympic average removes the highest price and the lowest price and averages the remaining eight prices. The commodity prices used for valuing agricultural land for the 2023-2024 appraisal cycle are as follows:

(a) Spring wheat price used in the valuation of non-irrigated summer fallow and non-irrigated continuous cropped farm lands is $5.96 per bushel.

(b) Alfalfa hay price, reduced by 20 percent as required by 15-7-201, MCA, used in the valuation of irrigated and non-irrigated hay lands is $111.30 per ton.

(c) Private grazing fees used in the valuation of grazing lands is $23.50 per Animal Unit Month (AUM).

(2) The minimum value of irrigated land as determined by the methodology detailed in ARM 42.20.675 is $535.47 per acre.

(3) The statewide grazing productivity average is .20 AUMs per acre, and is used in calculating the values of:

(a) nonqualified agricultural lands; and

(b) nonproductive patented mining claims.

(4) For the 2023-2024 appraisal cycle the capitalization rate for Class 3 agricultural land, which is used to convert an ongoing income stream into an estimate of value is 6.4 percent.

(5) For the 2023-2024 appraisal cycle the highest productivity of non-irrigated continuously cropped farmland is 60 bushels per acre, and is used in calculating the values of specialty crop land.

(6) For the 2023-2024 appraisal cycle, the value of the one acre beneath a residence on agricultural land is $2,003.

(7) For the 2023-2024 appraisal cycle, the minimum carrying capacity for grazing land to be eligible for agricultural classification is 25 AUMs as determined by the Montana State University - Bozeman, College of Agriculture, in accordance with ARM 42.20.620. 

(1) Parcels of land between 20 acres and 160 acres that do not meet the agricultural land classification income requirements outlined in 15-7-202, MCA, and ARM 42.20.620 but are used for farming or ranching, or as a part of a family farm or ranch business as described in 15-7-202, MCA, may be valued as agricultural land if the following requirements are met:

(a) the property must be located within 15 air miles of the family-operated farm or ranch;

(b) the property owner must submit proof that 51 percent or more of the owner's Montana annual gross income is derived from agricultural production;

(c) the property taxes on the subject property are paid by the family-operated farm or ranch business, which may be a family corporation, family partnership, sole proprietorship, or a family trust; and

(d) the property owner of the property must submit documentation proving that at least 51 percent of the farm or ranch entity's Montana annual gross income is derived from agricultural production.

(2) If the requirements of (1) are satisfied, the land is eligible for agricultural land classification.

(3) The department will accept a copy of a cancelled check as documentation that property taxes were paid by the family-operated business entity. Other acceptable documentation will be considered on a case-by-case basis.

(4) If the property owner is a shareholder, partner, owner, or member of the family-operated farming or ranching entity involved in Montana agricultural production, they may qualify the property as agricultural land if the following documentation submitted details the legal relationship between the owner and the family-operated farming or ranching business entity:

(a) documentation that establishes a legal relationship with the family-operated farming or ranching business entity, such as documents on file with the Montana Secretary of State; and

(b) documentation that indicates at least 51 percent of the property owner's or family-operated farming or ranching business entity's Montana annual gross income comes from agricultural production.

(5) If the requirements of this rule are satisfied, the land is eligible for classification as agricultural land according to its use.

(6) For all agricultural land classification applications received under this rule, acceptable income documentation will be the most recent year's Montana individual and/or corporate tax return, whichever is appropriate. All state and federal income tax forms submitted must detail the amount of income received from agricultural production as well as the amount of Montana gross income.

(7) If a property owner owns personal property related to the family farm or ranch business, and the market value of the personal property is above the threshold provided in 15-6-138, MCA, then the property owner must submit to the department each year a completed personal property reporting form in accordance with the requirements provided in 15-8-301, MCA, and ARM 42.21.158.  

(1) For the purpose of this rule, the term "specialty and unique crops" includes, but is not limited to, the agricultural products provided in (3)(a) through (g).

(2) A landowner may apply for agricultural land classification for specialty and unique crops. To receive this agricultural land classification, the landowner must prove that:

(a) the agricultural products they grow, raise, or produce meet the definition of agricultural in 15-1-101, MCA;

(b) the agricultural products are grown, raised, or produced by the land referenced in the agricultural land classification application; and

(c) the marketing of agricultural products, other than livestock grown, raised, or produced by the land results in at least $1,500 annual gross income, as described in ARM 42.20.620.

(3) In addition to the agricultural land classification criteria provided in ARM 42.20.620 and (1), agricultural products grown, raised, or produced by the land must also meet applicable specialty and unique crops requirements.

(a) poultry or game birds must be raised in an unconfined area and receive their general dietary requirements from the land. For poultry and game birds raised in a building, cage, or enclosed area, the land is not eligible for consideration for agricultural land classification.

(b) the sale of honey and other products from bees is considered agricultural income if the landowner or the landowner's business is registered with the Montana Department of Agriculture as an apiary.

(c) the sale of biological control insects is considered agricultural income if the insects are supported solely from vegetation grown on the land.

(d) a garden or produce farm if the plants and nursery stock are grown in and nourished by the land, and are managed using industry standard management practices, including weed and grass maintenance, fencing, and a watering system. Examples of ineligible plants include trees grown in self-contained pots or burlap bags placed in or on the ground and plants grown in flats.

(e) a Christmas trees farm if the landowner provides proof that all trees are cultivated under industry-standard management practices and sheared on a regular basis.

(f) a fruit tree orchard if the landowner provides proof that the orchard is maintained using industry-standard management practices including pest and disease control, wildlife control fencing, weed and grass maintenance, and a watering system.

(g) a vineyard if the landowner provides proof that the vineyard is maintained using industry-standard management practices, including vine pruning, weed and grass maintenance, pest and disease control, and trellising and staking.

(4) As provided in 15-7-202, MCA, land used to grow, raise, or produce the agricultural products in (3)(e), (f), and (g) is eligible for a five-year provisional agricultural land classification. A landowner must submit an application for provisional agricultural land classification on a form provided by the department.

(5) Land used to grow, raise, or produce agricultural products provided in (3)(a) through (g) that qualifies for agricultural land classification is valued at the highest productivity level of non-irrigated continuously cropped farm land, as provided in ARM 42.20.681.

The following definitions apply to this subchapter:

(1) "Board foot" means a measurement of wood equivalent to one inch thick by 12 inches long by 12 inches wide.

(2) "Contiguous parcels of land" means separately described parcels of land under one ownership that physically touch one another or would have touched one another were the acreages not separated by:

(a) deeded roads and highways;

(b) rivers and streams;

(c) railroad lines; or

(d) federal or state land that is leased from the federal or state government by an owner whose land is physically touching the federal or state land.

(3) "Cubic foot" means a measurement of wood equivalent to 12 inches thick by 12 inches long by 12 inches wide. In the forest land productivity model developed by the University of Montana – College of Forestry and Conservation, authorized under 15-44-103, MCA, the conversion factor is one cubic foot will equal four board feet.

(4) "Diameter at breast height (DBH)" means the average trunk diameter, measured outside of the bark, at a point 4.5 feet above the ground on the uphill side of the tree.

(5) "Hardwood species" means broadleaf trees. Examples of hardwood species native to Montana are alder, Rocky Mountain maple, birch, aspen, and cottonwood.

(6) "Land use" means the utilization of the land which directly relates to its classification, in accordance with 15-7-103, MCA.

(7) "Mean annual increment (MAI)" is a measurement of the average annual increase in growth produced in a tree or a natural stand of trees. MAI can be calculated by dividing total tree or natural stand growth by the total age.

(8) "Natural stands" means fully stocked, even-aged groups of softwood stands of trees which naturally regenerate. Further, "fully stocked" means the highest degree in which a natural stand of trees could fully utilize the site's capacity to grow trees.

(9) "Noncommercial forest land" means forest land stocked with trees that are not economical to harvest due to quality and quantity of the wood.

(10) "Nonforest land" means land at least 120 feet in width and at least five acres in size, which does not meet the requirements of ARM 42.20.705. Nonforest land can include rivers and streams, roads, highways, power lines easements, railroads, and noncommercial tree species. Nonforest land is classified as agricultural land, nonqualified agricultural land, residential land, commercial land, or industrial land.

(11) "Nonproductive forest land" means forest land that produces less than 100 board feet per acre annually.

(12) "Ornamental trees" means trees grown commercially to ornament and decorate or for use as shade trees or windbreaks.

(13) "Parcel" means a tract or plot of land distinguishable by ownership boundaries.

(14) "Producing timber" means growing trees, including trees removed through harvest, clear-cut, or by natural disaster.

(15) "Residence" means all conventionally constructed homes, as well as all mobile homes and manufactured housing, that may serve as living quarters for one or more individuals or a family, regardless of actual occupancy.

(16) "Scribner Log Rule" means a forest industry recognized mathematical formula that estimates the net board foot lumber volume that can be sawn from a log that is scaled to a specific diameter and log length. Volumetric yields are based on softwood trees at least 8.0 inches in diameter at breast height (outside bark). Tree volume is measured from a one-foot stump to a six-inch inside bark minimum top. Board foot estimates using the Scribner Log Rule are based on 16-foot nominal log lengths with five percent hidden defect.

(17) "Softwood species" means conifer species that can be economically processed into lumber. Some examples of softwood species that are native to Montana are ponderosa pine, Douglas-fir, larch, lodgepole pine, spruce, and alpine fir.

(18) "Site" means at least 15 contiguous acres with the capacity to grow timber.

(19) "Stocked or stocking" means a measurement of the crown coverage or degree to which an area is effectively covered with living trees.

(20) "Timber" means softwood species that can be economically processed into lumber. Whitebark pine, limber pine, and Rocky Mountain juniper are generally considered to be noneconomical to process into lumber products in Montana and are not classified as commercial softwood species for the purpose of these rules.

(21) "Under one ownership" means when two or more parcels of land are deeded under an owner's identical name or when an owner has obtained department recognition of parcels under one ownership through the affidavit process described in ARM 42.20.705.

(1) The department classifies contiguous forest land of 15 acres or more, under one ownership which is capable of producing timber that can be harvested in commercial quantity with:

(a) an annual productive capacity of 100 board feet or more of lumber per acre in live softwood trees, measured using the Scribner Log Rule, at the culmination of the MAI for fully stocked natural stands;

(b) softwood timber stocked at 10 percent or greater on an area of at least 120 feet in width; or

(c) a minimum stocking rate of 300 saplings per acre with 12-foot average spacing.

(2) Land that does not meet the stocking requirements in (1)(b) or (1)(c) because of timber harvest, clear-cuts, or by natural disaster, but will have trees regenerated within ten years, is classified as forest land.

(3) Land that was classified as forest land in a prior year and is now reduced to less than 15 acres as the result of a land acquisition through eminent domain, as set forth in 70-30-102, MCA, maintains its forest land classification unless the forest land has been further divided or is devoted to a residential, commercial, or industrial use as provided in 15-6-143, MCA.

(4) Forest land classification is not available for nonforest land, nonproductive forest land, noncommercial forest land, or land:

(a) incapable of yielding wood products due to adverse site conditions;

(b) withdrawn from timber use by statute, ordinance, covenant, court order, or administrative order;

(c) producing commercially marketable cultivated Christmas trees; or

(d) producing fruit trees or ornamental trees, including trees used as shade trees and windbreaks.

(5) A person who owns two or more contiguous parcels of land deeded in non-identical names may file an affidavit with the department attesting to the parcels as being under one ownership.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) The department determines productivity value of forest land by dividing the state into four regional forest valuation zones (zone) designed to recognize unique marketing areas, timber types, growth rates, access, and other pertinent factors affecting value. The counties contained within each zone are:

(a) Zone 1 - Northwest: Flathead, Lake, Lincoln, and Sanders counties;

(b) Zone 2 - Southwest: Deer Lodge, Granite, Mineral, Missoula, Powell, Ravalli, and Silver Bow counties;

(c) Zone 3 - Central: Beaverhead, Broadwater, Cascade, Chouteau, Fergus, Gallatin, Glacier, Golden Valley, Hill, Jefferson, Judith Basin, Lewis and Clark, Liberty, Madison, Meagher, Park, Pondera, Sweet Grass, Teton, Toole, and Wheatland counties; and

(d) Zone 4 - Eastern: Big Horn, Blaine, Carbon, Carter, Custer, Daniels, Dawson, Fallon, Garfield, McCone, Musselshell, Petroleum, Phillips, Powder River, Prairie, Richland, Roosevelt, Rosebud, Sheridan, Stillwater, Treasure, Valley, Wibaux, and Yellowstone counties.

(2) The valuation of forest land is provided in 15-44-101 through 15-44-105, MCA. Each zone's productivity value is calculated using the statutory formula provided in 15-44-103, MCA. However, the department applies the formula per industry standard as I/R=V. The department calculates each forest valuation zone's net income per acre (I) by:

(a) multiplying the potential forest productivity, expressed in board feet per acre, by the average per acre stumpage value for the specific forest zone; and

(b) adding the zone-specific per acre agricultural net income provided in (3); and

(c) subtracting zone-specific per unit cost of the forest product provided in (4).

(3) The department calculates the agricultural-related net income of a zone by:

(a) multiplying the average per acre grazing fee on private land by the

zone-specific average grazing productivity of forest land expressed in animal unit months (AUM) per acre; and

(b) deducting the landowner's grazing expenses of 25 percent from the gross income per acre value.

(4) The department assigns a potential productivity which is a weighted mean of volume produced, expressed in board feet per acre, to each forest acre based on the culmination of MAI measured by the Scribner Log Rule.

(5) The department calculates the per unit cost of forest product produced over the base period provided in 15-44-103, MCA, and determined by:

(a) averaging the actual expenditures for reforestation, fire assessment, slash disposal, timber stand improvement, timber harvest, and forest practices of the Department of Natural Resources and Conservation (DNRC) in each zone over the base period;

(b) adding the average fire assessment fees charged by the DNRC over the base period; and

(c) adding the average severance tax paid by landowners for harvested timber over the base period.

(6) The department uses the capitalization rate of eight percent as set in

15-44-103, MCA, to convert the net income to a forest land productive value.

(7) The department classifies one-acre of land beneath any residence located on forest land as a forest home-site. The value of the one-acre site will be determined using the sales comparison approach to value.

(8) Land under structures which are associated with forest land management are classified and valued as forest land.

(a) For the purpose of this rule, "associated with forest land management" means the primary use of a structure that supports the health, maintenance, growth, or harvest of the forest land on the property.

(b) If a residence and structures associated with forest land management share the same area, the department will value the one-acre site using the sales comparison approach to value. 

This rule has been repealed.

This rule has been repealed.

(1) Forest lands with trees destroyed by natural disaster are eligible for a 50 percent reduction in assessed value for 20 tax years beginning the first full tax year following the natural disaster. The affected forest land must have been classified as forest land under 15-6-143, MCA, and had ten percent or greater stocking prior to the natural disaster, and less than ten percent stocking of live trees after the natural disaster.

(2) The property owner must submit the natural disaster reduction request to the department on a Request for Informal Classification and Appraisal Review, Form AB-26.

(a) A Form AB-26 submitted in the year the natural disaster occurred or during the first full year following the natural disaster, and the reduction is approved, the property owner will receive the 50 percent reduction in assessed value for 20 years.

(b) A Form AB-26 submitted in any subsequent year after the first full year following the natural disaster, and the reduction is approved, the property owner will receive the 50 percent reduction for the year the Form AB-26 was submitted and the remaining years of the 20-year reduction period.

(3) The following information must be included on the Form AB-26:

(a) property owner's name, current mailing address, and phone number;

(b) date of application;

(c) legal description of the property where the natural disaster occurred;

(d) type of natural disaster;

(e) approximate size of forest land affected by the natural disaster;

(f) date the natural disaster occurred; and

(g) description of the damage to the timber stocking on the forest land affected by the natural disaster.  

(1) Forest land productivity value is subject to change as a result of reappraisal, a land use change, or through acreage changes incidental to updates from the Geographic Information System or fluctuations in agricultural land use due to typical farming practices. The department must phase in value increases as provided in 15-7-111, MCA.

(2) Before the department can apply any annual phase-in value, the department first determines the difference between the value before reappraisal (VBR) and the full reappraisal value.

(3) If the forest land's productivity value changes as a result of:

(a) reappraisal, the department will use the full reappraisal value from the previous reappraisal cycle as the VBR;

(b) a land use change, the VBR is calculated as if the new forest land acres had existed before reappraisal; or

(c) acreage changes due to department updates from the Geographic Information System, or due to incidental fluctuations in agricultural land use due to typical farming practices, the department will use the forest land value from the last year of the previous valuation cycle as the VBR.

(4) The phase-in value calculations for each year of the reappraisal cycle are as follows:

(a) Year 1 phase-in value = VBR + (change in value x .1666);

(b) Year 2 phase-in value = VBR + (change in value x .3332);

(c) Year 3 phase-in value = VBR + (change in value x .4998);

(d) Year 4 phase-in value = VBR + (change in value x .6664);

(e) Year 5 phase-in value = VBR + (change in value x .8330); and

(f) Year 6 phase-in value VBR + (change in value x 1.000).

(5) For forest land that deceases in value due to reappraisal, the lower value will be fully implemented immediately and will not be phased in.  

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) "Appraisal period" means the reappraisal cycle provided for in 15-7-111, MCA.

(2) "Compaction ratio" refers to the ratio that expresses the relationship of the number of tons that will fill one cubic yard of capacity. For example, if the compaction ratio is .70, then 70% of one ton, 1,400 pounds of waste, can be deposited into one cubic yard of capacity. Compaction ratios for landfills are typically in the .50 to .70 range. Unless the landfill owner or its agent can provide by a preponderance of evidence to the contrary, the compaction ratio will be .70.

(3) "Cover materials" means at least six inches of dirt or a dirt-like substance that is applied to the exposed garbage each day and is not removed. It does not mean a tarp or tarp-like product.

(4) "Discount rate" is a rate expressed in a percentage that is used to discount the annual royalty payments over the projection period to a present value. The majority of the discount rates for landfills are in the 20% to 30% range. Unless the landfill owner or its agent can provide by a preponderance of evidence to the contrary, a discount rate of 20% will be used.

(5) "Improvements" means buildings, scales, and other structures permanently affixed to the ground necessary to operate a landfill.

(6) "Other property related income" means landfill income generated by the property, such as land/dirt farms and methane gas collection.

(7) "Reversionary value" means the market value of the landfill after it is closed.

(8) "Royalty rate" means a rate applied to the annual gross receipts that results in the estimated royalty payment for each year of the projection period. Unless the landfill owner or its agent or the department can provide by a preponderance of evidence to the contrary, the royalty rate will be 10%.

(9) "Royalty method" means a discounted cash flow analysis based on the premise that a landowner would lease land to a licensed landfill operator for a set percentage of the tipping fees received for dumping at the site. The present value of the annual royalty rate of payments must be estimated over the projected economic life of the licensed landfill, plus the present value of the landfill after it is closed.

(10) "Licensed Landfill" means an area of land or an excavation where wastes are placed for permanent disposal, and that is not a land application unit, surface impoundment, injection well, or waste pile. Licensed landfills are subject to federal regulations of the Environmental Protection Agency (EPA) and law as "permitted landfills" under Subtitle D of the Resource Conservation and Recovery Act of 1976 (RCRA) and state regulations through the Department of Environmental Quality (DEQ).

(11) "Tipping fees" are the dollar charge per ton for dumping municipal solid waste and other approved waste at the licensed landfill.

(2) The royalty method that will be used to determine the market value of licensed landfills will be applied using the following steps:

(a) The department shall estimate the amount of waste coming into the landfill for the appraisal period. The owner of the licensed landfill or its agent shall provide copies of its Department of Environmental Quality, Solid Waste Management System License Renewal Application for each of the immediate five years prior to the appraisal period. The amount of tonnage reported on the applications for the referenced five-year time period will be reviewed to estimate the annual increase of waste tonnage for the remaining economic life of the licensed landfill.

(i) The following calculation will be used to estimate annual incoming waste tonnage:

tons from the most recent year

x (1 + estimated annual increase)

= estimated first year tonnage.

(b) The department shall estimate the licensed landfill owner's annual tipping fees less any bulk discounts for the appraisal period. To accomplish this, the licensed landfill owner or its agent shall identify its annual tipping fees rate for compactor vehicles for the immediate five years prior to the appraisal period. The landfill owner shall identify its annual bulk discount rate by providing copies to the department of all of its annual disposal contracts. The discounted tipping fees for the immediate five years prior to the appraisal period will be reviewed to estimate the annual increase in the discounted tipping fees for the appraisal period. When calculating the discounted tipping fees, the department shall be aware of any potential aberrations identified by the licensed landfill owner or its agent that may exist in the documentation submitted by the landfill owner or its agent pursuant to this section. The department shall take those aberrations under consideration when calculating the discounted tipping fees.

(i) The discounted tipping fees will be calculated as follows:

most current year tipping fees

x (1- most current year bulk discount)

x (1 + estimated annual increase)

= discounted tipping fees for the projected remaining economic life of the licensed landfill. 

(c) The department shall calculate the remaining capacity of the licensed landfill for each tax year. To accomplish this, the existing capacity at the beginning of the projection period will be taken from the estimate recorded on the landfill owner's most recent Solid Waste Management System License Renewal Application.

(i) To compute the remaining capacity for each tax year, the tonnage received during the year must be converted into cubic yards of landfill that would be filled. The compaction ratio is used to make the conversion.

(ii) The number of cubic yards used during each year is calculated as follows:

tons received

÷ compaction ratio

= cubic yards used.

(iii) The remaining capacity shall be calculated as follows:

total landfill capacity

- cubic yards used

= airspace capacity before accounting for cover materials.

(iv) If cover materials are used in the landfill, the remaining capacity shall be calculated by multiplying the airspace capacity above-computed by .85 to account for the industry standard of reduction of remaining airspace by 15% for cover materials, otherwise no adjustment for cover material will be made.

(d) The department will use a royalty rate to calculate the estimated royalty payment for each tax year.

(i) The first year's royalty payment is computed as follows:

tons received first year

x discounted tipping fees

x royalty rate

= royalty payment.

(3) The discount rate shall be applied to each year's royalty payment as determined in (2)(d).

(4) The department shall estimate the reversionary value of the closed landfill. To accomplish this, the landfill owner or its agent shall provide the department with a projected closure date. The reversionary value will be discounted to the present worth.

(5) Any other property related income not included in the above calculations shall be added to the overall property value. The department shall consider the cost approach, the sales comparison approach and the income approach to value and use the most defensible approach in estimating the value of the other property related income.

(6) The market value of any improvements to real property owned by the lessee, and not included in the royalty agreement between the lessee and the land owner, will be added to the overall property value.

(7) The department shall calculate the final valuation for each tax year in the appraisal period applying this rule.

(8) Any information required to be supplied by the licensed landfill owner shall be held as confidential by the department.