Results of the North Dakota Land Valuation Model for the 2013 Agricultural Real Estate Assessment

Abstract

This report summarizes the 2013 results of the North Dakota Land Valuation Model. The model is used annually to estimate average land values by county, based on the value of production from cropland and non-cropland. The county land values developed from this procedure form the basis for the 2013 valuation of agricultural land for real estate tax assessment. The average value for all agricultural land in a county from this analysis is multiplied by the total acres of agricultural land on the county abstract to determine each county’s total agricultural land value for taxation purposes. The State Board of Equalization compares this value with the total value assessed to agricultural property in each county. The average value per acre of all agricultural land in North Dakota increased by 9.46 percent from 2012 to 2013 based on the value of production. Cropland value increased 9.62 percent, and non-cropland value increased by 5.68 percent. The formula capitalization rate was 5.488 percent. The capitalization rate used for all years from 2003 through 2011 was the minimum rate set by the Legislature. The legislation setting a minimum capitalization rate expired after the 2011 tax year. The increase in the values for cropland and all agricultural land was primarily due to increased value of crop production. The value of production for most counties has been considerably higher since 2007 than prior years. This increase in value of production is a combination of increased yields, higher prices and a change in cropping mix. The capitalization rate change increased land valuations by 6.85 percent in all counties; while the cost of production index decreased land values in all counties by 5.4 percent. The value of production impacted cropland values from a negative 1.73 percent to a gain of 14.47 percent. Non-cropland values increased by 5.68 percent, 1.45 percent from changes in the capitalization rate and the cost of production index and the remainder from an increase in the price received for calves and cull cows. Changes in market value are included for comparison. Market value data are from the annual County Rents and Values survey conducted by North Dakota Agricultural Statistics Service.