1

Elmore County Republican Central Committee

Special Meeting Regarding Irrigated Farmland Assessments in Elmore County

June 11, 2015

The meeting was called to order at 7:00 PM by Chair Megan Blanksma.

The prayer was offered by Arlie Shaw and the Pledge of Allegiance was led by Donna Bennett.

The roll was called and a quorum was found to be present.

Business. The rules of the forum were discussed and the request was made for minutes from the

meeting to be distributed to everyone present. Names who do not normally receive e-mail from the

committee will receive the minutes of the meeting.

Megan introduced Ron Fisher, Elmore County Assessor who gave a brief overview of the process and

how we arrived at where we are. Ron stated that what we are discussing tonight comes down to a few

basis questions:

1) What business does state have in Elmore County? He explained that the County is not

autonomous but subject to laws passed by the legislature and rules that govern the County are

made by State agencies. The County sets property assessments in accordance with State Law

and Rules. State law declares that assessments must be at market value. After the assessors set

the values the State Commission makes sure values are equitable across state i.e. that values

for comparable properties in the various counties are comparable.

2) Why so much of increase in value this year? It appears that values for irrigated agriculture have

probably not increased since maybe 1980. At any rate its been a long time since they were

adjusted. Assessments were made if the property was new ground and so forth but not

countywide.

3) Why do we have only 2 years to bring up to value? According to law we should be raising the

assessment this year completely to 100% of market value to be in compliance. Our County

Commissioners wanted to stretch out to 2-5 years to ease the shock but according to law we

must comply sooner. We are hoping to get 2 years to get values up to what they should be to

ease the shock this year. State Tax Commission meets in August & will need to approve taking 2

years to get up to market value. If they do not approve it the full adjustment will come for this

years taxes.

4) The changes in assessed values are not due to Tax Commission forcing the issue. They are just

doing their job according to the law. One of the members saw that the valuation for irrigated

agricultural land values had not changed for long periods. The values should vary as the

capitalization rate varies. The capitalization rate is determined annually by Farm Credit Bank in

Spokane. Values should change each year just based on the change in the capitalization rate but

have not. This was the red flag that triggered an investigation by Ron to see why the values

were not changing.

2

Ron started as Assessor in 2011. It was at the beginning of his 2nd Term that he became aware of the red

flag and started his investigation into the problem.

Ron then introduced the representatives from the State Tax Commission

a. Allen Dornfest

b. Matt Virgil

c. Kathlynn Ireland State Tax Presentation. Consulting Appraiser for State Tax

Commission. She also consults with Elmore County on valuations.

Kathlynn began her presentation on how properties are valued and what is required under Idaho law.

She stated that she wanted to be transparent & wanted to bring people in to be a part of the process.

Questions can be asked as we go through her slides.

Kathlynn began by asking Why are we here? Data was compared from surrounding counties and

Elmore County irrigated ag values are very low in comparison (maybe 35% of similar counties) and have

not changed over the years. The annual capitalization rate should change assessed values but they have

not been changing. This is a big red flag! Other counties have much higher assessments for irrigated

agriculture. Some of the counties that Kathlynn showed have very low irrigation costs and arent

directly comparable to Elmore County. Some of the other counties appear to be more comparable and

are irrigated ag lands there still have much higher assessments.

One of the members of the audience asked if the legislature has restricted budget increases for

Counties. Alan Dornfest responded to the question that in 1995 the legislature placed limits on budget

increases for taxing districts within the state. The limit is a 3% growth in revenue dollars per year. A

district can increase a little more than 3% if there is new construction within the district or if they annex

new areas. There is no limit on reductions in budgets.

Kathlynn then discussed how values are determined for irrigated Ag. The values for assessments are not

based on sales of ag property but are based on the income method of appraisal. Under Idaho law the

speculative value of farm property is exempt. That means that if property is being sold for five times its

value for agriculture the assessed value is based on the value for ag and not the sales prices which may

be driven by speculation due investors or developers.

Ron raised assessments this year substantially but values are still not comparable to nearby counties.

Currently in the county there is only one area that has highest assessment valuation (now about $1000).

The county average is about $700. Which is much lower than the values in Owyhee, Gem and Jerome

County which are about $1400 per acre.

Kathlynn then explained some of the rules & statutes that govern assessed valuations in the counties.

These include Idaho Code 63-314 and Rule 63-314, Code 63-602K and rule 613, and Code 63-604 and

Rule 645. She also explained that just because your assessment goes up it doesnt mean that your taxes

are going up by the same amount. The levee rates (i.e. the factor applied to your assessed valuation) is

determined months after the assessments are made to meet budget demands. It does follow that if

3

your assessments go up that your taxes will go up but not to the same extent as the increase in

assessment.

State law under statute 63-602k requires that the capitalization rate developed by Farm Credit Services

must be used to calculate values. There is a 5 year rolling average that is applied to the data used to

level out humps & valleys in the capitalization rate, cost data and income data. Under Idaho Code 63-

314 all property must be at current market value on the assessors records.

A County ratio study is performed to determine if properties are at market value and the results must be

between 90-110% of market value. Commercial properties are studied every year to determine that the

assessments are correct. If the assessments arent correct across the property categories tax burdens

shift from one property sector to another. This is even more important for commercial properties since

they dont have any exemptions like agriculture or home owners.

The factors used to determine market value for irrigated agricultural lands in Idaho are based on the

following factors:

1) Gross Income uses a 5 year rolling average crop price given to the County by the Idaho Tax

Commission.

2) Capitalization Rate as determined by Farm Credit Services

3) Expenses This is the big kicker to be determined correctly to correctly determine valuation.

The assessors office needs information from property owners on expenses so they can correctly value

properties in an area. This data is needed to develop the medians and averages for cost data that are

required to determine costs for comparable areas. One area where costs are comparable is where

irrigation costs are comparable. This prevents the application of cost data across very different areas.

For example comparing parcels in areas where water costs are low with parcels on the Sailor Creek

Project where energy costs are very high to get water from the river to the farms would result in the

over valuation of the Sailor Creek property while under valuing the low lift areas.

The discussion appeared to be getting bogged down in the details and Megan gave a summary of where

the presentation is going & tried to get an understanding of what was coming so we could move ahead

with the discussion.

Kathlynn explained that expenses are determined on a rolling average as well as income. The current

average cost for irrigation used in Elmore County is $68 per acre. This is very low for some areas of

Elmore County.

On the income side crop prices are set by the University of Idaho based on market data. Most of the

income data is set by State tax commission based on the U of I data so only the expenses can be

determined at the county level.

Alan Dornfest explained that a person can go to the tax commission website and look at your code area

(Elmore County) and get an estimate of 2015 taxes. Estimates are normally within 1-2% of the actual

4

bill. One way to reduce taxes is to participate in taxing district budget meetings. The site is found at:

tax.idaho.gov and go to the estimate taxes link. You can then estimate your taxes.

A question was asked about land classifications and why havent other categories gone up? From the

assessment data it appeared that only row crops went up. It was explained that all of irrigated ag

needed to go up to stay in accordance with law. Other classifications dont appear to have had the

problem that irrigated ag has experienced.

Kathlynn explained that the County is now using agricultural neighborhoods rather than soil types or

individual appraisals as the basis for property assessments. Using agricultural neighborhoods simplifies

assessments over using much more detailed data such as soil type. The Assessors Office has a map that

shows the neighborhoods and can adjust the neighborhood boundaries if necessary. Differing rates for

expenses will be developed for like farms within the neighborhoods. An example of a neighborhood

would be an irrigation district.

Megan then compared two pieces of property one from Elmore & one from Owyhee and focused on

per acre irrigation costs. The property in Owyhee County was low lift and showed a 133% per acre

increase in assessed value across the county line. In Elmore County a parcel in a (medium) high lift area

had the assessed value increase 308% this year. Between the two parcels water lift is very different.

The Elmore County assessed value was 81% of Owyhee value for ground last year. This years value was

187% of the Owyhee County land. Both values increased but the values are no longer proportional.

Now high lift ground in Elmore County is more valuable than the low lift ground in Owyhee County. This

shows the need for the assessor to use data showing actual expenses to in their attempt to value

irrigated ground.

It was also noted that some irrigated parcels are not irrigated or some are in areas that, while water

costs are very low, do not have adequate water for the whole season and are thus much less valuable

than parcels that have adequate water supplies. Megan suggested that parcel owners need to get

together with neighbors in the various neighborhoods and combine their data in their appeals to the

County equalization board.

The question was asked about whether the Owyhee data is correct. We dont know anything about

their data but the assessor needs to look at land across county boundaries to ensure county data is

comparable. In order to have correct county assessments the assessors office needs accurate data

from farmers. Some dont want to share expense data considering it to be proprietary and none of the

governments business. The assessors office, however, needs expense data to get assessments correct.

It was noted that the assessors office really hasnt asked for this kind of data before. They have

received bits and pieces of the data but not real expense data so the really dont have correct expense

data for use in their analysis.

The question becomes Where do we go from here? The income data from the University of Idaho is

considered to be very good and the capitalization rate is mandated by law. The only place to make

changes is with the expense data which is the problem. Currently the cost data the county has is not

5

very good. The next step is to appeal to the board of equalization but individuals need to present data

in order for the board to make corrections.

At present the property assessments have been calculated based on the data the County had available.

Since the assessed valuation of the county will increase the tax rates will go down to keep the same

number of dollars available to the various taxing districts. The result will be that taxes will shift from

homeowners and commercial properties to ag as the new assessment valuations take effect. The

problem has been 35 years in the making and is being corrected in 2 years. It was stated that irrigated

ag property owners cant absorb these increases in only two years. Alan Dornfest reiterated that an

owner can use the tax estimator to estimate the actual impacts of the increased assessments. The law

doesnt allow any extension of time to phase in the new assessments.

It was explained that the County Assessor must act on data as they get it into their hands. A discussion

begun on who broke the law by not raising the assessment earlier and that it was someones fault. It

was explained that the law doesnt allow going back to fix the problem there was a tax shift from ag to

residential and commercial that occurred gradually over the years and now it must be fixed in one year.

They are hoping to be allowed to do it on two years but the Tax Commission could come back and force

the changes to occur this year. It was explained that the attempt to find blame wouldnt help the

correct the problem.

It was also explained that the state has asked for data for two years & didnt get good data in. When

they got the data in they found the problem & must be fixed. The County is currently trying to fix in 2

years rather than 1 year but that will be up to the State Tax Commission. The law says current market

value and doesnt allow any time to fix any problems. It requires that each year the assessments must

be based on current market value.

Ron explained that he understands that it creates budgeting problems for current owners but there are

no penalties for past inequities that have arisen due to the prior shifting of tax burdens.

Megan said everyone needs to take time to look at their assessments and challenge them. At this point

we need to find if assessments are accurate rather than looking at what we will be paying for taxes since

that has not been determined but will be based on the new assessments.

Allan, in reference to earlier comments by Representative Neilson, explained that since no one had data

that indicated any problems with the data that no one broke any law. Currently the Assessors Office

is using regional data so if individuals can bring in local data on costs they can do a better job in the

assessments.

SINCE THE ASSESSMENTS HAVE BEEN MADE THE NEXT STEP YOU MUST TAKE IS TO FILE AN APPEAL

WITH THE BOARD OF EQUALIZATION (MADE UP OF THE COUNTY COMMISSIONERS). What this means is

that you take your data and appeal the assessment. This requires Notice of Appeal with the Board of

Equalization. THIS MUST BE FILED BY JUNE 22, 2015 TO BE EFFECTIVE. A COPY OF THE FORM IS

ATTACHED. PLEASE PRINT THE FORM IN COLOR. The Board of Equalization makes adjustments for

entire areas of county not just individual properties.

6

You must file a form for each parcel (unless instructed otherwise) but when an adjustment is made it

will be for larger area likely for whole neighborhood for example irrigation district. THE BURDEN IS

ON THE PERSON FILING THE APPEAL TO PROVE THE ASSESSMENT IS WRONG SO BRING YOUR EXPENSE

DATA TO PROVE THAT THE ASSESSEMENT IS WRONG.

Bring your data to board of equalization. Can show water district assessment data bring evidence to

be considered. Here is a suggested set of data to bring to the Board of Equalization:

Crops Grown

5 year average yields

Type of Rent Paid Cash or Crop Share

Number of Acres Planted to each crop

Share of Income

Share of Expense

Current Water Costs

An appellant needs clear evidence that the assessment is wrong. A copy of your Schedule F from your

taxes would work. At minimum an appellant needs expenses for each neighborhood farm (not

necessarily for each parcel). Evidence needs to be good - usually not just a hand written note. If your

expenses include farms in more than one area it would be much more helpful to break them out by

neighborhood that you farm in rather than just the totals for multiple neighborhoods. Many costs may

be similar between neighborhoods and an average will be adequate but for expenses like water costs or

other costs that vary widely between parcels / farms should be broken out to gain the most benefit.

To get data on expenses make appointment with assessor to go over data used in assessment. Get

together as neighborhood to present data to commissioners / board of equalization. This will help get

assessments done correctly. ASSESSORS OFFICE WILL HAVE MAPS SHOWING THE NEIGHBORHOOD

THAT YOUR PARCELS / FARMS ARE LOCATED IN. This will help you see what costs are different for your

neighborhood.

In order to be heard by the Board of Equalization you must file an appeal by the 4th Monday of June

(June 22nd this year) before 5:00 PM. Neighbors can go together to present data and the commissioners

can hear the appeals in mass if they want. When adjustments are made it will be for all the farms in a

neighborhood that is charge of board of equalization to make property values fair within the County.

If your appeal is denied by the Board of Equalization you can appeal to the State Tax Commission with in

30 days of the mailing of the results from the Board. From board of equalization hearings (next Monday

through 14th of July (2nd Monday in July) then can go to state board of appeals Must file by June 20th by

statute. State can grant extension to give time for appeals.

If the Board of Equalization does not grant the appeal the decision can be appealed to the Tax

Commission within 30 days of the mailing (not receipt) of the decision of the Board of Equalization.

7

HARDSHIP: If the raise in assessment will create a hardship for you you can file for a hardship

exemption from the taxes that will result from the higher assessments. THIS MUST BE FILED IN

ADDITION TO THE APPEAL AND IS DUE ON JUNE 20TH OF THE TAX YEAR. SINCE THE 2OTH IS A SATURDAY

IT WOULD BE BEST TO FILE THIS REQUEST ON FRIDAY JUNE 19TH.

The data used in the analysis comes from several sources but can be located on the following websites:

www.farm.ewg.org subsidies

www.ers.usda.gov very broad information mostly countywide

The Assessor spreadsheet relied on data from the two sites listed below:

www.nass.usda.gov Quickstats option can search for data by state and county.

www.extension.uidaho.edu.crops.asp University of Idaho Site

Senator Bert Bracket explained that Owyhee County went through this a few years ago. This problem is

common and shifts around the state as problems with valuations are found.

The dates to remember are the 20th (plan on the 19th) for the hardship exemption and the 22nd for an

appeal to the Board of Equalization. A hardship exemption is individual and an appeal helps everyone in

your area. You need data for both and both must be filed by the respective deadlines if you want to do

both.

After some further discussion a motion to adjourn was made by Bunni Farnham, seconded and was

passed. The meeting adjourned at 9:40 PM.