Agricultural Property

In Iowa, there are five property classifications:

• agricultural
• residential
• multi-residential
• commercial
• industrial

Residential, multi-residential, commercial and industrial properties are assessed based on their market value; that is, what the property would sell for in the open market. Agricultural property is an exception. It is assessed based on a value-in-use standard, using a productivity and net earning capacity formula prescribed by law. Therefore, agricultural assessments are a fraction of what the properties would sell for in the open market.

Agricultural real estate is assessed at 100% of productivity and net earning capacity value. The assessor considers the productivity and net earning capacity of the property. Agricultural income is reflected by production, prices, expenses and various local conditions.

This is a complex formula that involves average crop yields and prices for a five-year period. The value of buildings and other improvements are factored into the equation. The percentage of non-productive land such as timber, ponds, etc is also considered. What this means is that as commodity prices rise over time, agricultural valuations rise, and vice versa.

Iowa law states that in determining the productivity and net earning capacity of agricultural real estate, the Assessor shall use available data from Iowa State University, the Iowa Crop and Livestock Reporting Service, the Department of Revenue or other reliable sources. The assessor shall also consider the results of a modern soil survey (if completed since January 1, 1949).

The Department of Revenue conducts a county by county productivity study in each equalization year (odd numbered years). Data used in the study pertains to crops harvested during a five year period ending with the calendar year in which assessments were last equalized. If the total agricultural land and building value for a jurisdiction is not within 5% of the current land and building calculations, a jurisdiction will receive an order to adjust values accordingly.

The use of a modern soil survey is the best method to value agricultural land. Corn Suitability Rating (CSR) is an index that rates soil types based on their productivity for row-crop production.

• Rating established for each soil type
• Ratings range from 5 to 100
• Rating of 100 is very good quality with little or no slope
• Rating of 5 is very steep or rocky, have many restrictions on ability to produce net income

In 2015, Linn County began using the new formula for making adjustments to the productivity values of certain agricultural lands. The Agricultural Adjustment Committee developed the new formula in order to provide more consistency statewide for assessment of non-productive land.

While the new adjustment formula was used, the assessments were also be based on a new CSR system released by Iowa State University called "CSR2."

CSR2 is an index similar to CSR ratings but incorporates a clearly defined and easily calculated formula to calculate the soil's productivity.

• CSR2 uses a more data-driven model similar to the NRCS methods while CSR used a judgement and experience based system
• CSR2 is more suitable to site-specific soil measurement and precision farming uses as it takes into consideration the soil inclusions or subcomponents
• The climate factor in the CSR formula has been eliminated in CSR2. Formerly northwest Iowa counties had points deducted for being colder and drier.
• ISU (Iowa State University) formerly was in charge of both the soil survey and CSR system. While ISU still controls CSR/CSR2, NRCS (Natural Resources Conservation Services) handles soil mapping, resulting in the need for a calculation that ties into the NCRS database.
• NRCS is using new technology to update soil maps in Iowa's 36 million acres of land. Soil names have been added or changed.
• Iowa now have full coverage with LiDAR, a soil survey tool. NRCS updates are no longer done by county.

• S = Taxonomic subgroup class of soil series
• M = Family particle size class
• F = Field conditions of particular SMU (Soil Map Unit)
• W = Water holding capacity
• D = Soil depth & erosion factor T
• EJ = Expert judgement correction factor

• The philosophical goal is to get the same values as CSR but with greater transparency, consistency & ease.
• The technical goal is to have CSR2 consistent with today's soil mapping, classification, and government programs.
• The ancillary goal is to be able to extend CSR2 across boundaries.

In order to determine the assessed value for agricultural buildings ad structures, assessors shall make an agricultural adjustment to the market value of the buildings and structures by developing an agricultural factor for their jurisdiction.

• Product of the ratio of the productive and net earning capacity value per acre

• Ag factors are calculated by the Iowa Department of Revenue in every odd or equalization year
• The calculation utilized agricultural production and price data from various sources, and market data provided by Dr. Michael Duffy's ISU ag land survey