2019 Current Use Farm-Ag Land Value for 2020 Tax

Overview

Current Use Farm & Ag owners will see an increase in the agricultural land value for assessment year 2019. In some cases, the increase will be significant. This is because the land value was calculated using the rate of interest and property tax component established by the Department of Revenue (DOR) according to RCW 84.34.065. In prior years, the land value was less than the statute's requirements.

The statute states "the true and fair value of farm and agricultural land shall be determined by consideration of the earning or productive capacity of comparable lands from crops grown most typically in the area averaged over not less than five years, capitalized at indicative rates. The earning or productive capacity of farm and agricultural lands is the ‘net cash rental,’ capitalized at a ‘rate of interest’ charged on long term loans secured by a mortgage on farm or agricultural land plus a component for property taxes" as provided each year by the DOR in WAC 458-30-260 and WAC 458-30-262.   

We now have current net cash rental value for all Current Use agricultural land in San Juan County. The methodology of calculating the value is now consistent with the DOR guidelines and other counties in the state.

Current use agricultural land is valued by capitalizing net rental income per RCW 84.34.065 and WAC 458-30-260 and WAC 458-30-262

Net cash rental income can be determined by:

Lease values WAC 458-30-260(5)(a)WAC 458-30-260(5)(a)
Earning or productive capacityWAC 458-30-260(5)(b)
Assessor discretionWAC 458-30-260(5)(c)

San Juan County determined net cash rental by productive capacity *

Cash value per ton averaged over five years$190
Production cost per ton (based on custom hire)$125

* USDA Hay Market Price Reports/Washington for "good" grass hay

Per acre amounts from typical production of two tons per acre

Cash value per acre$380
Less production cost per acre$250
Productive capacity per acre$130

Interest rate and property tax component

Interest rate per WAC 458-30-262(1)5.02
Property tax component per WAC 458-30-262(2)0.78
Capitalization rate5.80

Capitalized productive capacity based on soil type

The highest rated soils are considered to produce "good" grass hay in San Juan County.

Soil TypeType DescriptionProductivity FactorValue per Acre
2Good1.00$2,240
3Average0.79$1,770
4Below Average0.67$1,500
6Fair0.50$1,120
7Poor0.40$900
8Poor0.40$900

The productivity factor is based on historical production information and USDA Soil Survey capability ratings for San Juan County.

San Juan County does not have any soil type 1 or 5.