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Dispute brewing over assessed valuation of CREP land PDF Print E-mail
Written by Wauneta Breeze   
Thursday, 30 July 2015 18:06

By Russ Pankonin

The Wauneta Breeze


There’s a dispute brewing in Chase County over the assessed valuation of land enrolled in the Conservation Reserve Enhancement Program (CREP).

Owners of Chase County land enrolled in CREP feel the new 2015 assessed valuations far over-value the land for tax purposes.

For tax purposes, Chase County is assessing CREP land as irrigated land. For 2015, that value ranges from $4,190 to $4,445 per acre, depending on the quality of soil.

There’s approximately 5,400 acres in the county enrolled in the program.

CREP contracts do not allow any use of irrigation or farming on the land during the contract period. Contracts run for either 10 or 15 years.

In return for idling both the ground and irrigation, landowners are reimbursed on an annual basis. The payment remains the same during the length of the contract and was initially based on land rental rates.

The landowner does retain the right to resume farming and irrigating the land once the CREP contract expires.


Landowners protest valuation

Owners of CREP land in the county expressed their dissatisfaction with the new values by filing property valuation protests. Of the 75 protests filed this year, 35 disputed CREP land valuation.

Chase County Clerk Debbie Clark said 75 protests are easily the most she’s ever seen filed during her tenure.

Duane Dinnel of rural Wauneta has been at the forefront of the valuation issue.

His biggest complaint with the process was that he didn’t feel the voice of the landowners was heard by the commissioners.

On the recommendation of County Assessor Dotty Bartels, Commissioners Don Weiss, Chuck Vette and Dave Hogsett made no adjustment to the CREP land valuations.

One change that Bartels and the commissioners did make was to establish a new tax classification for land enrolled in CREP.

Bartels said she will begin tracking sales on CREP land to better establish market values.


Differing viewpoints

At Tuesday’s commissioners’ meeting, Dinnel provided them with a breakdown of CREP sales during the three-year window used for setting land values. That window runs from 2011 to 2013.

He showed that approximately 930 CREP acres sold during that time, with an adjusted market value of $4,247 per acre.

Ag land in Nebraska must be valued at 75 percent or less. In Chase County, it’s valued at 72 percent of market value. That would make the assessed value of CREP land $3,058 per acre, Dinnel said.

That represents a difference of nearly $1,300 per acre between irrigated land and CREP valuations, he added.

Bartels said Monday that some of the CREP sales occurred very early in that three-year window. Since then, she noted land has done nothing but go up and up, until leveling off recently.

Bartels doesn’t feel there’s been enough arms-length sales of CREP ground to accurately set a value.

When sales data is reported to her office, she said the forms do not include whether some or all of the ground sold was CREP ground.

One of the steps she’s taking in her office is to identify all CREP land in the county. Once identified, the data must then be updated and reviewed. It’s not just a two- or three-day task, she noted. It takes time, she added.

Dinnel said counties were directed by the Department of Revenue in 2009 to begin classifying CREP and other conservation lands differently for tax purposes.

He questions why a CREP classification wasn’t created until now.

Bartels said other neighboring counties value CREP land as irrigated land. She added that as land gets closer to coming out of a CREP contract, the more valuable she believes the land is.

According to the Natural Resources Conservation Service, some of the early contracts will expire in 2019. At that point, the land could go back into full production, including irrigation.

Several years ago, as crop and land prices escalated to record levels, some CREP contracts were bought out.

That required paying back all CREP payments, with interest; reimbursing cost-share expenses with interest; and paying a penalty for an early-out.

Bartels said those actions didn’t represent a true market value of CREP land for valuation purposes.


Dinnel plans appeal to TERC

Dinnel said he plans to appeal the county’s decision to leave valuations at irrigated land levels.

To do so, Dinnel must file his appeal with the Nebraska Tax Equalization and Review Commission (TERC).

However, that’s likely to be a lengthy process. An appeal to TERC on CREP values for 2014 by Page Johnston of Wauneta wasn’t finalized until mid-June, 2015.

While TERC denied Johnston’s protest, both Dinnel and Bartels felt the ruling reinforced their positions, although the ruling was somewhat contradictory in areas.

After looking at applicable sales data, the commission determined the median sale of land that included CREP acres was $4,410. At a 73 percent ag land factor, that would put the price of CREP land at $3,219.

The irrigated land values for 2014 ranged from $3,200 to $3,300 per acre. As a result, TERC ruled the CREP land was not overvalued.

Dinnel contends that sales data supports a value of closer to $3,000 per acre. He questions how the value of CREP land jumped from $3,200 to $3,300 per acre in 2014 to $4,190 to $4,445 per acre in 2015.

However, TERC ruled the CREP land should be valued at its present use, which is grassland. They noted the value of CREP land should not be determined by the market for grassland but rather for the market of CREP land.

Dinnel believes this statement indicates the CREP land should be valued at its current use, which is grassland.

Dinnel said that instead of the commissioners taking action to lower CREP value, they are leaving it up to TERC to decide.

Bartels said the decision to leave CREP values at irrigated levels is strengthened by TERC’s decision to deny Johnston’s appeal.

However, TERC did point out in its ruling that Johnston “produced competent evidence that the County Board failed to faithfully perform its duties and to act on sufficient competent evidence to justify its actions.”

The new 2015 valuations will be used by local taxing entities to set their levies for the upcoming budget year.