Louisiana Revised Statutes 47:2301
Chapter 6. Use Value and
Fair Market Value
Part I. Use Value
§2301. Use value; defined
§2302. Definitions
§2303. Eligibility for use
value assessment
§2304. Application for use value assessment
§2305. Loss of eligibility
§2306. Penalties
§2307. Determination of use value
§2308. Louisiana Tax Commission; tables; classifying land; public
hearings
§2309. Effective date; nonapplicability
§2301. Use value; defined
Use value of bona fide agricultural, horticultural and timber
lands means the highest value of such land when used by a prudent
agricultural, horticultural or timber operator for the sole purpose
of continuing the operation, as a commercial agricultural,
horticultural or timber enterprise, of an existing bona fide
agricultural, horticultural or timber use. Use value of bona fide
marsh lands is the highest value of such land for the sole purpose
of continuing the traditional use of the marsh lands for hunting,
fishing, trapping or various types of aquaculture by a prudent
manager of marsh lands. Use value of such land shall be so
established without reference to any other criteria of value
particularly, but not as a limitation, without reference to fair
market value or value to the public in general.
Added by Acts 1976, No. 702,§ 1, eff. Aug. 4, 1976; H.C.R.
No. 88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994 R.S., eff.
May 11, 1994.
§2302. Definitions
A. Bona fide agricultural land is land devoted to the production
for sale, in reasonable commercial quantities, of plants and
animals, or their products, useful to man, and agricultural land
under a contract with a state or federal agency restricting its use
for agricultural production.
B. Bona fide horticultural land is land devoted to the production
for sale, in reasonable commercial quantities, of fruits,
vegetables, flowers or ornamental plants, and horticultural land
under a contract with a state or federal agency restricting its use
for horticultural production.
C. Bona fide marsh land is wetland other than bona fide
agricultural, horticultural or timber land.
D. Bona fide timberland is land stocked by forest trees of any
size and specie, or formerly having such tree cover within the last
three years and not currently developed or being used for nonforest
purposes, and devoted to the production, in reasonable commercial
quantities, of timber and timber products, and timberland under a
contract with a state or federal agency restricting its use for
timber production.
Added by Acts 1976, No. 702,§ 2, eff. Aug. 4, 1976; H.C.R.
No. 88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994 R.S., eff.
May 11, 1994.
§2303. Eligibility for use
value assessment
In order to be classified as bona fide agricultural,
horticultural, marsh or timber land and assessed at its use value
under the provisions of Article VII, Section 18(C) of the Louisiana
Constitution of 1974, it must meet the definition of bona fide
agricultural, horticultural, marsh or timber land as described in R.S.
47:2302 and, in the case of bona fide agricultural,
horticultural, or timber land:
A. Be at least three acres in size, or have produced an average
gross annual income of at least two thousand dollars in one or more
of the designated classifications for the four preceding years, and
B. The landowner has signed an agreement that the land will be
devoted to one or more of the designated uses as defined in R.S.
47:2302.
Added by Acts 1976, No. 702,§ 3, eff. Aug. 4, 1976. Amended
by Acts 1979, No. 177,§ 1; H.C.R. No. 88, 1993 R.S., eff. May 30,
1993; H.C.R. No. 1, 1994 R.S., eff. May 11, 1994.
§2304. Application for use value assessment
A. A landowner, desiring a use value assessment under this Act
shall be required to file an application with the assessor in the
parish or district where the property is located certifying that the
property is eligible for use value assessment as bona fide
agricultural, horticultural, marsh or timber land as defined in
Section 2 of this Act.*
B.(1) Except as provided for in Paragraph (2) of
this Subsection, applications shall be filed in the parish or
district where the property is located and shall be permanent as
long as the property remains eligible for use value, except that in
the event of a sale of the property, the purchaser must sign a new
application within sixty days from the date of the sale.
(2) In the parishes of Orleans and Jefferson,
such applications shall be filed at least every four years except
that in the event of a sale of the property, the purchaser must sign
a new application within sixty days from the date of sale.
C. In addition to the filing of an application required in
Section 4(A) above, the landowner shall sign an agreement that the
land will be devoted to one or more of the designated uses as
defined in Section 2 of this Act.*
D to G. Repealed by Acts 1979, No. 630,§ 1.
Added by Acts 1976, No. 702,§ 4, eff. Aug. 4, 1976; H.C.R.
No. 88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994 R.S., eff.
May 11, 1994; Acts 1999, No. 833,§ 1, eff. Jan. 1, 2000.
*R.S. 47:2302
§2305. Loss of eligibility
A. If land having a use value assessment
ceases to meet the eligibility requirements described in Section
3 of this Act,* the owner shall be obligated to notify the
assessor in the parish or district where the property is located
within sixty days following the effective date of loss of
eligibility. Upon notification of loss of eligibility the assessor
shall reassess the property immediately, to become effective the
following tax year.
B.(1) If land having a use value assessment is sold for a price
four times greater than its use value, the land shall be presumed to
be no longer eligible to be classified as bona fide agricultural,
horticultural, marsh, or timber land. Upon application as provided
in R.S. 47:2304, the purchaser shall be given
the opportunity to demonstrate to the full satisfaction of the
assessor:
(a) That the sales price paid includes things of
value which are susceptible of appraisal including, but not by way
of limitation, standing crops or timber, improvements, equipment,
etc.; or
(b) That the land is actually in bona fide
agricultural, horticultural, marsh, or timber land use and meets the
requirements of R.S. 47:2302 and R.S.
47:2303. Such demonstration of bona fide operations may include
the preparation and implementation of farm or forestry plans or
programs within two years following the purchase.
(2) Upon such demonstration, the landowner shall
be entitled to a use value classification.
Added by Acts 1976, No. 702,§ 5, eff. Aug. 4, 1976; Acts
1986, No. 527,§ 1; H.C.R. No. 88, 1993 R.S., eff. May 30, 1993;
H.C.R. No. 1, 1994 R.S., eff. May 11, 1994.
*R.S. 47:2303.
§2306. Penalties
A. In the event that the landowner obtains a
use value assessment by means of false certifications on his
application, or fails to timely notify the assessor of loss of
eligibility for use value assessment as required by Section
5(A) of this Act,* he shall be liable for a penalty equal to
five times the difference between the tax under a market value
assessment and the tax under a use value assessment for the tax
years in which the use value assessment was attributable to the
false certifications or failure to timely notify the assessor of
loss of eligibility.
B. The tax collector in each parish upon notification by the
assessor of a taxpayer's liability for penalty as provided in Section
6(A) above, shall have the authority and the responsibility for
collecting the penalties provided for in this Section, and shall
disburse said penalties, pro rata, to the same authorities as taxes
for current year are disbursed.
Added by Acts 1976, No. 702,§ 6, eff. Aug. 4, 1976; H.C.R.
No. 88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994 R.S., eff.
May 11, 1994.
*R.S. 47:2305.
§2307. Determination of use value
A. Agricultural and horticultural lands
(1) Formula. Use value of
bona fide agricultural and horticultural lands shall be determined
by the application of the following formula:
Value equals net income divided by capitalization
rate.
In applying this formula the assessors shall
utilize the use value table and the capitalization rate as
determined by the Louisiana Tax Commission or its successor and said
formula shall be applied uniformly throughout the state.
(2) Net income. To assist the assessors in the
application of the formula described in Section
7(A)(1) above, and to determine the net income factor to be used
in the formula, the Louisiana Tax Commission or its successor shall
prepare and publish a table defining the different classifications
of land, the range of production costs and gross returns based on
four year averages. In preparing the use value table for
agricultural and horticultural lands, the Louisiana Tax Commission
or its successor shall consider the following factors:
(a) Classification
In defining classifications of land, the first four classifications
of the U.S. Soil Conservation Service shall be used, with such
modifications as may be required by special circumstances, provided
that all land historically subject to regular and periodic flooding
may be classified as Class IV land.
(b) Range of productivity
In determining the range of productivity the average soil
productivity for various classifications of soils within each
classification as determined by the U.S. Soil Conservation shall be
used.
(c) Cost of production and gross
returns--weighted average
In determining cost of production and gross returns, the Louisiana
Tax Commission or its successor shall use the weighted average cost
of production and gross returns, by land classification, of major
agricultural commodities produced in Louisiana for the four
production years immediately preceding the year in which the table
is prepared. Provided, however, no negative income factor shall ever
be an input factor in any such table, and if negative, said value
shall be entered as zero value.
(3) Capitalization rate
The Louisiana Tax Commission, or its successor, shall determine a
capitalization rate for use in determining use value by considering
the following factors:
(a) physical and economic risk;
(b) effect of relative marketability of
agricultural and horticultural lands on liquidity of investments;
(c) competition with other investments and
prevailing interest rate; and
(d) any other appropriate factors.
In no event shall the capitalization rate be less than twelve
percent.
B.(1) Marshland. The assessor of each parish containing bona fide
marshland shall determine the use value of such land, as defined in R.S.
47:2302 and shall assess such land on the basis of its highest
use value. In determining the use value of such lands, the assessors
shall utilize the use value table prepared by the Louisiana Tax
Commission or its successor which shall be applied uniformly
statewide.
(2) The table prepared by the Louisiana Tax
Commission shall define each different classification of marshland,
a range of production within each class, and the range of returns
based upon the past four-year averages.
(3) In preparing the use value table for
marshland, the Louisiana Tax Commission shall consider the following
factors:
(a) Classification of the marshland as either
freshwater, brackish, or saltwater marshland.
(b) The income that may be produced within each
class.
(c) Income derived from the traditional use of
such marshland, as such uses are enumerated in R.S.
47:2301.
(d) Physical and economic risks attendant
thereto.
(e) Prevailing interest rates.
(f) Liquidity of investments.
(g) Federal and state regulatory authority
governing use of such marshland.
C. Timberland
(1) Formula. Use value of bona fide timberland
shall be determined by the following formula:
Value equals net income divided by capitalization
rate.
In applying this formula the assessors shall
utilize the use value table and the capitalization rate as
determined by the Louisiana Tax Commission or its successor and said
formula shall be applied uniformly throughout the state.
(2) Net income. To assist
the assessors in the application of the formula described in Section
7(C)(1) of this Act and to determine the net income factor to be
used in the formula, the Louisiana Tax Commission or its successor
shall prepare and publish a table defining the different
classifications of timberland, the range of production within each
class, and the range of production costs and gross returns based on
four year averages. In preparing the use value table for timberland,
the Tax Commission shall consider the following factors:
(a) Classification of timberland
Class I timberland is timberland capable of
producing more than 120 cubic feet of timber per acre per annum.
Class II timberland is timberland capable of
producing more than 85 but less than 120 cubic feet of timber per
acre per annum.
Class III timberland is timberland capable of
producing less than 85 cubic feet of timber per acre per annum.
Class IV timberland is timberland capable of
producing less than 85 cubic feet of timber per acre per annum and
which is subject to periodic overflow from natural or artificial
water courses, and which is otherwise considered to be swampland.
(b) Range of productivity
Productivity of timberland shall be determined by
reference to the U.S. Forest Service Periodic Surveys and the U.S.
Soil Conservation Service Woodland Classifications.
(c) Net income
Net income shall be determined by multiplying the
annual cubic foot growth per acre for timber in each of the four
classifications defined in Section 7(C)(2)(a),
as determined by the U.S. Forest Service Periodic Survey times the
value per cubic foot of timber stumpage as derived from the
severance tax returns and reported by the Louisiana Tax Commission
or its successor less the management cost. The gross return and the
management cost shall be based upon weighted averages for timber
produced in Louisiana for the four-year period immediately preceding
the year in which the table is prepared, as determined from figures
furnished by the Louisiana Tax Commission and the Louisiana Forestry
Commission.
(3) Capitalization rate
In determining an appropriate capitalization rate to be used in the
use value table, the Louisiana Tax Commission or its successor shall
take into consideration the following factors:
(a) physical and economic risk;
(b) effect of relative marketability of
timberlands on liquidity of said investments;
(c) competition with other investments and
prevailing interest rates; and
(d) any other factors which may be appropriate.
In no event shall the capitalization rate be less than ten
percent.
(4) In determining the use value of lands
classified as Class IV timberland, as defined in Section
7(C)(2)(a) above, the Louisiana Tax Commission or its successor
shall use the net income figure employed in determining the use
value of Class III timberland; but shall adjust the capitalization
rate upward so as to appropriately reflect the low productivity of
lands falling within classification IV as a result of overflow and
siltation conditions.
Added by Acts 1976, No. 702,§ 7, eff. Aug. 4, 1976. Amended
by Acts 1981, Ex.Sess., No. 29,§ 1, eff. Nov. 19, 1981; H.C.R. No.
88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994 R.S., eff. May
11, 1994; Acts 1995, No. 230,§ 1.
*R.S. 47:2302.
**R.S. 47:2301.
§2308. Louisiana Tax
Commission; tables; classifying land; public hearings
Whenever the Louisiana Tax Commission or its successor is
required to prepare and publish a table or make a determination or
define classifications of land, it shall do so only after public
hearings held pursuant to the Administrative Procedures Act.
Added by Acts 1976, No. 702,§ 8, eff. Aug. 4, 1976; H.C.R.
No. 88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994 R.S., eff.
May 11, 1994.
§2309. Effective date; nonapplicability
This Act shall become effective upon signature by the governor,
or, if not signed by the governor, upon the expiration of the time
for bills to become law without signature by the governor.
Notwithstanding the effective date stated herein, the provisions of
this Act shall be effective only to the extent necessary under the
provisions of Section 23 of Article VII of the constitution of
Louisiana. In no event shall these provisions apply to ad valorem
taxes levied for the taxable years 1976 and 1977.
Added by Acts 1976, No. 702,§ 9, eff. Aug. 4, 1976;
H.C.R. No. 88, 1993 R.S., eff. May 30, 1993; H.C.R. No. 1, 1994
R.S., eff. May 11, 1994.
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