Irrigated...or not?

In the minds of many Red Willow County irrigators, the value of irrigated farm land is being diminished by a stingy Mother Nature holding back on rainfall.

Many of the landowners protesting new real estate valuations, at hearings with county commissioners this month, are anticipating greatly reduced amounts of irrigation canal water this summer because water levels are so low at Swanson Lake and Enders Reservoir.

Can the land be called "semi-irrigated"? Has it become "dryland"? County Commission Chairman Earl McNutt called it "the ditch water situation."

But the classification of ag land can't be changed in mid-stream -- even if the stream's drying up.

County Assessor Sandra Kotschwar told commissioners during hearings July 3 all property is assessed based on its market value as of January 1. Dryland, she said, is taxed at about half the value of irrigated land.

"Just calling irrigated land dryland isn't the way to go," Kotschwar said. Her offices uses Farm Service Agency records to determine the classification of ag land, and she said, it is her understanding that crop insurance premiums are also determined by "irrigated" or "dryland" designations.

Kotschwar said FSA offices would have more information about how farm payments are calculated.

Jim Trail of rural McCook asked commissioners to roll back the valuation of his land "I have no wells," he said. "And there's a shortage of water from Swanson Lake and the irrigation canal."

James Uerling, of rural Indianola, echoed Trail, suggesting a "limited irrigation" tax classification -- "somewhere between irrigated and dryland."

Kotschwar agreed, saying, "In the future, there may need to be a figure between dryland and irrigated, but only if the market supports this adjustment."

Kotschwar told commissioners she has found limited sales of Red Willow County farmland along the irrigation canals, upon which to base tax valuation figures of neighboring land.

Valuations are based on sales in Red Willow County, she said, and her office's valuations are required by the state to be 74-80 percent of market value. Market value ... that leads to another dilemma for Kotschwar.

The other situation that is "taxing" Red Willow County farmers -- and frustrating state and county tax officials -- appears to be the appeal of "living in the country," and the valuation of "the first acre." And again, it's a situation -- like the lack of rainfall -- over which farmers have very little, if any, control.

It seems city dwellers like the idea of living in the country, and many are willing to pay exorbitant prices for rural houses and/or small acreages. Kotschwar has compiled a thick notebook of recent sales that indicates that rural properties often sell for prices that are far above any apparent worth. One Red Willow County rural property valued at $22,000-- several acres and a house in sad, sad shape -- actually sold for $88,000, the records indicate.

Sales like these skew the value of neighboring properties, which are then perceived to be, for tax purposes, just as valuable.

It's tough, in many situations, to add valuation to aging rural houses, so many counties in Nebraska add value to "the first acre," which has electricity, sewer and water. The remainder of the acres are valued at a lower site value or as ag land.

Kotschwar said raising the valuation of improvements -- the house and outbuildings -- is not enough in many cases to meet the state-mandated 92-100 percent market value for residential property, so the value of "the first acre," also called the "site location," has been increased.

One protester said, "The well, the electricity and the septic tank have been there all along. Why is it worth more now?"

McNutt said, "We estimate it costs $5,000 to put in septic services, well and electricity, and that becomes part of the value of that one acre."

The perceived value of city residences also concerns homeowners. The general comments from homeowners July 3 seemed to be, "But I wouldn't be able to sell it for that amount," and "But I haven't made any improvements to justify an increase."

To determine the value of a city residence, assessors use "mass appraisal," comparing houses of similar age, size and condition. It is difficult to individualize the valuation on each and every parcel every yea, Kotschwar said.

To fine-tune a valuation in question, assessors consider "comparables," sales of similar houses within the past couple years.

One homeowner told Kotschwar and commissioners he purchased the small house five years ago for $16,500, he has made no improvements and it needs extensive repair. Kotschwar replied, "Our comparables would indicate we're in line, but it will come down to an opinion on condition."

"To be fair with you, maybe we should see the inside," McNutt told another homeowner protesting the valuation of his modular home.

McNutt and fellow commissioners Ed Bass and Steve Downer listened patiently as one property owner after another discussed their concerns over property valuations. One homeowner said the valuation of three of his properties seems to be quite accurate. "But these two are off a little," he said.

Another landowner told commissioners that noisy stock car racing at the county fairgrounds is devaluing his property, and another said the value of his home is decreasing because of the feedlot he built nearby.

"We'll definitely be fair with you," McNutt told protesters. Commissioners will personally inspect parcels in question, if an inspection is necessary. Some protests require only a change in information on record in the assessor's office. Commissioners have until July 25 to make decisions, and property owners will be notified in writing of all decisions. "Our minds are open," McNutt said. "We'll make no decisions today."

"Thank you for coming in and voicing your opinion. That's what this is all about," McNutt said during one of several eight-hour days of listening to protests, in person or over the telephone.

"We can't make any promises," he said. "We'll look it over, and see what we can do for you." ------ Still don't agree? Not happy with the commissioners' decision? Then, for $25, property owners can file a protest with the state's Tax Equalization Review Commission. Check in Kotschwar's office for more information.