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HB22-1301

Controlled Environmental Agricultural Facility As Agricultural Property

Concerning the treatment of controlled environment agricultural facilities for property tax purposes.
Session:
2022 Regular Session
Subjects:
Agriculture
Fiscal Policy & Taxes
Bill Summary

A "controlled environment agricultural facility" (CEA facility) is a nonresidential structure of not less than 1,000 square feet and related equipment and appurtenances that combines engineering, horticultural science, and computer management techniques to optimize hydroponic plant growing hydroponics, plant quality, and food production efficiency from the land's water for human or livestock consumption. The primary sole purpose of growing crops in a CEA facility is to obtain a monetary profit from the wholesale of plant-based food for human or animal livestock consumption.

Commencing January 1, 2023, for property tax purposes:

  • The definition of "agricultural and livestock products" includes crops grown within a CEA facility in a raw or unprocessed state for human or livestock consumption. For purposes of the bill, "agricultural and livestock products" does not include marijuana and hemp, or any other nonfood crop agricultural products.
  • The definition of "agricultural equipment" that is used on the farm or ranch or in a CEA facility includes any personal property used in connection with the operation of a CEA facility for planting, growing, and harvesting crops any personal property within a facility, whether attached to a building or not, that is capable of being removed from the facility, and is used in direct connection with the operation of a CEA facility, which facility is used solely for planting, growing, or harvesting crops in a raw or unprocessed state; and
  • The definition of "agricultural land" includes any land underlying or integral to the operation of a CEA facility;
  • "All other agricultural property" does not include a CEA facility that has been in production for at least 2 years; and
  • Agricultural equipment that is used in any CEA facility is exempt from the levy and collection of property tax.

Under the bill, a CEA facility is valued for assessment purposes based on the net operating income derived from the production and sale of the crops grown within the facility and capitalized at the same rate as irrigated agricultural land. The value so determined must be reduced by 25% to determine the actual value of the CEA facility for property tax purposes as all other agricultural property using the cost, market, and income approaches to value. If the sole use of the CEA facility is not the growing of crops for human or livestock consumption, then the property is classified and valued for assessment purposes based on actual use.If the primary use of the CEA facility is not the growing of crops for human or livestock consumption, then the property is classified and valued for assessment purposes as other agricultural property.As part of the personal declaration the owner of a CEA facility signs and returns to the county assessor, the bill requires the owner to include an affidavit executed by the owner in which the owner affirms that the CEA facility meets the requirements for such a facility as specified in the bill. If the crop grown in the CEA facility is hemp, the owner must also include a copy of a license to verify to the assessor that the crop is not marijuana.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)


(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

Status

Introduced
Passed
Became Law

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