What is Your Land Worth?
By Kari Short
While the issue of property taxes has taken a backseat to COVID, masks and governmental edicts, landowners representing at least 80,000 acres in Kerr County are concerned the State of Texas is placing too high a value on agricultural land. Led by local property owners Lary Priour and Thomas Wallace, who hosted meetings this summer to help property owners understand and protest property taxes, landowners remain resolved to improve agricultural taxation methodology.
Most of the participants felt the property valuations which increased from 40 to 537 percent this year were unwarranted and excessive. Based on a 2019 Productivity Values Report from the Texas Comptroller’s office, Kerr County’s per acre productivity value was the second highest valuation compared with surrounding counties: Gillespie $78, Kerr $60, Kendall $58, Kimball $48 and Edwards $43. However, the comptroller’s office set targets to increase valuations this year between 2 percent and 55 percent for the five-county area. The targeted increase for Kerr was 28 percent.
Many of the property owners found some relief by protesting their taxes through the Kerr Central Appraisal District’s Appraisal Review Board and some local taxing entities reduced their tax rates. Nevertheless, Priour and Wallace still question the accuracy of the data gathered and used by the Kerr Central Appraisal District (KCAD) to calculate agricultural valuations.
According to the Texas Comptroller of Public Accounts’ website: The Texas Constitution and Tax Code provide that certain kinds of farm and ranch land be appraised based on the land’s capacity to produce agricultural products (productivity value) instead of at market value. In many cases, this appraisal technique substantially reduces taxation of land that qualifies for agricultural appraisal. . . .” Interestingly, and perhaps fortunately for today’s landowners, farm and ranch land in Texas was taxed at market value until the 1960s.
The Texas Comptroller’s office establishes the methodology for appraising agricultural values, and each county distributes questionnaires regarding land ag productivity to property owners. Details of this process can be read in the 70-page Manual for the Appraisal of Agricultural Land produced by the Texas Comptroller’s office. Data is then collated to set the per acre tax rate applied throughout the state and county for agricultural property.
According to Priour, after protests, many Kerr County landowners were able to reduce their valuations – from $60s to mid $70s per acre. What won some of the protests was the difference in land quality throughout the county; for example good pastureland versus rocky, cedar-covered terrain. He thinks that some progress was made with KCAD in recognizing the distinction between different land classes, but the heart of the discrepancy is the accuracy of the data collected on the annual questionnaires and the “skewed” calculation formula.
First, there is the challenge of people even returning the questionnaires. Many people find questions asking, “What is your gross revenue?” invasive and simply don’t respond. Second, not considering all expenses when establishing land productivity value is inaccurate according to Priour. Third, he thinks application of the United States Department of Agriculture/National Agriculture Statistic Service’s weighted ag productivity formula preferable to the “skewed weighted formula” used.
Already through ongoing conversations with KCAD, Priour has found some areas of agreement. Prior said, “They will establish three subclasses of native pasture. I would urge ranchers to figure out a comfortable carrying capacity for livestock in acres per animal for all of their adjoining acres in Kerr County as a whole. I think this would be the most accurate data to establish subclasses. Also, KCAD agreed not to use the weighted average formula.”
However, the ag questionnaire remains a quagmire for Priour. “KCAD needs to be asking for a net number not gross to establish accurate ag and hunting productivity value,” said Priour. Currently, the questionnaire does ask about fence, windmill, pump and well construction, replacement or repair as well as brush or cedar clearing. However, Priour identifies a number of basic ranching and hunting expenses not considered in the current questionnaire: cost of road construction and maintenance as well as hunting operation expenses. In fact, specific to hunting leases, there is nowhere on the questionnaire for net revenue regarding hunting operations.
“The key is the questionnaire,” said Priour. He has created a revised ag questionnaire that he is encouraging area ranchers to return to him at: 530 Henderson Branch Rd, Ingram, Tx 78025. “The manual specifically says you have to reduce to a net-typical cash lease regarding hunting. What my questionnaire tries to do is define a typical cash-rent lease and exclude all the other methods for hunting income which aren’t cash-rent leases. The exclusions weed out all the other methods charging for hunting. If you do that and you get to the typical cash-rent lease, the only expenses you have to be concerned with are those currently listed in section two in the KCAD questionnaire, except for the expense of roads.”
He encourages every rancher to complete his questionnaire and is willing to discuss and answer any questions. His questionnaire can be found at the West Kerr Chamber of Commerce website or people may email Priour directly to request a questionnaire. Priour said that KCAD will not distribute a revised questionnaire this year, but they are willing to discuss changes. Priour is going to tabulate all the data he collects and present to KCAD officials.
At the heart of this and many other taxation issues is the question of “Who is in charge?” KCAD is perhaps the best example of existing between a rock and a hard place. The comptroller’s office sets the revenue targets using rules and guidelines established by the Texas Legislature and USDA, and KCAD is placed in the role of enforcement. Annie Edenfield, RPA, CCA, ag and residential appraiser for KCAD, says, “KCAD uses what the State Comptroller’s office requires for all the counties in Texas. Our survey has been approved by the comptroller’s office. It would be unethical for KCAD to use the (Priour’s) proposed net calculations.”
However, Priour, imbued with generations of ranchers’ grit, is committed to resolving what he fundamentally views as unfair taxation, so he plans to keep lobbying for revisions to the questionnaire. “KCAD Chief Appraiser Sharon Constantinides, (RPA, CCA), has also told me that the controller’s target for ag productivity value for this next year is $87!” said Priour. “So unless we get plenty of real and accurate data, we are going to repeat this protest nightmare again next summer. Sharon claims that she will stand up to the comptroller if we can give her enough accurate data to use, and she will consider all our data when she returns in January.”
Priour says, “The first thing people can do who are concerned about rising property taxes on agricultural land is complete the revised confidential questionnaire by January 31 which will present a more comprehensive portrayal of ag productivity valuations. Please note this questionnaire does not replace the official KCAD questionnaire that has already been mailed to area landowners and is also due January 31, 2021.” Priour’s questionnaires are posted at the West Kerr Chamber website wkcc.com, or available by request through Lary Priour at email@example.com.