Borough to align farm-structure valuation rules with state law change (SB179); assessing staff seeks clarifications from state assessor

Cecily Manning, director of Assessing, presented an ordinance to amend FNSBC 8.04.030 and consolidate the borough's preferential farm valuation rules to reflect 2024 state law changes.

Manning said the 2024 legislature passed SB179, which she said amended the state statute identified in the packet and requires a mandatory preferential valuation for farm and agricultural land and now for farm structures used in farm operations. "The 2024 legislature passed SB179," Manning said, and the borough must amend its code so farm structures are included in the mandatory preferential valuation.

She said the statutory changes remove the previous 10% income requirement and replace it with a $2,500 threshold of agricultural products produced from the land in a tax year; the ordinance also sets the borough application deadline as May 15. Manning said the change converts a prior optional farm-structure exemption into the mandatory preferential assessment and that the change is intended to help increase farming activity by clarifying eligibility and easing administration.

Assemblymembers asked how the change would affect school funding calculations, whether IRS forms 1040 or 1065 would be acceptable supporting documentation and how many applications might change. Manning said the state assessor will provide direction on whether Form 1065 remains acceptable; staff typically require Schedule F documentation. She identified roughly 50 applicants on the farm-use assessment historically and said last year the optional structure exemption had four applicants. Manning said last year the preferential farm use assessment deferred about $2.8 million in valuation, equating to about $42,000 in tax deferral.

No vote was taken in the work session; staff said they will continue to coordinate with the state assessor and notify applicants about changes before the March 1 application window opens.