2023 Louisiana Laws › Revised Statutes › Title 47 - Revenue and Taxation › §47:2307. Determination of use value

RS 47:2307 - 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 Paragraph (A)(1) of this Section, 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 Paragraph (C)(1) of this Section 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 Subparagraph (C)(2)(a) of this Section, 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 Paragraph (C)(2)(a) of this Section, 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.