Kentucky Administrative Regulations › Title 103 - FINANCE AND ADMINISTRATION CABINET - DEPARTMENT OF REVENUE › Chapter 8 - Ad Valorem Tax; State Assessment › Section 103 KAR 8:160 - Valuation of municipal solid waste landfill facilities

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO: KRS 132.020, 132.200, 224.1-010
NECESSITY, FUNCTION, AND CONFORMITY: KRS 132.202 requires the
				department to promulgate an administrative regulation to implement a valuation
				methodology for the taxation of property used as a landfill, also known as a
				municipal solid waste disposal facility. This administrative regulation
				establishes a uniform system of ad valorem valuation for a municipal solid
				waste disposal facility as defined in KRS 224.1-010(15).
Section 1. Definitions.
(1) "Compaction ratio" means the ratio that
			 expresses the relationship of the number of tons (2,000 pounds) of waste that
			 will fill one (1) cubic yard of landfill capacity. For example, a compaction
			 ratio of 0.60 means that sixty (60) percent of one (1) ton (1,200 pounds) of
			 waste can be compacted into one cubic yard of landfill capacity.
(2) "Cover materials" means soil or other
			 suitable material that is spread and compacted on the top and side slopes of
			 disposed waste in order to control disease vectors, gases, erosion, fires, and
			 infiltration of precipitation or run-on; support vegetation; provide
			 trafficability; or assure an aesthetic appearance.
(3) "Department" means Department of Revenue,
			 Finance and Administration Cabinet, Commonwealth of Kentucky.
(4) "Discount rate" means a pre-tax
			 percentage rate used to discount the annual royalty income over the projected
			 remaining economic life of the landfill to a present value.
(5) "Effective tipping fee" means the average
			 net dollar amount collected per ton for depositing waste into the landfill
			 being assessed not including surcharges, host fees, and related
			 taxes.
(6) "Landfill" means a
			 municipal solid waste disposal facility as defined by KRS 224.1010(15) but does
			 not include construction and demolition debris (CDD) landfills of less than one
			 (1) acre.
(7) "Landfill valuation
			 method" means a discounted cash flow, also known as yield capitalization, which
			 is a valuation methodology used to determine the fair cash value of a
			 landfill's real property.
(8)
			 "Other landfill income" means the five (5) year average of income generated by
			 a landfill from sources other than effective tipping fees, net of applicable
			 expenses.
(9) "Present value" means
			 the sum of the discounted projected annual royalty income over the remaining
			 life of the landfill. The present value formula is:
Click to
				view image
PV + present value of landfill
CF = the annual projected royalty income
Y = the annual pre-tax discount rate
N = the number of annual periods in the projection
(10)
			 "Remaining permitted capacity" means the volume of permitted airspace remaining
			 for the placement of waste materials.
(11) "Reversionary value" means the potential
			 future market value of a landfill after all post-closure regulatory
			 requirements, including a required minimum post-closure monitoring period of at
			 least thirty (30) years, have been fulfilled by the owner or
			 operator.
(12) "Royalty income"
			 means that portion of effective tipping fees and other landfill income that
			 would be paid pursuant to a presumed comparable market lease agreement by the
			 landfill operator to the real property owner in consideration for the right to
			 use the real property for landfill purposes.
(13) "Royalty rate" means a percentage rental
			 rate to real property applied to the sum of the annual effective tipping fee
			 revenue and other landfill income that results in the estimated royalty income
			 for each year of the estimated remaining economic life of the
			 landfill.
(14) "Tax year" means a
			 calendar tax year.
(15) "Ton" means
			 2,000 pounds.
(16) "Tons of waste"
			 means the five (5) year average of annual tons of waste received by the
			 landfill, as determined utilizing information submitted to the Division of
			 Waste Management for the Kentucky Department for Environmental Protection on
			 Form DEP 7046, as incorporated by reference in  401 KAR 47:110, Section
			 5(1)(h).
(17) "Waste" means waste
			 as defined by KRS 224.1-010(31)(a).