agricultural land; valuation

Plain English Breakdown

The official source confirms the bill passed both chambers and reached final enrollment, but no effective date is listed in the provided metadata.

HB2814: Rules for Valuing Agricultural Land

This bill changes how Arizona county assessors calculate the value of land used for farming by requiring a specific income-based method and separating buildings from the land.

What This Bill Does

• Requires that agricultural land be valued using only the income approach without considering urban or market influences.
• Sets the property's income based on the average annual net cash rental over a five-year period before the valuation year, if practicable to find comparable data nearby.
• Excludes real estate and sales taxes from the calculation of the average annual net cash rental.
• Requires capitalizing the rental value at a rate 1.5 percentage points higher than the average long-term farm loan interest rate for the previous five years.
• Directs county assessors to remove the value of buildings, fixtures, and permanent crops from the land's statutory valuation.

Who It Names or Affects

• County assessors who determine property values
• Owners of agricultural land in Arizona

Terms To Know

Income approach to value

A method that calculates a property's worth based on the money it earns rather than what similar properties sell for.

Capitalized average annual net cash rental

The total yearly rent earned from land, averaged over five years and adjusted by an interest rate to find its value.

Depreciable improvements

Items like buildings or permanent crops that lose value over time and must be valued separately from the land itself.

Limits and Unknowns

• The bill does not state a specific date when these new rules will take effect.
• The text requires using rental data if it is 'practicable,' but does not define what happens if such data cannot be found.

Official Summary Text

HB2814 - agricultural land; valuation

Current Bill Text

HB2814 - 572R - I Ver

REFERENCE TITLE:
agricultural land; valuation

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 2814

Introduced by

Representative
Livingston

AN
ACT

amending section 42-13101, Arizona
Revised Statutes; relating to the valuation of agricultural property.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 42-13101, Arizona Revised
Statutes, is amended to read:

START_STATUTE
42-13101
.
Valuation of agricultural land

A. Land that is used for agricultural purposes shall
be valued using only the income approach to value without any allowance for
urban or market influences.

B. The income of agricultural
property

land
shall be determined using the capitalized average
annual net cash rental of the
property
agricultural
land
. For
the
purposes of this
subsection
,
the average annual net cash rental of the
property:

1. Is the average of the annual net cash rental,
excluding real estate and sales taxes, determined through an analysis of
typical arm's length rental agreements collected for a
five year
five-year
period before the year for which the valuation
is being determined for comparable agricultural land
that is
used
for agricultural purposes and located in the vicinity, if practicable, of the
property

agricultural land
being valued.

2. Shall be capitalized at a rate 1.5 percentage
points higher than the average long-term annual effective interest rate for all
new farm credit services loans for the
five year
five-year
period before the year for which the valuation
is being determined.

C. For the purposes of this section,
the county assessor shall exclude from the statutory valuation of agricultural
land the contributory value of depreciable improvements, including structures,
fixtures and permanent crops.� The county assessor shall identify and value
depreciable improvements, including structures, fixtures and permanent crops,
separately using standard appraisal methodologies and techniques.
END_STATUTE