Bowman County represented an important exception to a recent study that suggested agricultural land values in the state have decreased.
“All our indications show that ag land values are increasing in the county,” said Dean Pearson, county tax and equalization director.
Several factors play into the determination of agricultural land value, including sales and production. Values placed on it for tax purposes are based on the latter.
According to figures released by the NDSU Extension Office, the average price of Bowman County ag lands, based on production levels, was $337.48 per acre in 2015. This year, so far, that number is $357.89 per acre.
Production values are considerably less than what people are buying and selling land for, and the sales figures of ag land in the county aren’t as straightforward.
Pearson said that to examine true increases or decreases in values, the numbers would have to be analyzed over a longer period of time.
Every year it has its ups and downs, he said.
The median agricultural land sales prices within one mile of Bowman city limits have varied drastically each year, though from 2008 to 2015 the general trend saw an increase.
The biggest jump in sales prices occurred in late 2012 to 2014. Pearson said at that time speculators bought up parcels of agricultural land around the county hoping that the oilfield explosion would expand.
While Pearson confirmed the general trends show that values are increasing, he said the downside of predicting land sales are its ebbs and flows: when crops are doing well and farmers can afford to expand their operation. Conversely, when times aren’t so good, people are apprehensive to expand, lands become available and are sold for less.
For tax purposes, however, the most relevant figures are those released each year by the NDSU Extension.
“What we’re getting from NDSU for the last three years show that non-cropland and cropland are increasing in value based on the productivity,” he said.
Pearson’s role as tax director is to ensure that the county’s values stay within 10 percent of the values that NDSU releases for that year.
If the values differ, Pearson, through a complicated process, has to either increase or decrease land values and do it so all values are computed equally and fairly.
Taxes placed upon agricultural properties are based on the mill levy multiplied by the value that Pearson sets on it. Those values could vary though based on what kind of soil found at the property — Bowman has about 150 different types of soil and each are valued differently.
“We may see a decrease in value this year based on what people are going to buy and sell things for, but I won’t probably know until end of next year,” Pearson said.
For 2016 values, the county may have lost 2 to 4 percent of its value, according to Pearson. But he said his department wouldn’t change values because they are within the required 10 percent tolerance.