Farm Assessments

Publication 122 - Instructions for Farmland Assessments 

Farmland Assessments
35 ILCS 205/20e

Farmland is assessed according to productivity (PI). 

Productivity is the estimated yield of each soil type based on a five year study conducted by the University of Illinois, U.S. Department of Agriculture, and the Department of Revenue.

By measuring the acreage within each soil type and using the farmland formula to compute the weighted PI number within the designated categories, an assessment can be achieved.

Farmland is not equalized and it is not assessed according to market value.

The dollar value of each weighted PI is set by the Department of Revenue and certified to each county every year.

A parcel or tract of land must be used solely for the purpose of agriculture in order to receive an agricultural assessment.

The statutes (20e) regarding farmland specifically indicates primary use. 

If the parcel contains a residence, it is up to the assessor to determine the primary use of the parcel or that tract.

If the assessor has determined that the primary use of a parcel is agriculture, and the parcel contains a residence, then the amount of the FNF (Farm-Non-Farm) acreage (sometimes called a homesite) must be removed from the total acreage in order to calculate the farmland assessment.  The homesite value must also be supplied by the assessor.

A parcel of land which is less than 10 acres and contains a residence for which some agricultural activity is taking place will almost always be assessed as residential.  This is not a statutory requirement; it is a guideline for the assessors to relate to when trying to determine primary use.  Some exceptions to this rule of thumb would be greenhouses, chicken farming, mushroom farms, and other farms in which the homesite is contiguous to other land being farmed by the same owner.

Guideline on Primary Use Provision of Farm Definition

The Property Tax Code definition of “Farm” (35 ILCS 200/1-60) states in part:  “For purposes of this code, ‘Farm’ does not include property which is primarily used for residential purposes even though some farm products may be grown or farm animals bred or fed on the property incidental to its primary use.”  This definition of farm prohibits the farmed portion of parcels primarily used for residential purposes from being assessed under the farmland assessment provisions of the Property Tax Code (35 ILCS 200/10-110 et seq.)

This guideline pertains to situations when residential and farm uses occur on the same parcel of property and may be used only for purposes of determining whether the parcel is primarily used for residential purposes.  This guideline is intended to supplement assessor’s judgment and experience, and provides advice and direction to assessors for determining whether a parcel with both farm and residential uses is used primarily for residential purposes.  The determination of primary use by an assessor must have a rational basis and be uniformly applied in the assessment jurisdiction.  This guideline does not pertain to tracts assessed under the Forestry Management Plan provisions of the Property Tax Code (35 ILCS 200/10-150).

Farm Parcel Uses

Intensive Farm/Residential
The primary use of a parcel containing only intensive farm and residential uses is residential unless the intensively farmed portion of the parcel is larger than the residential portion of the parcel.

Conventional Farm/Residential
The primary use of a parcel containing only conventional farm and residential uses is residential unless the conventionally farmed portion of the parcel meets both of the following requirements:

1. It is larger than the residential portion of the parcel; and
   
   
2. It is not less than 5.00 acres in area, which creates a presumption that the primary use of the parcel is residential.  This presumption may be rebutted by evidence received by the assessor that the primary use of the parcel is not residential.

Residential/Conventional Farm/Intensive Farm
If a parcel has a use combination of residential, conventional farm, and intensive farm, the determination of whether the primary use is residential must be made by applying the criteria for each type of farm use as set forth above and then weighing the result of all farm uses against residential use of the parcel.

Residential/Non-Residential Non-Farm/Farm
If a parcel has a use combination of residential, non-residential non-farm (e.g., commercial, industrial, open space), and any type of farm use, the relative proportion of all uses should be considered in determining whether the primary use of the parcel is residential.  For example, if the primary use of the parcel is commercial, the primary use of the parcel cannot be residential, and any portion of the parcel having any farm use would be entitled to farmland assessment even though it may be smaller than the portion of the parcel used for residential purposes.

Definitions
For purposes of this guideline, “Conventional Farm” use means the tending of all major and minor Illinois field crops, pasturing, foresting, livestock, and other activities associated with basic agriculture. 

“Intensive Farm” use means farm practices for which the per acre income and expenditures are significantly higher than in conventional farm use.  Intensive farm use often requires significantly more labor than conventional farm use.  Because of the wide variety of types of intensive farming, it is not possible to compile a comprehensive list of all intensive farming operations, but the growing of floriculture crops and truck farming are two examples of farming often found to be intensive.

Explanation of Reason Why a Farm Assessment Would or Would Not Apply to Each Example

Examples of when the farm assessment would apply to the farm portion:

Conventional Farming

• 7-acre parcel consisting of 6 acres corn or crop and 1 acre residential.  Farmed portion is at least 5 acres and is larger than the residential portion.
  
  
• 19-acre parcel consisting of 5 acres pasture, 10 acres open space or commercial, and 4 acres residential.  Farmed portion is at least 5 acres and is larger than the residential portion.  The 10 acres assessed as open space or used commercially would have no bearing.

Intensive Farming or Intensive/Conventional Combination

• 3-acre parcel consisting of 2 acres used for commercial growing of flowers and 1 acre residential.  Farmed portion of the parcel is larger than the residential portion.
  
  
• 10-acre parcel consisting of 2 acres used for vegetable farming, 5 acres forestry management, and 3 acres residential.  Farmed portion of the parcel (7 acres) is larger than the residential portion (3 acres).

Examples of when the farm assessment would not apply to the farm portion:

Conventional Farming

• 5-acre parcel consisting of 3 acres wheat and 2 acres residential.  Farm portion does not meet the minimum 5 acres.
  
  
• 11-acre parcel consisting of 5 acres hay or pasture and 6 acres residential.  Farm portion is smaller than the residential portion.

Intensive Farming or Intensive/Conventional Combination

• 3-acre parcel consisting of 1 acre used for the commercial growing of flowers and 2 acres residential.  Farm portion is smaller than the residential portion.
• 15-acre parcel consisting of  2 acres managed timber, 2 acres vegetable or truck farming, 6 acres unmanaged idle land, and 5 acres residential.  Farm portion (4 acres) is smaller than the residential portion (5 acres).  The 6 acres of unmanaged idle land is not farm and would have no bearing.

Example of when the farm assessment would apply to the farmed portion of a parcel which contains both conventional farming and residential uses, when the farmed portion of the parcel is less than 5 acres but is part of a larger farmed tract:

• 4-acre parcel consisting of 1 acre residential and 3 acres pasture, but which is part of a four parcel 200-acre farm tract.  It would be obvious that the primary use of the overall tract is farm, and the fact that 3 of the farm acres are located on the same parcel would be inconsequential. 

Example of when the farm assessment would apply to the farmed portion of a parcel which contains both intensive farming (or intensive/conventional combination) and residential uses, when the farmed portion of the parcel is smaller than the residential portion of the parcel but is part of a larger farmed tract:

• 6-acre parcel consisting of 2 acres vegetable or truck farming and 4 acres residential but which is a pat of a two parcel, 20-acre tract in which the 14-acre parcel is in Forestry Management.  The primary use determination should be made on the overall farm tract when such tract consists of multiple tax parcels.  The farmed portion of the tract (2 parcels) is larger than the residential portion.

Farm Property – Illinois Farmland Assessments

As of January 1, 1982 this law provided for an agricultural use-value assessment of farmland on a net income-to-land basis.  Assessments are based on a capitalized value for land.  The agricultural income method of land valuation uses crop production costs, yields, prices and capitalization rates averaged over a five year period.  This approach to assessments overcomes inequities in the formula assessments that were caused by using gross agricultural income.

In valuing farm buildings, the objective is to arrive at that value which their presence adds to the productivity of the land.  This means, in effect, that farm buildings have value in proportion to their degree of usefulness (not always being the purpose for which they were built).

Farm residences are assessed according to market value in the same manner as urban residences and are subject to equalization.  Refer to the residential section of the manual for the valuation of farm residences.

Homesites are subject to the equalization factors and should be assessed at the same percentage of market value as urban property.  The sales comparison approach should be used to value farm homesites whenever possible.  That part of the land used for homesite purposes should be assessed as non-farm land.

Cropland, permanent pasture and other farmland shall be defined according to the U.S. Census Bureau definitions in use during the assessment year in question.  Cropland shall be assessed in accordance with the equalized assessed value of it’s sole productivity index as certified by the Department of Revenue and shall be debased to take into account factors including but not limited to slope, drainage, ponding, flooding, and field size and shape.  Permanent pasture shall be assessed at 1/3 of its debased productivity index equalized assessed value as cropland.  Other farmland shall be assessed at 1/6 of its debased productivity index equalized assessed value as cropland.  Wasteland shall be assessed on its contributory value to the farmland parcel.  In no case shall the equalized assessed value of other farmland, except wasteland, be below 1/6 of the equalized assessed value per acre of cropland of the lowest productivity index certified by the Department of Revenue.

There are four major parts to be considered in farmland valuation:
a. Cropland                  c. Other Farmland
b. Permanent Pasture  d. Wasteland

1. Definitions of Land Use

• A. Cropland includes all land from which crops were harvested or hay was cut; all land in orchards, vineyards, and nursery and ornamental stock; land in rotational pasture and grazing land that could have been used for crops without additional improvements; land used for cover crops, legumes, and soil improvement grasses; land on which crops failed; land in cultivated summer fallow; and idle cropland.  If land falls into any one or more of these categories, it must be assessed as cropland.
• B. Permanent pasture includes any pasture land which is not normally tilled except for renovating.
• C. Other farmland includes land in ponds; woodland pasture; woodland including wood lots, timber tracts, cut over and deforested land; and farm building lots other than homesites.
• D. Wasteland includes land not falling into any of the above categories and which cannot be cultivated or pastured.

2. Assessment Procedures

• A. Cropland will be assessed in accordance with the equalized assessed value of its soil productivity index as certified by the Department.  Each year, the Illinois Department of Revenue will supply a chart showing the equalized assessed value of cropland for each productivity index.  Cropland with a productivity index below the lowest productivity index certified by the Department shall be assessed according to the procedure under Section V of these guidelines. 
• B. Permanent pasture will be assessed at 1/3 of its debased productivity index equalized assessed value as cropland.  In no case shall the equalized assessed value of permanent pasture be below 1/3 of the equalized assessed value per acre of cropland of the lowest productivity index certified by the Department.
• C. Other farmland will be assessed at 1/6 of its debased productivity index equalized assessed value as cropland.  In no case shall the equalized assessed value of other farmland be below 1/6 of the equalized assessed value per acre of cropland of the lowest productivity index certified by the Department.
• D. Wasteland will be assessed based on its contributory value.  In many instances wasteland contributes to the productivity of other types of farmland.  Some land may be more productive because wasteland provides a path for water to run off or a place for water to collect.  In cases where wasteland has a contributory value, it will be assessed at 1/6 of the value of the lowest productivity index of cropland certified by the Department.  When wasteland has no contributory value, a zero assessment is recommended.

3. Debasement Factors

• A. Debasements for slope and erosion.  Adjustments to productivity index for slope and erosion should be made using Table 3 on Page F4 of the Illinois Real Property Appraisal Manual.
• B. Debasements for flooding.  The productivity index of the immediately affected acreage only, which suffers actual (not potential) crop loss due to flooding should be adjusted as prescribed in Circular 1156 published by the University of Illinois College of Agriculture, Cooperative Extension Service.
• C. Debasements for ponding.  No general adjustment for ponding will be made as a soil’s ponding tendency is taken into consideration when the productivity index is calculated.  However, when ponding consistently produces a crop loss, then a flooding adjustment should be made.
• D. Debasements for field size and shape.  At this time the Department offers no guidelines for field size and shape adjustments.
• E. Debasements for droughtiness.  No adjustments for soil droughtiness will be made.  A soil’s droughtiness is taken into consideration when the productivity index is calculated.
• F. Adjustments for drainage district assessments.  The equalized assessed value of farmland acreage which is subject to drainage district assessment may be adjusted by subtracting from the equalized assessed value an amount equal to 33 1/3 percent of he per acre drainage district assessment divided by the five year Federal Land Bank mortgage interest rate.  Since drainage district assessments may vary widely from year to year, it is advisable to use a five year average of per acre drainage district assessments when making this adjustment.
• G. Debasements for soil inclusions.  No general adjustment for inclusions will be made.  Long term yield averages, taken at many locations such as those contained in Circular 1156 would include the effects of many inclusions.  Only unusual conditions of large amounts of inclusions with differing productivity potential would be likely to affect the productivity of a local area.

4. Guidelines For Alternative Uses

• A. Roads.  No value should be assigned to acreage in dedicated roads.  Exception:  If a portion of the right-of-way is being used for a farm use, this portion should be assessed.
• B. Creeks, streams, rivers, and drainage ditches*:  Acreage in creeks, streams, rivers and drainage ditches should be assessed as wasteland.
• C. Grass waterways and windbreaks*:  Acreage in grass waterways and windbreaks will be assessed as other farmland.
  *Drainage ditches were originally placed with grass waterways and windbreaks in “4.C”   above.
• D. Ponds.  Ponds will be assessed as other farmland.  Exception:  If a pond is used as part of the homesite, it will be assessed with the homesite at 33 1/3 percent of market value.  If the pond is used commercially, it will disqualify the parcel for a farmland assessment.
• E. Power lines.  No adjustment should be made.
• F. Lanes and non-dedicated roads.  Acreage in lands and non-dedicated roads will be assessed as the adjacent land use.  This could be cropland, permanent pasture, other farmland, or wasteland.
• G. Borrow pits.  Borrow pits will be assessed as wasteland.  If borrow pits are a part of the homesite or are being used commercially, the same comments made under ponds will apply to borrow pits.
• H. Conservation Reserve Program (CRP):  Land in the ten year Conservation Reserve Program shall be assessed according to its actual use.  Cropland placed into the Conservation Reserve Program can be planted to grasses or trees.  If planted to grass, this land will be classified as cropland based upon the portion of the cropland definition which reads, “Cropland used for cover crops, legumes, and soil improvement grasses.”  If planted to trees, this land will be classified as other farmland.

5. Assessment of Cropland of a Productivity Index Below the Lowest Productivity Index Certified by the Department Shall be Assessed in the Following Manner:

A. The equalized assessed value of cropland of the lowest productivity index certified by the Department is subtracted from the equalized assessed value for cropland of a productivity index five times greater than the lowest productivity index certified by the Department.

B. The result of a. is divided by 5.

C. The difference between the lowest productivity index for which the Department certifies an equalized assessed value and the productivity index of the cropland being assessed is found.

D. The result of b. is multiplied by the result of c.

E. The result of d. is subtracted from the lowest equalized assessed value for cropland certified by the Department.  This is the equalized assessed value of the cropland being assessed subject to f.

F. In no case shall the equalized assessed value of cropland be below 1/3 of the equalized assessed value of cropland of the lowest productivity index certified by the Department.