At the state Capitol, $4.50 has ruffled some feathers.
That's the amount per square foot that state assessment officials last year increased their recommended appraisals of standard chicken houses for large-scale growing operations.
Frustrated state legislators have held three public hearings on the matter, questioning the valuations.
County assessors have moved on, but lawmakers remain miffed, passing a resolution last week without dissent condemning the state Assessment Coordination Division's poultry house valuations and urging further study.
Assessment officials say that it was time to update poultry house appraisals, which had remained unchanged since 1995.
Several lawmakers though argue that chicken houses are a special type of property, and the rates were changed without proper representation for the farmers.
"You can't appraise a chicken house like you would a normal house," said Sen. Gary Stubblefield, R-Branch, who sponsored Interim Resolution 2019-003.
Stubblefield's resolution urges the Assessment Coordination Division to amend the chicken house guidelines it issued in 2018; it also asks the Joint Performance Review Committee to study how poultry houses should be assessed and recommend legislation on poultry house valuation. It was adopted by the Arkansas Legislative Council on a voice vote without audible dissent.
The issue began to bubble to the surface after the Assessment Coordination Division issued its new guidelines to all 75 county assessors in mid-2018. About half of Arkansas' counties have gone through reappraisals since then. The others will go through reappraisal cycles over the next few years.
The state guidelines raised the square-foot valuation from $4.50 to $9 on broiler houses -- those used to raise chickens for human consumption.
In addition to the farmers upset about increased property-tax bills, there were misconceptions about whether the division's recommendations were binding on county assessors who felt the rates were too high in their respective counties.
The Assessment Coordination Division was created to help ensure that local taxes across the state were levied equitably. The division publishes guidelines to assist assessors, but they are not mandatory. The final authority to determine market value in a specific county lies with that elected assessor.
Bear Chaney, the director of the Assessment Coordination Division, penned an October letter to address the concerns of the Joint Performance Review Committee after a contentious September hearing.
However, Rep. DeAnn Vaught, R-Horatio, a poultry farmer, said the issue is still "muddy" even after Chaney's October letter. She said some farmers could go out of business.
"[The Assessment Coordination Division] issues valuation guidelines for use by county assessors, but county assessors are not required to use those guidelines," Chaney wrote. "ACD's guidelines provide a starting point for assessors in determining valuation of different types of property."
Stubblefield said that while the guidelines aren't binding on assessors, most are forced to abide by them because they don't have the resources to independently develop their own valuation measures.
Baxter County Assessor Jayme Nicholson, president of the Arkansas Assessors Association, opposed Stubblefield's resolution in a letter to the Legislative Council. She said that she and the association's board members tested the new poultry house rates in each of their counties and found them to be accurate. All 75 county assessors are members of the association, she said.
Nicholson said assessors understand that the guidelines are not mandates, and that poultry houses that don't align with the recommended values should be adjusted through depreciation. To leave the chicken house tax rates and the 1995 valuation would be unfair to other taxpayers, Nicholson said.
Nicholson added that there's already a process in place for property owners to challenge tax assessments that they disagree with through a county's Board of Equalization and an appeals process that can lead all the way to the state Supreme Court.
"Finally, again we as the Arkansas Assessors Board see a trend whereby special interest groups are being treated special and the general property owners are not seeing the same special treatment," Nicholson wrote. "If you say your goal is for everyone to be treated fairly, please don't cave into one particular property owner."
Stubblefield discounted Nicholson's letter, saying that the association board's review of the division's poultry guidelines didn't include many counties with large concentrations of poultry houses.
Polk County Assessor Jovan Thomas said that most of the confusion appeared to have cleared from her perspective. She said that she has spoken with many poultry farmers whose concerns were eased after she walked them through the new appraisal guidelines. Most, she said, ended up owing far less than expected.
Thomas, who said Polk County has one of the highest concentrations of chicken houses in the state, added that new poultry houses are affected the most by the new guidelines, but she said that after meeting with one farmer in the middle of building new chicken houses, even he was surprised at how little the taxes would increase.
To determine the property tax owed in Arkansas, 20% of a valuation is multiplied by a millage rate. Under the state constitution, a property-tax bill can increase at most 10% a year when the valuations increase.
"It will take years for the values to reach full assessed value, if they ever do," Nicholson said. "As with all other properties, new and older properties are adjusted by age and are depreciated to reflect true value."
According to research done earlier this decade by agencies within the U.S. Department of Agriculture, broiler houses have gotten larger and larger over the years.
In the 1980s, they were about 16,000 square feet each, then grew to 20,000 square feet. At the time of the survey, houses of 40,000 square feet were being built.
In one county, an older 40-foot-by-500-foot poultry house was appraised at $82,167, or $4.10 a square foot, according to property-tax records available at arcountydata.com. The appraised value times 20% equals an assessed value of $16,433. That times the millage rate of 0.0455 puts the property tax at almost $750. If the appraisal valuation were based on $9 a square foot, the annual property tax eventually would rise to nearly $1,650.
Thomas also said the Assessment Coordination Division's poultry house valuations were accurate based on poultry house sales in Polk County. If anything, she said, the rate remains favorable to the farmer.
In recent months, Thomas said that poultry farmers in her area have come to realize that the new valuations are not as tremendous and scary as they thought.
"We just had to take the time to explain it to our constituents," Thomas said.
Many farmers remained frustrated and concerned. Stubblefield, who has raised poultry and livestock, said that poultry houses deserve special consideration.
Unlike cows, which can be put into an enclosed pasture, chickens require structures with precise systems to control temperatures. The equipment wears out, and the businesses that contract with farmers frequently require equipment updates and improvements, Stubblefield said.
"The equipment wears out twice as fast as the structure itself," Stubblefield said, noting that assessments don't often capture that aspect.
Chaney, the Assessment Coordination Division director, said he was unsure why poultry house valuation guidelines had remained unchanged for more than two decades. He said the valuations will be evaluated every few years to determine if they need to be decreased or increased.
In 2018, Chaney said that to arrive at the new chicken house valuations, his agency looked at recent poultry house sales in Arkansas, reviewed national commercial valuation service guidelines and spoke with industry experts, bankers and fee appraisers. He said the current valuations are "conservative."
Charlie Collins, the state revenue commissioner at the Department of Finance and Administration, noted that change is difficult, but that the new rates will benefit communities.
"The [Arkansas] Constitution says property should be valued at market value," Collins said in an interview. "The majority of [property tax] money is used to educate children in public schools locally. We're very focused on that so that children in public schools are getting funding that is based on these contemporaneous numbers."
Bill Mainer, an 82-year-old poultry farmer from Branch, fears that high taxes on poultry houses could have the opposite effect by discouraging the construction of chicken houses.
He noted that recent expansion of poultry farming in Franklin County had given a needed boost to the County Line School District.
"Some will say that schools and other institutions need this increase in tax revenue," Mainer said in an email. "I would respectfully submit that view is short-sighted and does not consider growth in student enrollment, growth in the many businesses that benefit from this industry, and additional growth in the overall tax base. Let's not kill the goose (in this case the chicken or turkey) that lays the golden egg."
A Section on 12/28/2019