| The assessment of agricultural land in South Dakota for property tax purposes have seen some major changes recently as a consequence of the inability of the market value system to provide an accurate valuation of the agricultural land. The change in the assessment method from a market based valuation system to a productivity based valuation system is expected provide a more accurate agricultural land value that depends on the productive capacity of the land. This research provides a description and comparison of the market valuation method and the productivity valuation method of agricultural land, and evaluate the productivity value method recently adopted by South Dakota lawmakers to assess agricultural land. The evaluation was performed using a regression analysis of the productivity value on the assessed values, and on the estimated market values using historical data for the period 2004 to 2009. This research also provides an overview of what the assessed value for 2004--2009 would have been under the productivity method as if it was adopted in 2004 in comparison to the ones based on market value. An examination of, the capitalization rate variation under the productivity method and the stability of the agricultural land values under the productivity value method was also done for the period, 2004--2009. |
