Md. Code Regs. 15.15.02.06

Current through Register Vol. 51, No. 18, September 6, 2024

Section 15.15.02.06 - Formula for Determining Agricultural Value

To determine the agricultural value of the land on which the landowner has applied to sell an easement, complete the following five steps:

A. Step 1. Using the following method, determine the soil productivity index of the parcel of land on which the applicant has applied to sell an easement. First, note how many acres of cultivatable land (Class I through VI soils) are contained in this parcel. Second, determine how many of these acres consist of Class I soils. Third, using the table found in Regulation .07 of this chapter, multiply the number of acres of Class I soils by the soil productivity index for Class I soils. Having completed the calculation process for Class I soils, follow the same process for Class II through Class VI soils. Next, add each of these calculations together. Finally, divide this sum by the total number of acres of cultivatable land contained in the entire parcel. This figure equals the soil productivity index of the applicant's parcel. (For example, if the applicant's parcel consists of 60 acres of Class II soils and 40 acres of Class III soils, the following calculations must be made: 60 acres X 0.72 = 43.20; 40 acres X 0.50 = 20; 43.20 + 20 = 63.20; 63.20 divided by 100 acres = 0.632. The soil productivity index of the applicant's parcel in this example equals 0.632.) Use this calculation to complete Step 3.

B. Step 2. Determine the average distance the applicant's land is from Baltimore and Washington. First, note the distance this land is from Baltimore. Second, note the land's distance from Washington, D.C. To obtain the land's average distance from Baltimore and Washington, add these two distances together and divide by 2. (For example, if the applicant's land is 50 miles from Washington and 20 miles from Baltimore, its average distance from these areas is 35 miles. (50 + 20) divided by 2 = 35.) Use this calculation to complete Step 3.

C. Step 3. Using the mathematical equation discussed in Regulation .05 of this chapter, determine the per acre rental value of the applicant's land. That equation is as follows: Rent = -53 + (160 X productivity index) + (0.11 x average distance from Baltimore and Washington, up to 100 miles). Insert the figures derived from completing Steps 1 and 2 to complete the equation. The productivity index number is the figure derived from completing Step 1. The average distance is the figure derived from completing Step 2. If the average distance is 100 miles or more, insert 100 into the equation. (Using the figures from the examples noted in Steps 1 and 2, the equation is completed as follows: Rent = -53 + (160 X 0.632) + (0.11 X 35) or, to answer the equation, $51.97 per acre.) Use this calculation or the most recent 5-year average cash rent of the county where the property is located, whichever is lower, to complete Step 4. If the rental value calculated in Step 3 or if the running 5-year average cash rent of the county is less than $25 per acre, use $25 per acre to complete Step 4.

D. Step 4. To determine the per acre agricultural value of the applicant's land, divide the figure derived from completing Step 3 (the per acre rental value of the applicant's land) by a capitalization rate of 6 percent (the Department has estimated 6 percent to be the capitalization rate). (Using the figure from the example noted in Step 3, or $51.97 per acre, the per acre agricultural value is $742.43 ($51.97 divided by 0.06).) Use this figure to complete the final step.

E. Step 5. To determine the agricultural value of the applicant's land, multiply the figure derived from completing Step 4 (the per acre value) by the total number of acres of cultivatable land comprising the applicant's land.

Md. Code Regs. 15.15.02.06

Regulations .06 adopted as an emergency provision effective March 4, 1991 (18:6 Md. R. 681); emergency status extended at 18:16 Md. R. 1810 (August 9, 1991)
Regulations .06 adopted effective October 28, 1991 (18:21 Md. R. 2310)
Regulation .06C amended effective September 8, 1997 (24:18 Md. R. 1297)