Derivation of a basic schedule of values by grade for the non-irrigated tillable farm land classification
in Montana
by Gerald Drew
A THESIS Submitted to the Graduate Faculty in partial fulfillment of the requirements for the degree
of Master of Science in Agricultural Economics at Montana State College
Montana State University
© Copyright by Gerald Drew (1960)
Abstract:
This study is primarily concerned with the derivation of a basic schedule of non-irrigated farm land
values by grade that will reflect the relative tax paying ability of the grades. A secondary purpose of
this study is to develop the methodology for using sale prices of farm land in deriving the basic
schedule of farm land values.
Examples of the inequalities that exist in tax levies, assessments, and classification in Montana are
pointed out as evidence for the need of an adequate system for grading and valuing land according to
its relative tax paying ability.
The Land Reclassification Law passed by the 1957 Montana State Legislature is outlined along with a
brief discussion of the duties and responsibilities of the county commissioners, county assessors, and
the State Board of Equalization.
Questions and assumptions concerning problems in the use of sale prices for valuing farm land, such as
the overall level of prices being paid for land, the number of years and which years to use in the
sample, and scarcity of bona fide sales, are discussed.
The statistical analysis indicates that variables other than productivity are influencing sale prices of
farm land. Variables listed as probably influencing the sale prices of farm land are size of tracts sold,
acreage allotments, distance from markets, hobby farmers, buying of land for tax offset purposes,
distance of acquired land from the farmstead, speculation in the land market, sentimental values,
recreation and Scenery, and community attitudes. It is also possible that errors have been made in
grading the land, both within counties and between counties.
The real estate market is notorious for its disorganized nature. The lack of homogeneous characteristics
of farms and farm land and the meager knowledge of market opportunities on the part of many buyers
and sellers contribute to a wide variation in sales prices. This variation may be exaggerated in periods
of somewhat feverish land market activity such as has existed in recent years. It is possible that sales
data used from a different period of time might show a closer association between productivity ratings
and sales prices than the poor statistical relations obtained in this study.
In spite of the variations of sale price around the averages, the average sale prices found may give some
useful value comparisons between classes and grades of land. Another suggestion made in this report is
that the landlord share method be used to arrive at a basic schedule of values as a check against the
schedule obtained by use of sales prices. DERIVATION OF A BASIC SCHEDULE OF VALUES BY GRADE
FOR THE NON-IRRIGATED TILLABLE FARM LAND CLASSIFICATION IN MONTANA
by
Gerald Drew
'❖
A THESIS
Submitted to the Graduate Faculty
in
partial fulfillment of the requirements
for the degree of
Master of Science in Agricultural Economics
at
Montana State College
Approved:
I^ad, Major Department
Chairman, Examining Committee
Dean, Gradua^ Division
\
Bozeman, Montana
December 1960
W i; (/I'
•k'
X
TABLE OF CONTENTS
Page
H
iii
v
vi
CHAPTER I. INTRODUCTION ....................................
The Problem Situation
Objectives ........
Hypothesis . . . . .
Procedure ........
I
DISCUSSION OF LAND RECLASSIFICATION AND LAND
VALUATION . . . . . . . . . ....................
Procedures and Responsibilities Involved ........ . .
Land Reclassification Process..........
Methods and Problems of Valuing Non-Irrigated
Farm Lands . .'......................................
CO CO <1 H--
LIST OF ILLUSTRATIONS........................................
LIST OF TABLES ................
AC K N O W L E D G M E N T .............................. '...............
A B S T R A C T ..............................
CHAPTER II.
CHAPTER III.
METHODS USED IN TYING LAND SALES PRICES TO A
SPECIFIC G R A D E .....................
ANALYSIS OF USING MARKET PRICES BASED ON PRODUCTIVITY
AS THE CRITERIA OF ARRIVING AT A BASIC SCHEDULE OF
LAND VALUES BY GRADE FOR THE NON-IRRIGATED TILLABLE
FARM LAND CLASSIFICATION........ '...............
Chouteau County ........................ . . . . . . . .
•Fergus County ................................
Judith Basin County ................ . . . . . . . . . .
Summary Analysis of Sale Prices Combining Sales From
Chouteau, Fergus,. Judith Basin, Daniels and Teton
Counties . . . . . . . . . . . . .
........ . . . . . . . .
A Basic Schedule of Values . . . . . . ................ ..
11
12
13
14
21
CHAPTER IV.
26
27
32
39
43
44
CHAPTER V. SUMMARY AND CONCLUSIONS . . . . . ................
Summary .........................
r. . . . . .
Conclusions .............................................
Need For Further Research........................ . , . . '
50
50
55
56
APPENDICES....................
APPENDIX A ..................................
APPENDIX B ..............
APPENDIX C . ............................................ '
APPENDIX D
APPENDIX E ..................................
58
59
62
63
65
67
BIBLIOGRAPHY. .................................................’
68
i
»7563
.LIST OF ILLUSTRATIONS
Figure
1
2
3
4
5
Page
The Number of Sales Taken From the Counties Involved
in This Study for Years' 1950-1960 . . . . . . . . . .
9
Fitting a Straight Line to Sale Prices from Chouteau
County on a Productivity Basis by the Equation" Y =
. - 24 k 5 . 7 8 1 7 X ................................ .. .
28
Fitting a Straight Line to Sale Prices From Fergus
County on a Productivity Basis by the Equation.Y =
- 54,0695 + 9.2204X . . . . . . ....................
34
Fitting a Straight Line to Sale Prices From Judith
Basin Cpunty on a -Productivity Basis by therEquation
Y = -S- 7.03ti4 + 5.2486X............. . . .
.'. . .
40
Fitting a Straight Line to Sale Prices From Chouteau,
Daniels, Fergus, Judith Basin, and Tetoh Counties on a
Productivity Basis by the Formula Y = - 19.74 +
• 6.12 1 3 X ........ .. . . :............................
ii
45
LIST OF TABLES
Number
I
II
III
. IV
V
VI
VII
VIII
IX
X
Page
TAXABLE VALUATIONS AND ACREAGE MILL LEVIES ON FARM
LANDS 1950-1958 . . . . . . . . . . . . . . . . . .
7
NON-IRRIGATED FARM LAND CLASSIFICATION BY GRADE . .
14
SCHEDULE OF 1959 SALE PRICES AND HYPOTHETICAL SALE
PRICES ON THE NON-IRRIGATED FARM LAND CLASSIFICATION
BY GRADE FOR CHOUTEAU COUNTY . . . . . . . . . . .
31
TOTAL. NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY
PAID, AND THE AVERAGE SALE PRICES PAID BY GRADE
WITHIN THE NON-IRRlGATED TILLABLE FARM LAND CLASSTt
FICATION FOR CHOUTEAU CpUNTY'ADJUSTED TO A 1959
VALUE LEVEL . . . . . . . . . . . . . . . . . . . .
32
SCHEDULE OF 1959 SALE PRICES AND HYPOTHETICAL SALE
'PRICES ON THE NON-IRRIGATED FABM- LAND CLASSIFICATION
BY GRADE FOR FERGUS COUNTY. . . . . . . . . . . . .
35
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY
PAID AND THE AVERAGE SALE PRICES BY GRADE WITHIN THE
NON-IRRIGATED TILLABLE FARM LAND CLASSIFICATION FOR
CHOUTEAU COUNTY ADJUSTED TO A 1959 VALUE LEVEL . .
36
COMPARISON OF AVERAGE PRICES PAID PER ACRE BY GRADE
OF SALES UNDER 500 ACRES AND FOR SALES OVER 500 ACRES
FOR THE NON-LRRIGATED TILLABLE FARM LAND CLASSIFICATION
IN FERGUS COUNTY ADJUSTED TO A 1959 VALUE LEVEL „ .
36
AVERAGE PRICE PER ACRE PAID BY GRADE FOR FARM LAND
BOUGHT WITH AND WITHOUT BUILDINGS FOR THE NONIRRIGATED TILLABLE FARM LAND CTASSIFICATION IN
FERGUS COUNTY ADJUSTED TO A 1959 VALUE LEVEL . . .
38
SCHEDULE OF. 1959 SALE PRICES AND HYPOTHETICAL SALE
PRICES ON THE NON-IRRIGATED FARIVl LAND CLASSIFICATION
BY GRADE FOR JUDITH BASIN COUNTY. . . . . . . . . .
39
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY
PAID AND THE AVERAGE SALE PRICES BY GRADE WITHIN THE
NON-IRRIGATED TILLABLE FARM LAND CLASSIFICATION FOR
CHOUTEAU COUNTY ADJUSTED TO A 1959 VALUE LEVEL . .
42
ill
LIST' OF TABLES
(continued)
Number
XI
XII
XIII
XIV
XV
XVI
XVII
Paqe
COMPARISON OF AVERAGE PRICES PAID PER ACRE BY GRADE
OF SALES UNDER 500 ACRES WITH SALES OVER 500 ACRES
.FOR THE NON-IRRIGATED TILLABLE FARM LAND CLASSIFI­
CATION IN JUDITH BASIN COUNTY ADJUSTED TO A 1959
VALUE LEifEL.......... ..............................
,
42
AVERAGE PRICE PAID PER ACRE BY GRADE FOR FARM LAND
WITH AND WITHOUT BUILDINGS FOR THE NON-IRRIGATED
TILLABLE FARM LAND CLASSIFICATION IN JUDITH BASIN
COUNTY ADJUSTED TO A 1959 VALUE L E V E L ..............
43
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY
PAID AND THE AVERAGE SALE PRICES PAID BY GRADE WITHIN
THE NON-IRRIGATED TILLABLE1FARM LAND CLASSIFICATION
f o r T e t o n c o u n t y a d j u s t e d t o a 1959 v a l u e l e v e l . . .
46
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY
PAID AND THE AVERAGE SALE PRICES PAID BY GRADE WITHIN
THE NON-IRRIGATED TILLABLE FARM LAND CLASSIFICATION
FOR DANIELS COUNTY ADJUSTED TO A 1959 VALUE LEVEL . .
.46
SUMMARY OF 1959 SALE PRICES AND HYPOTHETICAL SALE
PRICES ON THE NON-IRRIGATED FARM LAND CLASSIFICATION .
BY GRADE FOR CHOUTEAU, DANIELS, FERGUS, JUDITH BASIN,
AND TETON COUNTIES . . . . . . . . . . . . . . . . . .
47
SUMMARY OF THE TOTAL NUMBER OF ACRES BOUGHT, TOTAL
AMOUNT OF MONEY PAID AND THE AVERAGE SALE PRICES
PAID BY GRADE WITHIN THE NON-IRRIGATED TILLABLE FARM
LAND CLASSIFICATION FOR CHOUTEAU, DANIELS, FERGUS,
JUDITH' BASIN AND TElbN COUNTIES ADJUSTED TO A 1959
VALUE LEVEL . . . . . . . . . . . . ........ . . . .
48
SCHEDULE OF HYPOTHETICAL SALE- PRICES ON THE NONIRRIGATED FARM LAND CLASSIFICATION AND THE RESULTING
TAXABLE,VALUATION ADJUSTED TO A 1959 VALUE •
LE^fEL e o o e e e e e e o A e o e e o y e e ' e e o - e o
49
iv
ACKNOWLEDGMENTS
The author wishes to express sincere appreciation and thanks for the
aid and encouragement extended by all those contacted throughout the
course of post-graduate work.
Special thanks are due Dr. Layton S. Thompson for his guidance,
assistance and encouragement. Professor’s H. C. Holje and, M. C. Taylor,
the other members of the thesis committee, also deserve recognition and
thanks for their suggestions and assistance in developing this thesis.
Special thanks are also due to Dorothy Windecker for typing the thesis
Any errors or omissions in this study are the responsibility of the
author.
v
ASSTfiACT
This study is primarily concerned with the derivation of a basic
schedule of non-irrigated farm land values by grade that will reflect the
relative tax paying ability of the grades. A secondary purpose of this
study is to develop the methodology for using sale prices of farm land
in deriving the basic schedule of farm land values.
Examples of the inequalities that exist in tax levies, assessments,
and classification in Montana are pointed out as evidence for the need of
an adequate system for grading and valuing land according to its relative
tax paying ability.
The Land Reclassification Law passed by the 1957 Montana State
Legislature is outlined along with a brief discussion of the duties and
responsibilities of the county commissioners, county assessors, and the
State Board of Equalization.
Questions and assumptions concerning problems in the use of sale prices
for valuing farm land, such as the overall level of prices being paid for
land, the number of years and which years to use in the sample, and scarcity
of bona fide sales, are discussed.
The statistical analysis indicates that variables other than produc­
tivity are influencing sale prices of farm land. Variables listed as
probably influencing the sale prices of farm land are size of tracts Sold,
acreage allotments, distance from markets, hobby farmers, buying of land
for tax offset purposes, distance of acquired land from the farmstead,
speculation in the land market, sentimental values, recreation and Scenery,
and community attitudes. It is also possible that errors have been made
in grading the land, both within counties and between counties.
The real estate market is notorious for its disorganized nature. The
lack of homogeneous characteristics of farms and farm land and the meager
knowledge of market opportunities on the part of many buyers and sellers
contribute to a wide variation in sales prices. This variation may be
exaggerated in periods of somewhat feverish land market activity SUCh1 as
has existed in recent years. It is possible that sales data used from a
different period of time might show a closer association between produc­
tivity ratings and sales prices than the poor statistical relations obtained
in this study.
In spite of the variations of sale price around the averages, the
average sale prices found may give some useful value comparisons between
classes and grades of land. Another suggestion made in this report is that
the landlord share method be Used to arrive at a basic schedule of values
as a check against the schedule obtained by Use of sales prices.
vi
CHAPTER I
INTRODUCTION
The Problem Situation
The history of taxation indicates that one of the earliest methods
used to raise revenue was a tax on the ownership of real estate and
personal property.
The basis for the property tax is the theory that the
amount of a man’s property is a fair indication of his ability to contri­
bute to the operation of his government.— /
Samuelson suggests that this
theory does not hold true today because so much wealth and income is
divorced from real estate.— /
Whatever side of the argument one might
take on the merits or demerits of the property tax, it is still the back­
bone of the revenue systems for local governments throughout the United
States,-S/ The property tax is primarily levied on real estate but in
some places personal property such as livestock, machinery9 furniture
I
and jewelry is also taxed.— /
It is of interest that general property tax
collections increased more than twelvefold in the United States between
1902 and 1952.
A subdivision of property may be made to see what increases in taxation
have taken place on farm land.
In using the years 1909-13 = 100 as a base
l/
Earl F. Grouse and Charles H. Everett, Rural Appraisals. Prentice- ,
Hall, Inc., Englewood Cliffs, New Jersey, 1957, p, 325.
2/
Paul A. Samuelson, Economics. McGraw-Hill Book Company, Inc., New
York, New York, 1958, p. 134.
3/
American Federation of Labor and Congress of Industrial Organization,
State and Local Taxes. December, 1958, p. 24.
i/
Samuelson, op. cit.. p. 134.
for property taxes paid in the United States, the index number for the
average tax on farm land in 1945 was 178.
The index value then started a
(
:
climb upward and reached a relative value of 422 in 1955. This is an
increase of 137 per cent in tax per acre from 1945 to 1955.^
Because of the increase in property taxes on farm lands, and since a
substantial portion of property in rural areas consists of farm land,
efforts have been focused on more equitable and uniform methods of
assessing farm lands.
Studies show that inequalities in assessed valuations
of farm lands are widespread.
These inequalities arise from disparities
in the valuation of one farmer’s property as compared with the valuation
of other farmers’ property.^
too close to the average.
Murray states that assessments concentrate '
The excellent farms are underassessed while
the poor farms are overassessed.
assessment.
This is contrary to the purpose of
The assessment process is supposed to provide for taxation
in proportion to value.5/
This also means that owners of high value
farms benefit at the expense of the low value farms because the low
value farm has to bear part- of the tax burden that should be paid by the
better farms.
This is unfair to those that own low value farms because
they generally have a lesser ability to pay.^
Jl/
Raleigh Barlowe, Land Resource Economics. Prentice-Hall, Inc.,
Englewood Cliffs, New Jersey, 1958, pp. 552-553.
2/
Joseph Ackerman, "Need For a Uniform Tax Valuation System," Proceedings
— Land Valuation Conference. Fort Collins, Colorado, June 17-19, 1952, p.7.
3/
William G. Murray.-Farm Appraisal. Iowa State College Press, Ames,
Iowa, 1950, p. 216.
4/
Ackerman, op. cit.. pp. 7-8.
- 3Presently, the 1919 classified property tax law serves as a basis for
tax assessments on land in Montana.
The," land classification process under
this law was hurried and the counties could not get adequate information
to indicate proper use and economic value of the various lands.
Until
the Land Reclassification Act of 1957 went into effect, there had been
few changes made in classification of the land since the original plats
were completed.l/
The use of the 1919 Classified Property Tax Law proved to be
inequitable because land which was of similar productivity was not placed
in the same class.
Land which was classed as good farm land in one area
was classed as grazing land in another area.
Also some classes of land
were not changed when the major use of the land had been changed.
These
differences in classification made it impossible to assess land in a
manner which reflects its relative tax paying a b i l i t y . A n example
of inequitable land classification and tax assessment frequently cited
comes from Fergus County.
Land that had a uniform slope of about one
degree was classified as "engine piowland."
Due to this classification
such land received a relatively high valuation for tax purposes.' Some of
this land wasn't used for farming purposes but as long as it was classed
\J
H. H. Lord, S. W. Voelker, and L. F. Gieseker, Standards and Procedure
for Classification and Valuation of Land For Assessment Purposes.
Montana State College -Experiment Station Bulletin No. 404, Bozeman,
Montana, June, 1942, p. 3.
2/
Harold G. Halcrow and H. R. Stucky, Procedure for Land Reclassification
In Montana. Montana State College Experiment Station Bulletin No. 459,
February, 1949, p. 3.
4
as "engine plowland” it was taxed as farm land even though it was used
for grazing
Further need for uniformity in classification, appraisal and
assessment of farm land is cited by John C. Bower, Extension-Economist,
in a mimeographed report.
One example cited is of similar fields
of land being assessed at different rates.
"One field was assessed at $2.00 per acre and another
similar field in the same farm was assessed at $15.00 per
acre. This means that pne field was assessed at Tjjs- times
'as much as the adjoining field."■»
■
Bower lists another example of the lack .fof. uniformity in assessment
concerning a field of sod land which was assessed as- ‘tillable:at $4 .0 0
,
per acre and a nearby field being used to grow wheat was assessed at
■$2.00 per a c r e . T h e report further cites a study conducted by the
State Board of Equalization to indicate the differences in the level
of assessments between counties.
This 1955 study indicated that sane
counties were assessing as low as 20 per cent of full and true value
while some counties were assessing at 54 per cent.
counties was about 30 per cent.
The average of all
The above figures suggest that farmers
in some counties may be contributing two and one-half times as much to
the cost of state services as farmers in other counties.^
I/
Ibid.
2/
John Cv Bower, The History. Need For, and Present Land Reclassification
Law. Mimeographed Report,' Montana State College Experiment Station,
Bozeman, Montana,- February, 1959, p. I.
3/.
Ibid.
4/
Tbid., p. 2.
- 5 In 1937 R. R. Renne and 0. H. Brovmlee made a study of the relation­
ships between assessed values and productive values of farm and grazing
lands.. Renne and Brownlee used a selected area covering 1,210,000 acres
in parts of six Montana counties.
They showed that the tax burden was
not spread according to the earning' capacity of the land.
They also
showed that first and second grade farm lands were underassessed while
all other grades of farm, land were relatively overassessed.
The inequality
in the assessments on the different grades and classes of land helped to
explain the high rate of tax delinquency that was prevalent at that
time/
Property taxes have been increasing nationwide.
exception to this trend.
Montana is not an
Property tax levies in Montana, excluding
levies for cities and towns, have increased from 78.73 mills in 1950 to
93.51 mills in 1958.
This is an 18.77 per cent increase in the mill levy
over a nine year period.
See Table I.
During this same period of time
the taxable valuation bn Irrigated lands, no.n-irrigated lands, and
grazing lands also increased by 9 per cent.
In 1958,63.11 per cent
of the tax dollar came from property taxes and 41.83 per cent of the
property taxes came from real estate and improvements. Property taxes on
farm real estate and improvements comprise 17.48 per cent of the tax on
real estate and improvements.
l/
Because of the large amount of tax revenue
R. R. Renne and 0. H. Brownlee, Uncollected Property Taxes in Montana,
Montana State College Experiment Station Bulletin No. 382, Bozeman,
Montana, August, 1940, p. 30.
- 6 derived from property, it is essential that this tax base be equitable.l/
The State Board of Equalization has recognized that due to the tremendous
increase in state and local levies along with the high proportion of taxes
derived from land and improvements, it is very important that this portion
of the property tax base carry its fair share by proper enumeration, and
equalization between individuals and counties
5
A step in the direction of property tax equalization was made when
the 1955 Montana State Legislature passed a.Land Reclassification Law,
providing for the classification of lands, and the appraisal of city and
town lots and rural and urban improvements for assessment and taxation
purposes.' This law was later declared unconstitutional on technical
grounds but was passed again in the 1957 Legislative session with minor
revisions.
The duties of the county commissioners, county assessors, and
the State Board of Equalization in carrying out the reclassification
program are outlined in the law.
Provisions are made in the law for
classifying lands according to their use and the establishment of grades
within each use class according to soil and productive capacity.— ^
The
five classifications of land as approved by the State Board of Equalization
are tillable irrigated land, non-irrigated farm land, grazing land, wild
hay land and non-irrigated continuously cropped farm l a n d . i t is the
intent of this law that classification and appraisal of lands, city and
j_____ _____ I_____ ____ .
________________________
•
________________
1
•.
j / . Montana State Board of. Equalization, Eighteenth Biennial Report.
'
Helena, Montana, 1958, pp. 14-16.
2/
Ibid., p. 3.
3/
See Appendix A.
4/
Montana State Board of Equalization, Procedure and Instructions for
Land Reclassification. Helena, Montana. 1957. .0:. 5.
- 7 town lots and rural and city improvements will be completed not later
than March 9, 1962.
TABLE I.
TAXABLE VALUATIONS AND AVERAGE MILL LEVIES ON MONTANA FARM LANDS.
1950 -1958 .*
Year
1950
1951
1952
1953
1954
1955
1956
1957
1958
*
Source;
•
Taxable Valuation
on Farm Lands
Average Mill Levy
on Farm Lands a/
$79,826,104
80,308,401
80,459,053
81,037,442
81,908,109
83,226,153
84,511,775
86,555,365
78.73
80.33
78.90
77.70
81.51
84.91
87.59
89.96
93.51
8 7 ,714,973
Montana State Board of Equalization, Eighteenth Biennial Report.
Helena, Montana, 1958.
Special district and miscellaneous levies and total taxes levied for
all purposes except cities and towns.
Objectives
The first objective is to determine the relative values between
the grades of land within the non-irrigated farm land- classification from
which an attempt will be made to provide a basic schedule of values on
which a uniform and equitable method of tax assessment for the state of
Montana may be based.
The second objective is to develop and describe the methodology
used in finding the basic schedule of values.
l/
See Appendix A.
- 8 Hypothesis
A basic schedule of land values for tax assessment purposes, based
on productivity and reflecting the relative tax paying ability,, may be
assigned to the grades of land within the non-irrigated farm land classi­
fication through the collection, inspection, and analysis of land sales
prices as derived from sales of land in the market.'
Procedure
The study area was set up to include all counties in Montana from
which we could obtain sales data on non-irrigated farm land.
Since the
hypothesis requires that the sale of land be tied to a specific grade of
land we were limited in processing some sales data because the counties
were not finished with the reclassification program.
The largest number
■of non-irrigated farm sales included in this study come from Chouteau,
Judith Basin, and Fergus counties.
Also there are included in the
analysis a scattering of sales from Daniels County and Teton County.
The sales information was obtained from three sources.
A large
number of sales were obtained from lending agencies, some sales were
sent in by county assessors or other county personnel and a few sales
were obtained from the warranty deed registration in the county offices.
See Figure I for the number of sales used in this study by county.
The sales were then checked by persons'- acquainted with the real
\
estate transaction in the respective counties.so as to eliminate love
and affection sales, and other transactions that were not thought to be
bona fide market sales.
/i
MONTANA
Teton
Chouteau
_ 165
Fergus
|Judithi
"IBasin
I 63
Figure I.
The Number of Sales Taken From the Counties Involved in This Study for Years
1950-1960.
10 Also the procedure used in tying each sale to its respective grade .
within the classification is described in detail.
The method of arriving
at values for each classification is described and a statistical analysis
will be made on the sales data.
Problems raised in regard to the use of sales data, the method used,
and the assumptions made are discussed.
In the final section conclusions are drawn concerning the assignment
of values to grades of land within a classification.
CHAPTER II
DISCUSSION OF LAND RECLASSIFICATION AND LAND VALUATION
In order to have a sound basis for valuing land, the 1955 State
Legislature voted that the lands of the state of Montana would be
subjected to a land reclassification program based on productivity.
The program was to be completed within five years after its inauguration.
The 1955 Land Reclassification Law was declared unconstitutional but was
passed with a few revisions in the 1957 session of the State Legislature.i/
Upon completion of the land reclassification program, values must be
assigned to each grade of land within a classification so a uniform and
equitable assessment for tax purposes may be based on the productive value
of the land.5/
These relationships must be uniform within the counties
as well as between the counties if the tax equalization program is to
provide justice to taxpayers.
The problem of land reclassification has faced Montana since the
1919 Classified Property Tax Law went into effect.
It must be admitted
that this law was a step in the right direction but the economic data,
production histories, and other information were just not available to
the extent that an adequate classification could be made.
Many men have worked diligently in the area of land reclassification
in Montana.
Many of their names appear in footnotes in this paper as
authors of publications on the subject.
Each has contributed something
J./
See Appendix A for a complete wording of the 1957 Land Reclassification
Law.
2/
Value is taken here to mean a judgment which consists in attributing
to goods a certain sum of money.
- 12, but the man that is mentioned time and time again is B. F. Gieseker.
Gieseker is listed by some as being responsible for relating productivity
to soil type which is the basis for the 1957 land reclassification program.!/
Several counties have shown aggressiveness in the. development of the
land reclassification program.
Teton County is generally credited as
being the birthplace in the late 1920"s and early 1930*s of classifying
according to productivity.!/
Phillips and Pondera counties were not far
behind in classifying land on a productivity basis.!/
Procedures and Responsibilities Involved
After the inauguration of the land reclassification program in 1957
the State Board of Equalization published a booklet entitled Procedure
.and Instructions for Land Reclassifications.
In this booklet they stated
that s
"Classification means placing lands of similar use and
productivity in the same .class and grade. Lands of similar
use and productivity have similar ability to pay taxes. . Once
lands' of similar use and productivity are put in the same grade,uniform valuations can be placed on all land in the
grade. The assessed valuations can be adjusted between grades
to reflect relative sales value and/or productivity value or
combination of both. The process of valuation and assessment
however, should be kept entirely separate from the process of
classification, "d/
l/
Rita McDonald, Montana Land Classification Technique— Its Applications
and Evolution. Term Paper, Department of Agricultural Economics and
Rural Sociology, Montana State College, Bozeman, Montana, 1959, p. I,
2/
Bower, op. cit.. p. I.
3/
McDonald, op. cit.. p. 49.
4/
State Board of Equalization, Procedure and Instructions for Land
Reclassification, op. cit.
I
13 In order that the classification program may be carried out,
responsibilities of the county commissioner, county assessor, and the
State Board of Equalization has been outlined in Chapter 198 Session Law
of 1955 amended as, of 1957.-1/
The county commissioners were given the
responsibility of providing for the classification of all taxable lands
within their respective counties in a manner directed by the State
Board of Equalization.
It is then the duty of the county assessor to assess all lands for
taxation purposes in conformance with the classification made by the
county commissioners.
The State Board of Equalization is to provide for a general and
uniform method of classifying lands in order that an equitable and uniform
assessment of land for tax purposes may be secured on a state-wide basis.
Land Reclassification Process
The land reclassification process involves two steps.
First, the
classification of land according to use and second the grading of land
within each use class according to productivity.
There are five classes
of land set up under the law but the non-irrigated farm land is the
only class involved in this study.
This classification includes non-
irrigated land which is now under cultivation but excludes continuously
cropped farm land.
The schedule as presented in Table II expresses land grades in
terms'of the long-time productivity of the land.
l/
See Appendix A.
The figure in the
- 14 -
TABLE II.
Bushel of wheat per
acre on summerfallow .
Grade
I
I
I
I
I
2
2
A 3
A 2
Al
A
B
A
B
*
NON-IRRIGATED FARM LAND CLASSIFICATION BY GRADE.*
30 and
28 26 24 22 20 18 -
Sources
over
29
27
25
23
21
19
Grade
.
2
3
3
4
4
5
Bushel of wheat per
acre on summerfallow
C
A
B
A
B
16 - 17
14-15
12 - 13
10 - .11
8 - 9
under 8
State Board of Equalizations Procedure and Instructions For
Land Reclassification. Helena, Montana, 1957, p. 6.
right hand column represents the standard crop grown dm the class of
land.
In the case of non-irrigated farm land the standard crop is wheat.
The figures in Table IT are listed in two bushel increments indicating
the standard of productivity associated with each grade.
Methods and Problems of Valuing Non-irrigated Farm Lands
Four, ways of arriving at a basic schedule of values for taxation
purposes were discussed at the Land Classification and Assessment
Conference held at Montana State College in December of 1,959. .The
methods discussed were the cash-rent approach, landlord .share approach,
the budgeting process, and the sale price approach.
It was decided that
the cash-rental approach might be good to use in the case of valuing
grazing lands but not in the case of setting values on farm land because
there would be few cash rentals in the tillable farm land classification.
This would make it difficult to find a cash-rental lease rate that could be
used for the s t a t e . I t was brought out at the conference that the
«l/
Cash-rent refers to the payment of a fixed sum of money usually on
an annual basis.
- 15 I
landlord.share method can be used in the non-irrigated tillable class, in
the irrigated tillable class, and on the wild hay classification because
the typical arrangement is to give the landlord a certain share of the
product.!/
A net income is figured for the owner and is capitalized in
order to find the value of the property.
The budgeting process as a method of valuation was -also discussed J=/
"it was decided that this was not a good approach because there are not
adequate data available.
This is substantiated by Bradford and Johnson
when they state that "one ’joker* in the budgeting process in. the problem
of getting appropriate prices and quantities to put into the budget
forms or budget equations.”^
Error may also be made in the above three methods through the capitali­
zation process.^/
A change of one per cent in interest rate will make a
large difference in value.
For instance assume a net annual income of
Jl/
The share rental approach would range typically from l/4 to l/3 of the
crop going to the owner on the non-irrigated farm land classification.
2/
Budgeting is a technique used to state in advance the expenses and
receipts from a farm enterprise. It is also used as a tool to study
alternatives within the farm enterprise and gives some idea of the
problems that may be encountered.
3/
Lawrence A. Bradford and Glenn L. Johnson, Farm Management Analysis.
John Wiley arid Sons, Inc., New York, New York, 1953, p. 330.
4/
Capitalization refers to the use of the following equations
Value = net annual income
interest rate
This formula is used when the income will continue to be received for
an indefinitely long period into the future. The above formula is a
' reduction of the more complex formula y. — a • +
a
+
a
— (l+r)
(l+r)2
(l+r)3
a
. (a = annual income and r = interest rate.) The latter formula
(l+r)n
shows algebraically the value of each expected annual increment discounted
to present value.
- 16 $1.00 and an interest rate of 4 per cent.
Solving the capitalization
formula (V -
) gives a value of $25.00. If this interest rate is
.04
changed to 5 per cent and still using the same net annual income figure
of $1,00 the value now is $20.00 (V
°-S~- = $20.00) the capitalization
.05
process tells us how much can be paid for the land and still earn an
interest rate of 4 per cent in the first case and 5 per cent- in the
second case.
In other words, if you are-satisfied with earning 4 per
cent interest, $25.00 per acre can be paid for the land.
If 5 per cent
interest is the desired rate of return only $20.00 may be paid for the
acre of land.
Errors may also be made.in arriving at a net annual income figure.
For instance, if the above $1.00 net annual income was increased to
$2.00 through differences in cost or return estimates, and if the interest
rate remains at 5 per cent, this would mean an error of $20.00 per acre
in value (V = AvQQ = $20.00) (.QvQQ = $40.00).
.05
.05
It is not meant through
this discussion that the above methods are wholly inadequate but they do
have their limitations, and for this reason some combination of methods
should probably be used in arriving at a basic schedule of land values.
The sales method of valuing lands was also discussed at the meeting,
and is to be explored in this paper as a method of finding a basic schedule
.of land values.
Indirectly, sales prices reflect the use of the capitali­
zation method because the sales price is essentially a measurement of what
people (buyers and sellers) think land is w o r t h H o w e v e r , many questions
l/
Notes taken at Land Classification and Assessment Conference held at
Montana State College in December of 1959,
17 have been asked which must be answered before the derivation of a basic
schedule of values may be obtained from the use of land sales.
The first question, which is important in figuring a taxable value
but is not necessarily important in finding relative values of the grades',
is in regard to the high prices being paid for land today and the effect
this will have on the schedule of values.
In answer to this question it
must be emphasized that the immediate objective is to find the proper
relationship of values for the grades within the classification.
After
the proper relationships have been found, the basic schedule of values
may be set at whatever level is appropriate.
One restriction is that
the resulting taxable valuation must bear an equitable relationship to
other kinds of property.
The question of how many years of sales data to use in the sample
is another problem that must.be worked out.
Bonright states that the
advantage in using recent transactions on sales is that it secures the
most up-to-date market prices; thus, they more nearly reflect conditions
as they exist- at the time of valuation.— /
However, if it is decided
that the long-run average is necessary in order to derive a basic
schedule of values, sales data should be collected for the necessary
number of years to arrive at this value.
Sale prices of land for an
11-year period were collected in this study which should be adequate
to reflect current conditions and still incorporate enough years in the
sample to give a good average of land values.
JL/ James C. Bonright. Valuation of Property. McGraw-Hill Book Co., Inc.,
New York, New York, 1937, p. 137.
18 Acreage allotments on wheat are another consideration of the sale
price of land that must be explained.
In the Journal of Land and Public
Utility Economics. Mason states:
"There can be no question that acreage allotments and
associated marketing quotas, appertaining to particular farms
do now constitute, a major factor in the value and market price
of such farms."2/
However, Mason states further that it is almost impossible to obtain
market data that is an accurate measurement of the values of allotments
and marketing quotas.
"No two farms are exactly alike; and the wide" differences
between farms actually sold, even in .a given area over a
relatively short rent period, would require rather arbitrary
adjustments of actual price to achieve comparability. This is '
the reason why no attempt is made to employ mass statistical
methods to isolate the effect of acreage allotments on land
prices."2/
Also, in the collection of sales prices it is hard to determine what the
acreage allotment was on a piece of land in 1950 when we are collecting
this sale in 1960.
Due to a limitation of time and money, no effort has
been made to check allotments on these sales.
In essence, then, it will
be assumed that the allotment affects the sale price equally in all cases.
In one" instance, the allotment base might be high but low in another sale.
If enough sales are used in the analysis an average figure should be
arrived at which will take account of the variations in sale price due
to the allotment base.
l/
John E. Mason, "Acreage Allotments and Land Prices,” The Journal of
Land and Public Utility Economics. Volume XXII, Number 2, May, 1946,
p. 177.
2/
Ibid.
- 19 One definite obstacle in the us,e of sale prices for setting a basic
schedule- of values is the scarcity of bona fide sales.— /
Even'where
numerous sales prices are available, further investigations will have to
be made because of various intangible considerations that may have caused
the property to be sold at more or less than its productive value.— /
Intangibles that may-influence sale prices include such- items as ‘
sentimental
attachments, geographic location of farmstead in regard to scenery, markets
and recreation, and attitudes that prevail within the community.
Two
other problems are in evidence in the collection of land sale prices.
Are
the sales bona fide and has any time elapsed betwe’
en the sale date and the •
recording date■of a contract for deed?— /
The above obstacles were overcome as nearly as possible by asking
•-several people who were acquainted with real estate operations in the
area if the- sales were bona fide and if the data collected on the sale
were correct. ’ If the validity of a sale was questioned by these people
it was not used in this study.
It was found by Dr. Layton Thompson in an earlier study on farm real
estate that 85 per cent of the tracts which changed ownership were
_l/
A bona fide sale refers to the exchange of land between willing informed
buyers and sellers that excludes love and affection sales or emergency
sales, and other transactions that were not thought to be actual market
sales as determined by informed people in the respective counties.
2/
Ackerman, op. cit., p. 10.
3/
A contract for deed is an agreement between a buyer and seller of real
estate stipulating the installments to be paid over a definrhe .period
6f years. The deed goes to the buyer when some agreed percentage of
the purchase price is paid. This often times results in a number of
' years difference between the date of sale and the recording of the deed.
20 purchased by farmers who intended to use the land.
Eighty-one per cent
of the land was purchased by farmers who were owner-operators previously.l/
John Lawrence, in a study on the effect of increasing farm size on land
values, states that 32 per cent of land transfers nationwide in 1954 were
for, farm enlargement.
This still suggests that a significant number of
land transfers are for the purpose of farm enlargement.S/
Lawrence points
out in his thesis that "land values increase as additional units of land
are added to an existing farm unit.”
Economies of scale was named as one
of the reasons for the increase in land value." Lawrence found in his study
that as more land is added to the existing unit, average production costs
per acre decline.
The net income per acre is then increased and when
this new net income figure is capitalized, a higher value per acre is
realized on the land .-2/ Although current appraisal methods do not take
into account the increased value of land when it is added to an existing
unit, the land buyers are faced with this factor
Here again, the time element and expense involved do not allow an
actual appraisal of each added tract.
It is hoped that with the collection
of enough sales that an average figure will be obtained that will reflecta balance between higher and lower prices paid for different tracts of land
under this marginal demand theory.
l/
Layton Thompson, Changing Aspects of the Farm Real Estate Situation
in Montana, 1940 to 1946. Montana State College Agricultural Experi­
ment Station Bulletin No. 440, January, 1947, p. 19.
2;/
John D. Lawrence, The .Effect, of Increasing Farm Size on Land Values.
Master's Thesis, Department of Agricultural Economics and Rural
Sociology, Montana State College, Bozeman, Montana, May, 1958, p. 2.
3/
Ibid., p. 63.
4/
Ibid., p. 64.
CHAPTER III
METHODS USED IN TYING LAND SALES PRICES TO A SPECIFIC GRADE
One important aspect of the land reclassification program is the
setting of values on the grades of land within the different use classifi­
cations.
This will be done five years after the inauguration of the
reclassification law. . The point has now been reached where the methodo­
logy in tying land values to a particular grade of land should be explained.
As previously mentioned, sales of non-irrigated farm land were
acquired from three sources.
The first source was from lending ,agencies.
In order that the process may be followed closely an actual sale using
this source o.f information will be used as an example.
from Fergus County.
This sale is
Also make note that all sale's from this source
were processed in the same manner.
The information used included a
complete description of the land, total acres involved in the sale,
cultivated acres, value of the sod, value of buildings at the time of
sale, the total purchase price, and the year of sale.
The sale to be used here is a 320 acre tract with 269 cultivated
acres.
A total price of $20,000 was paid for this land in 1954.
were no buildings inlcuded with this sale.
There
In checking the legal descrip­
tion with the land classification office it was found that the sale
acreage contained 208 acres of grade 2 C, 61 acres of grade 3 A, and 51
acres of gracing,land, for a total of 320 acres.
It is necessary then
to deduct the value of the grazing land from the purchase price.
The
grazing land in' this instance was appraised at $20.00 per acre which means
that $1,020 must be deducted from the total purchase price leaving a
22 balance of $18,980 as the amount paid for the farm land.
The value given
to the grazing land was set by a lending agency appraiser who was familiar
with the sale.
The grade of farm land must now be weighted in order to
find an average grade for the tract sold.
In using the mid-point of-
bushels per acre listed in Table II as the production for that grade,
the land is assigned to its proper weighted average.
the 2 C grade is 16.5 bushels per acre.
The mid-point for
This figure is multiplied by
the number of acres in this grade which comes to 3,'432 = (16.5 x 208).
The process is repeated for the 3 A grade taking 61 acres times the
grade mid-point which is 14.5.
x 61).
The figure derived here is 884.5 = (14.5
The sum of these two products divided by the number of acres
involved gives a weighted average, which will fit into the schedule in
Table II.
The sum of 3,432 + 885.5 divided by 269 = 16:05 = (4.,317.5)>
269
This estimate then falls into the 2 C grade of l a n d T h e
price paid
for the farm land ($18,980) divided by the number of acres of farm land
(269) will give a per acre price paid for the land of $70.56.
In order to get an adequate sample of sale prices on farm land it
was necessary to use sales from more than one year.
Since the overall
land values and the price level change from year to. year it was also
necessary to convert the sale prices of farm land to a base year.
The
sale prices were converted to the year 1959 through the use of an index
of farm land values for Montana published by the United States Bepartment
l/
See Appendix B Table I for the production limits used in assigning
farm land to a specific grade.
-
of Agriculture j J
23
-
The -method of converting prices paid for farm land to
a 1959 base is explained in the following example.
The net price paid
($18,980) for the land taken times the conversion factor for land in 1954
which is 1.3 gives a 1959 value of $24,557 for the land.2/
A price per
acre in 1959 dollar's may be obtained by dividing $24,557 by 269.
price paid per acre in 1959 dollars is $91.28.
The
If buildings had been
included in this sale, their value"would have been subtracted from the
sale price which would have reduced the net price paid for the farm land.
All other sales acquired from lending agencies' were processed In this
manner.
In a cooperative effort to find a basic schedule of values for farm
land, sales data on farm land were sent in by county assessors and other
interested people.
The information included (of use in this study) was
the total number of acres involved in the sale, the appraised value of
buildings, the year of sale, the number of acres in each class and grade '
and the sale price or the amount of revenue stamps involved in the purchase.
The valuation that should be put on the buildings posed a problem.
In approximately 95 per cent of the sales the building value had been set
by a lending agency appraiser.
price paid for the farm.
This value was then subtracted from the
In approximately 5 per cent of the sales the
buildings included in the transaction did not have an appraised value at
the time of sale.
Another
method had to be developed in order to put a
l/
See Appendix C Table I.
2/
See Appendix C. Table I for index and conversion factors used in
assigning 1959 values to prices paid for farm land.
- .24
value on these buildings.
It was felt that the full value of the house
should not be subtracted from the price paid for the farm land because
only a portion of the house value contributes to farm earnings and there
are less potential buyers for a farm house than for a house in town.
This
should make the value of a farm house less than the value of a comparable
house in town.
Chouteau County reclassifiers valued farm houses at 65
per cent of the value of a house in Fort Benton.
In this study, the 65
per cent value of farm houses compared to Fort Benton values was used.
Added to the value of the house was the appraised value of other farm,
buildings.
This is the figure that was subtracted from the total sale
price in this study.
Since the buildings were all appraised by county
classifiers at.the 1959 value level, the buildings included with a
transaction in .years other than 1959 had to have the appraised values
converted back to the year of sale.
This was done because of the changes
in the. level of building material costs and the changes in the price
level that take place over a period of years.
A cost of building materials
and fencing index was used to revalue these b u i l d i n g s . A conversion
factor was applied to the appraised value of the buildings in order to
convert the 1959 appraised value back to the year of sale.
The adjusted
value of the buildings was then subtracted from the total price paid for
the tract,
value level.
the net price paid for farm land was then converted to a 1959
The process of finding a specific sale price for a specific
grade of farm land was then completed in the same manner described for
the sales data obtained from lending agencies.
'l/
See Appendix C 5 Table II for index of building materials used in
assigning values for buildings to the year of sale.
-
25
-
. County records of deed registrations were used as- a third source of
sale information.
two methods.
Again, the same information was required as in the other
Most sales taken from deed recordings had to have a purchase
price applied through interpretation of the revenue stamps bought when' the
deed was recorded.
Fifty-five cents of revenue stamps signifies up to
$500.00 as the price paid on the deed.
One dollar and ten cents means that
between $500.00 and $1,000.00 was the price paid for the land.
In order
that the sale price would not be missed by a full $500.00, the mid-point
between the extremes was used so that the assigned sale price at the most
would only deviate from the actual price by $250.00.
the sale price of a tract was $999.00.
The buyer would, have to buy.$1.10
worth of revenue stamps when the deed was recorded.
to this tract would then be $750.00.
For instance, assume
The price assigned
The actual price paid was missed
by $249.00 but someone else might pay only $501.00 for the next tract of
land? then the average price paid for both tracts would be $750.00.
If sales of land had more than 10 per cent grazing land and did not
have a value put on it by an appraiser it was not used in this study.
The
assumption here is if land bought does not include more than 10 per cent
grazing land the price paid for the land is not influenced greatly by the
small amount of grazing land.
land.
In other words, the tract is bought as farm
Also, the sales were checked with people acquainted in the respective
counties in.order to eliminate sales that were not bona fide.
Upon the
assignment of a grade of land, to a specific price, the data were then
included with the sales information from the other two sources.
CHAPTER IV
ANALYSIS OF USING MARKET PRICES BASED ON PRODUCTIVITY AS THE CRITERIA OF
ARRIVING AT A BASIC SCHEDULE OF LAND VALUES BY GRADE FOR THE NON-IRRIGATED
TILLABLE FARM LAND CLASSIFICATION
Up to this point the concern has been mainly the presentation of the
inequality that exists in the levying of property■taxes, the methodology
used in processing the data, discussions of problems, and the assumptions
made in carrying out this study.
The next step in the process of analyzing
the data is to separate the sales of farm land by grades and counties.
This process allows an analysis to be made of the values obtained for
each grade.
Two averages will be obtained by grade for Chouteau, Sergus, and
S
Teton counties.
The same will be done on a" summary analysis of all counties
involved which include a scattering of sales from Daniels and Teton counties.
The first average found is weighted by acreage and is calculated by dividing
the.amount of money involved by the number of acres.
The use of an average
weighted by acres means that sale prices of large acreages have a greater
influence in affecting the average sale price than the sale-prices of small
acreages.
The other average is found on a per sale basis.
This allows
the sale of small acreages to have as much weight as the sale of large
acreages.
The average price paid for farm land on a per sale basis is
calculated in the following manner.
First, an average price per acre must
be calculated for all transactions.
The average figures obtained are then
added together.
The resulting sum is then divided by the number of sales,
thus putting the quotient on a per sale basis.
27 In the statistical analysis the average per sale figure was used to
fit a straight line to a group of data by a linear regression equation.l/
An analysis of the sales data by county is presented here with a
summary analysis involving sales from five counties.
Chouteau County
If the average prices paid for farm land by grade on a per sale basis
were the only factor considered in this analysis it would indicate that on
the average, people are paying more for the higher grades of farm land than
the lower grades.
The average price paid per sale using 1959 as the base
year, ranges from $69.14 in grade 3 A to $117.17 in grade I A.
price per sale for all sales is $86.61.
See Table III.
The average
The fitting of a
straight line to this data is demonstrated in Figure 2.
The arithmetic mean, weighted by acres found for each grade, also
seems to indicate that people are paying more for the higher grades of
farm land.
The average price paid per acre ranges from $72.75 in grade
3 A to $122.18 in grade I A.
for the county is $94.73.
taken just as averages.
The average weighted on a per acre basis
See Table IV.
However, the averages must be
They do not show the .extreme piice variations
paid for farm land within each grade.
The discrepancy observed in figuring
the average per sale and the average per acre seems to indicate that higher
prices are paid for large acreages than small acreages.
This will be
explained further in the analysis for Fergus and Judith'Basin counties.
l/
Statistical formulas used in this analysis may be found in Appendix
D , Table I.
28
Price Per Acre
Adjusted to 1959
Value Level
25
3
Bushels of
Wheat Per Acre
Figure 2.
a/
Fitting a Straight Line to Sale Prices from Chouteau County
on a Productivity Basis by the Equation Y = -24 + 5.7817X. _a/
The dotted lines show the extreme ranges for finding the true slope of
the regression line at the 95 per cent confidence level.
- 29 It is not feasible to accept an average figure unless further stati­
stical analysis is made in order to determine the reliability of this
average.
One such test of reliability is the standard error of estimate
which is $34^82 for Chouteau County.-/
are subject to sampling error.
These are sample figures and they
If it is assumed the sample is randomly
drawn and the sampling errors are normally distributed the probable error
around the line of regression can be estimated.
The line of regression
is a single straight line that best describes the average relationship
between sale price and productivity.
In other words, it defines the ten­
dency for sale prices and productivity to vary together.-^=/ In order to
derive a 95 per cent confidence limit for estimating the average relationship about the regression line, 1.96 is multiplied times $34.82.
resulting product is $68.25.
3/
The
This means that with 95 per cent confidence
the sale prices of farm land, based on productivity, can be found within
a range of plus or minus $68.25 from the regression line.
The above figures seem to indicate that factors other than productivity
have influenced the purchase price of farm land in Chouteau County,
A
hypothesis in explanation of the poor results obtained in the above
l/
Formula for figuring the standard error of estimate is;
Sy • X "
byxy
N - -2
2/
Fredrich C. Mills, Statistical Methods. Henry Holt and Company, New
York, New York, 1955, p. 259.
3/
The figure 1.96 is a constant value used in finding the 95 per cent
level of confidence.
— 30 —
statistical test would be that variables such as acreage allotments,
distance to town, distances of the acquired land from the farmstead,
hobby farmers, buying of land for tax purposes and speculation in the
land market are playing a part in the price paid for farm land.
Another
factor that might influence the statistical results obtained here is the
classification process itself.
Because this amounts to a "mass appraisal?'
program, it seems likely that there will be errors in grading individual
tracts.
■The wide variations in the sale prices paid for farm, land may be
-further explained by the following quote from Barlowe on the nature of
the real estate market.
"In their use of the market-comparison approach, appraisers
ordinarily encounter wide variations^in market prices. They find
that most buyers and sellers operate with incomplete knowledge •
of their market opportunities, that their properties have a
wide variety of characteristics, and that pome properties sell. ,
for more than they probably should while others sell for.less."-/
In order to establish a 95 per cent confidence band for the true
line, 1.96 is multiplied by the estimate of the standard error of the
coefficient of regression for the line plus or minus the b value (1.96
x .9182 = 1.7997).^ /
A confidence band for Chouteau County may be found
within.the limits of 5.781 plus or minus 1.7997.
This is demonstrated
l/
Barlowe, op. cit.« p. 195.
2/
yFormula for finding the standard error of the coefficient of regression
■is:
“ 31 —
TABLE III.
SCHEDULE OF 1959 SALE PRICES AND HYPOTHETICAL SALE PRICES. ON
THE NON-IRRIGATED FARM LAND CLASSIFICATION BY GRADE FOR CHOU­
TEAU COUNTY. >
Grade of
Farm Land
(I)
I A 3
I A 2
IAl
I A
I B
2 A
2 B
2 C
3 A
3 B
4 A
4 B
5
TOTAL
Bushels of
Wheat Per Acre
(.2)
over 30
28 - 29
26 - 27
24 - 25
22 ' 23
20 - 21
18 - 19
16 - 17
14 - 15
12-13
10-11
8 - 9
under 8
Average Sale
Hypothetical
Prices by Grade a/ Sales Prices by
Adjusted to a
Grade Adjusted
1959 Value '
to a 1959
Level , b/
Value Level
(3)
(4)
$
-
Size of
Sample
(5)
$159.92
140.36
—
117.17
~~
107.72
80.53
64.27
69.14
-
—
——
128.80
117.23 •
105.67
94.11
82.54
70.98
59.42
47.85
32
12 '
86
20
15
36.29
24.72
—
——
13.16'
$86.61
$86.61
.165
s/
This is the average price paid per sale.
b/
Hypothetical sale prices are calculated from the linear-regression
equations
Y = -24.42 + 5.7817 X.
in Figure 2„
It can be stated 95 per cent of the time that the slope of
•' ■
the line will fall within this interval.-/
The use i
of a coefficient of determination is another method used to
find the relationship between v a r i a b l e s /
l/
This measurement assumes that
Formula for finding the slope of the line is:
b =
Zx2
2/
Formula used in finding the coefficient of determination, is:
d =
JL^Y.
SY 2
32 -
TABLE IV.
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY PAID, AND
THE AVERAGE SALE PRICES PAID BY GRADE WITHIN THE NON-IRRIGATED
TILLABLE FARM LAND CLASSIFICATION FOR CHOUTEAU COUNTY ADJUSTED
TO A 1959 VALUE LEVEL.
Total Amount of Money
Average Sale
Under Consideration
Prices by Grade
Grade of
Adjusted to a 1959
Total Acres Under Adjusted to a
Size of
Farm Land
Value Level
Consideration
1959 Value Level Sample
(I)____________ (2)____________________ (3)____________ (4)
a/
(5)
I A
'2 A
2 B
'2 C
3 A
TOTAL
a/
$1,313,304.01
10,749
5,050
33,873
557,465.45
3,078,082.78
559,741.62
317,565.00
$5,826,158.86
4,365
110.39
90.87
75.00
72.75
61,500
$94.73
7,463
32
12
$122.18
This is the average sale price weighted by acres.
dividing column (2) by column (3).
86
■
20
15
165
It is obtained by
causality flows from the productivity of farm land to the sale prices for
each grade.
.195654.
The coefficient of determination for Chouteau County is
This seems to indicate that only 19.5654 per cent of the
variability of sale prices on farm land is associated with the producti­
vity ratings of the farm land.—/
,
Fergus Codnty
The average price paid per sale ranges from $41.37 in the 4 B grade
to $170.71 in the I A grade of farm land.
See Table V.
With the
exceptions of grades 4 B and 2 C, the trend, inferred from the averages, ■
indicates that higher prices ,are paid for the higher,producing grades of
Jl/
Statistical formulas and the values obtained may be seen in Appendix
D, Tables I and II.
33 farm land.
However, it must be remembered that the average tells nothing
about the variability in the sale prices of farm land.
After the linear
regression equation was applied to the data the average price paid on a
per sale basis was smoothed to fit a line ranging from $2.86 in grade 5 to
$227.15 in grade I A 3.
Grade numbers 5, I A I, I A 2, and I A 3 were
not represented by sales but the use of the linear regression equation
permits a projection of the possible sale prices for these grades.
The
sale prices obtained by this process are essentially hypothetical for they
assume the regression line continues as a linear line.
The scatter
diagram in Figure 3 indicates that the trend is definitely toward the
payment of higher prices for the higher producing farm lands.
It may be
observed from the scatter of sale prices that much variation exists about
the regression line.
The average prices paid, on a per acre basis in Table VI range from
$40.46 in grade 4 B to $170.71 in grade I A.
This compared favorably with
the average price per sale before the regression equation was used to
smooth out the averages.
However, a discrepancy in the mean value on a
per sale basis and on a per acre basis is observed.
In Chouteau County
the difference was also observed but no explanation was offered.
The
$109.07 average per acre in Table VI is weighted by acreage thus allowing
the sale prices of the larger tracts to have more weight in arriving at
an average figure.
per sale basis.
The $102.81 average calculated in Table V is on a
This method allows the sale price of a small tract to
have as much weight as the sale price of large acreages.
The differences
34 -
Price Per Acre
Adjusted to 1959
Value Level
Bushels of
Wheat Per Acre
Figure 3.
a/
Fitting a Straight Line to Sale Prices From Fergus County on a
Productivity Basis by the Equation Y = -54.0695 + 9.2204X. a/
The dotted lines show the extreme ranges for finding the true slope of
the regression line at the 95 per cent confidence level.
- .35 -
TABLE V.
Grade of
Farm Land
(I)
I A 3'
I A 2
I. A I
I A
I B
2 A
2 B
2 C
3 A
3 B
4 A
4 B
5
TOTAL
a/
SCHEDULE OF 1959 SALE PRICES AND HYPOTHETICAL SALE PRICES ON THE
NON-IRRIGATED FARM LAND CLASSIFICATION BY GRADE FOR FERGUS COUNTY.
Bushels of
Wheat Per
Acre
(2)
over 30
28 - 29
26 - 27
24 - 25
22-23
20 - 21
18 - 19
16 - 17
14 - 15
12 - 13
10 - 11
8 - 9
under 8
Average Sale Prices
Hypothetical Sale
by Grade
Prices by Grade
•Adjusted to
Adjusted to a 1959 Size of
a 1959 Value Level a/
Value Level b/ Sample
(3)
(4)
<4
$
$227.15
208.71
190.27
171.83
153.39
134.95
116.51
98.07
79.63
■61.19
■42.74
24.30
2.86
$102.81
— —
——
170.71
150.45
144.12
101.30
108.49
82.40
48.79
37.13
41.37
—
$102.81
^■
-iI
7
12
14
15
8
4
7
2
70
This is the average price paid per sale,
b/ 1Hypothetical averages calculated from the linear- regression equation
Y = - 54.0695 + 9.2204X.
in these two average's indicates that the prices paid for large acreages is
greater than the prices paid for small acreages.
Some proof of- this is offered in Table VII.
divided into two acreage groups.
The sale of land was
One group included all sales up to 500
acres and the other group included all sales over 500 acres.
was obtained by grade on a per acre basis.
An average
The average price paid per
acre for all grades in the over 500 acre group is $112.02 as compared
with $105.09 per acre paid for tracts under 500 acres.
36 -
TABLE VI.
Grade of
Farm.Land
(l)
IA
I B
2 A
' 2 B
2 C
3 A
3 B
4 A
4 B
TOTAL
a/
•
Total Amount of Money
Under- Consideration
Total Acres
Adjusted to a 1959 ■ ■ Under
Value Level
Consideration
(2)
(3)
$101,575.00- 521,605.50
579,751.50
499,427.40 ■
452,166.15
203,163.00
37,100.00
43,541.70
7,890.00
$2,446,220.25
Average Sale Prices
By Grade Adjusted
Size of
to a 1959 Value
Level a/
Sample
(4)(5)
595
3,6,36
4,075
4,759
4,274
3,044
760
1,090
195
22,428
$170.71
143.46142.27
104.94
105.79
66.74
48.82
39.95
40.46
$109.07
I
7
12
14
15
8
4
7
2
70
This is> an average sale price weighted by ;acres. It is calculated by
dividing values in column (2) by the values in column (3).
TABLE VII.
Grade of
Farm Land
(I)
.
I A .
I B
2 A
2 B
2 C
3 A
3 B
4 A
4 B
TOTAL
a/
TOTAL ItUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY PAID AND
THE AVERAGE SALE PRICES BY GRADE.WITHIN THE NON-IRRIGATED
TILLABLE FARM LAND CLASSIFICATION' FOR CHOUTEAU COUNTY ADJUSTED
TO A 1959 VALUE'LEVEL.
COMPARISON OF AVERAGE PRICES PAID PER ACRE BY GRADE OF SALES
UNDER 500 ACRES- AND FOR SALES OVER 500 ACRES FOR THE NONIRRIGATED TILLABLE FARM LAND CLASSIFICATION IN. FERGUS i
COUNTY
ADJUSTED TO A 1959 VALUE LEVEL.
Average Prices Paid for Sales
Under 500 Acres Adjusted to a
1959 Value Level• a/
(2)
Average Prices Paid for
Sales Over 500 Acres Adjusted to a 1959 Value Level
'(3)
a/
S
148.36
146.32
102.73
96.36
• 109.13
48.82
35.78
40.46
$105.09
Averages are calculated on a per acre basis.
$170.71
141.55
138.14
107.08
112.27
55.46
M
mm.
■ 51.44
,*• •—
$112.02
- 37 One hypothesis offered as to why the large acreages command higher
prices is that the large acreages may include more buildings with the sale
than the small tracts.
This also was checked -by again dividing the sales
of farm land into two groups, land bought with buildings and land bought ■
without buildings.
See Table VIII.
The average for both groups expresses
little difference as to whether land has buildings included with the sale.
Land without buildings commanded an average of $109.41 per acre while
land with buildings brought an average price of $108.95 per acre.
The
significance of these two averages seems to indicate the building's value
■has little to do with the high prices paid for the large acreages.
Another suggestion offered as to the difference in prices paid for large
and small acreages is that the large acreages may command more bidders
than the small acreages.
The reasoning offered here is the small tracts'
may only be bid on by a neighbor because of the distance factor while
large tracts would eliminate much of .the consideration for distance.
In
other words., buyers of land might figure they can pay more for large
tracts because it is cheaper to farm land in close proximity than land
that is scattered in small tracts.
Statistical tests made on the sales data for Fergus County indicates
a closer relationship between sale prices and productivity than was in
evidence in the other' counties.
$31.43.
The standard error of estimate (Sy .x) is
When this is put on a 95 per cent confidence level it may be
stated that'with 95 per cent confidence the sale prices of farm land,
based on productivity, can be found within a range of plus' or minus $61.60
'38 -
TABLE VIII.
AVERAGE PRICE PER ACRE PAID BY GRADE FOR FARM LAND BOUGHT
•WITH AND WITHOUT BUILDINGS'FOR THE NON-IRRIGATED'TILLABLE
FARM LAND CLASSIFICATION IN FERGUS COUNTY ADJUSTED TO A
1959 VALUE LEVEL.
Grade of
1Farm Land
(I)
Average Sale Prices
'by Grade for Farm
Land Bought With
Buildings (1959
Value Levels) a/
(2)
I A
I B
2 A
2 B
2 C
3 A
3 B
4 A
4 B ■
TOTAL
a/
$170.71
142.27
141.88
100.33
90.38
58.66
57.39
33.59
Average Sale Prices
by Grade for Farm
Land Bought Without
Buildings (1959
Value Levels) a/
(S) .
_ _
■
$152.09
144.72
113.04
133.70
117.18
31.84
42.59
'
40.46
— -T
■$108.95
$109.41
Averages are calculated oh a per acre basis.
from the regression line,— /
regression (S^) is .9833.
The standard error of the coefficient of
When put on a 9E> per' cent confidence level it'
may be stated that a band for the slope of the line may be found within
the limits 9.2204 plus or minus 1.9273.
for Fergus County is .56388.
The coefficient of determination
This indicates that 56.388 per cent of the
variability in sale prices of land is associated with productivity.— /
l/
A more detailed explanation of the inferences for the statistical
values may be obtained from the section on Chouteau County.
2/
The statistical formulas' used and the values obtained may be seen
in Appendix D 9 Tables I and II.
- '39 TABLE IX.
Grade of
Farm Land
(I)
I A 3
I A 2
I A I
I A
I B
2 A
.2 B
2 C
3 A
3 B
4 A
4 B
5
TOTAL
SCHEDULE.OF 1959 SALE PRICES AND HYPOTHETICAL SALE PRICES ON THE
NON-IRRIGATED FARM LAND.CLASSIFICATION BY GRADE FOR JUDITH BASIN
COUNTY.
Bushels of
Wheat
Per Acre
(2)
over 30
28 - 29
26 - 27
24 - 25
22 - 23
20 - .21
18 - 19
16 - 17
14 - 15
12 - 13
10 - 11
8 - 9
under 8
Average Sale I
Prices
by Grade
Adj ust.ed 'to a 1959
Value Level
(3)
Hypothetical Sale
Prices by Grade
Adjusted to a 1959
Value Level b/ ■
...
(4)
$
—
—
121.52
112.39
107.19
90.44
67.00
— —
— —
— —
$105.63
$165.33
156.62
146.12
135.62
125.12
Size of
Sample
(5)
— —
—
— —
6
11
33
12
I
114.63
■ 104.13
93.63
83.13
72.64
62.14
51.64
41.63
$105.63
—
'
—
— —
Ml —
63
a/
This is the average price paid per sale.
b/
Hypothetical averages calculated From the linear regression equation
Y = + 7.0304 +. 5.2486X.
Judith Basin County
The average price paid per sale in Judith Basin County indicates
that higher prices are paid for the higher producing farm lands.
The
sale prices range from $67.00 in the 3 A grade to $121.52 in grade I B.
Through "the use of a linear regression equation, a line was fitted to the
scatter diagram in Figure 4.
The range of prices after the line was
fitted'is $41.63 in grade 5 to $165.33 in grade I A 3.
The average pricq
per sale of $105.63 in Table IX in comparison with;$106.30 average per
40 -
Price Per Acre
Adjusted to 1959
Value Level
5
Figure 4.
a/
10
15
20
25
30
Bushels of
Wheat Per Acre
Fitting a Straight Line to Sale Prices From Judith Basin County
on a Productivity Basis by the Equation Y = +7.0304 +5.2486X. a/
The dotted lines show the extreme ranges for finding the true slope
of the regression line at the 95 per cent confidence level.
41
acre in Table X indicates that higher prices are being paid for the larger
acreagesi
Some proof of this is found in Table XI where sales of land
were divided into two groups9 those under 500 acres and those over
500 acres.
The $99.52 per acre average paid for farm land.under 500 acres
compares with the $10^.11 average per acre paid for farm land when it
was. included in a sale of more than 500 acres.
The hypothesis advanced
in the analysis of Fergus County that the higher prices paid for large
acreages might be due to there being more buildings on the larger tracts
of land might have some merit for Judith Basin County.
In Table XII it ■
may be seen that $113.15 per acre was paid for farm land bought "with.buildings^While $84.47 was paid per acre for farm land without buildings.
The standard error of estimate (Sy.x) for Judith Basin County is
$34.23.
At the 95 per cent level of confidence for the standard error
of estimatei the sale price's of farm Iand5 based on productivity^ can be
found within a range of plus or minus $67.09 (34.23 x 1.96) from the
regression line.
A confidence interval for the b value may be found
with' 95 ,per cent confidence within the limits 5.2486 plus or minus 4.7459.
The coefficient of determination.(d) indicates that 7.151 per cent of the
variation in sale prices is associated with productivity.■-/ The above
analysis seems to indicate very little relationship between productivity
ratings and sale prices for Judith Basin County.^
l/
A more detailed description of the meanings of the statistical values
may be seen in the section on Chouteau County.
2/
The statistical formulas used and the values obtained may be seen in
Appendix D 9 Tables I and II.
- 42 -
TABLE X. .TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY PAID AND THE
AVERAGE SALE PRICES BY GRADE WITHIN THE NON-IRRIGATED TILLABLE
FARM-LAND CLASSIFICATION FOR CHOUTEAU COUNTY ADJUSTED TO A 1959
VALUE LEVEL.
Total Amount of Money
Total Acres
Under Consideration
Grade of Adjusted to a 1959.
Under
Farm Land
Value Level
Consideration
(2)
(3)
Cl)
I B
2 A
2 B
2 C
3 A
TOTAL
a/
221,001.00
603,9.86.90
1,436,751.98
419,992.45
8,712.00
$2,690,444.33
1,720
5,484
12,932
5,043
130
, 25 j309
$128.49
110.14
111.10
■83.28
67.00
$106.30
■
6
11
33
12
I
63
This is an average sale price weighted by acresi It is calculated by
dividing the values in column (2) by the values in column (3).
TABLE XI.
Grade
(I)
I B
2 A
2 B
2 C
3 A
TOTAL
a/
$
Average Sale Prices
by Grade Adjusted
Size of
to a 1959
Sample
Value Level V
f4).
__(5,)_
.
COMPARISON OF AVERAGE PRICES PAID PER ACRE BY GRADE OF SALES
UNDER 500 ACRES'WITH SALES OVER 500 ACRES FOR THE NON-IRRIGATED
TILLABLE FARM LAND CLASSIFICATION IN JUDITH BASIN COUNTY '
ADJUSTED TO A 1959 VALUE LEVEL.
Average Price Paid For
Sales Under 500 Acres
Adjusted' to a 1959
Value-Level a/
12)
”
Average Price Paid For
Sales Over 500 Acres'
Adjusted to a 1959
Value Level a/
(3)
$112.21
121.18
$
86.29
109.-79
67.00
' $ 99.52
10.6,62
121.20
86.97
—$109.11
Averages are calculated on a per acre basis
- 43 -
TABLE XII.
AVERAGE PRICE PAID PER ACRE BY GRADE FOR FARM LAND WITH AND
WITHOUT BUILDINGS FOR THE NON-IRRIGATED TILLABLE FARM LAND
CLASSIFICATION IN JUDITH BASIN COUNTY ADJUSTED TO A 1959
VALUE LEVEL.
Grade of
Farm Land
(I)
Land Bought
With Buildings
(2) .
I B
2 A
2 B
2 C
3 A
TOTALS
a/
a/
$146.76
107.19
119.67
88.67
-$113.15
Land Bought
Without Buildings
(3)
$107.48
124.00
66,35
76.13
67.00
$ 84.47
Averages are calculated on a per acre basis.
Summary Analysis of Sale Prices Combining Sales From Chouteau, Fergus,
Judith Basin, Daniels, and Teton .Counties
Included in a summary analysis for all counties are four sales from
Teton County as shown in Table XIII and ten sales from Daniels County
shown in Table XIV.
The summary average sales value for all counties
included in this study by grade on a per sale basis range'from $41.37 in
grade 4 B to $118.79 in grade I A.
See Table XV.
In two cases, the average
sale price for a grade is higher than the average sale price- for the prec­
eding grade.
This occurs In grades I B and 4 B.
In the case of the average
for the 4 B grade, little weight can be put on this average alone due to
the smallness of the sample.
The average sales value for the I B grade is
high and this may be due to two factors.
There were no sale values entered
in the I B grade from Chouteau County and the other factor may be that the’
sample is relatively small for this grade.
A comparison of the average
44 price paid per acre of $100.03 with the $92.96 average per sale again
indicates that higher prices are associated with the larger acreages.
The
range of values on a per acre basis are from $40.46 in the 4 B grade to
$124.72 in grade I A. .The I B grade average sale price is again higher
than the average sale price for the preceding grade.
Table XVI.
The scatter diagram in Figure 5 shows a large amount of
variation around the line of regression.
is $36.12.
This may. be seen in
The standard error of estimation
In converting this figure to a 95 per cent confidence level it
is found that the rangfe of variability around the regression line for
finding sale prices with 95 per cent confidence may be found within the
limits of plus or'minus $70.80.
A confidence interval for the b values
may be found with 95 per cent confidence between the limits of 6.1213 plus
or minus 1.2336.
is ,6294.
The standard error of the coefficient of regression (Sj3)
The coefficient of determination for all counties is .23389.
This indicates that 23.389 per cent of the variation in sales prices is
associated with the productivity ratings.
A Basic Schedule of Values
It has been proposed in this research project that a basic schedule
of values may be obtained by using sales prices paid for land3 based on
its productivity rating as an indication of the relative value of the
grades of land.
It seems rational to assume the level of the sale
prices paid for land is too high.
In 1959, the rate of return, nationwide,
on market values' of land after the deduction of all costs was estimated at
45 Price Per Acre
Adjusted to 1959
Value Level
Bushels of
Wheat Per Acre
Figure 5.
a/
Fitting a Straight Line to Sale Prices From Chouteau, Daniels,
Fergus, Judith Basin and Teton counties on a Productivity Basis
by the Formula Y = - 19.74 + 6.1213X. a/
The dotted lines show the extreme ranges for finding the true slope
of the regression line at the 95 per cent confidence level.
46 -
TABLE XIII.
Grade of
Farm Land
(I)
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY PAID AND
THE AVERAGE SALE PRICES PAID BY GRADE WITHIN THE NON-IRRIGATED
TILLABLE FARM LAND CLASSIFICATION FOR TETON COUNTY ADJUSTED
TO A 1959 VALUE LEVEL.
Total Amount of
Money Under
Consideration
Adjusted to a
1959 Value Level
(2)
2 A
2 B
TOTAL
a/
$24,750
74,720
$99,470
Total Acres
Under
Consideration
(3)
240
801
1,041
Average Sale
Prices by
Grade Adjusted
to a 1959
Value Level a/
(4)
$103.13
93.28
$ 95.55
Size of
Sample
(5)
I
3
4
The average price weighted by acres paid I,s derived by dividing the
figure entered in column (2) by the corresponding figure in column (3)
TABLE XIV.
Grade of
Farm Land
(I)
3 A
3 B
4 A
TOTAL
TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF MONEY PAID AND
.THE AVERAGE SALE PRICES PAID BY GRADE WITHIN THE NON -IRRIGATED
TILLABLE FARM LAND CLASSIFICATION FOR DANIELS COUNTY ADJUSTED
TO A 1959 VALUE LEVEL.
Total Amount of
Money Under
Consideration
Adjusted to a
1959 Value Level
(2)
$ 46,617,
15,302
48,435
$110,354
Total Acres
Under
Consideration
(3)
$
855
474
1,090
$2,419
Average Sale
Prices by
Grade Adjusted
to a 1959
Value Level a/
(4)
$54.52
32.28
44.44
$45.62
Size o:
Sample
(5)
4
2 .
4
10
Ji/ The average price weighted by acres paid Is derived by dividing the
figure entered in column (2) by the corresponding figure in column (3),
three per cent.-Z
If it may be! assumed that 6 per cent is a fair rate of
return for owners of farm land based on earnings, the sale price of farm
Jl/
United'States Department of Agriculture^' Otrrent 'JDeveItpments' in the
Farm ReaT'Estate Market. Washington...D.'
Agricultural: Research
Service,-MayyvI960j pp. 6-8.
47 -
TABLE XV.
SUMMARY OF 1959 SALE PRICES AND HYPOTHETICAL SALE PRICES ON
THE NON-IRRIGATED FARM LAND CLASSIFICATION BY GRADE FOR
CHOUTEAU, DANIELS, FERGUS, JUDITH BASIN AND TETON COUNTIES.
Bushels of
Wheat
(2)
Grade of
Farm Land
(I)
I
I
I
I
I
•2
2
A 3
A 2
Al
A
B
A
B
Average Sale Prices
by Grade Adjusted
to a 1959 Value
Level a/
(3)
over 30
28 - 29
26 - 27
24-25
22 - 23
20 - 21
18 - 19
16 - 17
14 - 15
12 - 13
10 - 11
8 — 9
under 8
2 C
3 A
3 B
4 A
4 B
5
TOTALS .
$
Hypothetical Sale
Prices by Grade
Adjusted to a 1959
Value Level b/
(4)
Size of
Sample
(5)
$166.96
154.71
142.47
— —
- -
118.79 '
137.10
121.15
89.55
85.07
70.78
M a*
OU —
130.23
33
117.98
'13
105.74
93.50
81.26
136
47
36
69.01
28
41.37
56.77
44.53
32.29
6
11
2
$392.96
20.04
$.92.96
312
44.65
39.22
a/
This is the average price paid per sale.
b/
Hypothetical averages calculated from the linear, regression equation
Y = -
19.74 + 6.I213X.
land obtained In Table XVI can be divided by one-half in order to allow a
6 per cent return on investment.
Table XVII.
This calculation is demonstrated in
Column (4) is the "basic value" obtained, in this analysis.
Column (5) is the taxable valuation obtained by taking 30 per cent of the
"basic value."
It must be emphasized that the valuations obtained here are basic
and the county 'assessors still must do a job.
If It is deemed necessary
for the county assessors to deviate from this basic schedule of values In
- 48 order to find taxable valuations due to such differences in farms as
distance from town, difference- in distance to school, quality-of roads,
etc., some uniform method of deviating from the basic schedule of values
should be adopted in order that the tax valuation process will remain
orderly on a statewide basis.
TABLE XVI.
Grade of
Farm Land
(I)
I A
I B
2 A
2 B
2 C
3 A
3 B
4 A
4 B
' TOTALS
a/
SUMMARY QF THE TOTAL NUMBER OF ACRES BOUGHT, TOTAL AMOUNT OF
MONEY PAID AND THE AVERAGE SALE PRICES PAID BY GRADE WITHIN
THE NON-IRRIGATED TILLABLE FARM LAND CLASSIFICATION FOR
CHOUTEAU, DANIELS, FERGUS, JUDITH-BASIN, AND TETON COUNTIES
ADJUSTED TO A 1959 VALUE LEVEL.
Total Amount of Money
Under Consideration
Adjusted to a 1959
Value Level
(2)
$1,414,879.01
742,606.50
. 1,765,953.85
5,088,982.16 '
1,431,900.22
576,057.00
52,402.00
•91,976.70
7,890.00
$11,172,647.44
Total Acres
Under
Consideration
(3)
11,344
5,356
14,849
52,365
16,780
■ 8,394
1,234 1
2,180
195 ■
112,697
Average Sale
Prices by Grade
Adjusted to a
Size oJ
1959 Value Level Sample
. (4) a/
(5)
$124.72
138.-65
- 118.93
97.18
85.33
68.63
42.47
42.19
40.46
$100.03
' 33
13
36
136
47
28
6
11
2
312
This is the average sale price weighted by acres. ; It is derived by
dividing column (2) by column (3).
- 149 -
TABLE XVII.
Grade of
Farm Land
. Cl)
I
I
I
I
I
2
2
2
3
3
4
4
5
A 3
A 2
A I
A
B
A
B
C
A
B
A
B
SCHEDULE OF HYPOTHETICAL SALE PRICES ON THE NON-IRRIGATED
FARM LAND CLASSIFICATION AND THE RESULTING TAXABLE VALUATION
ADJUSTED TO A 1959 VALUE LEVEL.
Bushels of
Wheat Per
Acre
(2)
over 30
28 - 29
26 - 27
24-25
22 - 23
20
18
16
14
12
10
-
21
19
17
15
13
11
Hypothetical Sale
Prices by Grade
Adjusted to a 1959
Value Level a/
(3)
$166.96
154.71
142.47
130.23
117.98
105.74
93.50
81.26
69.01
56.77
44.53
8 - 9
32.29
under 8
20.04
One-Half of
Hypothetical
Sale Value b/
. (4)
~
Taxable
Valuation c/
(5)
$83.48
77.36
71.24
$25.04
23.21
21.37
65.12
58.99
19.54
52.87
46.75
40.63
34.51
15.86
14.03
17.70
12.19
28.39
22.27
10.35
8.52
6.68
16.15
10.02
4.85
3.01
a/
Hypothetical average sales value by grade taken from Table XVI.
b/
Dividing the values in column (3) by one-half allows 6 per cent
earnings on farm land. This calculation was made in order that
the basic schedule of values will reflect 6 per cent earnings on
farm land instead of the 3 per cent earnings that were made
nationwide in 1959.
c/
Derived by taking 30 per cent of column (4).
CHAPTER V
•SUMMARY AND CONCLUSIONS
Summary
In this study, the rising level of property taxes on a nationwide
basis and in Montana was discussed.
It was also pointed out that inequa­
lities in levying property taxes exists within counties in Montana as well,
as between counties.
Examples of the inequalities in assessment and
classification of land was presented as proof of the need for reclassi­
fication and revaluation of property for taxation purposes.
A discussion of the methods that may be used in finding a basic
schedule of values was -presented, pointing out the strong and weak points
of each method.
A more detailed discussion of problems met in using sale
prices of land in arriving at a basic schedule of values was offered
because attention was focused on the method in this study.
The methodology used to arrive at a basic schedule of values by grade
for the non-irrigated tillable farm land classification was presented in
detail.
Ldnding agencies, county assessors and other interested people,
and county deed recording books were listed as the sources of sales data
for this study. , The information needed on a transaction in order to arrive
at a specific sale price for a specific grade of farm land was a complete
legal description of the land sold, total acres involved in the sale, the
number of acres under cultivation, an appraisal value on the sod, value
of the buildings at the time of sale, the total purchase price, and the
year of sale.
- 51 In order to trace the method used in arriving at the specific sale
price for a specific grade of farm land, an actual sale of farm land was
used as an example.
The legal description of the land involved In the
sale was used to find the use classification and grade put on the land by ..
the 'county classifiers.
Through a process of weighting an average grade
was found for the farm land involved in the sale.
Building and sod values
were subtracted from the total purchase price of the tract to arrive at the
price paid for the farm land. In order
to get an adequate sample, the
sales from more than one year
were used in this study. The sales that '
I
'
were used covered the II-year period from 1950 through 1960. Because the
overall level of land values were changing and corrections for price level
changes had to be made, an Index of farm land values for, Montana was used
to correct sale prices to the
1959 level of values.
The next step was to
divide the number of acres of
farm landby the amount’of money paid.
The
resulting answer was,an average price paid per acre, at the 1959 value
level, for a specific grade of farto land.
In cases where buildings were included in a sale but did not have a
value put on them by an appraiser, a method was developed through the use
of a buildings and fencing materials index to value the buildings as of
the year of sale.' This was accomplished by applying a conversion factor
to the 1959 level of appraised values put on the buildings by the county
classifiers.
The building’s value as of the year of sale was then subtra­
cted from the total price paid for the tract.
It was brought out in this study that sale prices of land taken from
county deed recording books could be established within a narrow range
- 5.2 through the interpretation of the revenue stamps bought when the deed
was recorded.
It was also brought out in this study if sales' of land had more than
10 per cent sod and the sod did not have a value put on it by an appraiser,
the sale was not used.
If less than 10 per cent of the transaction was
made up of sod it was assumed the tract was bought as farm land.
Statistical analysis was performed individualIy on Chouteau, Fergus,
and Judith Basin counties.
The summary analysis also included a scattering
of sales from Daniels and Teton counties.
A schedule of hypothetical.land
values was derived through the use of a linear regression equation.
A
basic schedule of land Szfalues was obtained through a division of the
hypothetical land values by one-half.
The idea was to allow a 6 per cent
earnings as the rate of return for market values of farm land instead
of the estimated 3 per cent return that was made in 1959.
The taxable
valuation was found by taking 30 per cent of the basic value.
Inferences made from the sales data used in this study and the
statistical analysis performed on this data seems to'indicate that only
a small portion of the variability in sale prices of farm land Is associ­
ated with productivity.
It was found in Chouteau County that sale prices
based on productivity can be found from the regression line within a range
of plus or minus $68.25 with 95.per cent confidence.
In Fergus County
the sale prices could be found within plus or minus $102.81 from the
regression line at the 95 per cent confidence level.
Judith Basin County .
also had a large margin for error-in finding the sale price of farm land
53 based on productivity. .With 95 per cent confidence the sale price could
be found within plus or minus $105.63 from the regression line.
The margin
needed to find the sale price based on productivity for all counties from
the regression line at the 95 per cent confidence level was plus or minus
$70.80.
The large margins around the regression lines needed to find the
sale prices indicates that sale prices of farm land cannot be predicted
accurately from productivity ratings.
The derivation of a coefficient of determination gave some indication
of the percentage of variability of sale prices on farm land that was
associated with the productivity ratings on the farm land.
The coefficient
of determination by county was Chouteau County .195654, Fergus County .563878,
Judith Basin County .071508, and for all counties is .23389.
The coefficient
of determination for Fergus County suggests that a 56.38 per cent association
exists between sale prices and productivity ratings.
The coefficient of
determination for Chouteau and Judith Basin counties did not even approach .
this figure. ■Even in Fergus County the association is only apparent
approximately one-half of the time.
The ranges in which the true slope of the 'regression lines could fall
were calculated.
It was•found that the range for finding the true slope
of the regression line was relatively small in all counties except■Judith
Basin.
Several suggestions were offered in explanation for the poor statisti­
cal results obtained in this study.
Those offered were that variables such
as acreage allotments, distances from markets, distance of. the acquired
— 54 —
land from the farmstead, hobby farming, buying of land for tax offset
purposes, size of existing farms and land speculation are playing a role
in the prices paid for farm land.
It was also brought out that intangible
values such as sentimental values, location with respect to scenery and
recreation, and community attitudes may also be affecting farm land sale
prices.
Another possibility is that errors exist in the grading of farm
land within a county as well as between the counties.
This could be one
reason for the differences in the slope of the regression line between
the counties.
One reason advanced for any differences in grading that may
exist is that all counties may not be using the same period of years in
figuring their productivity averages.
It was also suggested that ■incomplete
knowledge of market opportunities, lack of judgment on farm land values
and the lack of homogeneous characteristics in farm land are factors '
contributing to the wide variations in the sale prices.
It was observed in this study that higher prices were being paid for
the larger acreages.
This was checked by dividing sales of land into tracts
under 500 acres and tracts over 500 acres.
It was found in Judith Basin
and Fergus counties that higher prices were paid for the larger acreages.
A suggestion that larger acreages include more buildings was checked and
the results were inconclusive.
Another suggestion offered was .that higher
prices are paid for large acreages because of a larger number of bidders
while 'small tracts only receive bids from people in the immediate area.
- 55
Conclusions
The hypothesis advanced in this study must be rejected because the
evidence presented indicates that' other variables are very important in
determining sale prices paid for farm land besides the productivity
ratings.
This may be true particularly for the period of years used
in this study, for Dr. Layton Thompson and Dr. ML M. Kelso did a similar
study using sales data from the early 1930's through 1951 and obtained
significant correlation between sale prices and productivity ratings.
This suggests the possibility that the association between sale price and
productivity ratings may be more significant in some other period of time..
However, one difference does exist in the studies.
The productivity
ratings used in the Thompson-Kelso study were taken from the records of­
fending agency appraisers while the productivity ratings used in this
study were supplied by county classifiers.
Another suggestion is to use the landlord share method described
earlier in this study to arrive at a basic schedule of farm land values.
The values obtained in this study oh sale prices may then be used as a
comparison with the values obtained in the landlord share method.
Some
adjustment may be made between the two values in order to arrive at a
basic schedule of values.
\f
Layton S. Thompson, and M. M. Kelso, Valuation of Montana Agricultural
Land for Tax Purposes. Unpublished Bulletin, Department of Agricultural
Economics and Rural Sociology, Montana State College, Bozeman, Montana
May, 1959, p. 27.
- 56 -
Need For Further Research
It is 'obvious from the analysis conducted in this study that other
variables besides productivity are affecting the sale prices paid for
farm land.
The poor statistical results in this study may be explained
by both tangible and intangible factors.
Some items affecting sale prices
of farm land are acreage allotments, distances from markets, distance of
the acquired land from the farmstead, hobby farmers,size of existing
farm unit, buying of land for tax offset purposes, speculators In the land
market, sentimental values, location with,respect to scenery and recreation,
and community attitudes.
If further research is done in this area it is
suggested the sales data on farm land be analyzed by a multiple regression
equation.
A recommended multiple regression equation model might contain
the following variables; acreage allotments, distances from markets,
distance of the purchased tract from the farmstead of the buyer, produc­
tivity values and size of the existing unit.
It is recognized by the
author that other variables are affecting farm land values but the natureof these variables are such that it is hard to quantify them and thus, it
would be extremely difficult to fit them in a multiple regression equation.
The rejection of the hypothesis does not mean that the basic schedule
of values developed in this study cannot be useful for tax assessment
purposes.
Some degree of relationship of the tax paying ability between
the grades is expressed in these values.
The statistical results do not
show a close association between sale prices of farm land and productivity
ratings but the basic schedule of values presented should help to bring
order to the tax assessment process.
The author feels this is- true
because a fairly large number of farm land sales are used in the analysis.
This should allow for an averaging out of the effects that acreage
allotments, size of the existing farm unit, distance from markets, etc.,
have on the basic schedule of values.
- 58 -
APPENDICES
,59 -
APPENDIX-A
CHAPTER 198 SESSION LAWS OE 1955
"AN ACT PROVIDING FOR THE CLASSIFICATION OF LANDS, AND THE APPRAISAL
OF CITY AND ,TOWN LOTS AND RURAL AND URBAN IMPROVEMENTS IN THE STATE OF
MONTANA FOR ASSESSMENT AND TAXATION PURPOSES; DEFINING THE DUTIES' OF THE
BOARDS OF COUNTY COMMISSIONERS, COUNTY ASSESSORS, AND THE STATE BOARD OF
EQUALIZATION IN CONNECTION THEREWITH, PROVIDING FOR A TAX LEVY; AND REPEAL­
ING SECTIONS 84-430:T0 84-437 INCLUSIVE, REVISED CODES OF MONTANA. OF 1947,
AND ALL ACTS AND PARTS OF ACTS IN CONFLICT HEREWITH."
Be It Enacted By the Legislative Assembly of the State of Montana;
Section I. It is hereby made the duty of the board of countycommissioners of the several counties of the state of Montana to
accomplish, in such manner as the state board of equalization may
direct, the following;
a.
The classification of all taxable lands.
b.
The appraisal of all taxable city and town lots.
c.
The appraisal of all taxable rural and urban improvements.
A record thereof must be kept upon such maps,- plats and forms, and
entered in such books of record as may be prescribed by the State Board
of Equalization. Such maps, plats, forms and books of record shall be
official records of the county. A certified copy of all such records as
may be desired- shall be furnished to the State Board of Equalization, and
the State Board of Equalization shall provide for the payment to the several
counties of "the cost!of preparing such copy of the records so provided
for, as they may require.
After compliance with the other provisions of this Act, it shall be
the duty of the board of county commissioners to maintain current, the
classification of all taxable lands, and appraisal of city and town lots,
and rural and urban improvements, as provided for herein.
Section '2. The board of-county commissioners shall create and estab­
lish a fund to be known as the "Classification and Appraisal Fund" and
may levy annually a tax not to exceed two (2) mills upon all property in
the county subject to taxation, the proceeds of which shall be deposited
by the county treasurer to the credit of such fund, and any balance
unexpended at the end of any fiscal year shall remain in such.fund and be
available to carry out the provisions of this Act. All costs and expenses
60 incurred by the board of county commissioners for such work, labor,
services and supplies required by this act, shall be paid by warrants
drawn on said fund on claims approved by said board; and the board of
county commissioners is hereby authorized to declare an emergency and
issue such warrants in the manner provided by Section 16-1907 of the
Revised Codes of Montana of 1947.
Section 3. The county assessor must base the assessments of all
lands, city and town lots, and all improvements on the classification and
appraisal as made by the board of county commissioners.
Section 4. It is the intent of this Act that classification and
appraisal be initiated expeditiously, but in no event later than July I,
1957 and shall be completed not later than five years from the effective
date of this act.
Section 5, It shall be the duty of the board of county commissioners
to cause to be mailed to each owner a notice of the classification of the
land owned by him and the appraisal of the improvements thereon. If the
owner' of any land and improvements be dissatisfied with the classification
of his land or the appraisal of the improvements, the board'.of county
commissioners shall give reasonable notice to such taxpayer of the time
and place of hearing and hear any testimony or other evidence which the
taxpayer may desire to produce at such time and afford the opportunity
to other interested persons to produce evidence at such hearings and
thereafter the board of county commissioners shall determine the true
and correct classification of such land or appraisal of such improvements
and forthwith notify the taxpayer of their determination and when so
determined the land shall be classified and improvements appraised in the
manner ordered by the board of county commissioners. If any property
owner shall feel aggrieved at the classification and/or the appraisal so
made by the Board of County Commissioners he shall have the right to
appeal to the State Board of Equalization whose findings, shall be final
subject to the right of review in the proper courts.
Section 6. It is hereby made the duty of the State Board of Equali­
zation to implement the provisions of this act by providing;
1, For a general and uniform method of classifying lands in the
state of Montana for the purpose of securing an equitable and uniform
basis of assessment of said land for taxation purposes.
All lands shall be classified according to their use or uses and
graded within each class according to soil and productivetcapac&ty. In
such classification work, use shall be made of soil surveys and maps and
all other pertinent available information. All lands must be classified
by forty (40) acre tracts or fractional lots.
2,
For a general and uniform method of appraising city and town lots.
- 61 3. For a general and uniform method of appraising rural and urban
improvements.
4.
For a general and uniform method o f appraising timber lands.
Section 7. Any and all work performed or caused to be performed by
the boards of county commissioners of the various counties for the
classification of lands and appraisal of city and town lots and rural
and urban-improvements, under the provisions of Chapter 198, Laws of 1955,
is hereby declared to be valid and of the same effect as if performed
under the provisions of this Act.
Section 8. Sections 84-430 to 84-437, inclusive, of the Revised
Codes of Montana, 1947, and Chapter 198 of the Session Laws of 1955
and all acts and parts of acts in conflict herewith and hereby repealed.
Section 9. This act shall be in full force and effect from and
after its passage and approval.
■Approved March 9, 1957
62 -
APPENDIX B
TABLE I.
PRODUCTION LIMITS USED IN ASSIGNING LAND TO A GRADE FOR THE
,NON-IRRIGATED TILLABLE FARM LAND CLASSIFICATION.
Grade
I.A 3
I A 2
IAl
I A
1 B
2 A
2 B
2 C
3 A
3 B
4 A
4 B
5
Bushels of Wheat Per Acre
29.5
27.5
25.5
23.5
21.5
19.5
17.5
15.5
13.5
11.5
9.5
7.5
7.49
and over
to 29.49
to 27.49
to 25.49
to 23.49
to 21.49
to 19.49
to 17.49
to 15.49
to 13.49
to 11.49
to 9.49
and under
63 -
APPENDIX C
TABLE I.
Index Farm Real Estate
Prices 1947-4.9 = 100
(l)
Year
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
*
INDEX OF CHANGES IN FARM REAL ESTATE PRICES 1947 - 1949 = 100
AND THE CONVERSION FACTORS NECESSARY TO ADJUST SALE PRICES TO A
1959 VALUE LEVEL.*
'
105
126
139
145
147
153
159.
164
174
192
201
Index Farm Real Estate Conversion Factors
Prices 1959 = 100 a/ to Adjust Prices t<
. (2)
'59 Levels b/ (3)
55
66
72
76
77
80
83
85
91
100
105.
1.82
1.52
1.39
1.32
1.30
1.25
I -.20
1.18
1.10
1.00
.95
'
Index taken from the Current Developments in the Farm Real Estate. Market9
Agricultural Research Service, U.S.D.A., May5 1957, 1955, and 1960.
a/
The 1959 = 100 index is derived by dividing the index number for each
year by the desired base year.
b/
The conversion factor is found by dividing index for current data by '
index .for earlier data. Examples the 1959 index of 100 is divided by •
the index for 1958 of 91 with a resulting conversion factor of 1.10.
Any price on farm real estate sold in 1958 is then multiplied b y '1.10
in order to bring the 1958 price up to the 1959 level.
- 64 TABLE II.
Year
(I)
INDEX OF PRICES PAID BY MONTANA FARMERS AND RANCHERS FOR
BUILDINGS AND FENCING MATERIALS USING. 1947 - 1949 = IOO
AND CONVERSION FACTORS NECESSARY TO ADJUST BUILDING VALUES
TO YEAR OF SALE.* Index for Building and
Fencing Materials Prices
1947-1949 = 100
a/
(2)
HO
120
124
125
125
128
132
140
138
138
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
• '
*
Source:
Conversion Factors to
Adjust Building Values
to Year of Sale b/
(3)
1.25
1.15
1.11
I. IO
1.10
1.08
1.05
.99
1.00
1.00
'
"
•%
Maurice C. Taylor, P. J. Creer and R. D. Rawson, Prices Received
and Prices Paid by Montana Farmers, and Ranchers. 1949-1959.
Montana Agricultural Experiment Station in cooperation with
the Agricultural Marketing Service,. United States Department
of Agriculture, Montana State College Agricultural Experiment
Station, Bozeman, Montana, 1959, p. 32.
a/
The conversion factor is found by dividing the index for current value
by the index for earlier date. Examples the 1958 index of 138 divided
by 140 = .99.
b/
The 1959 building material costs may be converted back to any of the
listed years by dividing the sound value of the buildings by the
conversion factor in column '-(3).
65 -
APPENDIX D.
TABLE I.
FORMULAS USED IN THIS ANALYSIS.*
Average Sale Price = Y
Average Production = X
2 Xy1=SXY
- (SSBtZl).
N
.2
2x2
= 2 X 2- I z I l
' 2Y2=2Y2-iYP
Value of b =
ZyS
Value o f .a =
Y
-
b X
Standard error of estimate of sales prices (Y) as estimated from
production QE').
s .x = \ y<y ~ b ^ ^Y-
y
N - 2
An estimate of the standard error of the coefficient of regression is:
Sy^ . X
Sb =
Coefficient of determination:
~2
d - b2
2
J2S
Zy2
*
Method suggested by Dr. Edward H. Ward.
66 “
TABLE II..
Statistical
Notations
Z xy
Z x2
z
STATISTICAL VALUES OBTAINED FOR CHOUTEAU, FERGUS AND JUDITH
BASIN COUNTIES AND TOTALS FOR ALL COUNTIES.*
Chouteau
County
8,316.7445
1,438.4485
245,766.544
Fergus
County
9,418.5360
• 1,0 2 1 .4 8 5 8
154,099.0919
Judith Basin
County
1,048.98
199.8572
76,994.5358
$34.82
5.7817
.9182
$ 3 1 .4 3
- 24.42
.195654
- 54.0695
.563878
+ 7.0304
.071508
I
19.203
17.0143
18.7857
I
$86.61
$102.81
$105.63
Sy.X
b
Sb
a
d
*
9.2204
.9833
$34.23
5.2486
2.4214
Totals
20,166.642
3,294.4872
528,102.299
$36.12
6.1213
.6294
- 1 9.74
.23389
18.4103
$92.96
See Appendix D 9 Table I for the formulas used to arrive at these
values.
- -67 -
APPENDIX E
TABLE I.
Year
1950 ■
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
SUMMARY OF TOTAL ACRES SOLD, TOTAL PRICE PAID AND tOTAL NUMBER
OF SALES FOR THE YEARS 1950 - .I960 USED IN DERIVING THE BASIC
SCHEDULE OF VALUES.
Total Acres Sold
11,749
8,611
5,492
12,285
12,687
12,408
9,780
8,306
10,386
17,866
3,127
Total Price Paid
Total Number of Sales
$535,950.00
37
455,740.00
423,450.00
866,792.00
907,168.00
1,246,537.00
. 763,702.00
667,715.00
983,081.00
1,953,542.00
270,741.00
22
17
42
34
34
31
25
.
33
32
5
68 -
BIBLIOGRAPHY
Ackerman,■Joseph, "Need For a Uniform Tax Valuation System", Proceedings—
Land Valuation Conference. Fort Collins, Colorado, June 17-19,1952.
American Federation of Labor and Congress,of Industrial Organization,
■ State and Local Taxes. December, 1958.
Barlowe, Raleigh, Land Resource Economics; Prentice-Hall, Inc., Englewood
Cliffs, New Jersey, 1958.
Bonright., James C., Valuation of Property, McGrawrHill Book Co., New York,
New York, 1937.
Bower, J ohn C ., The History. Need For, and Present Land Reclassification
Law. Mimeographed Report, Montana State College Experiment ,Station,
Bozeman, Montana, February, 1959.
Bradford, Lawrence A. and Glenn L. Johnson, Farm Management Analysis.
John.Wiley and Sons, Inc., New York, New York, 1953.
Crouse, Earl F., and Charles H. Everett, Rural Appraisals. Prentice-Hall,
Inc., Englewood Cliffs, New Jersey, 1957.
Halcrow, Harold G., and H. R. Stucky, Procedure for Land Reclassification
in Montana. Montana State College Experiment Station, Bulletin No.
459, February, 1949.
Lawrence, John D., The Effect of Increasing Farm Size on Land Values.
Master's Thesis, Department of Agricultural Economics and Rural
Sociology, Montana State College, Bozeman, Montana, May, 1958.
Lord, H. H., S. W. Voelker and L. F. Gieseker, Standards and Procedures
for Classification and Valuation of Land For Assessment Purposes.
Montana State College Experiment Station, Bulletin No. 404, Bozeman,
Montana, June, 1942.
Mason, John E., "Acreage Allotments and Land Prices," The Journal of
Land and Public Utility Economics. Volume XXII, No. 2, May, 1946.
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