Impact Aid Programs, 31592-31604 [E8-12233]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 73, Number 106 (Monday, June 2, 2008)]
[Proposed Rules]
[Pages 31592-31604]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-12233]



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Part III





Department of Education





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34 CFR Part 222



Impact Aid Programs; Proposed Rule

Federal Register / Vol. 73, No. 106 / Monday, June 2, 2008 / Proposed 
Rules

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DEPARTMENT OF EDUCATION

34 CFR Part 222

[DOCKET ID ED-2008-OESE-0008]
RIN 1810-AB00


Impact Aid Programs

AGENCY: Office of Elementary and Secondary Education, Department of 
Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend regulations governing the 
Impact Aid program under Title VIII of the Elementary and Secondary 
Education Act of 1965 (Act), as amended by the No Child Left Behind Act 
of 2001. The program, in general, provides assistance for maintenance 
and operations costs to local educational agencies (LEAs) that are 
affected by Federal activities. These proposed regulations are 
necessary to clarify and improve the administration of payments under 
section 8002 of the Act relating to the Federal acquisition of real 
property.

DATES: We must receive your comments on or before July 2, 2008.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments by fax or by e-mail. Please submit your comments only 
one time, in order to ensure that we do not receive duplicate copies. 
In addition, please include the Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to https://
www.regulations.gov to submit your comments electronically. Information 
on using Regulations.gov, including instructions for accessing agency 
documents, submitting comments, and viewing the docket, is available on 
the site under ``How To Use This Site.''
     Postal Mail, Commercial Delivery, or Hand Delivery. If you 
mail or deliver your comments about these proposed regulations, address 
them to Catherine Schagh, Director, Impact Aid Program, U.S. Department 
of Education, 400 Maryland Avenue, SW., Washington, DC 20202-6244.

    Privacy Note: The Department's policy for comments received from 
members of the public (including those comments submitted by mail, 
commercial delivery, or hand delivery) is to make these submissions 
available for public viewing in their entirety on the Federal 
eRulemaking Portal at https://www.regulations.gov. Therefore, 
commenters should be careful to include in their comments only 
information that they wish to make publicly available on the 
Internet.


FOR FURTHER INFORMATION CONTACT: Catherine Schagh, Director, Impact Aid 
Program, U.S. Department of Education, 400 Maryland Avenue, SW., 
Washington, DC 20202-6244. Telephone: (202) 260-3858 or via the 
Internet, at: Impact.Aid@ed.gov.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Relay Service (FRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Invitation To Comment

    We invite you to submit comments about these proposed regulations. 
The Secretary is particularly interested in comments on proposed Sec.  
222.23, in the following areas:
     Sec.  222.23(a)(3) and (c)(1) (Excluding from the base 
value of the expected use categories of the eligible Federal property a 
portion allocated to accommodate anticipated non-assessed or tax-exempt 
uses):
    (1) Based on the highest and best use of taxable adjacent 
properties, can local officials determine the proportion of the 
eligible Federal property in each use category that likely would be 
exempt from local real property taxes (e.g., roads, parks, and other 
municipal uses) if the Federal property were privatized?
    (2) Would it be appropriate to establish a standard proportion for 
each use category of eligible Federal property that would be allocated 
to anticipated non-assessed or tax-exempt uses? If so, what would be 
reasonable figures to use for this purpose?
     Sec.  222.23(c)(2)(i) (Minimum number of adjacent 
properties):
    (1) Could local officials readily find a minimum number of adjacent 
properties for each identified use category (assessment classification) 
for determining the base values of those categories and the estimated 
assessed value (EAV) of the eligible Federal property?
    (2) If so, is 10 a reasonable minimum number of adjacent properties 
for each identified use category of adjacent property?
    (3) If 10 is not a reasonable minimum number, what other minimum 
number would be reasonable?
    (4) Should different minimum numbers of taxable adjacent properties 
be applied to different LEAs (e.g., LEAs that contain taxable property 
of less than $100 million in total assessed value might be required to 
use at least 10 properties, and LEAs that contain taxable property 
equal to $100 million or more in total assessed value might be required 
to use at least 30 properties)?
     Sec.  222.23(d)(2) (Using recent sales): 
    Is it possible for a local official to identify readily the data 
needed to determine the proportion of sales that are ``recent sales'' 
as defined in proposed Sec.  222.23(e)(3) (that is, the number of 
taxable properties in an assessment classification that have 
transferred ownership within the three most recent years for which data 
are available) for each type of taxable adjacent property and the total 
number of properties in that assessment classification?
     Sec.  222.23(e)(1) (Definition of ``adjacent''):
    (1) Could local officials implement a definition of adjacent 
property that generally means the closest taxable parcels, and includes 
parcels further than one mile from the perimeter of the Federal 
property only in extremely rare circumstances?
    (2) Would the proposed definition allow the local official 
generally to select at least 10 taxable properties in each expected use 
category (assessment classification) to determine a base value for that 
category?
    (3) If not, what maximum distance from the perimeter of the 
eligible Federal property would be reasonable for adjacent properties?
    Affected LEAs will have ample opportunity to comment on the 
specific provisions of the proposed regulations and to share the 
document with their local assessment officials. We expect that the 
final regulations will be effective for fiscal year (FY) 2010 
applications, which we anticipate will be due February 2, 2009. In 
addition, the proposed changes generally would affect only the last 
step of the payment formula and, thus, would have a limited impact on 
overall applicant revenues.
    To ensure that your comments have maximum effect in developing the 
final regulations, we urge you to identify clearly the specific section 
or sections of the proposed regulations that each of your comments 
addresses and to arrange your comments in the same order as the 
proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while

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preserving the effective and efficient administration of the program.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations by accessing Regulations.gov. 
You may also inspect the comments, in person, in room 3E107, 400 
Maryland Avenue, SW., Washington, DC, between the hours of 8:30 a.m. 
and 4 p.m., Eastern time, Monday through Friday of each week except 
Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, please contact the person 
listed under FOR FURTHER INFORMATION CONTACT.

Background

    These proposed regulations would amend regulations implementing the 
Payments for Federal Property portion of the Impact Aid program, 
authorized under section 8002 of the Act. Current regulations 
implementing the section 8002 program are found in 34 CFR 222.20 
through 222.23.
    As described more fully in this notice under Summary of Proposed 
Regulations, the Secretary proposes revisions to Sec.  222.21, 
concerning how an LEA establishes eligibility for section 8002 
payments, and Sec.  222.23, concerning how a local official determines 
an aggregate estimated assessed value (EAV) for the eligible Federal 
property upon which section 8002 payments are based. In accordance with 
the Department's Principles for Regulating, these proposed regulations 
are essential to promoting quality and equality of opportunity in 
education.
    The amendments to Sec.  222.21 would provide greater flexibility to 
applicants in documenting their eligibility for assistance under 
section 8002 of the Act, thereby providing more equitable treatment for 
applicants that are affected by specific record retention policies. The 
amendments to Sec.  222.23 would provide more specificity for local tax 
officials who establish the EAV of Federal property, and would result 
in greater uniformity in the methods used to establish those values, 
eliminate inequities in current practices, and make the determinations 
of EAVs more consistent and reliable.

Summary of Proposed Regulations

    Following is a summary of the proposed regulatory provisions. We 
discuss substantive issues under the sections of the proposed 
regulations to which they pertain. Generally, we do not address 
proposed regulatory provisions that are technical or otherwise minor in 
effect.

Section 222.21 What requirements must a local educational agency meet 
concerning Federal acquisition of real property within the local 
educational agency?

    Statute: Section 8002(a)(1) of the Act provides that LEAs are 
eligible for assistance if, among other things, the United States owns 
property in that LEA that has been acquired since 1938 and that had an 
assessed value (determined as of the time or times of acquisition) 
aggregating 10 percent or more of the assessed value of all real 
property in the LEA (at the time or times of acquisition or, in certain 
specified cases, in the first year preceding or succeeding 
acquisition).
    Current Regulations: Section 222.21(d) lists the documents that an 
applicant must submit to demonstrate that the 10 percent threshold 
described in the Act has been satisfied. Section 222.21(d)(1) provides 
that new applicants may use only original records prepared by legally 
authorized officials at the time of Federal acquisition, or facsimiles 
such as microfilms of those records. Redeterminations of eligibility 
may be based only on records of the type described in Sec.  
222.21(d)(1) or Departmental records. Section 222.21(e) provides that 
the Secretary does not base determinations or redeterminations of 
eligibility on secondary documentation such as estimates, 
certifications, or appraisals.
    Proposed Regulations: We propose to amend Sec.  222.21(d)(1) to 
expand the scope of records upon which the Secretary determines or 
redetermines eligibility under section 8002(a)(1) of the Act. Under the 
proposed regulations, if the forms of records currently specified in 
the regulations are unavailable, the Secretary would have the 
discretion to base the determinations on other records the Secretary 
deems to be appropriate and reliable for establishing eligibility under 
section 8002(a)(1) of the Act, such as Federal agency records or local 
historical records. In addition, we propose to amend Sec.  222.21(e) to 
provide that the Secretary does not base a determination or 
redetermination of eligibility on secondary documentation if that 
documentation is in the nature of an opinion, such as estimates, 
certifications, or appraisals.
    Reasons: The Secretary is proposing these regulations to provide 
greater flexibility to applicants in documenting their eligibility for 
assistance under section 8002 of the Act, thereby promoting quality and 
equality in education. These changes would allow eligibility to be 
based on alternative records to the original tax records if such other 
reliable alternative records exist. In some jurisdictions, record 
retention standards are resulting in the planned destruction of tax 
records, which under the current regulations makes it difficult and 
sometimes impossible for new applicants to establish eligibility for 
section 8002 payments. This increased flexibility would allow those 
applicants to establish eligibility if they can locate alternative 
reliable records.
    However, under proposed Sec.  222.21(e), secondary documentation 
that is in the nature of an opinion, such as estimates, certifications, 
or appraisals, could not be used as the basis for establishing section 
8002 eligibility. Such records are not reliable evidence of a 
property's actual assessed value for taxation purposes, upon which an 
LEA's eligibility for assistance under section 8002 is based.

Section 222.23 How does a local educational agency determine the 
aggregate assessed value of its eligible Federal property for its 
section 8002 payment?

    Statute: The amount of an LEA's section 8002 assistance is based, 
in part, on a determination of the aggregate assessed value of the 
eligible Federal property in the LEA. Section 8002(b)(3) of the Act 
provides that the local official responsible for assessing the value of 
real property for the purpose of levying property taxes shall determine 
that aggregate assessed value of the eligible Federal property on the 
basis of the highest and best use of property adjacent to the eligible 
Federal property as of the time that the value is determined.
    Current Regulations: Section 222.23 describes how the local 
official determines the aggregate assessed value of eligible Federal 
property. In brief, the regulations provide that the local official 
first determines (estimates) a fair market value (FMV) of the eligible 
Federal property based on the highest and best use of taxable 
properties adjacent to the eligible Federal property (Sec.  
222.23(a)(1)). The local official then determines a section 8002 
assessed value for each eligible Federal property by adjusting the FMV 
by any

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percentage, ratio, index, or other factor that is used for taxable 
property. The regulations provide that, in making this adjustment, the 
official may assume that there was a transfer of ownership of the 
eligible Federal property for the year in which the section 8002 
assessed value is being determined (Sec.  222.23(a)(2)). The official 
then calculates a section 8002 aggregate assessed value for all 
eligible Federal property in the LEA by totaling the section 8002 
assessed values for all eligible Federal property in the LEA (Sec.  
222.23(a)(3)). The regulations also provide definitions of the terms 
adjacent and highest and best use (Sec.  222.23(b)(1) and (2), 
respectively) and examples to further explain the regulatory 
requirements and definitions.
    Proposed Regulations and Rationale: We propose a number of changes 
to Sec.  222.23. First, we propose in new paragraphs (a)(1) through 
(a)(6) to outline the process local officials must use in determining 
the aggregate assessed value of Federal property and to clarify that 
the aggregate assessed value of the Federal property that the local 
officials determine is an estimate (estimated assessed value or EAV). 
The EAV established for section 8002 payment purposes is different than 
a tax-exempt value that a jurisdiction may be required by State law to 
establish for the Federal property and carry on its tax-exempt property 
rolls. Next we propose to redesignate current paragraph (b) 
(Definitions) as paragraph (e), and to add new paragraphs (b), (c), and 
(d) that describe in detail the specific steps in the overall process 
outlined in new paragraph (a).
    We are proposing these amendments to provide more specificity for 
local tax officials who establish the EAV of Federal property and 
greater uniformity in the establishment of those values, eliminate 
inequitable inflation in the value of the eligible Federal property, 
and provide more reliability in the determination of EAVs. These 
improvements in determining EAVs will promote quality and equality in 
education. Our rationale for specific provisions is described in the 
following discussion.

General (Sec.  222.23(a))

    Proposed paragraphs (a)(1) through (a)(6) would describe the 
overall process local officials would use to determine the aggregate 
EAV of eligible Federal property. Proposed paragraph (a)(1) would 
provide, as required by section 8002(b)(3) of the Act, that a local 
official who is responsible for assessing the value of real property 
located in the jurisdiction of the LEA for levying a property tax makes 
the determination of the section 8002 aggregate EAV.
    Proposed paragraph (a)(2) would specify that the local official 
first would categorize proportionately the types of expected uses of 
the eligible Federal property in each Federal installation or area in 
the LEA, based on the highest and best uses of taxable properties 
adjacent to the eligible Federal property, and then allocate the 
eligible Federal property acres accordingly to each of those expected 
uses. The specific process for categorizing the expected uses and 
allocating the Federal acres to those proportions would be described in 
proposed paragraph (b).
    Under proposed paragraph (a)(3), the local official would determine 
a base value for each category of expected use of the eligible Federal 
property in each Federal installation or area. The specific process for 
establishing the base values of the expected use categories would be 
described in proposed paragraphs (c) and (d). As explained in more 
detail later in this section, this process would exclude a proportion 
for non-assessed and tax-exempt uses and specify a minimum sample size, 
a three-year cycle, and an allowable number of recent sales.
    Proposed paragraph (a)(4) would describe how the local official 
determines a section 8002 EAV for each category of expected use of the 
eligible Federal property in each Federal installation or area. Under 
this provision, the local official would determine the EAV by adjusting 
the base value for that category, which is established as described in 
paragraph (a)(3), by any percentage, ratio, index, or other factor that 
the official would use to determine the assessed value if the eligible 
Federal property were taxable.
    Under proposed paragraph (a)(5), the local official determines a 
total section 8002 EAV for each Federal installation or area by adding 
the assessed values determined for each category of eligible Federal 
property in that Federal installation or area. Finally, proposed 
paragraph (a)(6) describes how the local official determines the 
section 8002 aggregate EAV for all Federal property in the LEA.

Categorizing Expected Uses (Sec.  222.23(b))

    Proposed paragraph (b) would detail how local officials would 
categorize proportionately the types of expected uses of eligible 
Federal property based on the highest and best uses of taxable adjacent 
properties. Once this step is complete, the local official would 
multiply each proportion of the taxable adjacent properties by the 
total acres of the eligible Federal property to derive the number of 
acres in each category for the eligible Federal property.

Determining the Base Value for Expected Use Categories (Sec.  
222.23(c))

    Proposed paragraph (c) details how the local official would 
establish a base value for each category of expected use of the 
eligible Federal property. First, as explained in proposed paragraph 
(c)(1), the local official would identify the taxable use portions of 
the eligible Federal property by allocating a proportion of the 
eligible Federal property acres identified for each use category to 
expected non-assessed or tax-exempt uses, such as schools, parks, 
churches, and roads. The local official would base these proportions on 
the amount of area the official believes normally would comprise the 
non-assessed or tax-exempt uses in that assessment category. (The non-
assessed or tax-exempt proportions would likely vary for different 
categories of taxable property.) The local official then would multiply 
the non-assessed or tax-exempt proportion(s) by the number of acres in 
each expected use category of the eligible Federal property to 
determine the number of acres attributable to non-assessed or tax-
exempt uses. Next, the local official would subtract the number of 
acres attributable to non-assessed or tax-exempt uses from the number 
of acres of eligible Federal property in each expected use category to 
determine the taxable use portion of that category.
    Under proposed paragraph (c)(2), for the portions of the eligible 
Federal property allocated for taxable uses, the local official would 
calculate a base value for each expected use category from a selected 
sample of taxable adjacent properties representing the highest and best 
uses of the taxable adjacent properties for each category.
    Minimum number of taxable adjacent properties. Currently, as a 
matter of policy, we encourage local officials to select at least three 
taxable adjacent parcels to determine the base value for each expected 
use category (assessment classification) for the eligible Federal 
property. Some local officials use significantly more than three 
parcels. We believe that a sample size of more than three would lead to 
greater reliability in the resulting base value figure and in the 
overall EAV of the eligible Federal property. The purpose of the 
proposed changes is to standardize, at a reasonable number of 10, the 
minimum number of taxable adjacent properties that all section 8002 
applicants must use to establish those base value figures.
    Accordingly, under proposed paragraph (c)(2)(i), we would require 
all

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local officials to use at least 10 taxable adjacent properties to 
determine the base value of each expected use category (assessment 
classification). As described elsewhere in the preamble under 
Invitation to Comment, we specifically request comments on this 
proposed minimum number.
    Under the proposed regulations in paragraph (c)(2)(i), if at least 
three but fewer than 10 taxable adjacent properties are available for 
an expected use category, the local official would identify the taxable 
adjacent property with the lowest value per acre and replicate that 
property as many times as necessary to reach a total of 10 properties 
in combination with the available taxable adjacent parcels.
    If fewer than three taxable adjacent properties exist in a 
particular expected use category, generally the local official would 
not use that category in determining the assessed value of the eligible 
Federal property. However, the proposed regulations provide that, in 
extremely rare circumstances, the local official could use fewer than 
three parcels for a particular use category if the Secretary determines 
it to be necessary and reasonable.
    For example, if one taxable property adjacent to the eligible 
Federal property is a golf course, which is a separate assessment 
classification in that jurisdiction, the Secretary could determine that 
it was necessary and reasonable to allow the local official to use only 
that one golf course for that applicable use category rather than 
disallowing the category for lack of a sufficient number of taxable 
adjacent properties. (Under the proposed changes to the definition of 
highest and best use in paragraph (e)(2)(iii), the local official would 
also have to have determined that the Federal property is physically 
adaptable for use as a golf course and that there would be a need or 
demand for a golf course if the property were not federally owned.)
    After selecting the adjacent properties for each expected use 
category to serve as the basis for valuing the eligible Federal 
property, the local official would calculate an average per acre value 
for the taxable portion of each expected use category in accordance 
with proposed paragraph (c)(2)(ii). The local official then would 
determine the base value for each expected use category by multiplying 
the average per acre value by the number of acres of eligible Federal 
property in that expected use category, as described in proposed 
paragraph (c)(2)(iii).

Additional Procedures for Determining Base Values (Sec.  222.23(d))

    Proposed paragraph (d) would detail the following additional 
procedures that the local official would be required to apply in 
establishing a base value for each category of expected use of the 
eligible Federal property.
    Three-year cycle. Under proposed paragraph (d)(1), the local 
official would allocate expected uses for the eligible Federal property 
and select taxable adjacent properties only once every three years. The 
year for which that determination occurs would be referred to as the 
base year. In the following two years, the local official would 
determine the section 8002 EAV of eligible Federal property under 
section 8002(b)(3) of the Act by using the same allocation of expected 
uses and the same adjacent properties selected for the base year, but 
updating the values and acreage of the selected taxable adjacent 
properties.
    Under this proposal, in non-base years (that is, the two program 
application years following the base year), the local official could 
remove a taxable adjacent property selected for the base year only if 
that adjacent property became unsuitable for determining the base value 
for the expected use category of the eligible Federal property. A 
taxable adjacent property would be considered unsuitable only under the 
following circumstances:
    (1) a changed assessment classification (for example, an originally 
selected agricultural parcel was subdivided into residential parcels);
    (2) a change to tax-exempt status; or
    (3) a change in the original character upon which its selection was 
based (for example, the improvement on an originally selected improved 
parcel is destroyed, or an improvement is built on an originally 
selected unimproved parcel).
    If a previously selected adjacent property became unsuitable during 
the three-year cycle, the local official would be required to 
substitute a suitable taxable adjacent parcel of the same assessment 
classification as the original adjacent property. In the absence of any 
suitable parcel for substitution, the requirements for using a minimum 
number of taxable adjacent properties (minimum sample size) in proposed 
paragraph (c)(2)(i) would still apply.
    Limiting transfer-of-ownership assumption (recent sales). Second, 
under proposed paragraph (d)(2), local officials would no longer be 
permitted to assume a total transfer in ownership of the eligible 
Federal property. Currently, Sec.  222.23(a)(2) allows tax officials to 
assume a transfer of ownership of the eligible Federal property for the 
year in which the section 8002 EAV is being determined, by using 
taxable adjacent properties that all have recently sold. This option 
originally was included in the regulations to provide flexibility to 
localities in determining the valuation of the eligible Federal 
property, including those jurisdictions that re-assess real property 
primarily upon resale.
    Under this assumption, some LEAs have selected all new adjacent 
parcels each year that are only recent sales. This practice has 
resulted in disparities among LEAs in the relative rate of increase of 
maximum section 8002 payments. We do not believe that it is reasonable 
to assume that the eligible Federal property, if privatized, would 
change ownership in its entirety every year.
    Therefore, we propose to replace current Sec.  222.23(a)(2) with 
paragraph (d)(2)(i), to allow local officials to use a maximum number 
of recent sales to determine the base value for each identified 
expected use category. That number is based on the proportion that 
results when the number of taxable properties in each expected use 
category that has transferred ownership (i.e., sold) over a three year-
period is divided by the total number of taxable properties in the 
specific expected use category for the most recent year for which data 
are available. The three-year period would be established by an 
accompanying new definition of recent sales in proposed paragraph 
(e)(3), which would define recent sales or recently sold as meaning 
taxable properties that have transferred ownership within the three 
most recent years for which data are available. Under proposed 
paragraph (d)(2)(ii), the local official then would multiply the total 
number of taxable adjacent properties selected by that proportion to 
determine how many recently sold taxable adjacent properties the 
official could include among the taxable adjacent properties used to 
establish the base value for that expected use category.
    As required by section 8002(b)(3) of the Act, this proposed 
approach still results in the EAV of the eligible Federal property 
being based on the highest and best use of adjacent properties. Under 
the proposed approach, the local official would take those highest and 
best uses of adjacent properties into consideration by using them as 
the basis for categorizing and allocating the expected uses of the 
eligible Federal property, and then by establishing base values for 
those expected use categories with a

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selected sample of those adjacent properties.
    If applying the recent sales proportion to the total number of 
selected adjacent properties results in a fraction, proposed paragraph 
(d)(2)(ii) would require the local official to round the fraction down 
to the nearest whole number. For example, if the proportion of recent 
sales over a three-year period in an expected use category is six 
percent and the local official selects 10 adjacent properties, only .6 
of those adjacent properties, or zero adjacent properties (by operation 
of rounding down) could be recent sales.
    In some cases, an LEA may be located in and have eligible Federal 
property in more than one taxing jurisdiction. In those cases, by 
operation of State law, more than one local official is responsible for 
establishing the EAV for eligible Federal property in that LEA and, 
therefore, would establish separate EAVs for the eligible section 8002 
Federal property in each respective taxing jurisdiction.

Definitions (Sec.  222.23(e))

    We propose the following changes to redesignated paragraph (e):
     Adjacent (redesignated paragraph (e)(1)). The definition 
of adjacent would be amended to provide that, in most cases, adjacent 
means the taxable parcels within the LEA that are closest to the 
eligible Federal property. The proposed definition would specify that 
adjacent properties means properties further away from the eligible 
Federal property only if the Secretary determines that it is reasonable 
and necessary to use those properties for determining the EAV of 
eligible Federal property. Under the proposed definition, the term 
adjacent would mean further away than one mile from the perimeter of 
the eligible Federal property, or outside the LEA, only in extremely 
rare circumstances determined by the Secretary. This provision would 
help ensure that the adjacent property upon which the valuation of the 
eligible Federal property is based is close to the eligible Federal 
property and will more truly reflect what the Federal property could 
become if privatized.
     Highest and best use (redesignated paragraph (e)(2)). We 
propose to amend the definition of highest and best use. The current 
definition of this term in Sec.  222.23(b)(2)(i) provides that the 
highest and best use of an adjacent parcel of taxable land means the 
fair market value based upon a ``highest and best use'' standard in 
accordance with State or local law and guidelines, if available, or 
otherwise generally a reasonable fair market value based upon the 
current use of the property.
    Although the current definition is a reasonable interpretation of 
section 8002(b)(3) of the Act that requires the EAV of Federal property 
to be determined ``on the basis of'' the highest and best use of 
adjacent taxable property, LEAs have interpreted the provision to mean 
that each year they may base the EAV of Federal property exclusively on 
the assessed value of adjacent taxable properties that have recently 
transferred ownership. In some cases, this has led to unreasonably 
inflated EAVs of eligible property. We view this approach to be 
unreasonable as it is effectively based on the implausible assumption 
that an entire Federal property, which is often a quite extensive tract 
of land, changes hands in its entirety every year.
    Accordingly, the Secretary is proposing to amend the definition of 
highest and best use in redesignated paragraph (e)(2)(i) by eliminating 
the references to ``fair market value.'' Local officials still would be 
required to use the highest and best use of taxable adjacent properties 
to categorize the expected uses of the eligible Federal property under 
proposed paragraphs (a)(2) and (b), and to establish the base values of 
the expected use categories of that eligible Federal property under 
proposed paragraphs (a)(3), (c), and (d). This approach would be 
consistent with the Act and permit a reasonable limitation on the use 
of recently sold adjacent properties in establishing the EAV of 
eligible property.
    As noted, current Sec.  222.23(b)(2)(i) provides that highest and 
best use is established in accordance with available State or local 
laws or guidelines, and includes any improvements consistent with those 
laws or guidelines. An additional proposed amendment to this paragraph 
would clarify that State or local laws or guidelines must be of general 
applicability and not used exclusively to value eligible Federal 
property. We are proposing this change to ensure consistency between 
the methods States and local jurisdictions use to establish highest and 
best use values for the eligible Federal property and the methods that 
they ordinarily use to value non-Federal property in the jurisdiction.
    In addition, we propose to amend this definition to clarify that, 
to the extent State or local law or guidelines of general applicability 
are not available, the determination of the highest and best use would 
be based on the current use of the adjacent parcels, including any 
improvements. This clarification is consistent with current practice.
    We also propose to amend the definition of highest and best use (in 
redesignated paragraph (e)(2)(i) and (iii)) to clarify that the local 
official may consider the most developed and profitable use for which 
the taxable adjacent property is physically adaptable only if that use 
is legally permissible and financially feasible, and for which there is 
a need or demand in the near future. The local official also takes into 
consideration the same factors with respect to the eligible Federal 
property. As with the adjacent properties, the proposed regulations 
would require that the Federal property be physically adaptable for the 
various uses upon which its EAV is being based and that there be a need 
or demand in the near future for those uses if the property was not in 
Federal ownership. We believe that these additional requirements are 
necessary to reflect realistic highest and best use values of the 
adjacent properties, and to apply those values realistically to the 
eligible Federal property. The proposed regulations would prohibit a 
local official from basing the highest and best use on potential uses 
that are speculative or remote.
     Recent sales or recently sold (new paragraph (e)(3)). 
Finally, as noted previously, proposed paragraph (e)(3) would define 
recent sales or recently sold to mean taxable properties that have 
transferred ownership within the most recent three years for which data 
are available. This timeframe for recent sales should benefit small 
LEAs that have fewer taxable properties and fewer annual sales than 
larger, more developed LEAs tend to have.
    We also have added more examples throughout the proposed 
regulations, and a number of illustrative tables, to assist LEAs and 
local tax officials in understanding these proposed changes.

Executive Order 12866

    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive order and review by OMB. Section 3(f) of 
Executive Order 12866 defines a ``significant regulatory action'' as an 
action likely to result in a rule that may (1) have an annual effect on 
the economy of $100 million or more, or adversely affect a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments, or communities 
in a material way (also referred to as an ``economically significant'' 
rule); (2) create serious inconsistency or otherwise interfere with an 
action taken or planned by

[[Page 31597]]

another agency; (3) materially alter the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) create novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive order. The Secretary has 
determined that this regulatory action is not significant under the 
Executive order.

1. Potential Costs and Benefits

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action.
    The potential costs associated with the proposed regulations are 
those resulting from statutory requirements and those we have 
determined to be necessary for administering this program effectively, 
fairly, and efficiently.
    In general, the proposed regulations would provide more specificity 
with respect to local officials' selection of adjacent parcels upon 
which they base their valuation of the Federal property. These more 
specific rules generally would reduce burden by eliminating the need 
for lengthy consultations with Department staff, multiple revisions to 
valuation submissions, and application amendments. Although one of the 
regulatory changes would require local officials to select a minimum 
number (generally 10) of properties on which to base the valuation of 
the Federal property and, therefore, may require some local officials 
to add more properties than they currently are using, any resulting 
increase in the local official's time for this task would be offset by 
the accompanying regulatory change to reduce the selection cycle from 
every year to once every three years.
    These proposed regulations will provide the following benefits for 
section 8002 applicants: greater uniformity in how local officials 
value the eligible Federal property in each of their jurisdictions; 
elimination of inequitable inflation in the value of the eligible 
Federal property; and greater reliability and consistency in the 
valuation process nationwide. In assessing the potential costs and 
benefits, both quantitative and qualitative, of this regulatory action, 
we have determined that the benefits would justify the costs.
    We have also determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.

2. Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum on ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec.  '' and a numbered heading; for example, 
Sec.  222.21 What requirements must a local educational agency meet 
concerning Federal acquisition of real property within the local 
educational agency?)
     Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. The entities that would be affected by these proposed 
regulations are LEAs receiving Federal funds under this program, a 
substantial number of which (over 90 percent) are small entities.
    However, the proposed regulations would not have a significant 
economic impact on those small entities because the proposed 
regulations generally would decrease rather than increase any 
regulatory burden and decrease the necessity for Federal supervision. 
This is because the proposed regulations would establish a three-year 
cycle, rather than the current annual cycle, for section 8002 
applicants to submit information on the taxable adjacent parcels upon 
which the Federal property valuation is based.
    Overall, the regulations will benefit small LEAs by providing more 
uniformity, consistency and reliability in Federal property valuation 
for all section 8002 applicants, by allocating a proportion of the 
Federal property for expected non-assessed or tax-exempt uses, 
standardizing the minimum sample size of taxable properties and 
providing more uniformity in the proportions of recently sold 
properties that may be selected. These proposed changes will result in 
a more equitable distribution of the limited funds available, including 
for small LEAs.
    In any case, although limiting the number of recent sales that an 
LEA may use and other changes that would be made by these proposed 
regulations may result in reduced Federal property valuations in some 
cases, the proposed changes generally would have only a minor economic 
effect on most section 8002 applicants, including small LEAs. This is 
because small LEAs depend much more heavily on State and local revenue 
than on Federal revenue. In addition, for most LEAs, these proposed 
regulations affect only that portion of Federal section 8002 revenue 
that is distributed under the last step of the payment formula (section 
8002(h)(4)(B) of the Act), which is based on the maximum section 8002 
payment calculation that takes into account the Federal property 
valuation. Those affected section 8002 revenues constitute less than 
one percent of the average total annual revenue from all sources 
received by these small LEAs, and, for that reason, any reduction in 
those revenues would not have a significant economic impact.

Paperwork Reduction Act of 1995

    Section 222.23 contains information collection requirements related 
to the submission of an applicant's section 8002 application. The 
section 8002 application form, and the regulation that requires it (34 
CFR 222.3) are approved under OMB number 1810-0036, with an expiration 
date of June 30, 2008. Table 1 of that approved application (Tax 
Assessor's Valuation of Section 8002-eligible Federal Property) 
requires each applicant LEA's tax assessment official (local official) 
to certify the accuracy and completeness of certain information about 
the eligible section 8002 property, including its aggregate EAV as 
required by section 8002(b)(3) of the ESEA, and summary information 
upon which that value was derived.
    Proposed Sec.  222.23 would make several changes to the information 
that the local official must obtain and use in determining the 
aggregate EAV of the Federal property. However, for the

[[Page 31598]]

reasons explained below, the Secretary believes that these changes 
would not result in an increase in the paperwork collection burden.
    Proposed Sec.  222.23(a)(3) and (c)(1) would require local 
officials to identify the taxable use portions of the eligible Federal 
property by excluding a proportion of each expected use category that 
the local official would allocate to accommodate anticipated non-
assessed or tax-exempt uses. We propose this change to avoid 
overstating the aggregate EAV of the eligible Federal property upon 
which section 8002 payments are based, which otherwise might occur if a 
portion of the property is included that likely would remain exempt 
from real property taxation if no longer federally owned.
    In addition, proposed Sec.  222.23(c)(2)(i) would require local 
officials to obtain a minimum sample size of 10 adjacent properties for 
each type of property, rather than using a lesser number of properties. 
We propose this change to standardize the minimum sample size and 
provide greater consistency and reliability in payments. Federal 
property valuations must be established as consistently as possible to 
achieve equity in LEAs' payments, which payments are based in part upon 
those valuations and are mutually dependent upon one another due to 
lack of full funding for the program.
    Although the change in the minimum sample size may increase the 
burden for some LEAs, it will reduce or have no effect on the 
collection burden of others that currently obtain a higher number of 
sample properties. In any event, the Secretary believes that both of 
these changes will be offset by the following simultaneous burden 
reductions: (1) In proposed Sec.  222.23(d)(1), moving from an annual 
to a three-year sample selection cycle; and (2) in proposed Sec.  
222.23(d)(2), limiting the number of recent sales that a local official 
may select in each base selection year, which likely will lead to fewer 
new selections of sample properties.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, Attention: Desk Officer for U.S. Department of Education. 
Send these comments by e-mail to OIRA_DOCKET@omb.eop.gov or by fax to 
(202) 395-6974. You may also send a copy of these comments to the 
Department representative named in the ADDRESSES section of this 
preamble.
    We consider your comments on these collections of information in--
     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

    This program is not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether these 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
https://www.ed.gov/news/fedregister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.
    You may also view this document in text or PDF at the following 
site: https://www.ed.gov/programs/8002/legislation.html.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: https://www.gpoaccess.gov/
nara/.

(Catalog of Federal Domestic Assistance Number 84.041, Impact Aid-
Maintenance and Operations)

List of Subjects in 34 CFR Part 222

    Education, Education of children with disabilities, Educational 
facilities, Elementary and secondary education, Federally affected 
areas, Grant programs--education, Indians--education, Public housing, 
Reports and recordkeeping requirements, School construction, Schools.

    Dated: May 28, 2008.
Kerri L. Briggs,
Assistant Secretary for Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Secretary proposes 
to amend part 222 of title 34 of the Code of Federal Regulations as 
follows:

PART 222--IMPACT AID PROGRAMS

    1. The authority citation for part 222 continues to read as 
follows:

    Authority: 20 U.S.C. 7701-7714, unless otherwise noted.

    2. Section 222.21 is amended by revising the introductory text in 
paragraph (a), and revising paragraphs (d)(1) and (e).
    The revisions read as follows:


Sec.  222.21  What requirements must a local educational agency meet 
concerning Federal acquisition of real property within the local 
educational agency?

    (a) For an LEA with an otherwise approvable application to be 
eligible to receive financial assistance under section 8002 of the Act, 
the LEA must meet the requirements in subpart A of this part and Sec.  
222.22. In addition, unless otherwise provided by statute as meeting 
the requirements in section 8002(a)(1)(C), the LEA must document--
* * * * *
    (d) Except as provided under paragraph (a)(2) of this section, the 
Secretary's determinations and redeterminations of eligibility under 
this section are based on the following documents:
    (1) For a new section 8002 applicant or newly acquired eligible 
Federal property, only upon--
    (i) Original records as of the time(s) of Federal acquisition of 
real property, prepared by a legally authorized official, documenting 
the assessed value of that real property;
    (ii) Facsimiles, such as microfilm, or other reproductions of those 
records; or
    (iii) If the documents specified in paragraphs (d)(1)(i) and (ii) 
are unavailable, other records that the Secretary determines to be 
appropriate and reliable for establishing eligibility

[[Page 31599]]

under section 8002(a)(1) of the Act, such as Federal agency records or 
local historical records.
* * * * *
    (e) The Secretary does not base the determination or 
redetermination of an LEA's eligibility under this section upon 
secondary documentation that is in the nature of an opinion, such as 
estimates, certifications, or appraisals.
* * * * *
    3. Section 222.23 is revised to read as follows:


Sec.  222.23  How does a local educational agency determine the 
aggregate assessed value of its eligible Federal property for its 
section 8002 payment?

    (a) General. A local educational agency (LEA) determines the 
aggregate assessed value of its eligible Federal property for its 
section 8002 payment as follows:
    (1) A local official who is responsible for assessing the value of 
real property located in the jurisdiction of the LEA for levying a 
property tax makes the determination of the section 8002 aggregate 
assessed value, based on estimated assessed values (EAVs) for the 
eligible Federal property in the jurisdiction.
    (2) The local official first categorizes proportionately the types 
of expected uses of the eligible Federal property in each Federal 
installation or area (e.g., Federal forest) based on the highest and 
best uses of taxable properties adjacent to the eligible Federal 
property (adjacent properties), and allocates the amount of acres of 
the eligible Federal property to each of those expected uses, in 
accordance with paragraph (b) of this section.
    (3) For each category of expected use of the eligible Federal 
property identified in accordance with paragraph (a)(2) of this section 
for each Federal installation or area, the local official then 
determines a base value in accordance with paragraphs (c) and (d) of 
this section.
    (4) The local official next determines a section 8002 EAV for each 
category of expected use of the eligible Federal property in each 
Federal installation or area. The official determines that EAV by 
adjusting the base value for that category established in accordance 
with paragraph (a)(3) of this section, by any percentage, ratio, index, 
or other factor that the official would use to determine the assessed 
value (as defined in Sec.  222.20) of the eligible Federal property to 
generate local real property tax revenues for current expenditures if 
that eligible Federal property were taxable. (This process is 
illustrated in Example 7 and Table 7-2 at the end of this section.)
    (5) The local official then determines a total section 8002 EAV for 
each Federal installation or area in the LEA by adding together the 
assessed values determined pursuant to paragraph (a)(4) of this section 
for all property use categories of eligible Federal property in that 
Federal installation or area.
    (6) The local official determines a section 8002 aggregate assessed 
value for the LEA as follows:
    (i) If the LEA contains a single Federal installation or area with 
eligible Federal property, the total section 8002 EAV determined 
pursuant to paragraph (a)(5) of this section constitutes the section 
8002 aggregate assessed value for the LEA.
    (ii) If the LEA contains more than one Federal installation or area 
with eligible Federal property, the local official calculates the 
section 8002 aggregate assessed value for all of the eligible Federal 
property in the LEA by adding together the section 8002 total EAVs 
determined pursuant to paragraph (a)(5) of this section for all Federal 
installations and areas containing eligible Federal property within the 
LEA. (This process is illustrated in Example 7 and Table 7-2 at the end 
of this section.)
    (b) Categorizing expected uses. (1) The local official categorizes 
the expected uses of the eligible Federal property, in accordance with 
paragraph (a)(2) of this section, by--
    (i) Identifying the types of tax assessment classifications 
representing the highest and best uses of the taxable adjacent property 
(e.g., residential, commercial, agricultural); and
    (ii) Determining the relative proportions of taxable adjacent 
properties, based on acreage, devoted to each of those tax assessment 
classifications that represent the highest and best uses (e.g., 
agricultural--50 percent; residential--40 percent; commercial--10 
percent).
    (2) The local official then determines the allocation of each of 
those expected uses to the eligible Federal property acres by 
multiplying each of the proportions determined under paragraph 
(b)(1)(ii) of this section by the total acres of the eligible Federal 
property in that Federal installation or area.
    (c) Determining the base value for expected use categories. The 
local official determines a base value for each category of expected 
use of the eligible Federal property in accordance with paragraph 
(a)(3) of this section as follows:
    (1) The local official first identifies the taxable use portion of 
the eligible Federal property acres in each expected use category as 
follows:
    (i) The local official allocates a proportion (percentage) of the 
eligible Federal property acres identified for each expected use 
category under paragraph (b)(2) of this section to expected non-
assessed or tax-exempt uses, such as public open space, schools, 
churches, and roads. The local official bases these proportions on the 
actual non-assessed or tax-exempt uses for each category of taxable 
property in the LEA.
    (ii) The local official then determines the number of acres 
attributable to non-assessed or tax-exempt uses for each expected use 
category by multiplying the non-assessed or tax-exempt proportions 
identified in paragraph (c)(1)(i) of this section by the number of 
acres in each expected use category determined pursuant to paragraph 
(b)(2) of this section.

    Example 1 (Allocation of Proportion of Eligible Federal Property 
to Non-Assessed or Tax-exempt Uses): The eligible Federal property 
(1,000 acres) is surrounded by properties that are classified for 
tax purposes according to their highest and best uses as residential 
(40 percent) and agricultural (60 percent) property. For the 
residential category (400 acres), the local official determines that 
approximately 20 percent would be devoted to non-assessed or tax-
exempt uses, such as roads, parks, churches, and schools. The local 
official multiplies that proportion (.20) by the number of eligible 
Federal acres allocated to the residential category (400 acres) to 
determine the number of eligible Federal acres (80 acres) that 
likely would not be assessed for taxation or would be tax-exempt if 
the Federal Government no longer owned that property, as illustrated 
in the chart at the end of this example (Table 1-1). The local 
official follows a similar process for the proportion of the 
eligible Federal property the official allocated to agricultural 
use.

[[Page 31600]]



  Table 1.--Proportion of Residential Category of Section 8002 Eligible
      Federal Property Allocated to Non-Assessed or Tax-exempt Uses
------------------------------------------------------------------------
                                                        Eligible Federal
                                                        acres allocated
                                                        to expected use
                                        Allocated       category (col. 2
                                        proportion         x acres in
                                                          expected use
                                                           category)
(1)                                               (2)                (3)
------------------------------------------------------------------------
      Residential portion of eligible Federal property (400 acres)
------------------------------------------------------------------------
Allocated by local official for                   20%                 80
 non-assessed or tax-exempt uses..
Allocated for taxable residential                 80%                320
 use..............................
                                   -------------------------------------
    Total.........................               100%                400
------------------------------------------------------------------------

    (iii) The local official then calculates the number of acres 
attributable to taxable use for each expected use category by 
subtracting the number of acres attributable to non-assessed or tax-
exempt uses determined under paragraph (c)(1)(ii) of this section 
from the total number of acres of eligible Federal property in that 
use category identified in paragraph (b)(2) of this section.
    (2) For the taxable use portion determined under paragraph 
(c)(1)(iii) of this section for each expected use category, the 
local official then calculates a base value as follows:
    (i) The local official selects from each expected use category 
identified pursuant to paragraph (b)(1)(i) of this section a minimum 
sample size of 10 taxable adjacent properties that represent the 
highest and best uses of the taxable adjacent properties. The 
official identifies the value of each selected taxable adjacent 
property that is recorded on the assessment records for that 
property before any adjustment, ratio, percentage, or other factor 
is applied to establish a taxable (assessed) value. If at least 
three but fewer than 10 taxable adjacent properties exist in an 
identified use category, the local official calculates a per acre 
value for each adjacent property and then identifies which of those 
properties has the lowest per-acre value. The official replicates 
that adjacent property's value and acreage as many times as needed 
until the combination of actual and replicated adjacent properties 
reaches 10 in number. In extremely rare circumstances, the local 
official may use fewer than three parcels for a particular tax 
assessment classification if doing so is determined by the Secretary 
to be necessary and reasonable.
    Example 2 (Minimum Sample Size of Adjacent Properties): The 
eligible Federal property is surrounded by properties that are 
classified for tax purposes according to their highest and best uses 
as residential, commercial, and agricultural property. The local 
official selects at least 10 taxable adjacent parcels from each of 
the residential and agricultural property classifications as the 
basis for valuing the eligible Federal property.
    In the commercial classification, however, only six taxable 
adjacent properties exist. The lowest per-acre valued parcel, Parcel 
A, is valued at $6,000 per acre. As illustrated in Table 2-1, the 
local official selects all six of the commercial taxable adjacent 
properties, and then replicates Parcel A's value and acreage four 
more times to reach the minimum number of 10 properties for that 
classification.
    (ii) The local official then calculates an average per-acre 
value for the taxable portion of each expected use category by 
totaling the values (following application of any equalization 
factors, if relevant) and acres of the actual and any replicated 
adjacent properties and dividing the total value by the total number 
of acres in those properties, as illustrated in the following chart 
(Table 2-1).

                Table 2-1.--Average Per-Acre Value of Minimum Sample Size of Adjacent Properties
----------------------------------------------------------------------------------------------------------------
       Selected adjacent properties--commercial
                    classification                            Value               Acres          Value per acre
(1)                                                                   (2)              (3)                   (4)
---------