Current through March 20, 2024
002.01 Mineral
interests, either producing or non-producing, are real property and shall be
valued for taxation as any other real property whether or not such mineral
interests are severed from the surface interests. For more information, see
Real Property Regulations, Chapter 10.
002.02 Any owner of land from which a mineral
interest has been severed or the owner of a mineral interest which has been
severed may file an application with the assessor of the county where such land
is located to separate for purposes of assessment and taxes such severed
mineral interest from the surface interest and place them separately on the
assessment and tax roll of the county. When proof of ownership of the severed
mineral interest is not made available to the assessor, the mineral interest
shall be assessed to the owner of the surface interest. The applicant shall, at
his or her own cost, provide to the assessor proof of ownership of the severed
mineral interest and a record of the creation of the severed mineral interest,
as shown by the records of the county clerk or register of deeds. Proof of
ownership, the name and last known address of the owner or owners, the
ownership interest including any fractional interest, legal description, and
the record of creation of the severed mineral interests shall be provided in
the form of an opinion by an attorney or a certificate prepared by a licensed
abstracter.
002.03 The application
requesting separate assessment listings of a severed mineral interest and
surface interest must be filed with the assessor on or before January 1 of the
year in which the interests are to be separately listed and assessed. The
mineral interest will continue to be separately assessed without a new
application regardless of any change of ownership of either the surface
interest or the mineral interest. If after separate assessment the owner of the
surface becomes the owner of the mineral interest, so that all interests in the
surface and the mineral interest are the same, the owner of the surface may
request in writing, along with proof of recorded ownership, that the separate
assessment cease. Upon receipt of the request and proof of recorded ownership,
the assessor shall combine the values of the surface and mineral
interest.
002.04 The assessor shall
determine the actual value of all mineral interests, whether producing or
non-producing, in the county by use of the applicable factors listed in Neb.
Rev. Stat. Section
77-112. The
three standard approaches to value are cost, income, and sales comparison. The
summed total value of the mineral interest and any value established for the
surface interest only, shall not exceed the value of the fee simple interest
for the parcel of land as may be compared to properties with similar uses,
geographical characteristics and/or geological potentials.
002.05 All items of real property, such as
wells, buildings, fixtures, except trade fixtures, improvements, or mobile
homes, that are used for the production of minerals and owned by parties other
than the owners of the mineral and/or surface interests are real property and
shall be assessed as improvements on leased lands.
002.06 All taxable tangible personal property
held or owned on January 1, which may include pipe, submersible pumps, sucker
rods, fittings and any other equipment, trade fixtures, tools and items used
for the production of minerals, shall be reported to the assessor where such
property is located.
002.07 In the
valuation of parcels of real property containing mineral deposits the assessor
shall consider the likelihood of the mineral to be extracted or to begin
extraction within a several year time frame. The assessor shall consider
whether the present value of a mineral that will be extracted diminishes in
value the more remote the extraction is likely to be in terms of time or
certainty of occurrence.
002.07A If an income
approach is used to value a mineral interest, it requires an estimate of the
amount of mineral in place, an estimate of the time of commencement and period
of extraction, a net dollar value per unit of the extracted mineral, a
determination of continuity of production and the selection of an appropriate
capitalization rate. The selection of the capitalization rate shall be based on
market factors, including capital costs and risks based on the certainty of the
existence or quality of minerals or the commencement and continuity of an
extraction operation. The determination of the dollar value per unit of mineral
should be based upon the prevailing local lease/royalty rate per ton (or other
appropriate measure) for similar mineral, and the existence of considerations
of abnormal expenses of extraction such as depth of overburden or restoration
of the property.
002.07B The
valuation of mineral interests shall be evaluated each year as part of the
valuation process by the assessor for changes in the underlying assumptions
contained in the present value calculation, such as the ongoing nature of the
extraction operation, the likelihood of near term extraction of minerals, or a
change in the quality and rate of extraction.
002.07C The net present value of the
potential cash flow will be calculated based on the summation of the estimate
of the individual cash flows discounted for time of production and time until
commencement of extraction.
002.07D
In those occurrences where extraction is so remote in time or probability of
being extracted as to have little present value, the mineral interest shall
have little or no measurable contributory value and is considered included in
the total value of the fee interest assessed. The parcel's value shall be
comparable to other parcels with similar uses, geographical characteristics,
and geological potentials.
002.08 In the valuation of parcels of real
property containing mineral deposits which would require the impairment of the
surface interest in extracting the minerals, the assessor shall determine the
value of such parcels in the following manner:
002.08A When the extraction of minerals
diminishes or impairs the use of the surface of the parcel (open pit mining and
sand and gravel pumping operations and subsurface mining susceptible to
subsidence), the portion of the value of the parcel representing the surface
use of the parcel will diminish as the extraction of minerals consumes the
surface of the parcel or creates a subsidence hazard. As the surface is
consumed, or the subsurface is removed creating a subsidence hazard, the
portion of the value of the parcel represented by the mineral interests may
increase as a percentage of the entire value of the parcel.
002.08B As minerals are extracted and mineral
deposit is depleted on any portion of a property, the value of the mineral
interests on that portion of the property will decrease. The assessor should
seek to ascertain data regarding the extent of the minerals extracted and the
likelihood of the parcel continuing to generate minerals at the same level in
the future.
002.08B(1) Where the surface of
the parcel is primarily used for the production of agricultural and
horticultural products and the actual value of the parcel is influenced by
nonagricultural or non-horticultural influences, including the potential for
mineral extraction, the surface interest value may qualify for special
valuation pursuant to REG. 11, Agricultural or Horticultural Land Special
Valuation.
002.08B(2) In order for
special valuation to apply to the parcel, in addition to the use of the surface
primarily for agricultural or horticultural purposes, the parcel must meet all
of the eligibility requirements set forth in REG 11-004.
002.08B(3) The extraction of minerals
constitutes a change of use of the parcel or the portion of the parcel from
which the minerals are extracted when such extraction disrupts the use of the
surface of the parcel or the portion of the parcel. For parcels receiving
special valuation, the extraction of minerals sufficient to disrupt the
agricultural or horticultural use of the property shall constitute a
disqualifying event pursuant to REG 11-006 for the portion of the parcel no
longer primarily used for agriculture or horticulture.
002.08B(4) The parcel shall only be
disqualified from special valuation to the extent of the portion of the parcel
for which the primary use changes to mineral extraction. For example, if an 80
acre parcel, on which the primary use of the surface is for the production of
agricultural or horticultural products contains minerals and the extraction of
those minerals is begun on 10 of the 80 acres, the acres taken out of
production (10 acres) shall be disqualified from valuation as agricultural
property or for special valuation. The remaining acres, if being used primarily
for agricultural or horticultural purposes, would not, by virtue of change in
use of the 10 acres or a conditional use permit to extract on the remaining 70
acres, be disqualified for agricultural valuation or for special
valuation.
002.08B(5) It shall be
the duty of the owner, agent, guardian, or executor to notify the assessor of
any change in status of the parcel or a portion of the parcel which will
disqualify it from receiving special valuation, including an impairment of
additional acres through increased extraction of minerals. The assessor shall
continually verify, throughout the year, that all properties listed for special
valuation continue to qualify and shall apply the recapture valuation to any
properties which are no longer eligible.
002.08C When minerals have been extracted
from a parcel and mining operations have been discontinued, the assessor shall
consider the following factors in estimating the value of the parcel:
002.08C(1) The damage to and ability to use
the surface of the parcel, including the cost to restore the parcel and risk to
surface use caused by existing and potential subsidence from subsurface mining
or other affects of mining; and
002.08C(2) The existing use of the parcel and
readily available uses or practical potential uses of the surface of the
mined-out parcel. In determining the readily available uses or practical
potential uses of the parcel, the assessor shall consider whether those
potential uses are physically possible, legally permissible, financially
feasible, and the most productive use of the parcel. Within consideration of
these factors, the cost to realize such use, the time to commence and complete
conversion to the potential use, regulatory approval of the alternative or
potential use, the time to convert the parcel to such use, capital cost and
risk to convert, and existing demand for the alternative or potential
use.
002.08C(3) The value of
parcels or portions of parcels of real property adjoining mined-out parcels may
be affected by the proximity to the mined-out parcels. The assessor shall
consider the impact on the adjoining parcels including "buffer" or "open space"
acres, caused by their proximity to the mined-out parcels.
002.08C(4) Where no readily available or
practical potential uses of the impaired parcel meet the four part test for
highest and best use of the parcel described in this section, the value of the
parcel shall consider the valuation of "waste acres" in the county or other
parcels with similar characteristics regardless if they are associated with an
agricultural or horticultural parcel of land.
