An Act to adjust the assessment methodology for owner-occupied single-family dwellings and nonagricultural property.

Be it enacted by the Legislature of the State of South Dakota:

Section 1. That § 10-6-101 be AMENDED:

10-6-101. Terms used in this chapter mean:

(1) "Assessment year," the year in which real property is assessed, which immediately precedes the year in which property taxes are due and payable;

(2) "Department," the Department of Revenue;

(2)(3) "Director," a county's director of equalization;

(4) "Prior assessment year," the assessment year immediately preceding the current assessment year;

(3)(5) "Tract," "lot," "piece," or "parcel," any contiguous quantity of land that is possessed by, owned by, or recorded in the name of the same person.

Section 2. That § 10-6-119 be AMENDED:

10-6-119. The director shall individually assess each tract of real property at its fair market value, subject to the limitations provided in section 3 of this Act.

In determining the fair market value of property, the director may not adopt a lower or different standard of value because it is to serve as a basis of taxation. The director may not adopt as a criterion of value the price for which a tract of real property would sell at a forced sale, or in the aggregate with all other tracts of real property in the county. The director shall determine the fair market value by appropriate consideration of the cost approach, the market approach, and the income approach to appraisal. The director shall consider and document all elements of such approaches that are applicable prior to a determination of fair market value.

Section 3. That a NEW SECTION be added to chapter 10-6:

Except as otherwise provided in sections 4 to 6, inclusive, of this Act, for the 2027 assessment year and each assessment year thereafter, the director shall adjust the assessed value of each property classified as an owner-occupied single-family dwelling or nonagricultural property, pursuant to § 10-6-110, to equal the lesser of:

(1) The fair market value of the property, determined pursuant to § 10-6-119; or

(2) The assessed value of the property in the prior assessment year, increased by five percent.

Section 4. That a NEW SECTION be added to chapter 10-6:

Notwithstanding section 3 of this Act, every fifth assessment year, the director shall assess each owner-occupied single-family dwelling and nonagricultural property, classified pursuant to § 10-6-110, at the property's fair market value determined pursuant to § 10-6-119.

Section 5. That a NEW SECTION be added to chapter 10-6:

The provisions of section 3 of this Act do not apply to assessed value derived solely from the new construction of, reconstruction of, improvements to, or additions to, real property for the first assessment since the new construction, reconstruction, improvement, or addition was made.

Section 6. That a NEW SECTION be added to chapter 10-6:

The provisions of section 3 of this Act do not apply to property assessed under chapters 10-28 to 10-38, inclusive.

Section 7. That § 10-6-124 be AMENDED:

10-6-124. The secretary of revenue the department may promulgate rules pursuant to chapter 1-26 concerning the:

(1) Collection and tabulation of information required to determine median appraisal or sales assessment ratio, and coefficient of dispersion;

(2) Criteria to be included in a compliance audit of assessment practices;

(3) Conditions under which a certificate of compliance may be issued to a county;

(4) Procedures for determining the valuation of agricultural buildings and structures;

(5) Procedures for determining the valuation of dwellings on agricultural land and automobile garages or portions of buildings used as automobile garages;

(6) Application of cropland and noncropland income values;

(7) Application of soil classification standards; and

(8) Procedures for making adjustments to the value of agricultural land pursuant to §§ 10-6-127 to 10-6-132, inclusive; and

(9) Adjustment to the assessed value of property pursuant to sections 3 to 6, inclusive, of this Act.

Before the secretary promulgates any rules pursuant to subdivision (4) to (8), inclusive, the secretary shall present the proposed rules to the Agricultural Land Assessment Implementation and Oversight Advisory Task Force established pursuant to § 10-6-134.