I built a watershed pond on my Kansas land -- does the property tax exemption cover my buildings too?

Plain-English summary

Kansas gives a property tax break to landowners whose ground sits next to a watershed pond built under the watershed district laws. This short directive answers the two questions counties kept asking about it: what the break covers, and who approves it.

On coverage, the answer is narrow and specific. "County appraisers shall not include building value in the amount to be exempted pursuant to K.S.A. 79-201g." The Division's reasoning is a reading of the statute's own words: "The term 'real property,' as used in K.S.A. 79-201g, refers to land only. Buildings are not considered part of the exemption for property contiguous to a watershed pond."

That is a meaningful clarification, because "real property" normally does include buildings in Kansas property tax law. Here the Division reads the term more narrowly, pointing out that the statute "refers to 'land' and 'real property,' and uses the terms interchangeably," and that "K.S.A. 79-82a-405 clarifies this further as it refers to 'land' only."

On approval, the watershed exemption skips a step most Kansas exemptions require. Ordinarily an exemption request goes to the state board of tax appeals. Not this one: "if the county appraiser recommends the exemption be granted, the exemption shall be in the amount recommended by the county appraiser. The county appraiser shall not file the exemption application and recommendations with the state board of tax appeals. See K.S.A. 79-213(e)."

The relief then runs year by year rather than as a one-time adjustment. "The county clerk or county appraiser shall annually make such adjustment in the taxes levied against the real property as the owner may be entitled to receive under the provisions of K.S.A. 79-201g, as recommended by the county appraiser, beginning with the first period, following the date of issue of the certificate of completion on which taxes are regularly levied, and during the years which the landowner is entitled to such adjustment."

Two timing points are embedded there. The clock starts at the certificate of completion for the watershed structure, not at the start of construction. And the adjustment is annual, made by the clerk or appraiser, for as long as the entitlement lasts.

What this means for you

Landowners with a watershed pond

Check what your county actually exempted. If the exempted amount includes the value of a barn, shed, house or other improvement on the contiguous land, that is inconsistent with this directive -- the exemption reaches land value only.

Conversely, if you were told the exemption was denied because there are buildings on the parcel, that is also not what the directive says. Buildings are simply carved out of the exempt amount; their presence does not disqualify the land.

Landowners waiting on approval

You are not waiting on Topeka. Where the county appraiser recommends the exemption, the amount recommended is the amount granted, and the appraiser does not forward the application to the state board of tax appeals. If your county tells you the file is pending with the state board, this directive and K.S.A. 79-213(e) are worth raising.

Landowners whose pond was recently completed

The first year of adjustment is keyed to the certificate of completion -- specifically, the first period following its issue date on which taxes are regularly levied. If the certificate issued after that year's levy, expect the adjustment to begin the following period rather than retroactively.

Accountants and tax professionals

Two practice notes. First, when reviewing a client's exempt amount, reconcile it against land value only; an exemption computed on total parcel value is overstated under this directive. Second, this is one of the exemptions that does not generate a state board order, so there may be no state-level document in the file -- the county appraiser's recommendation is the operative record.

Common questions

Q: Does the watershed exemption cover my house or outbuildings?
A: No. "County appraisers shall not include building value in the amount to be exempted pursuant to K.S.A. 79-201g."

Q: But isn't a building part of "real property"?
A: Generally yes, but the Division reads this statute more narrowly: "the term 'real property,' as used in K.S.A. 79-201g, refers to land only," because the statute "refers to 'land' and 'real property,' and uses the terms interchangeably."

Q: Do I have to file with the state board of tax appeals?
A: Not where the county appraiser recommends granting it. "The county appraiser shall not file the exemption application and recommendations with the state board of tax appeals."

Q: Who decides the amount?
A: The county appraiser. Where the appraiser recommends the exemption, "the exemption shall be in the amount recommended by the county appraiser."

Q: When does the tax adjustment start?
A: With "the first period, following the date of issue of the certificate of completion on which taxes are regularly levied."

Q: Is it a one-time adjustment?
A: No. The county clerk or appraiser makes the adjustment annually "during the years which the landowner is entitled to such adjustment."

Q: Is this directive still in force?
A: It superseded Directive #92-017 and was approved August 27, 2019. Check the Division's current directive list before relying on it.

Citations and references

Authority for the directive: K.S.A. 79-505(a).

The exemption itself:

• K.S.A. 79-201g -- property tax adjustment for real property contiguous to a watershed pond; read by the directive as applying to land only
• K.S.A. 82a-409 -- watershed structures and the certificate of completion that starts the adjustment period

Procedure: K.S.A. 79-213(e) -- the appraiser does not file the application and recommendation with the state board of tax appeals.

Also cited in the directive's text: "K.S.A. 79-82a-405," cited by the Division for the proposition that the statute "refers to 'land' only." The citation is reproduced verbatim from the directive.

Directive superseded by this one: #92-017.

Source

• Landing page: Kansas Property Tax Directives
• Original PDF: PVD Directive 19-017

Original ruling text

Division of Property Valuation
300 SW 29th Street Phone: 785-296-2365
PO Box 3506 Fax: 785-296-2320
Topeka KS 66601-3506 www.ksrevenue.gov
Mark Burghart, Secretary Laura Kelly, Governor

                                  DIRECTIVE #19-017

TO: County Appraisers and County Clerks
SUBJECT: Watershed Exemption
This Directive Supersedes Directive #92-017

This directive is adopted pursuant to the provisions of K.S.A. 79-505(a), and shall be in force and
effect from and after the director's approval date.
With regard to a request for exemption from property taxes pursuant to the provisions of K.S.A.
79-201g and 82a-409, if the county appraiser recommends the exemption be granted, the
exemption shall be in the amount recommended by the county appraiser. The county appraiser
shall not file the exemption application and recommendations with the state board of tax appeals.
See K.S.A. 79-213(e). The county clerk or county appraiser shall annually make such adjustment
in the taxes levied against the real property as the owner may be entitled to receive under the
provisions of K.S.A. 79-201g, as recommended by the county appraiser, beginning with the first
period, following the date of issue of the certificate of completion on which taxes are regularly
levied, and during the years which the landowner is entitled to such adjustment.
County appraisers shall not include building value in the amount to be exempted pursuant to K.S.A.
79-201g. The term “real property,” as used in K.S.A. 79-201g, refers to land only. Buildings are
not considered part of the exemption for property contiguous to a watershed pond. K.S.A. 79-
201g refers to “land” and “real property,” and uses the terms interchangeably. K.S.A. 79-82a-405
clarifies this further as it refers to “land” only.

Approved: August 27, 2019
David N. Harper
Director of Property Valuation