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United to Grow Family Agriculture Since 1934

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Ohio Current Agricultural Use Value Docs

June 3, 2015 By Ron Sylvester 1 Comment

cauvgraphic_220There has been a lot of deserved attention to CAUV (Current Agricultural Use Value)  valuations by our membership over the past two to three years. While we have worked especially hard to represent you in Columbus, I think we should also provide the actual documents being distributed by the state of Ohio regarding CAUV.

For those who are not farmers in Ohio, CAUV is a system for taxing farm land in Ohio that grants a property tax break to active farmers. To be eligible for CAUV:

To qualify for the CAUV, land must meet one of the following requirements during the three years preceding an application for the CAUV:

  • Ten or more acres must be devoted exclusively to commercial agricultural use; or

  • If under ten acres are devoted exclusively to commercial agricultural use, the farm must produce an average yearly gross income of at least $2,500

Why CAUV? States grant a special status to farm land to:

  • keep the land in agricultural use (farmland preservation)
  • help farmers account for the sometimes wild fluctuations in the markets they produce in – land is a cost of production

Here are the documents recently released by the Ohio Dept. of Taxation regarding CAUV:

  1. 2015 Ohio Dept. of Taxation Presentation on CAUV
  2. 2015 Ohio Dept. of Taxation Spreadsheet on CAUV Inputs
  3. 2015 Ohio Dept. of Taxation CAUV Explanation
  4. 2014 CAUV Explanation Ohio Dept. of Taxation

Filed Under: Blog Tagged With: 2014, 2015, CAUV, Current Agricultural Use Value, Ohio, Ohio Dept. of Taxation

OFU lauds initial tweaks to CAUV, but more is needed

June 1, 2015 By Ron Sylvester 1 Comment

Woodlands need more attention from state officials

Mel Borton, Ohio Farmers Union.

Mel Borton, Ohio Farmers Union.

In more than 80 years of life spent on and around Ohio’s farms, Mel Borton has seen cycles of woodlands preservation and cutting the woods on farmland.

“One sure way to remove woodlands across the state is for the real estate tax code to essentially promote chopping down trees,” said Borton.

“In my first 40 years, farmers cleared their woods as fast as they could. In my last 40 years farmers were conserving woodlands. It seems like the pendulum is swinging away from conservation and that’s a shame,” Borton added.

Mel Borton, left, talks to fellow OFU member Karen Wood at OFU's summer picnic in 2014. The Ohio Farmers Union is the second-largest general farm organization in Ohio.

Mel Borton, left, talks to fellow OFU member Karen Wood at OFU’s summer picnic in 2014. The Ohio Farmers Union is the second-largest general farm organization in Ohio.

He fears that’s exactly what Ohio’s Current Agricultural Use Valuation system for taxing farmland is doing. He and other members of the Ohio Farmers Union are pleased that the Kasich Administration began fixing CAUV this year, but many, like Borton, worry that woodland valuations are still not functioning in the way that CAUV framers intended.

Borton, a retired farmer and former lobbyist for OFU, spoke out at last Thursday’s Ohio Dept. of Taxation CAUV Advisory Committee hearing.

“I told the committee that I volunteer answering phones at our (OFU’s) state office and farmers are telling me that they are clearing their woods because of CAUV,” Borton said.

“The folks in Columbus have done some good things this year to get the wild swings in CAUV under control, but they haven’t done enough on woodlands,” Borton added.

Ted Finnarn, OFU’s resident CAUV legal expert and a member of the state’s CAUV advisory committee said that woodland values will be lower in the 2015 tax year as compared to 2014, but OFU and other ag groups need to keep the pressure on the tax department to continue reviewing woodland valuations and the capitalization-interest rate.

“I think the Tax Department is moving in the right direction, but much more needs to be done to come up with CAUV values that are more reasonable,” Finnarn said.

Finnarn, a Greenville attorney, has been on the advisory committee since its inception in the 1970s. The committee met last week to hear public comment and to release the 2015 valuations for CAUV.

Ohio Tax Commissioner Joe Testa said his department has heard and responded to concerns about CAUV.

“I am certainly aware that there are some farmers and farm land owners facing tax increases but believe the factors impacting land values are moving in a favorable direction for the agriculture industry in Ohio,” Testa said.

“The CAUV remains a very valuable program for Ohio’s farmers which results in
significant property tax reductions when compared to land not being used in agriculture,” he added.

Testa said the values released last week affect the 24 counties in this year’s triennial CAUV re-valuation rotation.  According to the department, the average CAUV per acre in 2015 in Ohio is $1,388, which is 17 percent less than the 2014 valuation of $1,668.

The department made changes, as suggested by the Ohio Farmers Union and Ohio Farm Bureau earlier this year.

On behalf of OFU, Finnarn worked closely with the Farm Bureau and others across the state for more than two years as CAUV values began to wildly fluctuate.  Among the recent changes, Finnarn points out the following differences between the 2015 tax year and previous years:

  • Modifications to the Capitalization-Interest Rate by going to a longer term fixed rate with an 80% loan-20% equity split versus the previous more restrictive 60% loan-40% equity calculation.  This will have the effect of lowering CAUV values from the originally proposed values.
  • Correction to woodland values by updating and increasing the costs of clearing from $500 to $1,000 and increasing sub-surface drainage to $770 and surface drainage to $380.  Woodland values will be lower for 2015 as compared to 2014.
  • Improving the accuracy of input data in regards to crop prices and cost data by bringing it more current in regards to crop production yields, crop price values and costs.  Inputs from the Ohio State University crop enterprise budget for 2015 were put into the formula so that this represents no lag time.  These costs have increased – lowering the CAUV values from the original proposal.

Finnarn said some values are still increasing from the 2012 values, but not as much as they would have without the changes. Values will not change for the 41 counties that underwent their reappraisals and reevaluations for tax year 2014 (increased taxes paid in 2015).  However, these counties will benefit from the changes in the future when they recycle for reevaluations in three years in tax year 2017.

Filed Under: Blog Tagged With: CAUV, Current Agricultural Use Value, Joe Testa, John Kasich, Mel Borton, Ohio, Taxes, Woodlands

81st OFU Convention Preview

January 26, 2015 By Ron Sylvester Leave a Comment

Here’s the press release sent statewide by the Ohio Farmers earlier today:

ofulogofbfeatWater Quality, Farmland Tax on Deck for Ohio Farmers Union 81st Convention

State Representatives Sheehy, Patterson will be honored on final day of meeting

COLUMBUS – Ohio’s educational and advocacy organization dedicated to family farming will tackle several hot button issues in Ohio during its 81st annual convention in Columbus this Friday.

“We expect 2015 to be an exceptionally important year for Ohio’s farmers in terms of state legislation and Kasich administration tax policies,” said Linda Borton, executive director of the Ohio Farmers Union.

“Farmers in Ohio are facing additional regulation with manure application and they are already feeling the effects of agricultural property taxes increasing by 50 to 300 percent in the past couple of years,” Borton said.

“Those two items – water quality and the broken CAUV formula – will be major points of emphasis for our policy committee,” Borton said.

CAUV, or Current Agricultural Use Valuation, is a state tax formula instituted in the 1970s to help protect Ohio farmland by lowering the property tax bills for farmland. The program is responsible for keeping much of Ohio’s agricultural lands in production as the lower property tax rates do not skew the farmers’ cost of production, especially in areas where rural land is threatened by urban sprawl and suburban development.

Due to changes in commodity markets and the effects of a changing larger economy, over the past two to three years, the formula used by the Ohio Dept. of Taxation for determining a farmer’s CAUV tax value has begun to wildly fluctuate. In many cases across the state, family farmers have seen their farmland property taxes rise by 300 percent or more in a single year.

Borton said that on the water quality front, OFU is expected to adopt policy for 2015 urging the Ohio General Assembly to take a “science-based and targeted” approach to new regulation. During the debate over H.B. 490 in 2014, OFU President Joe Logan and other members asked the Ohio House to limit tighter regulatory schemes to distressed watershed areas such as the Maumee River Basin in northwest Ohio.

“No one wants to see the algae problems we’ve had in Lake Erie and in other waterways,” Borton said.

“The key is for regulation to be fair, fact-based and targeted,” Borton added.

[Read more…]

Filed Under: Blog Tagged With: Ag Policy, CAUV, Convention, Current Agricultural Use Value, John Patterson, Legislator of the Year, Mike Sheehy, Ohio, Ohio Farmers Union, Water Quality

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