COLUMBUS – Ohio Farmers Union (OFU) has proposed substantial recommendations to the governor, the Ohio Department of Taxation and the General Assembly concerning corrections and improvements to the Current Agricultural Use Value (CAUV) program.
Under CAUV, farmland is taxed on its agricultural use rather than its Fair Market-Recent Sales Value (FMV).
According to Ted Finnarn, attorney and long-time member of, “The CAUV formula has worked well in the past, but during the recent three years, it has gone out of whack,” said Ted Finnarn.
Finnarn is a long-time leader in OFU, a Darke County attorney and member of the Ag Advisory Committee to the Ohio Department of Taxation.
“The problem was mainly due to the extremely low interest–capitalization rate in the formula, as a result of the Federal Reserve’s unprecedented monetary intervention policy known as ‘quantitative easing’ and the lack of a three-year averaging factor in the computations. “
Farmers around the state have been slammed with rising property tax values as a result over the past three years. In tax year 2014, those farmers whose land is up for revaluation are seeing tax increases from 100 to 200 percent. Another factor affecting rising values is lower grain prices versus a farmer’s expenses.
After a careful review of the CAUV history over the past almost forty years, consultation with farmers, appraisers, attorneys, economists and other parties, OFU has recommended the following corrections and changes in the formula:
- Establish a Stabilization Equalization Factor (SEF) with three-year averaging within the formula that would even out the “roller coaster” gyrations in the CAUV as it is applied to the applicable counties during their year of valuation change.
- In regards to the capitalization-interest rate, go back to a longer term fixed rate, that was originally used in the formula (30 years) and take out any influence from the QE program.
- Return to a more traditional loan-equity percentage split of say 80% loan vs. 20% equity rather than the recent “too restrictive” breakdown of 60%/40%. (The program originally used a 90%/10% mix).
- Eliminate and take out the two (2) sinking fund adjustments of “less equity build up” and less “5% appreciation” which were mistakenly put in a few years ago, since they are somewhat related to commercial building appraisal methods, and not farm income valuations.
