GREENVILLE – During the Ohio State University (OSU) Extension Darke County Ag Breakfast Thursday, guests were greeted by speakers: Darke County Auditor Carol Ginn, Darke County Treasurer Scott J. Zumbrink and Ohio Senator Bill Beagle (District 5).
The presenters provided information and answered questions about the Current Agricultural Use Value (CAUV) program and property taxes. For property tax purposes, farmland devoted exclusively to commercial agriculture may be valued according to its current use rather than at its “highest and best” potential use. This provision of Ohio law is known as the CAUV program.
Zumbrink represents the Ohio County Treasurers Association on the CAUV committee. He provided handouts explaining some of the changes to the CAUV recommended by the Ohio Department of Taxation and Advisory Committee or other changes made by House Bill (HB) 49, effective September 29. HB 49 creates the Fiscal Year 2018-2019 operating budget.
“We were probably at the lows on CAUV in 2005, 2006 and 2007,” Zumbrink said. “Most of the CAUV values going up are due to interest rates, which are the biggest drivers in the CAUV formula. Once you understand interest rates are the biggest driver, it makes sense as to why the values went up, because the lower the interest rates, the higher the values.”
According to Zumbrink, the CAUV formula is as follows: (Yield (Crop Pattern) x Price) minus Non Land Costs divided by Capitalization Rate. The lower the capitalization rate, the higher the value, he said. Some of the changes to the CAUV recommended by the Ohio Department of Taxation and Advisory Committee or other changes made by HB 49 are as follows:
-Formula components: Crop yield, crop rotation and crop prices will lag only one year, versus the old methodology of two years; Non-land production cost will be based on the current OSU Crop Enterprise Budgets.
-Capitalization Rate: Debt to Equity split will be 80 percent loan to 20 percent equity – it was 60/40; Loan term will be Farm Credit Service 25-year multi-flex loan – it was used 15-year multi-flex loan; Tax additur will be one-year lag; HB 49 changed the equity yield rate used in the CAUV capitalization rate, to equal the greater of the 25-year average of the total rate of return on farm equity published by the USDA, or the loan interest rate for the year, whichever is greater.
-Woodland Values: Deductions for surface drainage, subsurface drainage and clearing wooded area have all increased, helping bring the value of woodland down.
Other changes include: Agricultural Advisory Committee Meetings and Public Hearing dates are all on a new schedule, to better accommodate more current data for the CAUV formula; and HB 49 established that farmland devoted to conservation practices, or enrolled in a federal land retirement or conservation program, is to be valued at the lowest value in the prescribed table of values.
Darke County Auditor Carol Ginn said she wanted to thank the House and the Senate for working on the CAUV.
“That has been very complicated for our office, because we are mandated by the state; what they send us we have to use,” she said. “It was really tough a couple years back when everyone was upset and our hands were tied; there was nothing we could do.”
Ginn explained instructions on accessing the darkecountyrealestate.org website to calculate tax estimates using the 2016 tax rates. The directions are as follows:
1. On the home page choose “search” and select “parcel search”; 2. Type Parcel ID from the letter received about Valuation, and click “search”; 3. Go to the “Agricultural” tab to get 100 percent CAUV Land Value; 4. Go to “Valuation” tab to get 100 Percent Improvements; 5. Add these totals together; 6. Return to Home Page and click on “Tax Estimator”; 7. Click “Start”; 8. Select “Taxing District”; 9. Click “Continue”; 10. Select “Class”; 11. Enter the value from step 5 ; 12. Click on “Calculate”
“It is not going to be exact, but it will be close and you can see what your savings will be,” Ginn said. “If you have problems, call our office [937-547-7310] and we will walk it through with you. In another week, all of the new levies that are going to be voted on will be on our website. You will be able to click on those levies and it will tell you what your increase in tax will be, depending on where you live.”
Among other committees, Senator Beagle is vice chair of the Ways and Means Committee, and a member of the Senate’s Agriculture Committee.
“We have been looking at CAUVs since 2011, when I arrived,” he said. “What you are seeing here today is a second set of changes. The first set, the Department of Taxation was cooperative with working with the Farm Bureau, Farmers Union and Extension, to get a set of changes into the administration, which it was inclined to be helpful with. What you are seeing here are the sub – changes they were a little more resistant to. This is a result of the advocacy of the agricultural community.”
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