(CAUV) Current Agricultural Use Valuation. Year of Sexennial Reappraisal. Year of Sexennial Reappraisal WHY ARE WE HERE? and Triennial Update

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1 Current Agricultural Use Valuation (CAUV) Larry Gearhardt Ohio Farm Bureau WHY ARE WE HERE? REAPPRAISAL - the law requires the auditor to reappraise property every six years TRIENNIAL UPDATE - in the third year after a reappraisal, auditor adjusts values of property based upon sales OHO FARM BUREAU Year of Sexennial Reappraisal and Triennial Update i 2m» ireappraisai. jreappraisal jreappraisal REAPPRAISAL REAPPRAISAL REAPPRAISAL 1 COUNTIES j COUNTIES COUNTIES COUNTIES COUNTIES COUNTIES IALLEN ADAMS JAUGLA1ZE BELMONT CARROLL ASHLAND COSHOCTON 'COLUMBIANA.CLINTON BROWN CHAMPAIGN ASHTABULA GUERNSEY HANCOCK 'DARKE CRAWFORD CLARK ATHENS jsandusky IHOCKINO jdefiance CUYAHOGA FAIRFIELD BUTLER VINTON HOLMES.DELAWARE ERIE LOOAN CLERMONT 1 LAWRENCE IFRANKLIN FAYETTE MARION FULTON j MEIGS 'GALLIA HIGHLAND MEDINA GREENE I MONROE PAULDING GEAUGA HAMILTON HURON JEFFERSON MIAMI ROSS KNOX MADISON j SCIOTO 'HARDIN LAKE UNION MONTGOMERY TUSCARAWAS HARRISON LORAIN WYANDOT NOBLE 'WASHINGTON 'HENRY LUCAS SUMMIT 1! SJACKSON MORGAN WAYNE i 1 LICKING MUSKINGUM 1 :MAHONING OTTAWA! MERCER PORTAGE IMORROW STARK 1 'perry WARREN ipickaway WILLIAMS PIKE, PREBLE 1.PUTNAM RICHLAND 'SENECA! SHELBY 1 1 Itrumbull j VANWERT 3! 'WOOD Year of Sexennial Reappraisal and Triennial Update 2009 i UPDATE UPDATE UPDATE I COUNTIES, COUNTIES COUNTIES BELMONT Ibrown (crawford cuyahoga ERIE JFAYETTE.HIGHLAND 'HURON JEFFERSON LAKE jlorain jlucas MORGAN MUSKINGUM OTTAWA IPORTAGE JSTARK WARREN IWILLIAMS I CARROLL jchampaign ;CLARK ;fairfield 'LOGAN MARION MEDINA MIAMI iross lunion IWYANDOT ASHLAND.ASHTABULA ATHENS BUTLER CLERMONT 'FULTON.GREENE JKNOX MADISON MONTGOMERY NOBLE SUMMIT WAYNE UPDATE UPDATE UPDATE COUNTIES COUNTIES COUNTIES ALLEN ADAMS AUGLAIZE COSHOCTON COLUMBIANA CLINTON GUERNSEY HANCOCK DARKE SANDUSKY HOCKING DEFIANCE VINTON HOLMES DELAWARE LAWRENCE FRANKLIN MEIGS GALLIA MONROE OEAUGA PAULDING HAMILTON SCIOTO HARDIN TUSCARAWAS HARRISON WASHINGTON HENRY JACKSON LICKING MAHONING MERCER MORROW PERRY PICKAWAY PIKE PREBLE PUTNAM RICHLAND SENECA SHELBY TRUMBULL VAN WERT WOOD

2 FAIR MARKET VALUE The price at which a property will change hands between a willing buyer and willing seller with adequate time and knowledge Does not include foreclosures, auctions and sales between related parties FAIR MARKET VALUE ONLY TWO EXCEPTIONS: FOREST TAX CAUV FAIR MARKET VALUE WHEN CAUV WAS ADOPTED IN 1975, IT WAS DESIGNED TO REDUCE VALUES APPROXIMATELY 50%. IN 2005, CAUV PROVIDED A 90% REDUCTION. IN 2010, THE REDUCTION WAS 75%. We're Talking about the value of land - Not your final tax bill Factors that effect real estate taxes: Increase in property values The level of assessment Millage or tax rate Tax adjustment factor Special factors: 10% rollback 21/2% Rollback on Homestead Homestead Exemption 8

3 Requirement for Qualification Ohio Revised Code Section Land totaling more than 10 acres - if a house is on property, need 11 acres Three preceding calendar years Devoted exclusively to commercial agricultural use OR government program Requirement for Qualification Ohio Revised Code Section Land totaling less than 10 acres Three preceding calendar years Devoted exclusively to commercial agricultural use Average yearly gross income of $ Anticipated yearly gross income of $2500 OR government program 10 Requirement for Qualification Ohio Revised Code Section After three years, can allow land to lie fallow - No acts inconsistent with return of land to agriculture Less than 25% of tract devoted to conservation practices - grass waterways, terraces, diversions, filter strips, field borders, windbreaks, riparian buffers, wetlands, ponds, - cover crops for these purposes 11 What is Agricultural use? Ohio Revised Code Section Commercial animal or poultry husbandry aquaculture apiculture commercial timber timber contiguous to other qualifying land field crops tobacco fruits vegetables nursery stock ornamental trees sod flowers 12

4 Explanation ofthe calculation of Values for various soil mapping units for Tax Year 1993 The annual current agricultural use values of land are calculated by the capitalization oftypical net income from agricultural products assuming typical management, cropping and land use patterns, and yields for given types of soils. The approximately 3300 map units which are the major producing soils with slopes less than 25%. The types of information necessary to utilize a capitalized net income approach are as follows: YEILD INFORMATION CROPPING PATTERNS CROP PRICES NON-LAND PRODUCTION COSTS CAPITALIZATION RATE 13 Factors used in Calculation Based on 3 crops - corn, beans and wheat Yields begin with NRCS crop yield estimates, adjusted by the 10 year average of actual yields Prices are based upon a survey of Ohio elevators Cropping pattern based upon % of crop total Production Costs - from OSU farmer surveys Capitalization Rate - potentially the biggest influence on values - starts with mortgage interest rate for 15-year fixed rate mortgage from FCSA, with 40% equity and 60% debt, adjust for taxes 14 ROLLING AVERAGE For prices, costs, and capitalization rate, the last seven years of values are used, with the highest and lowest values removed and the remaining five years averaged TREND IN CROP PRICES Corn prices used in 2000, 2001, and 2002 $2.00, $2.00, and $2.50 Corn prices used in 2007, 2008, and 2009 $3.95, $3.95, and $

5 TREND IN CROP PRICES Bean prices used in 2000, 2001, and 2002 TREND IN CROP PRICES Wheat prices in 2000, 2001, and 2002 $4.80, $4.40, $5.45 $2.05, $2.50, and $3.20 Bean prices used in 2007, 2008, and 2009 Wheat prices in 2007, 2008, and 2009 $10.10, $9.60, and $9.60 $5.50, $5.80, and $ COSTS OF PRODUCTION CAPITALIZATION RATE CORN $ $ $ $58.59 BEANS $ $ $ $30.16 WHEAT $ $ $ $ % 8.5% 8.4% 8.3% 7.9% 7.8% 7.6% 19 20

V-6B(2010) Source: DTE 114 2010 Market Value per Acre Land on CAUV Program Statewide average is $2,795 acre GALLIA 7 1,204 Market Value No.

6 V-6B(2010) Source: DTE Market Value per Acre Land on CAUV Program Statewide average is $2,795 acre GALLIA 7 1,204 Market Value No. of Counties /'"^'L^^-^ Department of Taxation March, i 10 1,000-1, ,500-1,999 [ } 8 2,000-2, ,500-2, ,000-3,999 CI 16 4,000 and up i I 16 21

V-6C(2010) Source: DTE 114 2010 CAUV Value as a Percent of Market Value Statewide average is 22.

7 V-6C(2010) Source: DTE CAUV Value as a Percent of Market Value Statewide average is 22.9% WILLIAMS FULTON Ohio March, 2011 Department of Taxation % of Market No. of Counties C_ L_J >40 DJ 2 23

V-6A(2010) Source: DTE 114 2010 CAUV Value Per Acre Statewide average CAUV $641 /acre 332-1 LAWRENCE Ohio March, 2011

8 V-6A(2010) Source: DTE CAUV Value Per Acre Statewide average CAUV $641 /acre LAWRENCE Ohio March, 2011 Department of Taxation CAUV per Acre $0-$ [ L3D 700 and up t~3 No. of Counties

9 Conversion of CAUV Land Failure to file renewal application Failure of new owner to file initial application Failure to qualify as land devoted exclusively to commercial agriculture use If fallow - acts inconsistent with return to agriculture EFFECT - land loses CAUV status and recoupment of preceding 3 years tax savings 24

Western Ohio Cropland Values and Cash Rents

AEDE-RP-0136-11 Western Ohio Cropland Values and Cash Rents 2011-12 Barry Ward (ward.8@osu.edu) Leader Production Business Management OSU Extension, OSU Department of Agricultural, Environmental and Development