Ohio Farm Bureau is aggressively pursuing action by the state legislature to implement the organization’s proposal for changes to the Current Agricultural Use Value (CAUV) program, which was presented last spring to the Ohio Department of Taxation. Rep. Brian Hill, R-Zanesville, said he will sponsor a CAUV bill that encompasses OFBF’s suggested changes to the CAUV program. A bill is expected to be introduced as early as next week.
“We have reached a point where every indication is the tax department won’t act using their administrative authority to fix CAUV. If that’s the case, our message to lawmakers is that they should take targeted legislative action to require changes be made to improve the accuracy of the formula,” said Brandon Kern, Ohio Farm Bureau’s director of state policy.
OFBF believes CAUV is the state’s most effective tool for preserving farmland. Ohio Farm Bureau has done an extensive study of the CAUV formula and identified adjustments to the formula that provide fairness and accuracy while protecting the integrity of the program. The Ohio Department of Taxation accepted OFBF’s first set of recommended CAUV changes, resulting in an average 15 percent reduction in cropland value from the tax department’s originally proposed 2015 values. This translates to an average annual savings of $10 an acre for cropland and $15 for woodland for those on the 2015 revaluation cycle.
In its proposal last May to the tax department, Ohio Farm Bureau challenged two inaccurate assumptions in the CAUV formula’s capitalization rate: that land is a short-term investment and that it becomes more valuable as its mortgage is paid down.
The current formula assumes land is held for only five years when in reality farmland is typically held for decades and across multiple generations. Currently, there are non-use factors in the formula that inflate farmland value by assuming land appreciates and landowners achieve equity buildup at predetermined rates. These have nothing to do with the agricultural use of the land. OFBF proposes the current capitalization method known as the “Akerson Method” be replaced with a method known as the simple “Band of Investment Method,” which contains certain non-farm factors unrelated to use value.
The second proposal was all lands in federal conservation programs or other lands managed under year-round conservation practices be valued at the lowest possible rate to encourage practices that protect the environment and water quality.