CAUV values to jump - Other Community News - Ohioans for Responsible Rural Development

Buckeye Lake Beacon
October 22, 2011 Edition

By Scott Rawdon

UNION TOWNSHIP – Union Township Trustee Rick Black said some local farmers may see their CAUV values double or even triple this year. "We've had a pretty reasonable ride for quite some time," he said during Monday night's trustees meeting.

Licking County Chief Deputy Auditor Chad Fuller said the CAUV program discounts land values for agricultural property. The property's soil types primarily determine the value. "The State of Ohio has increased the cost per acre associated with these soil types," he said.

For 2011 property taxes that will be paid in 2012, Fuller said the state directed his office to apply the new soil rates. "Yes, depending on the types of soils, the CAUV value could double or even triple," he said. "Even with the increase, the CAUV value will still represent a major reduction in taxable value." Fuller said his office is currently in the process of creating a letter for CAUV property owners that will also include an estimate of the increase in taxes that the new soil rates dictate.

According to information from Larry Gearhardt, director of local affairs for the Ohio Farm Bureau Federation, in 1972, Ohio voters approved a constitutional amendment that allowed qualified agricultural land to be valued at its current agricultural use value for real property tax purposes rather than fair market value. The home, home site and outbuildings are still valued at fair market value.

CAUV values are rising for several reasons. First, the 2007 values were some of the lowest in CAUV history, and because of low 2007 values, it doesn't take much of an actual increase to represent a 200 to 300 percent increase over 2007 values. The rate is updated every three years. Also, the crop yields per soil type were increased and the capitalization rate decreased from 8.4 percent to 7.8 percent. Lower capitalization rates mean higher land value.

Finally, according to Gearhardt's report, the biggest reason for the increase in CAUV values is the increase in crop prices. Prices for corn, beans and wheat doubled. With a seven-year rolling average and three years between value adjustments, three years of crop prices drop out of the formula and are replaced by three new years of crop prices. For corn, the three crop prices that dropped out were $2.00, $2.00, and $2.00. Those prices were replaced by $3.30, $3.95, and $3.95. For beans, the prices that dropped out were $4.80, $4.80, and $4.40, replaced by $6.25, $10.10, and $9.60. For wheat, the prices that dropped out of the formula were $2.10, $2.05, and $2.50, replaced by $3.30, $5.50, and $5.80. Production costs increased, but not nearly in the same proportion as prices.

Read the full story on The Buckeye Lake Beacon website.