Auditor explains new CAUV rates for Highland County taxpayers

By BILL FAWLEY

Highland County Auditor

Due to the recent significant increases in CAUV rates, several questions have arisen. I would like to take this opportunity to answer some of the questions. We have also received questions from persons not enrolled in the program who want to know the qualifications so they know if they might be able to apply. So I will try to provide the basics, but if there are more detailed questions, please do not hesitate to contact our office at 393-1915.

WHAT IS CAUV?

In 1972, Ohio voters approved a constitutional amendment that allowed qualified agricultural land to be valued at its current agricultural use value (CAUV) for real property tax purposes rather than fair market value. Every three years the Department of Taxation provides a value for each soil type that is enrolled in CAUV. The market value set by the County Auditor’s Office is completely separate from the CAUV rates. The home, homesite, and outbuildings are still valued at fair market value.

WHO QUALIFIES FOR CAUV?

       The land must be devoted exclusively for agricultural production. Even though only corn, soybeans, wheat and hay are used to determine the rates per soil type, agricultural production may include livestock, specialty crops, and woodlands. Please check with the County Auditor’s Office to determine eligibility. If the farming unit contains fewer than 10 farmable acres, there must be proof of income of at least $2,500 from agricultural production.  The property owner will then receive a renewal form to be completed each year stating whether the land is continuing to be used for agricultural production.

HOW IS CAUV CALCULATED?

       The CAUV values are based upon a formula containing five factors applied to four crops: corn, soybeans, wheat, and hay. The five factors are:

Cropping pattern-  based upon the slope of the soil: level ground weighted towards corn and beans; steep slopes weighted towards wheat and hay.

Crop prices —  based upon a survey of elevators in Ohio

Crop yields —  based upon FSA yields per acre for each soil type

Non-land production costs- based upon farmer surveys by The Ohio State University Capitalization rate —  based upon the interest rate for a 15-year fixed mortgage at Farm Credit Services.

The crop prices, crop yields, non-production costs and capitalization rate are calculated by taking the previous seven years of numbers, eliminating the highest number and the lowest number, and then averaging the remaining five. The years used for the calculation for Tax Year 2009 (Payable in 2010) are 2001, 2002, 2003, 2004, 2005, 2006, and 2007. Therefore, changes in prices and costs during 2008 and 2009 do not enter into the calculations.

These four factors are then divided by the capitalization rate. This calculation is performed for each of the 3650 soil types in Ohio. Highland County has approximately 275 soil types, second only to Ross County.

HOW DO THESE RATES AFFECT HIGHLAND COUNTY?

       Practically all soil types in the county showed significant increases.  Some of the more common soils in Highland County are:  Clermont (CM) increased from $120 per acre to $590, Brookston (BS) went from $640 to $1,310, Miamian (MlB2) increased from $230 to $770, and Rossmoyne (RpB) from $240 to $780.  These values are for cropland.The same soil types that are woodlands usually have a much lower value.

For taxes payable in 2009, the average CAUV value per acre in Highland County was $298.84.  For 2010, this per acre average has increased to $640.86. The average market value for land in the CAUV program for Highland County this year is $2,023.24. These averages include parcels that could have woods at a much lower rate or wasteland that has a zero value.  Last year the CAUV average was 16 percent of market value. This has increased to 32 percent for 2010.

A county receives these revised soil type values every three years, when either a revaluation or trienniel update is completed. All counties are not in the same appraisal cycles. Clinton County received increased values in 2009. Brown and Fayette counties are in the same cycle as Highland and Adams County will receive new rates payable next year.

CAN A PROPERTY OWNER APPEAL THESE INCREASES?

You can appeal to the County Auditor if you think the soil types, acreage, wasteland or market value are incorrect.  However, the CAUV rates are provided by the Ohio Tax Commissioner based on the formula that has been used since the 1970’s.

Again, we encourage anyone with questions concerning the CAUV program to contact the County Auditor’s Office at 393-1915.