COVID 19 and the shuttering of Ohio’s businesses is having a significant financial impact on the agricultural industry. This coupled with the fact that Ohio farmers were hit hard in 2019 by higher than average rainfall that forced many farmers to forgo the planting season, and a trade war with China and the states $125 billion agriculture industry is in crisis.
State Representatives Jason Stephens (R- Getaway) and Gary Scherer (R-Circleville) have introduced House Bill 485 which alleviates bureaucratic red tape for farmers by removing a requirement that owners of farmland enrolled in the Current Agricultural Use Valuation (CAUV) program file a renewal application each year in order to remain in the program.
While this doesn’t undo the economic hardship facing farmers it does take away the threat of qualified farmers losing their property due to government paperwork procedures.
According to joint testimony provided by both Representatives Stephens and Scherer the CAUV program is designed to permit agricultural land values to be set below true market values, at its current use value. The formula for CAUV values incorporates agricultural factors (soil types, yields, prices, and non-land costs for corn, soybeans, and wheat) to calculate the capitalized net returns to farming land based on the previous 5 to 10 years. This program allows commercial agricultural farmland to be valued based on its value in agriculture, rather than the full market value, which can result in significant savings for farmers.
A renewal application must be filed every year before the first Monday in March to continue in the CAUV program.
Along with the application process, county auditors are also required, each year, to inspect the farmland on CAUV, to ensure continuing compliance with commercial farming.
H.B. 485 repeals the requirement for property owners enrolled in the CAUV program to file a renewal application each year in order to remain in the program. A property owner is required to notify the county auditor if the owner’s land no longer qualifies for the CAUV program. Additionally, some property owners will be required to submit documentation, in lieu of a renewal application, to demonstrate continued qualification for the CAUV program.
These landowner will still be required to report information demonstrating continued qualification for the CAUV program if they meet one of two criteria.
1. The owner of a plot of land of less than ten acres must document the yearly income earned from that land. Small plots of land qualify for CAUV only if the land generates at least $2,500 in annual income or is enrolled in a federal conservation program. Currently, the renewal application requires such information to be provided for such plots.
2. The owner of CAUV land that becomes enrolled in a federal conservation program after initially qualifying for the CAUV program must provide to the county auditor a copy of the agreement between the owner and the federal agency. Land enrolled in a federal conservation program continues to qualify for CAUV even if it is no longer actively used for farming. Currently, that documentation must be provided with the first renewal application after enrollment in the federal program.
Should H.B. 485 become law the new CAUV program application procedures apply to tax years beginning on or after the bill’s effective date.
For working farms over 10 acres both Stephens and Scherer state that requiring these farmers to complete the renewal application every year and requiring the county auditor’s office to check the farm land each year results in unnecessary redundancy and difficulties for working farmers across Ohio. Under H.B. 485, the county auditor’s office will still be required to check the farmland annually, as in current law, but these farmers will no longer be tasked with the renewal of the CAUV application.
State Representative Jason Stephens serves residents of the 93rd House District, which includes Jackson and Gallia counties, as well as portions of Lawrence and Vinton counties. Stephens is the former Lawrence County Auditor and has first-hand experience addressing the challenges of CAUV. “CAUV was put in place in the 1970’s before auditors had access to aerial photography and other forms of technology to assess land valuations. The goal of this legislation is to simplify the process. CAUV is cumbersome for the farmers and is an unfunded mandate for local governments.” Stephens continues, “If you look at homestead and owner occupancy it is left to the auditor to administer and not written specifically into law as is CAUV. The goal is to give each county auditor flexibility to ensure each farmer is receiving CAUV while eliminating unnecessary paperwork.”
Under current law, failure to file the renewal application results in detrimental effects to the farmers. Not only does failing to file the application result in converting the CAUV land to a non-agricultural use which can cause significant financial loss, but land that no longer qualifies for CAUV is also assessed a recoupment charge upon removal from the program. According to current law, if the farmer does not return the application, for whatever reason, then they lose the CAUV credit for their property and their taxes most likely will go up. For many farmers this would result in losing their property.
The legislation was introduced in January and is being considered by the House Ways and Means Committee.
“I am very aware of how difficult farming is especially for small family farms. We can provide regulatory relief for farmers that makes sense and that maintains the goal of CAUV. It may be a small change but for the people it impacts hopefully it is one less burden.” Stephens concluded.