To the editor,

Farm real estate tax statements have farmers in a “flurry,” to say the least. On many parcels, taxes doubled from past tax assessment. Farmers should be concerned, I contend. I agree with their point of view, something has gone wrong.

The Wilmington News Journal story on April 2 reported that the “CAUV (Current Agricultural Use Value) to be improved.” The administrated changes cited in the article do not, I contend, adequately address the problem. The “tweeking” errors over time – since 1974 when CAUV was initiated – have accumulated to create the distortion in the calculated land reappraisal values for 2014. Those are now the basis for Clinton County land tax assessment.

Historical events provide noteworthy background. In the late 1960s, a Cleveland developer sued in the Ohio Supreme Court that all property – residential, business, industrial and agricultural – should be taxed at the same rate of market valuation. The court concurred. Previously, farmland was taxed at a lower rate of market value than the other uses.

There was legitimate reason for lower valuation. Only about 2 percent of farmland is bought and sold annually. Houses change hands much more often.

A few transactions thus create the comparable sales data for appraisers.

Furthermore, market value sales data typically reflect transitional land use changes. For a developer who pays $40,000 per acre for a tract, that land cost on a one-fifth acre lot is a small item in the new house price. But the appraiser collecting comparable sales data saw the land growing soybeans last year.

Thus, to him, the dollar figure is the market value of agricultural land. There is no notation on the real estate record that “this sale reflects housing development value,” nor a notation “this land will be farmland for the next 100 years.” Farmland 20 miles from the county courthouse which will be growing crops or pasture for the next 100 years thus has transitional market value built in to taxes.

The Farm Bureau Federation foresaw the potential effect on farmland from 100 percent market valuation. The organization promoted a constitution amendment to tax farmland based upon its earnings value in agricultural use – cropland, pasture, woodland and forest – instead of market price. Ohio voters approved the amendment in 1973, and permitting Ohio to institute agricultural use value assessment.

The basic premise of the procedure is to capitalize net income earnings per acre into an economic valuation. This is an economically sound and justifiable concept for calculating use value.

The Ohio Department of Taxation’s explanation of the method of value calculation has gone awry, in my estimation. It is obvious that the bureaucracy does not have agricultural agronomists nor economists on their staff.

Their method minimizes or omits soil type (productivity) and land class – arable, pasture or forest use – from the equation.

In my experience with Clinton County farmers and 40 years of teaching farm business analysis, my valuation is that land tax should be in the range of $28 to $35 per acre on the most highly productive land in the county. I have heard of taxes being $50 to $150 per acre. I think farm landowners have a legitimate gripe.

CAUV must be preserved. It is a legitimate land use valuation.

The calculation procedure must be changed to properly define the correct value, however.