DaytonDailyNews.com

XENIA — Each year, Luwanna Delaney wrangles in court with rural landowners over tax breaks that she claims shift too much cost to residential taxpayers, and at the expense of schools and other tax-dollar recipients.

The Greene County auditor said some property owners get undeserved tax breaks through Ohio's Current Agricultural Use Value (CAUV) program, which is meant to benefit farmers. Many property owners receiving those tax breaks live or work in town and own fewer than 30 acres.

"I try to be as fair as I can be, but if you're not farming, you're not farming," said Delaney, a self-described farm girl who grew up milking cows. "(Landowners) don't like it because the other county auditors don't do what I do."

What Delaney does is verify, as required by state law, all of the 4,000-plus applications her office receives for CAUV tax breaks each year. She also makes property owners who want tax breaks for parcels under 10 acres document that their land generates average gross income of $2,500 or more per year.

David Peters, 25, a stone mason from Xenia who bought 10 acres on U.S. 68 south of Xenia in 2006, at first was denied a tax break, though he had a farmer growing soybeans on his land. He paid a law firm $940 before Delaney agreed to give the tax break.

Had Peters not fought Delaney's decision, he would have had to pay $815 in taxes each year instead of $31, plus pay back three years of tax savings — $1,750 — received by the property's previous owner.

"If it weren't for this attitude of 'You're not a real farmer, you shouldn't be on CAUV,' it wouldn't bother me," said Larry Gearhardt of the Ohio Farm Bureau, a powerful advocate of the CAUV program. " ... She does not have the right to determine what is fair and not fair. Her job is to administer the law."

Law unevenly applied

Each year, state law requires Ohio's county auditors to make sure farmland receiving large tax breaks is actually being used exclusively for agriculture.

Some county auditors admit they don't do those annual checkups. Officials with the Miami, Montgomery and Warren county auditors' offices say they don't have the staff to check thousands of parcels each year.

"We have not been going out here recently and checking them all," Miami County Auditor Chris Peeples said. "I know the law says we should. (Other county auditors) might tell you they do, but I betcha they don't. ... Basically we've been taking (landowners) at their word."

The Warren County Auditor's Office typically inspects about 220 of its 3,100 CAUV parcels a year, said Jim Bove, deputy auditor.

Montgomery County Auditor Karl Keith said his office does 15 to 20 field checks per year out of roughly 3,200 CAUV parcels.

The Ohio Department of Taxation said abuse would be virtually eliminated if CAUV land is inspected yearly. The department would consider intervening if it finds evidence that counties aren't doing annual CAUV checkups, said Shelley Wilson, executive administrator of the department's tax equalization division.

Paying a fair share?

The Current Agricultural Use Value program was created to help keep farmers on the land and reduce their temptation to sell out to developers. The program taxes farmland based on its agricultural value, which is generally 75 percent to 90 percent below the market value at which other land is taxed.

Since then, the CAUV program has been touted as a way to reduce sprawl.

But more importantly, CAUV was meant to correct an inherent unfairness in the real estate tax system to farmers. Taxes from farmland were essentially subsidizing services in residential areas, according to the Ohio State University Extension. Recent cost-of-service studies in Clark and Butler counties by the farmland preservation group American Farmland Trust found that's still the case.

Still, in 2006, residential property accounted for 74 percent of the total taxable value of all real property in Ohio, up from 65 percent in 1985. Meanwhile, Ohio's agricultural property was 3.9 percent of the total taxable value of all real property in 2006, down from 8.1 percent in 1985.

Court battles

Delaney admits she's "hard-core" in overseeing the county's farmland tax break program. As a result, her decisions have been taken to court more than those issued by other county auditors.

Since 2004, at least seven property owners seeking CAUV status have appealed rulings against them by Delaney and the Greene County Board of Revisions to the state Board of Tax Appeals.

• In June 2006, the Ohio Supreme Court sided with the county board, turning down a request from Daniel and Debra Dircksen for CAUV valuation on their 26 acres of cropland and noncommercial timber in Sugarcreek Twp.

• In November 2007

D. Mark and Patricia Fife successfully appealed a county Board of Revision's refusal to give a CAUV tax break on the Fifes' 18.7 acres of pasture, woodland and residence in Centerville and Xenia Twp.

In that case, the Board of Tax Appeals said determining if woodland qualifies for the tax break is tough since it can take decades for a timber crop to mature to a size that can be commercially harvested. The board found the Fifes took steps to grow timber commercially. Delaney and the county board have appealed to the Ohio Supreme Court.

• In a third case, Delaney said she was willing to give veterinarian Daniel Brauer a tax break for part of his 31 acres in Spring Valley Twp., but not for all of it, noting much of the land is a defunct stone quarry.

During a May 7 hearing before the county Board of Revision, Brauer said he sold firewood from the wooded land in question — sales that don't help qualify the land for a tax break, Delaney claims.

Reform needed?

Rural landowners with parcels under 30 acres had to document farm income from that land to qualify for CAUV until 1993. That's when a state amendment took effect lowering that threshold to 10 acres.

That has let nonfarmers who build houses on rural lots of just over 10 acres lower their tax bill through a program meant for farmers, according to some county auditors.

In Greene County, 56 percent of more than 4,000 applications for farmland tax breaks went to properties under 30 acres for tax year 2007, according to Delaney. Those parcels' owners received $1.71 million, or 19 percent, of the county's $9.14 million in farmland tax breaks.

"It was never meant for these little 10-acre, 15-acre, 18-acre parcels. It was meant for the real farmer," said Miami County's Peeples, who wants the threshold for documenting farm income raised from 10 acres to 30 acres. "Throughout the state, it's kind of a mess."

He said there are about 80 stand-alone rural lots of 10 acres or less in Miami County that currently are receiving CAUV tax breaks.

Peeples said he doubts state legislators will follow through with reform due to the Ohio Farm Bureau's clout.

"Nobody over there's got the guts to change the program; the Farm Bureau will be on them," Peeples said. "It won't fly. The Farm Bureau's powerful."

Contact this reporter at (937) 225-7457 or bsutherly@DaytonDailyNews.com.