Dropping cropland values lift farmers’ bottom lines

Storm clouds gather to the north of a Farmersville farm in western Montgomery County. JIM NOELKER/STAFF
Storm clouds gather to the north of a Farmersville farm in western Montgomery County. JIM NOELKER/STAFF

Statewide reform brings farmland values to ‘more reasonable level,’ resulting in lower taxes.

The tax value of cropland in Montgomery County has dropped nearly 54% since 2014 because of changes to state law. The lower values normally mean lower property taxes on farmers, raising bottom lines.

“Folks are definitely happy to see their values come back to what seems to be a more reasonable level,” said Leah Curtis of the Ohio Farm Bureau Federation. “That helps them continue doing what they want to do, which is farm and keep that land in production.”

The value decline is the result of a 2017 reform that phased in changes to a statewide formula used in the Current Agricultural Use Value (CAUV) program. Farmers lobbied for the revision after land values rose in some instances 300% over county reappraisals two cycles before the change.

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The changes also made sure farmers weren’t hurt for the environmentally friendly practice of putting land into conservation, said Curtis, policy counsel and senior director of member engagement for the Farm Bureau.

“Prior to the reform, if you put in a conservation practice ... it still got taxed as if you were producing crop on it,” she said. “The point of conservation land is that it doesn’t produce an income, it doesn’t produce a crop. So by making that change, we were able to make sure there’s no penalty for putting conservation ground in.”

This year, the CAUV program in Montgomery County provided an average property value reduction of 75% compared to the market value of land. The market value of 3,500 parcels reappraised in 2020 is $677 million while valued at $169 million in the CAUV program, according to the Montgomery County Auditor’s Office.

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The result is Montgomery County farmers currently pay on average about $129 less an acre in property taxes than they’d otherwise be charged if not enrolled in the program, said Montgomery County Auditor Karl Keith.

“We know how important the CAUV program is for our working farmers,” he said. “It has a big impact on their bottom line.”

With changes now completely phased in after six years in Montgomery County, the full impact of the 2017 reforms are clear in a report, which the Auditor’s Office touted at a booth last week at the Montgomery County Fair.

“The changes responded in the way that was anticipated and (farmers) had savings as a result,” Keith said.

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Of Montgomery County’s total acreage, about 35%, or 105,000 acres, is currently enrolled in the CAUV program. Most CAUV properties are located in the western part of the county, according to Auditor’s Office records.

Half of the acres enrolled in the CAUV program are in Jackson, Clay and Perry townships. Farmland accounts for more than 12% of the total property value in four Montgomery County townships.

Montgomery County farmland

About 73% of the 105,000 acres of cropland enrolled in the Current Agricultural Use Value program is in five townships. The enrolled land accounts for more than 12% of four townships' total property value.
Township Acres Total value %
Jackson Twp. 18,000 17.1
Clay Twp. 17,400 12.1
Perry Twp. 17,200 18.4
German Twp. 14,700 8.7
Jefferson Twp. 9,600 12.1
Source: Montgomery County Auditor's Office

Between 2008 and 2014, rising crop prices caused the values of CAUV properties in Montgomery County to triple. Accordingly, while the CAUV program provided an average value reduction of 77.6% in 2008, it only offered a 34.3% reduction in 2014, according to the Montgomery County Auditor’s Office.

A three-year effort by Ohio farmers resulted in reforms to the formula, passed by the Ohio General Assembly and signed by the governor in 2017. Those changes were phased in during Montgomery County’s 2017 and 2020 reappraisals.

Both Curtis and Keith said the program is designed to preserve farmland.

“The whole idea of the program is to encourage farmers to continue to use their land for agricultural purposes rather than housing or development or subdividing it … and to continue to make a living with commercial agriculture,” Keith said.

Curtis said the CAUV program provides a buffer against economic crises that in the past resulted in the loss of cropland.

“The whole point of CAUV when it was created, and still today is a farmland preservation program,” she said. “It’s to try to keep productive farmland in production to keep that farmland operating here in the state of Ohio.”

What land is eligible?

Farmland that is at least ten acres and devoted exclusively to agriculture is eligible for tax savings through the CAUV program. Additionally, tracts of land with fewer than ten acres can be eligible if the land’s average yearly gross farm income for the past three years is at least $2,500.

Farm owners can visit www.MCAuditor.org/CAUV to apply for the CAUV program. Property owners who have questions about the program can call the Montgomery County Auditor’s Office at 937-225-4326.