Virginias Use-Value Assessment Program September 17, 2017 Buckingham Extension Office Gordon Groover /Lex Bruce Department of Agricultural & Applied Economics Virginia Tech (540) 231-5850 [email protected] (540) 231-4441 [email protected] Web site: http://usevalue.agecon.vt.edu/ Objectives Overview Use Value Assessment Program Ag and Forestal districts Two approaches to values Income Approach Rental Rate Approach Estimated changes in tax rates for Buckingham with use-value assessment Why? Use-value assessment is found in some form in all 50 states Preservation of this land use for producing food, fiber, and timber VA 1974: Costs/Benefits Costs easy to quantify tax relief to land owners in order to preserve agricultural, horticulture, forestry, and open space Benefits hard to quantify To encourage the preservation and proper use of real estate to produce safe supply of food, fiber To conserve natural resources, protect adequate and safe water supplies To preserve scenic natural beauty and open spaces To promote proper land-use planning and the orderly development
Virginias Use-Value Assessment Program Organization/Stipulations State Land Evaluation and Advisory Council (SLEAC) Oversees process to provide annual use-value estimates for each jurisdiction in the program. Responsibility for final value of assessment resides with the local assessing officer All buildings and improvements (dwellings, barns, greenhouses,) on the land are assessed and taxed at fair market value Virginias Use-Value Assessment Program Land must meet the following requirements in order to be considered for usevalue assessment: Agriculture and horticulture lands: 5 acres minimum and be a bona fide agricultural or horticultural operation. Forest land: 20 acres minimum of productive and nonproductive forest land with certification that the real estate is being used in a planned program of timber management and soil conservation practices. Open space land: 5 acres minimum lands, other than agricultural, horticultural, or forest lands, are used or preserved for park or recreational purposes, conservation, flood ways, wetlands, riparian buffers, historic or scenic purposes, community shaping purposes, or for the public interest. (Code of Virginia 58.1-3230 -3233). Owners must apply to participate No longer meet requirements, rollback taxes and interest (5-years) TY2018: Counties/Cities* with use-value assessment ordinances (Agricultural & Horticultural, Forest, and Open Space) Agricultural & Horticultural, Forest, and Open Space Agricultural & Horticultural and Forest Agricultural & Horticultural Open Space Open Space and Agricultural & Horticultural No use-value assessment ordinance Agricultural & Forestal Districts Only Ag and Hort: 92 counties/cities
Forest: 75 counties/cities Open Space: 56 counties/cities Lee Fredrick Clark Arlington Loudoun Alexandria Warren ShenanFauquier Fairfax doah Prince Essex RappaWilliam Page hannock King William King & Rockingham Culpeper Queen Stafford Madison Highland Richmond King George Greene Augusta Orange Spotsylvania Westmoreland Northumberland Albemarle Bath Caroline Louisa
Alleghany Rockbridge Fluvanna Hanover Accomack Goochland Lancaster Henrico Amherst Middlesex Buckingham Powhatan New Craig Botetourt Kent Cumberland Mathews Appomattox Chesterfield Charles Gloucester Northampton Giles Roanoke Bedford Amelia City Prince Buchanan Prince Campbell Montgomery Edward James City George Nottoway Bland Dickenson Tazewell Pulaski Surry
York Charlotte Dinwiddie Isle of Wise Hampton Sussex Russell Wythe Floyd Franklin Lunenburg Wight Smyth Newport News Halifax Brunswick Carroll Pittsylvania Norfolk Washington Henry Scott Southampton Virginia Grayson Patrick Mecklenburg Suffolk Beach Danville Nelson Greensville Chesapeake * Counties/Cities are identified from annual use-value reports and may differ from actual implementation. Contact government officials in each county/city for the current use-value implementation. Not all participating cities are identified on this map.
Ag & Forestal Districts Legislation was passed in 1977 then simplified in 2011 County needs to allow district(s) Establish advisory committee can be Planning Commission if 4 members are farmers/forest owners Then owners apply to county to establish a district Hold public hearing Need a core of 200 acres Additions or removal of land requires committee approval Ag & Forestal Districts (continued) Qualifies for deferred taxation use-value Length 4-10 years Flexible definitions of eligible land Withdrawal - rollback taxes & local ordinance Landowner benefits No unreasonably restriction on Ag or forestry No assessments or special tax levies Virginias Use-value Assessment Program Assessed Values $/Acre Two Approaches Capitalized: 1. Net income (Income Approach) 2. Rental rates (Rental Rate Approach)
Income Approach The Composite Farm The countys composite farm is a typical farm within the county Crop acreage from latest Census of Agriculture Only crops with 1 or more acres in the composite farm are considered Acres of crop number of farms 1 acre Net returns/profits are based on the totals for the jurisdiction's composite farm VCE budgets Yields value of an acre of land as a Farm That is, I can pay $/acre for land & pay for it farming Buckingham TY2018 Crop Acreage, Composite Farm (CF), & Net Returns 2012 Ag Census Buckingham Crop Acres 1 Alfalfa Barley Corn Cotton Hay Pasture Peanuts Potatoes Pumpkins Snap Beans Soybeans Sweet Corn Tobacco Tomatoes Watermelons Wheat Double-cropped 680 (D)
$153.65 $0.00 $8.16 $167.22 $74.99 $13.66 Buckingham County TY2018 Capitalization Net Return Use value Capitaliza tion Rate Net Use Value: $13.66 Capitalization Rates: a) Interest rate component 0.0584 (Long Term Rate, from AgFirst) b) Property tax component 0.0043 (Effective Tax Rate; Department of Taxation) c) Cap Rate 0.0627 (a + b) Unadjusted Use Values: $217.86 (without risk) Income Approach Buckingham County TY2018 Table 1a: Estimated use-values of agricultural land by jurisdiction. Estimates apply to tax-year 2018 Cropland Buckingham
Pastureland I II III IV AVG I-IV V VI VII AVG V-VII AVG I-VII VIII W/Out Risk 300 270 200 160 220
Estimated Change in Tax Rates Buckingham (2015 Data) % of 2015 total FMV Total of real property FMV Buckingham deferre d 0% $1,410,886,300 Total Taxable FMV $/100 Estimated Estimated Nominal increase in tax on additional tax Deferred Value tax rate tax rate to $200,000 on $200,000 $/100 keep levy of real of real estate constant estate (constant levy) $1,410,886,300 $0 0.5000 0 $1,000
$1,111 $111 2015 levy from real property was $7,054,432 Surrounding Counties Deferred Values? County Albemarle Amelia1 Buckingham Cumberland Fluvanna Nelson Nottoway Prince Edward1 1 Deferred Value$2 (Total FMV minus Total Taxable FMV $1,958,041,100 $76,587 None $84,370,980 $303,162,200 $538,352,750 $24,901,100 $14,102,500 % of Deferred Reporting Year Value of Total FMV 11.03% 2015 6.76% 2015 0% 2015 10.06%
2015 11.30% 2015 2015 17.93% 2015 2.73% 0.95% 2015 Deferred value is attributable to only Agri/Hort Use-Value Program. Others listed include forest use- value in their deferred values. 2 Deferred Values are Virginia Department of Taxation (Annual Reports Fiscal Year 2016) https://www.tax.virginia.gov/annual-reports Program Administration Additional FTEs in COR office? Timber management plans Application process Forms Proof Fees per parcel Validation cycle Averages vs. soil class (I-VIII) requires GIS Assessment cycle Useful Reports Use-Value Website http://usevalue.agecon.vt.edu/ The following reports are available on the website at. See publications and Presentations Why Use-Value Estimates Differ: Comparing Halifax and Pittsylvania Counties (2008) Use-Value Taxation in Virginia: A Brief Discussion (2006) Results of the 2003 Agricultural and Horticultural Use-Value Taxation Program Survey (2004) Measuring the Impact of Use-Value Taxation for Northampton
County, Virginia (2004) Thanks! & Questions? usevalue.agecon.vt.edu SOCIO-ECONOMIC IMPACTS OF CONSERVED LAND ON VIRGINIAS EASTERN SHORE Terry L. Clower, Ph.D. George Mason University and Dean D. Bellas, Ph.D. Urban Analytics, Inc. Grant #NA14NOS4190141 Task #10.01 July 27, 2017
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