ATTACHMENT A

 

Land Use Value Taxation Program

 

Statutory Provisions for Land Use

 

Under the provisions of § 58.1-3230 of the Code of Virginia, a county, city, or town may adopt an ordinance that provides for use-value assessment under four categories: real estate devoted to agricultural use, horticultural use, forest use, and open space use. Land used in agricultural and forestal production in an agricultural district, a forestal district, or an agricultural/forestal district is eligible for use-value assessment in the absence of a local ordinance.  The State Land Evaluation and Advisory Council (SLEAC) was created in 1973 to estimate the use value of eligible land for each locality participating in a use-value taxation program.  (See Attachment B for more information regarding SLEAC.)

 

Once a local land use ordinance is adopted for a land use classification, any parcel that meets the state criteria for that category must be granted use-value taxation. The County does not have the authority to impose additional eligibility requirements based on zoning restrictions or on the owner's future intentions for the use of the land.

 

The enabling legislation further states that before use-value assessment is granted, the local assessing officer must determine that the land meets the uniform standards for agricultural and horticultural use as defined by the Commissioner of Agriculture and Consumer Services, for forest use as defined by the State Forester, and for open-space use by the Department of Conservation and Recreation.

 

The County adopted all four categories of land use in 1973.  Each category of land use must meet prescribed standards and minimum acreage requirements:

 

·         Agriculture Use:  Land used for agricultural use must consist of a minimum of five acres and must meet prescribed standards for bona fide production for sale of crops and livestock or in an approved soil conservation program.  

 

·         Horticulture Use:  Land used for horticulture use must consist of a minimum of five acres and must meet prescribed standards for bona fide production for sale of fruits, vegetables, ornamental plants and ornamental products. 

 

·         Forest Use:  Land used for forestal use must be a minimum of twenty acres and must include standing timber and trees devoted to tree growth in such quantity and so spaced and maintained as to constitute a forest area.

 

·         Open Space:  To qualify as  open space,  a minimum of five acres, or a greater minimum acreage set by local ordinance, must be used to provide or preserve the land for park or recreational purposes, conserve the land or other natural resources, floodways, historic or scenic purposes to assist in the shaping of the character, direction, or timing of community development, or for the public interest and consistent with the local land use plan.  In 1990, the Board set the minimum acreage for open space at 20 acres.

 

There are 95 counties in the Commonwealth of Virginia.  In 2005, 71 counties allowed land use value taxation.  Of this number, 43 counties allow for agriculture, horticulture, forestry, and open space use.  19 counties allow for only three uses, with the major excluded category being open space.  Nine counties only allow  agriculture and horticulture as qualifying uses.

 

Current Status of Land Use

 

Based on 2005 real estate assessment data, Albemarle County has 277,434 acres under land use; 89,165 in agriculture, 185,587 in forestry, and the remaining 2,682 in horticulture and open space. This represents approximately 59% of the county's total 473,600 acres.  Since 1995,  the amount of acreage enrolled in the land use program has declined by 16.6%.  However, in this same timeframe, numerous parcels have been encumbered with open space easements, so this reduction in the amount of acres in the land use program is not totally a result of growth. Parcels under open space easement receive use-value tax, but are not required to be in the use program.

Text Box: Year
Number of Parcels
Number of Acres
Tax Rate
(per $100)
Reduced Assessment
Reduced Tax
  Rollback
          Collected                        Acres
 
 
 
 
 
 
 
 
1995
4,613
332,472
$0.72
$764,241,670
$5,502,540
$105,755
797
1996
4,680
*
$0.72
$763,538,570
$5,497,478
$99,822
547
1997
4,784
321,195
$0.72
$759,462,599
$5,468,131
$99,097
648
1998
4,841
*
$0.72
$761,253,899
$5,481,028
$108,493
509
1999
4,743
315,309
$0.72
$761,784,400
$5,484,848
$176,061
656
2000
4,953
*
$0.76
$781,041,450
$5,935,915
$90,964
437
2001
4,983
310,319
$0.72/0.76 
$950,530,600
$7,222,437
$168,102 
864
2002
4,940
*
$0.76
$920,882,600
$6,998,708
$202,914
588
2003
4,996
294,369
$0.76
$1,168,791,400
$8,882,815
$163,396
559
2004
5,002
*
$0.76
$1,142,678,000
$8,684,353
$396,016
1,431
2005
4,981
277,434
$0.74
$1,752,417,400
$12,967,889
$390,380
1,428
*Acreage report is done in reassessment years only.
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

Tax Implications of Land Use

 

The chart above shows the reduced  assessment and tax, and the roll back taxes collected since 1995. Assuming 2005 reduced  tax revenues of $12.97 million and the FY 2005-06 real estate tax revenue at $1.2 million per penny, the additional cost of the program to ineligible properties is approximately 10.8 cents on the tax rate.

 

In the past few years, particularly 01/02 and 03/04, there has been an increasing disparity between the rising fair market values on rural land and the decreasing SLEAC land use values.  The graph below displays the SLEAC values for land use properties in Albemarle County over the last twelve years, including 2005/2006.   Although SLEAC values have declined over the past years, the 2005/2006 SLEAC values, when compared to 2003/2004 values, indicate an average increase of  137% in agricultural, a 109% increase in horticulture, and a 43% increase in forestry rates.   

 

 

SLEAC is a technical advisory committee comprised of professionals familiar with Virginia agriculture.  It provides an appropriate methodology for estimating the use value of land.  §58.1-3229 of the Code of Virginia requires each participating jurisdiction’s assessment office to consider the SLEAC values when assessing the use value of eligible land.  Although the local assessing office is not required to use the SLEAC estimates, Albemarle’s assessing office has used the SLEAC values since 1975. 

 

Application Process

 

A property owner must submit an application for taxation on the basis of use assessment to the Assessor’s Office at least sixty days prior to the tax year for which the reduced taxation is sought, or within thirty days of the mailing of notices of general reassessment (whichever is later). Applications may be filed no later than sixty days after the deadline specified above, upon payment of a late filing fee of $125.

 

The following documentation, as well as any other pertinent information, may be requested from the parcel owner(s) at the time the application is filed in order to determine the proper qualifying use: 

 

1.                  The assigned USDA/ASCS farm number.

2.                  Federal tax forms (1040F) Farm Expenses and Income, (4835) Farm Rental Income and Expenses, or (1040E) Cash Rent for Agricultural Land.

3.                  A Conservation Farm Management plan.

4.                  Evidence that gross sales averaged more than $1,000 annually over the previous three years.

 

 

Albemarle County has the authority to request the documentation listed above.  However, failure to produce the requested documentation will not deny the eligibility of the parcel for land use assessment if the physical review confirms eligibility. 

 

Once the property has qualified, the governing body may require any property owner to revalidate annually on any land previously approved for taxation on the basis of land use. The Code of Virginia also allows a locality to impose a revalidation fee every six years.  The revalidation fee cannot exceed the original application fee.  Albemarle County does not currently require annual revalidation.

 

The County Assessor’s Office monitors all parcels in the Land Use Program to ensure they meet and maintain all State and local Land Use standards. Appraisal staff visits all properties on a biennial basis, and the parcels are field checked at the time of the appraisal review for compliance to State standards.

 

Albemarle County currently has 4,981 parcels enrolled in the land use program.  The County charges an initial application fee of $15 per parcel plus 15 cents for each acre over one hundred acres.  This  fee has not changed since the County adopted the land use program in 1973.  The chart below displays  the number of parcels, application fees, and revalidation schedules of various  jurisdictions around the State. 

Locality

Land Use Parcels

Application Fee

Revalidation

 

Augusta County

 

5,000

 

$12.00 plus $0.12/acre over 100 acres

 

Every Year

 

Chesterfield County

 

800

 

$10.00

 

Every Year

 

Fluvanna County

 

1,500

 

$10.00 plus $0.10/acre over 100 acres

 

Every Year

 

Greene County

 

600

 

$15.00

 

No

 

Henrico County

 

410

 

$20.00 plus $0.10/acre over 100 acres

 

Every Year

 

James City County

 

800

 

$10.00

 

Every Year

 

Louisa County

 

3,400

 

$10.00

 

Every Two Years

 

Loudoun County

 

5,000

 

$60.00

 

Every Year

 

Nelson County

 

 

1,600

 

$50.00 plus $0.25/acre over 100 acres

 

Every Five to Six Years

 

Orange County

 

800

 

$15.00 or $0.15 per acre

 

Every Year

 

Rockingham County

 

5,400

 

$60.00 plus $25.00 for adjoining parcels

 

Every Six Years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

The chart below indicates fees received for land use applications for the past ten  years. 

 

 

Year

Annual Applications and Fees

 

# of Apps.       Fees       Late Fees

1996

    279

$ 4,188

N/A

1997

    263

$ 3,943

N/A

1998

    281

$ 4,357

N/A

1999

    203

$ 3,120

N/A

2000

    286

$ 4,289

N/A

2001

283

$ 4,245

N/A

2002

163

$ 2,445

$11,865

2003

239

$ 3,585

$ 5,455

2004

290

$ 4,350

$ 6,615

2005

264

$3,960

$10,650

Total

  2,551

$38,482

$ 34,585

 

Revalidation

 

Once land qualifies in Albemarle, there is no revalidation requirement or revalidation fee.  Advantages of requiring revalidation:

 

Ø      Ensure that necessary qualifying information concerning land use parcels is accurate on an annual basis.

Ø      Process would notify all property owners on an annual basis that they are enrolled in the program.

Ø      Proof would be required from program participants of a farming/forestry/horticulture operation (i.e., Schedule F, income receipts, farm numbers, etc.).

 

 Disadvantages of requiring revalidation are:

 

Ø   Additional cost to administer the program (i.e., additional supply/postage expense and storage space needs).

Ø   Failure to meet deadline(s) and/or proper documentation would result in parcel(s) being removed from the program, resulting in taxpayer complaints.

 

 
Rollback

 

During the biennial reassessment, the County's real estate division visually inspects land use properties to ensure they continue to meet the classification standards set by the State. If continued eligibility of the property is suspect, the Assessor will require the landowner to submit proof that the land is either being farmed or forested. The County Assessor may determine that the property no longer meets the classification standards and remove the property from land use. Any property owner denied use-value assessment may ask that the County Assessor's decision be reviewed by the local Land Use Advisory Board.

 

When land changes to a non-qualifying use, the property is then subject to roll back taxes for the year of the change and for five years preceding the change, including 10% simple interest. Legislative attempts to increase the roll back period from 5 years to 10 years have repeatedly failed in the General Assembly.

 

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