A Discussion of Real-Life Tax Revenue Impact on Agricultural Counties

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Valentine Ethelbert Pope
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1 The Conservation Use Value Assessment Program (CUVA) and Forest Land Protections Act (FLPA): A Discussion of Real-Life Tax Revenue Impact on Agricultural Counties

2 Economic Factors Influence How Land Is Used

3 Tipping the Scales to Encourage Land Conservation In 1992, State enacts the Conservation Use Valuation Assessment Program (CUVA)

4 CUVA Program Provides a tax incentive for non-corporate landowners to: Ease development pressures Conserve open space Provide tax relief for Bona Fide agriculture and forestry uses Lowers property taxes on agriculture and forestry land Reduces incentive to clear land in residential transition areas Protects vulnerable areas Property is assessed at 40% of current use value, reducing the tax even more than an assessment at 40% of fair market value

5 How Does the CUVA Program Work? The Georgia Revenue Commission: Annually sets values for ad valorem tax purposes on conservation land Publishes rules and regulations to help county tax assessors determine the values of property that qualify for conservation use assessment Landowners sign a 10-year covenant with the state to keep land in current use less than 2,000 acres Minimum land areas are set by the Board of Commissioners Crawford County requires a 10-acre minimum, but exceptions are made to as little as three acres Business, corporation, partnerships do not qualify

6 How is the Valuation Set? What are the current use valuations? Established by the Dept. of Revenue for the purpose of prescribing the current use values for conservation use land The state is divided into nine Forest Land Protection Act Valuation Areas Taxation amounts emphasize current use valuation as opposed to fair market valuation Savings of greater than 90% possible in high property tax counties

7 Taxation Amounts CUVAVA/FLPAVA #5 Region Table of per-acre values: W1-580, W2-536, W3-493, W4-452, W5-409, W6-367, W7-323, W8-280, W9-233, A1-641, A2-558, A3-519, A4-475, A5-424, A6-361, A7-297, A8-234, A9-172

8 What Does This Mean in Real Dollars for Crawford County? 2009 FMV 40% CUVA 40% 753 parcels (75,034 acres) $164,299,549 $65,719,820 $34,400,853 $13,760,341 = $1,727,116 = $ 361,621 DIFFERENCE: $1,365,495 There is no reimbursement from the state to assist the county with the loss of tax revenues as a result of CUVA

9 Forest Land Protection Act (FLPA) Implemented after voter approval in the Nov elections Increased the number of eligible landowners able to receive the conservation tax benefit by removing acreage and ownership restrictions Requires landowners to maintain their land in a qualified use for 15 years

10 How the FLPA Works Eligible tracts must be used for subsistence or commercial production of trees, timber, or other wood and wood fiber products the value of any residences on the property are excluded Properties must be a minimum of acres unlike CUVA, there is no maximum acreage cap Eligible landowners can be individuals or any entity registered to do business in Georgia and are not required to be U.S. citizens 2008 values are used to calculate tax amounts for the entire 15-year exemption State to reimburse counties half the lost revenues up to 3% of the digest; anything above that amount would be reimbursed at a rate of 100%

11 Impact to Crawford County in Year 1 (2009) 2009 FMV 40% 2008 FMV 40% FLPAVA 40% 49 parcels (22, 152 acres) $21,841,039 $8,736,415 $17,612,115 $6,714,603 $8,141,712 $3,345,112 Using 2008 values as the baseline to calculate the impact on the tax digest = $176,459 = $ 87,909 DIFFERENCE: $ 88,540 State s reimbursement was only $36,578 net loss to Crawford County: $51, 962 Using current (2009) fair market values = $229,592 = $ 87,909 DIFFERENCE: $ 141,683 State s reimbursement was only $36,578 net loss to Crawford County: $105,105

12 74 parcels (40,324 acres) Impact to Crawford County in Year 2 (2010) 2010 FMV 40% 2008 FMV 40% FLPAVA 40% 43,539,619 $17,415,847 $33,996,677 13,268,422 $15,388,667 $6,155,467 Using 2008 values as the baseline to calculate the impact on the tax digest = $348,694 $ = $161,765 DIFFERENCE: $186,929 Anticipated State reimbursement: $46,539 net loss to Crawford County: $140,390 Using current (2009) fair market values = $457,688 $ = $161,765 DIFFERENCE: $295,923 Anticipated State reimbursement: $46,539 net loss to Crawford County: $249,384

13 $300,000 $200,000 $100,000 Long Term Impacts of FLPA FLPA Revenue Loss $- FY09 FY10

14 Cumulative Impact on Crawford County Pre-FLPA Post-FLPA State Reimbursement Value Final Position Current FMV Position FY 2009 $176,459 $87,909 $36,578 ($51,962) ($105,105) FY 2010 $348,694 $161,765 $46,539 ($140,390) ($249,384) TOTALS ($192,352) ($354,489) TAX EXEMPTION AMOUNT DUE TO CUVA (ANNUAL) $1,365,495 TAX EXEMPTION AMOUNT DUE TO FLPA (ANNUAL) $ 249,384 TOTAL EXEMPT FY10: $1,614,879

15 2010 Crawford County Acreage By Covenant (Crawford County Total Acreage = 205,570) Existing Pending/Eligible Acres Of Acres Of total total Preferential 3,834 2% 3,834 2% CUVA 75,034 37% 75,034 37% FLPA 42,091 21% 73,496 36% Total in Conservation 120,570 59% 152,364 75%

16 2010 Conservation Acreage in Crawford County Pending/Eligible FLPA Parcels 31,405 acres 59% 75% CUVA FLPA Pending/Eligible FLPA Parcels

17 $1,650,000 $1,600,000 $1,550,000 $1,500,000 $1,450,000 Total Revenue Loss Conclusion Land conservation cost Crawford County a total $1.6 million a year, amounting to 12.3% of the county s total budget In the last 10 years, the County grew by 135 people $1,400,000 $1,350,000 FY09 FY10 Can rural Georgia continue to bear the cost of land conservation?

18 Pat Kelly, County Manager Crawford County

Answers to Frequently Asked Questions about Conservation Use Valuation and Preferential Agricultural Assessment

Answers to Frequently Asked Questions about Conservation Use Valuation and Preferential Agricultural Assessment ` A presentation of the most frequently asked questions and answers collected over the past