Key Findings

Highlights

• Current projection for average CAUV value in 2020 is $665 which would represent a change of -24% from the previous tax year. This is the first year without the “phase-in”. • From 2017-2020 a -42% decrease in average CAUV values for counties receiving updates to their property taxes. • The projection for the average CAUV value in 2021 is$760. The average CAUV value projections could end up as low as $560 or as high as$900.
• From 2018-2021 a -25% change from the previous triennial update.

CAUV Calculation

CAUV Calculation Overview

It is the expected net present value of an acre of land based. To determine this, first a historical average of yields and prices for corn, soybeans, and wheat to determine gross income. Then historical non-land costs – compliments of The Ohio State University Agricultural Extension Agency – are subtracted from gross income for a measure of net income. And finally, this net income is divided by a capitalization rate based upon historical values of farm interest and equity rates. This value will vary based upon the particular soil type(s) for a farm.

CAUV Calculation Overview

• A CAUV value is assigned for each of the 3,514 soil types in Ohio
• based on their expected yields of corn, soybeans, and wheat from the last state-wide soil survey in 1984
• Value is the expected net present value based on the past 5 to 10 years worth of data for each component
• Economics jargon, it is the net operating income divided by capitalization rate
• Net operating income is based off of the expected revenue (price times yield) less the expected costs (only non-land costs). Calculated for corn, soybeans, and wheat.
• Capitalization rate is a combination of the interest rate on a loan for purchasing farmland along with appreciation rate of farmland.

Generic Formula

• CAUV is assigned for each soil type, although what really matters is the yields that soil type had for corn, soybeans, and wheat in 1984:

$CAUV_{s,t} = \frac{NOI_{s,t}}{CAP_t}$

• where $$CAP_t$$ represents the capitalization rate and $$NOI_{s,t}$$ represents the net operating income based on revenues less non-land costs for corn, soybeans, and wheat.
• Net operating income, $${NOI_{s,t}}$$, captures the average returns to an acre of land under normal management practices which is adjusted by the state-wide rotation pattern of commodities.

Generic Formula

• $${NOI_{s,t}}$$ can be defined as:

$NOI_{s,t} = \sum_{c} w_{c,t}\times(GOI_{s,c,t} - {nonland}_{s,c,t})$

• where $$w_{c,t}$$ represents a commodities share of total harvested acreage
• $$GOI_{s,c,t}$$ is the expected revenues for a soil type depending on the statewide price of a commodity and yield is a percentage adjustment to the soil’s yield in 1984 for each commodity:

$GOI_{s,c,t} = Price_{c,Ohio,t} \times \left( \frac{Yield_{c,Ohio,t}}{Yield_{c,Ohio,1984}} \times Yield_{c,s,1984} \right)$