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Future hangs in balance for ag-forestal districts / March 19, 2018
Every budget has an expenditure side and a revenue side, and Halifax County’s Agricultural and Forestal District tax program straddles both worlds.

How much longer the tax-advantaged AFDs will continue to exist is one of the big questions that the Halifax County Board of Supervisors must decide as they set this year’s county budget.

With Halifax County facing a dire need for more funding to support services ranging from schools to law enforcement to local libraries, surprisingly little has been said in this year’s budget discussions about the AFDs. Yet the program’s importance to the county budget and to Halifax’s farm industry can hardly be overstated: with property assessments generally in decline and the county anticipating a drop in real estate tax revenues, AFDs represent one of the few places the county can turn to for new money.

Translation: the seven-year program is nearing the end of its run unless supervisors can find a way to offset the $217,893 in booked revenues that now goes to agricultural producers in the form of tax bill savings. The draft budget that the Board of Supervisors will present tonight at a public hearing envisions the discontinuation of the AFD program.

AFDs continue to enjoy the support of county farming organizations, with the Farm Bureau strongly in favor of the program. J.T. Davis, chairman of the supervisors’ finance committee, is also a proponent of AFDs, which he describes as a “smart growth” policy for agriculture-oriented areas such as Halifax County.

“It’s an investment for the future which requires a balance to preserve farmland,” said Davis.

The reality of Halifax County’s budget, however, is that growth of the real estate tax base, absent any change in tax rates, will add only about $93,000 in new revenue in the next fiscal year. That positive number would be a negative one without accounting for the expiration of the AFD program with its nearly $220,000 cost.

“Our largest source of revenue [real estate] is stagnant and we anticipate just a $93,000 increase (less than 1 percent), due only to the non-renewal of the Ag-Forestal Districts,” wrote County Administrator Jim Halasz in an explanatory letter on the budget.

County revenues are projected to rise by $560,000 in the coming year. The largest single source of new money is from solar farm building permits — about $150,000. A proposal to raise the county’s refuse fee by $10 will bring in another $135,000. At $93,000, the new money coming from the real estate tax base, with AFDs ending this year, is a small part of the overall revenue pie.

While the county draft budget envisions the discontinuation of AFDS, the program has been long been crimped by a perpetual lack of tax revenue for local government operations. Created in 2010, the program was capped in 2012 after supervisors wrestled the loss of revenue at a time of tight budgets. Landowners already registered in the program were not affected, only those who wished to submit a new application.

Farm and timber lands entered in an AFD are assessed for tax purposes at “use value” rather than fair market real estate value. About one-sixth of all county agricultural acreage — almost 80,087 acres — is included in an AFD. Agricultural and timber tracts comprise the overwhelming majority of all county land; the A1 agriculture zone encompasses 494,912 acres, out of Halifax County’s 520,960 total acreage.

Even in capped form, the effect of the program has been to lower the total assessed value of Halifax County real estate by $45.4 million. If the supervisors do extend AFDs, they will also need to make a decision on whether to reopen the program to new applicants.

With 16 percent of agriculture landowners participating in an AFD, the net drain on county tax revenues is $217,893, according to Halasz. If 20 percent of farm landowners participated, the tax drain would increase to nearly $270,000 annually.

At 50 percent participation, the tax impact for the county rises to $673,257. If 100 percent of farm and timberland owners participated, the cost would skyrocket to $1,346,515.

In exchange for advantageous tax treatment, AFD landowners are restricted to using their land for farming and timber purposes. That is one of the program’s main appeals in areas where developmental pressures are eating away at a community’s traditional farming character.

In a recent article on AFDs published on the website of the Valley Conservation Organization, a member-supported nonprofit that protects natural resources of the Shenandoah Valley region, it is noted that an AFD provides much stronger protection from development pressures for farmers and other open space landholders than agricultural zoning restrictions manage alone.

While landowners are restricted in their land usage while a part of an AFD, so too are the powers of local, state, and the federal government restricted from making decisions detrimental to agricultural and rural land uses in the AFD.

Those responsible for balancing the county budget and keeping Halifax County a desirable place to live point out that in a robust economic environment, and in an area feeling development pressure, an AFD is a good investment.

In a county where real estate values overall are dropping, the calculus may prove to be different.

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It needs to be stopped until they open it up to all farmers. I inherited my farm after the cap was put on. So I have to pay full price while other farmers do not.


Supervisor Davis' business is selling insurance, part of which is crop insurance to farmers so, its definitely "an investment for the future" to him personal fortune. While the program was created, it was illegally capped in 2012. There is no provision in the Code of Virginia which allows a locality that has an AFD program to arbitrarily create a moratorium and stop those who wish to submit a new application. In addition, the existing AFDs have to be renewed to remain in effect and there is a whole state mandated process that the County MUST follow to do so. ALL landowners who want to apply should demand that the County either open enrollment of allow the existing AFDs to expire. If the supervisors do extend AFDs, they don't need to make any decision on whether to reopen the program to new applicants, they only need to follow the state code to the letter of the law
as it pertains to this blatantly mismanaged program.

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