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Use value vs. AFDs: panel eyes next step

SoVaNow.com / August 13, 2018
Agricultural and Forestal Districts (AFDs) in Halifax County have bumped up against budget constraints and complaints they are ineffective as an ag industry incentive. Now, county officials are considering shifting to the “use value” system of farm taxation, which is widely used across the state.

Scott Crowder, head of the Halifax Farm Bureau, said, “I don’t want people thinking we [farmers] want a free ride. We just want something fair.”

On Tuesday night, the ad hoc Halifax County Land Use Committee met at the Halifax Agriculture Center near Scottsburg for two hours to discuss the possible shift. Halifax is one of three counties in Virginia that uses the AFD system alone — New Kent and Northampton are the others. Other counties have use value, no programs, or some combination of use value and AFDs.

Interim County Administrator Dan Sleeper emphasized that the state General Assembly passed legislation establishing AFDs in 1977 when the conditions in Virginia were much different from the today. “The majority of Virginia was agriculture west of Richmond,” he said.

The AFD program assesses farming and rural land at lower-than-market values — which results in reduced real estate tax bills for those properties. Moving to use value would also set farmland at below-market tax assessments, but the system would also allow the county to reap more revenue than under AFDs.

Land use valuation could vary for different sectors of farmland ownership, including horticulture, forestry and “open space” properties.

A use value system also appears to benefit smaller agriculture operations over larger ones by including the market value of equipment, development, animals and homesteads in the value appraisal — while assuming little future development. Eligible land tracts would be smaller: AFDs require a minimum of 200 acres, either individual farms or a collection of contiguous farms, while use value applies to tracts as small as five acres for agriculture, horticulture and “open space” use. Under state law, timber tracts must be 20 acres at a minimum. Eligibility for the favorable assessment — based on the actual operation of an ag-related enterprise — is re-evaluated every year.

Sleeper emphasized Halifax’s dilemma: Out of a $93 million budget, the supervisors control only 9 percent in discretionary spending. Reducing the large tax expenditure costs of AFDs would free up money in the budget — particularly helpful with the ongoing Halifax courthouse renovations and consideration of new school facilities.

Supervisors expect to make a decision on a possible replacement for AFDs by the end of the year. While supervisors declined last week to repeal the county’s ordinance that established AFDs in 2009, the Board of Supervisors effectively defunded the program when it passed the current fiscal year budget in the spring. AFDs also expire at the end of 2018 after being in effect for 10 years, the window that supervisors created before the program must be reauthorized.

The expense of AFDs in the most recent county budget was around $218,000, but that cost figure would be much higher if all eligible farms were allowed to take part. AFD applications were frozen in 2012 once supervisors became aware of the program’s potential budget impact.

The movement away from AFDs occurs in a fraught context for farmers: the ongoing trade war. Low community prices resulting from tariffs on ag products have particularly hit crops such as soybeans. ED-1 Supervisor J.T. Davis, a member of the ad hoc panel, remarked, “That’s going to hurt us.”

The shift to use value, said Sleeper, will work better with the county budget, and also ensure the continued support for farmers, ranchers and horticulturists. The new use value program would allow flexibility and support of “bona fide” producers. Davis echoed the sentiment: “There are people there [in the AFD program] that should not be.”

Sleeper emphasized larger trends: In Halifax County, as across the nation, crop harvests have risen even with less overall acreage. There are 935 farming operations in Halifax County, which likely makes the ag industry the county’s largest employer. The total estimated impact of agriculture in the county, said Sleeper, is $388 million.

The need to support farming is apparent, said Sleeper. However, the use value taxation also lends itself to public goods of environmental quality and preserving forests and open land.

Farmland could also be later developed for crops such as hemp and marijuana, members of the committee suggested.

Some members of the committee raised ideas for bolstering Halifax County’s farm sector through means other than tax breaks. South Boston Town Manager Tom Raab spoke in favor of easements on larger tracts of land to prevent unwanted development. Matt Leonard, executive director of the Industrial Development Authority, cautioned the committee from focusing too much on revenue. “We’re dealing with value [of farming], not just revenue,” he said.

The committee set the date for the next meeting to take place on Aug. 20 or 23, depending on the availability of use value experts who can travel to Halifax County to address the panel, as well as the availability of data on what other localities are doing.

“[This] is going to take work … we’re going to get as much information in front of us as we possibly can,” said Davis.



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Comments

Yes we need to go to land use, my 188 acre farm did not qualify. But with land use it would. It was a rip off to help the big farmer.

Comments

allpolitical2 - it was indeed a ripoff ochestratated by none other than ED#1 Supervisor, who just happens to sell crop insurance to many large landowners who was able to be in the AFD program. It is also a fact that the Code of Virginia governs how AFD programs are run. Per this article, in Halifax County "AFD applications were frozen in 2012 once supervisors became aware of the program’s potential budget impact." This action is NOT allowed per State Code. The supervisors cannot just decide to stop taking applications. They knew that land such as yours could be added to an existing AFD district if it fell within a one mile radius of the already established AFD. They "closed" it arbitrarily in order to prevent the smaller farmers from piggy-backing on the newly created larger AFD districts. Do not believe for one moment that the BOS will treat Land Use Taxation equally and fairly as it pertains to the small farmer, the history of AFDs is proof. Halifax taxpayers beware!!!


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