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With demise of AFDs, land use taxation is back in play / August 02, 2018
Halifax County and South Boston officials will start talks next week on a replacement for the county’s agricultural and forestal tax districts, which allowed owners of undeveloped rural lands to pay lower property taxes but were discontinued this year due to concerns over their cost and effectiveness.

Halifax County’s Ad-Hoc Land Use Committee will hold its first meeting Tuesday, at 7 p.m. at the Mary Bethune Complex. The committee is comprised of representatives from the Board of Supervisors, the Town of South Boston, and several interested landowners.

Committee member and ED-2 supervisor Jeff Francisco described the committee as “just a group of people that Chairman [Dennis] Witt thought would be a good group to come up with rules.”

Francisco — one of two representatives from the Board of Supervisors, along with J.T. Davis — said that the AFDs were not achieving their intended purpose despite the estimated cost of more than $200,000 in deferred tax revenue to the county. During this year’s budget process, the Board of Supervisors agreed that AFDs would be abolished in December.

Francisco explained that many landowners within the tax-advantaged districts were not actually producing any agricultural or timber products and therefore were costing the county tax revenue without serving the intended goal of supporting the county’s ag economy. The AFDs allowed rural landowners to take advantage of lower tax assessments based on the use value of their land, rather than the market value derived from looking at the sale value of similar properties.

“If we didn’t have AFDs, the county would receive $221,000 dollars in revenue,” Francisco said, though he cautioned that the estimated cost of the program fluctuates based on how many people choose to take part in a given year.

The Ad-Hoc committee will seek to keep the spirit of the AFDs: a tax subsidy to encourage landowners to preserve open space and advance agriculture in the county. The panel will, however, take a harder look at what parcels of land qualify as what Francisco called “bona fide producers.”

So-called bona fide producers include agriculture operations — such as soybeans and tobacco as well as livestock. Francisco said that timber producers should also retain the tax break, but timber owners should be expected to provide a plan on how their trees would be harvested.

The committee will decide what is a bona fide producer. “This same committee will have the applications to review,” Francisco said, indicating that once the AFDs are replaced, the Ad-Hoc committee will be formalized and serve as the governing body for Land Use permits.

Witt established the Ad-Hoc committee with the stipulation that the Town of South Boston be represented. This is because tax breaks in the rural areas could have an impact on tax rates in the county’s urban centers.

“If the county reduces rates on farmers or forestry people, somebody’s got to pay,” said South Boston Town Manager Tom Raab, one of two town representatives on the committee. “He [Witt] wanted to be inclusive of the whole county.”

The cost of consumer services (known as COCS) is the heart of the land use issue. COCS refers to the amount of money a property generates in taxes, versus the amount of money the county spends to support the property.

Francisco said, “Agricultural land costs about 20 cents on the dollars per taxes paid.” He claimed that in South Boston the COCS was “$1.48 per what it costs.”

He said that the fairest way to tax the county would be to lower taxes in the rural areas and increase them in the urban areas, and under the current system, farmland was subsidizing town acreage.

Currently, the Land Use committee is still in development. It has not had a meeting, and it still lacks a chairman, but depending on the group’s prescriptions, it could signify a shift in the tax burdens borne by Halifax County residents. Their first meeting is open to the public.

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A little history of land use taxation - In 1971, the Virginia General Assembly enacted a law permitting localities to adopt a program of special assessments for agriculture, horticultural,
forest and open space lands (Section 58.1-3299 through 58.1-3244 of the Code of Virginia).When land qualifies for Land Use Taxation, the parcel receives a lower assessment than
the fair market assessment. The difference in tax dollars is not a total abatement, but rather a deferment. ED#1 BOS member wanted AFDs and fought to have the program created, yet now is critical of said program, which has been POORLY managed by county administration and the BOS.
Land Use Taxation will put into place a program that will allow LARGE land owners permanent tax relief rather than the temporary AFD district term. This will help the farmer, however, it will shift the overall tax burden to residential and commercial land owners.

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