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Advisory Committee for the TY 2010 Current Agricultural Use Values

Summary of the Advisory Committee meeting on Tax Year 2010 Current Agricultural Use Values presented on May 7, 2010. Updates on crop yields, prices, inputs, and soil values were discussed. The meeting focused on model adjustments and factors affecting agricultural taxation calculations.

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Advisory Committee for the TY 2010 Current Agricultural Use Values

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  1. Advisory Committee for the TY 2010 Current Agricultural Use Values Public Hearing Agricultural Advisory Committee May 7, 2010 Tax Equalization Division Ohio Department of Taxation

  2. Introduction This is a meeting before the Ohio Department of Taxation, May 7, 2010. We will be presenting data on the proposed tax year 2010 Current Agricultural Use Values.

  3. Agenda • Updates to the model for 2010 • Yield updates • Crop prices • Cost of inputs • Capitalization rate • Calculation of soil values

  4. Model Updates for 2010 • Single crop pattern • Based on most recent five year average of acres harvested • Corn 39% • Soybeans 51% • Wheat 10% • Eliminate hay • Maintain 50% corn and 50% soybeans for organic and frequently flooded soils

  5. Acres Harvested, 2004-2008

  6. Model Updates for 2010 • Elimination of hay • Previously used two hay crops, mixed hay and grass hay • Most produced for private use • Lack of a consistent and reliable source for hay prices • Produces more uniform values according to slope and productivity index

  7. Crop Yield Updates for 2010 • Continue to update crop yields annually; began in TY 2006 • Crop yields reported by the Ohio Agricultural Statistics Service for the past 10 years are averaged • That average is divided by the original yields published in 1984 • The resulting factor is applied to the yields of record for each soil type

  8. Yield Updates for TY 2010 • For 2010, the factor is based upon yield data from 1999-2008 • Soil yields from 1984 were increased by the following percentages • Corn: 18.73% • Soybeans: 12.88% • Wheat: 52.50%

  9. Yield Updates for 2010 • The yield update increases the corn yield for Miami Silt Loam, a soil with average productivity, from 108 to 128 bushels per acre. • By contrast, the average corn yield for all soil types in 2007 was 150 bushels per acre.

  10. CROP PRICES ____________________

  11. Crop Prices 2007, 2009 & 2010

  12. COST of INPUTS ____________________

  13. Non-Land Production CostsBase Unit, TY 2007, 2009 & 2010

  14. Non-Land Production CostsAdded Unit, 2007, 2009 & 2010

  15. CAPITALIZATION RATE _____________________________

  16. Capitalization RateTY 2007-2010 20072010 Mortgage/Equity Ratio 60/40 60/40 Years 15 15 Interest Rate 7.49 7.09 Equity Rate 8.35 7.45 Tax Additur 1.4 1.4 Capitalization Rate 8.4% 7.8%

  17. Capitalization RateTY 2009-2010 20092010 Mortgage/Equity Ratio 60/40 60/40 Years 15 15 Interest Rate 7.06 7.09 Equity Rate 7.65 7.45 Tax Additur 1.4 1.4 Capitalization Rate 7.9% 7.8%

  18. Calculation of Soil ValuesComparison of Values

  19. 2007 Sample Calculation

  20. 2010 Sample Calculation

  21. 2007 Sample Calculation

  22. 2010 Sample Calculation

  23. Average CAUV Values 2003-2010

  24. Average CAUV Values by Reappraisal Cycle

  25. Conclusion • Comments or questions.

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