Agricultural Advisory Committee for the TY 2011 Current Agricultural Use Values

1. Agricultural Advisory Committee for the TY 2011Current Agricultural Use Values Public Hearing Agricultural Advisory Committee February 25, 2011 Tax Equalization Division Ohio Department of Taxation

2. Introduction This is a hearing before the Ohio Department of Taxation, February 25, 2011. We will be presenting data on the proposed tax year 2011 Current Agricultural Use Values.

3. Agenda Use Value Calculation • Crop yields • Crop rotation • Minimum values • Factors • Crop prices • Cost of inputs • Capitalization rate Calculation of Soil Values • Sample calculations, 2008 & 2011 Comparative Charts – Cropland Data

4. Crop Yield Updates for 2011 • Annual update of crop yields; 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

5. Yield Updates for TY 2011 • For 2011, the factor is based upon yield data from 2000-2009 • Soil yields from 1984 were increased by the following percentages • Corn: 22.80% • Soybeans: 16.44% • Wheat: 52.95%

6. Yield Updates for 2011 • The yield update increases the corn yield for Miami Silt Loam, a soil with average productivity, from 108 to 133 bushels per acre. • By contrast, the average corn yield for all soil types in 2009 was 174 bushels per acre.

7. Cropping Pattern • Single crop pattern • Based on most recent five year average of acres harvested • Corn 38.6% • Soybeans 50.9% • Wheat 10.5% • Maintain 50% corn and 50% soybeans for organic and frequently flooded soils

8. Acres Harvested, 2005-2009

9. Minimum Use Values

10. CROP PRICES ____________________

13. Crop Prices 2008, 2010 & 2011

14. COST of INPUTS ____________________

15. Non-Land Production CostsBase Unit, TY 2008, 2010 & 2011

16. Non-Land Production CostsAdded Unit, 2008, 2010 & 2011

17. CAPITALIZATION RATE _____________________________

18. Capitalization RateTY 2008-2011 20082011 Mortgage/Equity Ratio 60/40 60/40 Years 15 15 Interest Rate 7.29 7.00 Equity Rate 8.15 7.30 Tax Additur 1.4 1.3 Capitalization Rate 8.3% 7.6%

19. Capitalization RateTY 2010-2011 20102011 Mortgage/Equity Ratio 60/40 60/40 Years 15 15 Interest Rate 7.09 7.00 Equity Rate 7.45 7.30 Tax Additur 1.4 1.3 Capitalization Rate 7.8% 7.6%

20. Calculation of Soil ValuesComparison of Values

21. 2011 Sample Calculation

22. 2008 Sample Calculation

23. 2011 Sample Calculation

24. 2008 Sample Calculation

25. Average CAUV Values 2004-2011

26. Average CAUVDollars per Acre1999-2011

27. Ohio Cropland Average ValueDollars per Acre, 1999-2010USDA

28. Ohio Cropland Average Valueand Average CAUVDollars per Acre, 1999-2010

29. Conclusion • Comments or questions. • CAUV information is available on the Department of Taxation’s web site --Tax.ohio.gov, under Government, Real Property Tax. Contact information: Tax Equalization Division 614.466.5744