May 13, 2009
CAUV Tax Status
by Justice Paul E. Pfeifer
In 1973, Ohio voters approved an amendment to the Ohio Constitution that authorized the General Assembly to make an exception to the constitutional requirement of uniform property taxation. The amendment provided that laws may be passed so that land devoted exclusively to agricultural use could be valued for property tax purposes at the current value that “such land has for such agricultural use.”
The General Assembly subsequently implemented the amendment by enacting laws that created what was called the “current agricultural-use valuation” or “CAUV.”
Under the new laws, the auditor of a county – who determines the value of property for tax purposes – “disregards the highest and best use of the property and values the property according to its current agricultural use.” It’s a procedure that “usually results in a lower valuation and a lower real property tax.”
The CAUV amendment provided the central issue in a tax case that we recently reviewed here – at the Supreme Court of Ohio. The case involved two parcels of land in Greene County owned by Mark and Patricia Fife.
The Fifes acquired the land from Mr. Fife’s father in 2003 and 2004. The two parcels comprise 18.7 acres. The Fifes devote about one acre to their house and grounds and about three acres to pasture for grazing cattle. The other 14 acres are wooded.
Mr. Fife’s grandfather had used the wooded portion of the land for timber production. That use continued over the decades when Mr. Fife’s father owned the property. The last harvest of trees occurred in 1998, when Mr. Fife’s father took down 85 trees, worth $8,000.
The property had previously enjoyed CAUV status during the elder Mr. Fife’s ownership. But in February 2005, the county auditor sent a notice to the Fifes stating that their purchase of the land triggered a redetermination whether the land still qualified for CAUV status.
In subsequent testimony before the board of revision, the Fifes detailed extensive activity to maintain access to the trees, to cull timber, and to girdle undesirable trees. The Fifes also met with a state forester and received a forestry plan specifically for their property. For the past four years the Fifes had also permitted a neighboring farmer to graze cattle on their three-acre pasture for $500 annually.
Nevertheless, the county maintained that the Fifes, as a matter of law, failed to demonstrate the requisite “commercial purpose” in maintaining the woodland, and the board of revision determined that the land did not qualify for CAUV status. This decision prompted the Fifes to file an appeal with the Board of Tax Appeals (“BTA”).
The BTA had to answer this question: Did the Fifes demonstrate that their property was devoted exclusively to agricultural use for the 2005 application year? The law describes several paths by which property might attain CAUV status.
The most pertinent path in this case is the one under which land qualifies for the tax break if – during the last three calendar years – the property was “devoted exclusively to commercial animal…husbandry or…the production for a commercial purpose of timber…”
The BTA found that “there is ample, and unrebutted, evidence of activity taken to grow timber for commercial production for the three years prior to the 2005 application.” Additionally, “the testimony and evidence support that the three acres of pasture have been actively and exclusively used for the grazing of cattle for more than three years prior to application.
Based on those findings, the BTA concluded that the land use satisfied the criteria of the law and granted CAUV status. After that, the county filed an appeal with us for a final review of this case.
When we review a BTA decision, we determine whether it’s “reasonable and lawful,” and we defer to the BTA’s factual determinations if there’s reliable evidence to support them. Did the evidence support the BTA’s determinations here? Let’s take a look.
On appeal, the county advanced three main contentions. First, the county asserted that the infrequency of timber harvesting on the land bars the claim for the CAUV status. Specifically, the county cited testimony showing that the last harvest occurred in 1998 and the next would not likely occur for another ten years – a gap of 19 years. The county argued that this lapse of time without a harvest ought to defeat the Fife’s claims.
The BTA acknowledged “the difficulty in determining whether the land in question is being used for the commercial production of timber” because “it may take decades for a timber crop to mature to a size and nature that can be commercially harvested.”
Accordingly, the BTA applied its previous holding that “a modicum of activity designed to further the growth of timber for commercial purposes” must be discernable. The record supported the BTA’s finding that the Fifes satisfied that standard through activity on the property that established the “commercial purpose” harbored by the owners.
Second, the county pointed to the ambiguity of woodland maintenance: Does such activity indicate a “commercial purpose” or does it merely constitute sound conservation practice? The county advocated a “bright-line test,” whereby an owner would have to show a recent timber harvest or existing contracts to cut timber to qualify the property for CAUV status.
We declined the county’s invitation to adopt such a test. The determination of commercial purpose constitutes a factual inquiry that the BTA must conduct on a case-by-case basis.
Third, the county asserted that even if the evidence did establish agricultural use as of the application year 2005, there is allegedly no evidence establishing the use during the three prior years. But this claim is without merit, too. Although the Fifes acquired the property within the three-year period, their use merely continued the prior use of the property by Mr. Fife’s father and grandfather.
For all the foregoing reasons we concluded – by a seven-to-zero vote – that the BTA acted reasonably and lawfully when it reversed the board of revision and ordered that CAUV tax status be granted to the Fifes.
EDITOR'S NOTE: The case referred to is Fife v. Greene Cty. Bd. of Revision 
, 120 Ohio St.3d 442, 2008-Ohio-6786. Case No. 2007-2213. Decided Dec. 30, 2008. Opinion Per Curiam.