Land Use Value Assessment/Agricultural & Forestal Districts

Description

Land use value assessment taxes real estate based on its usage, instead of its fair market value. As a result, land devoted to ag/forest, horticulture, and open-space use that eliminate or reduce development potential, can be subject to lower taxes, providing an opportunity for Va. localities to preserve long-term public benefits. Property owners in an Agricultural & Forestal District agree not to convert their farm or forest land to a more intense land use. The property owner benefits through eligibility for land use-taxation, which assesses taxes on the current, not the potential use value of the property. 

Land use value assessments reduce development pressure on open space, forested, and agricultural lands. Localities can focus these programs to preserve ecologically valuable land with benefits for flood & stormwater mitigation.

Case Study

Property tax reduction can be especially valuable for farmers or other large tract landowners who reside in localities with high land values & development pressures.

Ex: James City County - ag & forestal district program preserves over 15,000 acres of farm operations.

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Ordinance Language

Loudoun County Ordinance Chapter 1226 Ag & Forestal Districts

"...policy of the County to conserve, protect and encourage the development and improvement of its agricultural and forestal lands for the production of food and other agricultural and forestal products. It is also the policy of the County to conserve and protect agricultural and forestal lands as valued natural and ecological resources which provide essential open spaces for clean air sheds, as well as for aesthetic purposes...1226.02 Effect of Districting (a) All land use planning decisions, special exceptions, special use permits and variances affecting any parcel of land within or adjacent to a District shall take into account the existence of the District and the purposes and policies of this chapter… (b) Land used in agricultural and forestal production within a District shall automatically qualify for an agricultural or forestal value assessment..."

30 Virginia localities utilize Agricultural & Forestal Districts, covering over 730,000 acres

Benefits
  • Preserves essential open space without the costs of property acquisition
  • Benefits property owners without the need to permanently restrict development rights
  • Additional land parcels can easily be added to existing districts
  • Discourage land uses that do not keep with agricultural, forestal, or open space uses (greater degree of development restriction than an agricultural zone, which can encourage low-density residential sprawl)
Drawbacks
  • May only temporarily impede development in ecologically-sensitive areas (development is not restricted in perpetuity)
  • Requires interest from property owners
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Guidance

Land Use Value Tax: 118 Va. localities have enacted land use assessment ordinances. Eligible land uses include agricultural/horticulture, forest, & open space. Parcels must be greater than 5 acres to qualify as agriculture/open space, or greater than 20 acres to qualify as forest under a use-value taxation. (Va. Code § 58.1-3233). Localities can allow other parcels to qualify if enabled by code, like small forested parcels adjacent to bodies of water.

Ex. Albemarle County adopted all four categories of land use for value taxation. Open space use requires a minimum of 20 acres, used “to provide or preserve the land for park or recreational purposes, conservation of land or other natural resources, floodways…”

Ag & Forestal Districts: minimum size requirement = 200 acres. Multiple landowners, & contiguous tracts of land can be combined into one large district. Local advisory committee approves districts (usual life of 4-10 years). Localities must take districts into account for planning decisions & cannot unreasonably restrict agricultural/forestal activity within the district. Landowners are also afforded additional protection from eminent domain. An update in 2011 streamlined the process for creating Districts & clarified that additional parcels can be added to districts at any time.

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CRS Credit

1: Up to 1,450 points (Activity 420, Open Space Preservation (OSP), Manual pg. 420-3)

Credit for preserving open space in the floodplain. Active farmland may not be creditable. Extra credit for open space land protected by Deed Restriction (Activity 420, DR, pg. 420-11). Extra credit for open space parcels preserved in or restored to their natural state (Activity 420, NFOS, pg. 420-13).

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There are a number of voluntary agricultural and forestry BMPs that are covered by cost-share programs managed by the Soil and Water Conservation Districts that could be implemented on the large land tracts that also qualify for land use value tax assessment. Once a property owner receives funds and implements these BMPs - the use of the land is restricted. Ex. James City County has land within Ag & forestal lands where buffers and fencing are implemented to restrict use/access along streams and rivers. Land subject to value taxation may also qualify as an Urban Growth Reduction BMP or depending on land use, other agricultural or forestry Land-use Change BMPs. 

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2: Up to 250 points (Activity 420, Open Space Incentives (OSI), Manual pg. 420-20)

Credit for tax incentive programs to keep land undeveloped.

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Tax incentive programs can reduce the development (and associated impervious surfaces) pressures on greenfields and encourage preservation and restoration of large tracts of working land. See DOF report for ways to retain existing forested lands for TMDL credits. The incentivized use of Reforestation or Forested Buffer BMPs or Sheetflow to Conserved Open Space BMPs can help meet VSMP requirements and Chesapeake Bay TMDLs.

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James City County, Virginia

The County provides for special valuation of property greater than 5 acres for agricultural or horticultural uses, as well as forested tracts of 20 or more acres in an Agricultural/Forestal District. View the County's Map of Current Districts, Application, and Wthdrawl Policy below. 

Legislation

Code of Virginia, § 58.1-3231:

Authority for the assessment & taxation of ag & forestal land

Code of Virginia, § 10.1-1009:

Virginia Conservation Easement Act

Code of Virginia § 10.1-1700:

Virginia Open-Space Land Act

Code of Virginia, § 58.1-512:

Land Preservation Tax Credits

26 USC §170; 26 CFR 1.170A-14

Qualified conservation contributions   

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Tools
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Resources

Jarbeau , S. H., & Stiff, M.-C. (2015). Flood Protection Pay-Offs: A Local Government Guide to the Community Rating System. Wetlands Watch.

Knapp, J., & Kulp, S. (2015). Virginia Local Tax Rates, 2014. Weldon Cooper Center for Public Service.

Moser, S., & Ekstrom, J. (2012). Identifying and Overcoming Barriers to Climate Change Adaptation in San Francisco Bay. California Energy Commission.

Schmidt, K. (2011). Recent Changes to the Virginia Agricultural and Forestal District Act. USDA

VA APA. (2014). Managing Growth and Development in Virginia: A Review of the Tools Available to Localities. Virginia Chapter of the American Planning Association.

VA DOF (2017). Healthy Watersheds Forest Retention Project Phases 1&2 Final Report.