It’s evident, if not universally understood, what land-use taxation was meant to achieve in Rappahannock
Rappahannock County’s implementation of land-use taxation — the now-entrenched but often misunderstood process Virginia legislators came up with in the early ’70s for preserving agricultural land, forests and open space throughout the state — has had its consequences.
And most of them, by far, were intended.
One principal intended consequence in Rappahannock, as in many rural counties in the Shenandoah Valley, central Virginia and the Piedmont: It is “easier” to own a farm, and keep it as farmland, than to own any other type of large property. (Easier, that is, on the purse — not on the back muscles, or the length of your work day.)
It is not easy, however, to understand how it all works, or what land-use taxation means to local-government budgets as much as to local attitudes and priorities.
The details: Land-use tax deferments — tax breaks, essentially, which allow those who farm their land or manage their forests to pay a fraction of what they’d normally pay in real estate taxes — totaled $594 million in Rappahannock County in 2013.
That $594 million is subtracted from the total value of taxable land in the county (excluding buildings), which was $1.23 billion in 2013, to come up with the county’s real-estate tax base.
In 2013, that base (total land value minus deferments) was $638 million — a little more than half what it would be if Virginia never enabled local jurisdictions to join the land-use taxation plan. (The tax base is further reduced, though not as transparently, by the fact that the many acres of land in conservation easements in the county are permanently devalued from their fair-market value to their land-use value.)
That base, with the value of buildings ($898 million) added back in, is used to come up with an annual property tax rate. Last year, to cover a county budget of $22.24 million, the rate was 65 cents per $100 of assessed real estate value.
So what would happen if there were no land-use program?
“In the short term,” says county administrator John McCarthy, “of course you’d be able to lower your property tax rate significantly, because you’d be almost doubling the taxable value of the land in the county.”
The long-term effect, however, is what state authorities were thinking about in the ’70s (like local leaders about a decade later, when the county adopted its enabling land-use ordinances in 1982):
“In the long run, with no land-use taxation,” McCarthy says, “large pieces of land become too expensive to keep as farms or forests. They eventually get subdivided, and sold.”
In the short run, then, lower tax rates. In the long run . . . well, let’s use as an example Loudoun County (where McCarthy went to high school in the late ’70s), the former nexus of farm- and forestland where, over the past three decades, one of the largest commercial and residential real-estate booms on the East Coast occurred (east of U.S. 15, at least).
But “when I was in high school,” McCarthy says, “the tax rate was about what ours is now. And now Loudoun’s rate is $1-plus.”
Many have said that it’s land-use taxation policy — not Rappahannock County’s 25-acre-minimum subdivision code, among the state’s most restrictive zoning laws — that has, and will continue to, keep agriculture and open land viable here.
“When it comes down to it, restrictive zoning is just three votes on the board of supervisors,” says McCarthy. “And if the rising tide of opinion is that you should let us do more with our land because it’s too expensive to keep as agriculture or forest, then the pressure will mount, and eventually make for a change. Again, that’s what happened in Loudoun, and most every county east of here.”
Beverly Atkins, Rappahannock’s revenue commissioner since 1985, reports that in 2013 there were 1,861 parcels of land in one or more of the three types of land-use classifications allowed here (agriculture, horticulture and managed forest). The parcels ranged in size from five acres (the minimum for agriculture and horticulture) to thousands of acres, but the average acreage in land use, she says, “is somewhere between 25 and 50 acres.”
Turnover among participants is relatively low. Each year, she says, there are fewer than 100 parcels that either come in or leave the land-use program, about equally split between goers and comers. Atkins herself, who inspects all building-permit improvements, keeps an eye out on every trip for properties she knows are in land-use, mostly to insure they’re complying with the land-use rules — essentially your promise to farm, or to manage your forestland, for rolling, renewable six-year terms.
“Every time I go somewhere, I’m looking, I’m watching,” she says. On the other hand, “you’d be surprised how many anonymous tips I get,” she adds, referring to calls from neighbors who think someone might be cheating, or have noticed someone falling behind on hay-cutting.
Overall, though, Atkins says the revenue commissioner’s office fields as many complaints from those who think someone else is cheating as from those who are about to be bumped out of the program — and must pay retroactive “rollback” taxes on their land — because they haven’t been keeping up.
And increasingly the complaints she hears about so-called cheaters, Atkins says, turn out to be about the owners of properties that are in some sort of conservation easement — in which case the land does not, generally, need to be farmed or visibly managed (it depends on the easement type).
The ever-increasing acreage protected by conservation easements in the county, McCarthy has said, is the single largest reason county leaders haven’t decided to offer land-use taxation in an “open space” category, a non-farming use that is allowed by the state code but left up to local jurisdictions to include.
“The thinking is, at least agriculture and forestry land-use bring something back to the local economy,” McCarthy says. “Someone has to cut your hay, feed your cattle, harvest your trees.”
The land-use laws of the 1970s — which were based on similar smaller-scale farm-use land-assessment programs in use in many rural jurisdictions since the 1920s and 1930s — were meant to keep open, and green, much of those parts of Virginia between its largest urban areas. In Rappahannock, it’s working as it was meant to, but McCarthy worries that not all newcomers to the county understand what could happen if the program were significantly altered.
“I have heard from those who moved to their new home here, say, a house on four acres, who get upset because they have to pay a high amount of tax on their four acres while their neighbor, a big and supposedly rich farmer, doesn’t have to,” McCarthy says. “I have to remind them that they’re presumably living there because of that farm, and that they likely wouldn’t be — and their property likely would not have the same value it does — if that farm went away.”