Crop- and Forestland Preservation and Conservation :: Present Use Value :: Voluntary Agricultural Districts :: Conservation Easements :: Farmland Protection Plans & Programs

Crop- and Forestland Conservation and Preservation

This report focuses on state-sponsored conservation programs available to regional farmers but federal programs are also available: FarmlandConservationPrograms.xlsx. Many crop- and forestland farms participate in state and federal programs simultaneously.

Present Use Value Program

What is this?

This measure shows the amount of farmland enrolled in the Present Use Value Program and, consequently, taxed at a reduced rate. Present use tax is a deferment, not an exemption, from the higher rate as long as the land is kept in active cultivation. If the property no longer qualifies, the land is removed from the program and three years of deferred taxes (the difference between the use value and the market value), plus interest accrued for the current year, comes due.

Present Use Value Program allows reduced tax assessments for individually owned property in farmland used as agriculture, horticulture and forestry production. The “present-use value” of farmland is significantly lower than the market value of the property, and the difference between the use value and market value is “deferred” from the higher rate as long as the land is in active cultivation. Other qualifications related to ownership, acreage, income, and management practices apply. Tax rates differ by county.

Why is this important?

The main goal of the Present Use Value Program is to prevent the loss of farmland to other land uses. Farmland exiting the program is likely to have been sold for development. As such, the amount of land enrolled in the program over time may indicate the viability of agriculture in the region, although some farmland is simply not enrolled because its tax value does not differ significantly from the Present Use value.
This measure also allows comparison between counties. In urban areas, the difference between the “market value” (reflecting the highest-priced and best use of the property) and the “use value” of property on which a crop grows can be quite large. In rural areas, the difference between these two values is often slight; therefore, owners in urban counties may see the greatest saving.

What does this measure show?

Table 1. Triangle farms and acreage enrolled in the Present Use Value Program as of 2007.
Sources: County Soil & Water Conservation Districts; County Tax Assessors (2010)

The total amount of farm and forestland enrolled in the Present Use Value program across the Triangle is 98.3% of total acreage in the region (505,634 acres reported in the 2007 Census of Agriculture report) even without the inclusion of Johnston County.
Participation in the Census has negative incentives from the time required to fill out the form to potential concerns about how the information will be used; therefore, it not surprising that PUV acreage reported by the tax assessors office would exceed census data for total acreage.

Some land is purchased for speculative purposes in the high growth areas but still being managed for agriculture and forestry. The owners chose not to apply for PUV because they didn’t envision holding it for a long period while the market was rapidly appreciating (and would have to repay deferred taxes with interest when the land was sold). In the low growth areas, some land may not be enrolled because the difference between present use value and market value taxation is not substantial: A $1000/acre difference in valuation would translate to about $6/ac/yr in increased property taxes.These situations notwithstanding the PUV program provides a substantial incentive for enrollment [1].

Limitations and Further Research

Information regarding the amount of farmland entering and exiting the program annually is needed to be able to thoroughly analyze the trend for this farmland preservation program and to accurately analyze the amount of farmland lost to development over time. Please see the raw data for Wake County under the tabs named "WakeRollbackData" and
"WakeUseValueData" in this Excel workbook for an initial start at the collection of this data: PUV_All counties.xlsx

Authors: Aimee Schmidt and Elina Inkiläinen, NCSU (CNR) graduate students :: 2010.05.06

Reviewers: Tandy Jones, TLC; Dr. Nancy Creamer, NCSU CEFS Director

Technical Notes

The number of parcels and total acreage in each county were obtained from the Soil & Water District and/or Tax Assessor serving each county. The requests, submitted in March and April 2010, called for data from the past 10 years, including the market and use value of the acreage, however, data was incomplete or not available, and acreage broken down by land use does not sum to total acreage figures. Data and metadata can be found here: PUV_All counties.xlsx

[1] personal conversation with Tandy Jones on May 4, 2010