Use-value assessment (UVA) is the practice of valuing rural land
according to its current use rather than its market value to reduce
property taxes for rural land owners in the United States. This tax
preference amounts to tens of billions of dollars annually.Originally
created to slow the loss of farms, ranches, and forestland caused by
urbanization, the reality is that UVA is a blunt policy instrument that
provides tax benefits to all eligible landowners, with very little
impact on the number of acres being developed. UVA undermines the
integrity of the property tax system as a mechanism to fund local public
goods and services. Eligibility requirements are often lax, withdrawal
penalties are mild or nonexistent, and assessment methods are subject to
biased manipulation. Fundamentally, UVA programs are not fulfilling
their intended purposes.This report describes the history and design
features of state UVA programs, explains the theoretical underpinnings
of land valuation, and surveys empirical studies of UVA implementation
and impacts.It also identifies the weaknesses of UVA programs and
proposes the following set of policy reforms to make the programs more
effective and fair: Design eligibility rules to ensure that only parcels
serving UVA statutory goals can participate.Adopt state guidelines for
assessors that provide accurate UVA estimation methods.Create
appropriate penalty provisions for land removed from rural or
agricultural use.Restructure UVA programs to reduce tax inequities and
provide valuable benefits to society as a whole.This report was preceded
by the book Use-Value Assessment of Rural Land in the United States,
published in 2014
