Farm grain bins no longer taxed as real estate

Ruling will save farmers money, cost counties tax revenue.

The Ohio Supreme Court ruled in July that grain storage bins, which are modular and portable as opposed to silos that are fixed structures, should be considered personal property. The ruling will cost Clark and Champaign counties about $142,000 in combined tax revenue in 2016.

Local farmers say the move will provide a little bit of relief as their taxes continue to increase.

Dave Baird of Mad River Twp. has eight such bins on his farm on Old Mill Road and said the tax break will likely save him about $300-$500 off his more than $40,000 annual real estate tax bill.

It won’t be a huge deal for most farmers, Baird said. But as his real estate taxes have spiked due to the Current Agricultural Use Value formula, he said every little bit helps. In the past 10 years, his property taxes have gone from $7 per acre to about $50 per acre, he added.

“It’s going to be a small piece of the pie,” Baird said.

Scott Haerr of Moorefield Twp. has 12 bins on his Middle Urbana Road property and said he’s very happy with the tax break.

“We didn’t ever agree with the fact that they were being taxed,” Haerr said. “It’s a piece of equipment rather than real estate.”

He thinks he’ll likely save a couple thousand dollars a year.

Both Clark County Auditor John Federer and Champaign County Auditor Karen Bailey said they are in the process of making the change on the real estate tax rolls, which should show up on next year’s bill. Both plan to keep the bins listed in the real estate system, but their value will be zero.

There are 608 corrugated steel grain bins across 20 of Clark County’s 38 taxing districts, Federer said. Their total value is about $4.6 million.

The total reduction in taxes countywide from the change will be about $57,000 out of the $220 million total tax roll, he added.

“I don’t see it as a huge hit to anybody,” Federer said.

In Champaign County, there are 7,760 total grain bins which equal more than $5.4 million in market value. The total reduction for the county will be about $84,500 annually using existing tax rates, Bailey said.

School districts that benefit from county property taxes said they don’t anticipate a large impact on their funding.

“The effect on our district collection will be minimal as far as our voted millage goes, as effective tax rates will adjust to the valuation difference,” said Mandy Hildebrand, treasurer of Urbana City Schools. The district’s inside millage will see a small decrease due to about $300,000 in lost value.

“From what I understand, it will not have a large impact,” said Linda Jordan, president of the Northeastern Local Schools Board of Education. Northeastern Superintendent John Kronour said in his conversations with the county, it didn’t sound like there would be a huge difference in tax revenue for the schools.

The court decision stems from a Fulton County case involving the Metamora Elevator Company.

The company challenged an auditor’s assessment which valued its grain bins at more than $1 million. After the case was appealed to the Ohio Supreme Court, the Ohio Farm Bureau filed an amicus brief in the case, stating some of its members previously had their grain bins listed as taxable structures while others did not.

“I was almost on a county-to-county basis,” said Mandy Havenar, organization director for the farm bureau in Clark County.

The state farm bureau asked for all grain bins to be uniformly classified as personal property.

Metamora argued that corrugated steel storage bins are not buildings or permanent structures and therefore cannot be taxed as real property. They described them as “modular and mobile” metal structures bolted to concrete platforms, which hold, aerate and process grain to control humidity.

The court decided the bins fall under the category of “business fixture,” which is a type of personal property.

A business fixture has previously been defined by the state General Assembly as “an item of tangible personal property that is permanently attached to the land or to a building, structure or improvement and primarily benefits the business conducted on the premises,” according to the court’s decision. The legislature has expressly defined the term to include storage bins, the court determined.

The decision does not apply to grain silos or elevators, which continue to be designated as structures and taxed as real property.

In a statement on her website, Bailey explained that in order to qualify as personal property, a grain bin must be modular and portable, capable of being assembled and disassembled, and there must be a market for the personal property.

Farmers are able to take apart and sell grain storage bins, Baird said, making them much different than silos, which are permanent structures on a property.

Federer compared the bins to a freezer used by a business to store goods, which is personal property.

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