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Lancaster term easement terminated

BY TOM DANIELS, Senior Contributing Editor

 

To prove my point, a farmer here in Lancaster County recently decided to terminate his term easement, which dated back to the mid-1980s when the County offered $250 an acre for a 25-year term easement. The catch was that to end the term easement, the landowner had to pay back the $250 an acre plus six percent interest. So, now one landowner has done it and there is one less preserved farm (of 46 acres) in Lancaster County.

The good news is that of the County’s other 20 term easements, 18 have already made the transition to permanent easements, one is becoming a permanent easement, and the final one could go permanent or be terminated.

Pennsylvania’s county-state farmland preservation program offered term easements with permanent easements when the program began in 1989. But there were no takers for the term easements, in large part because the payment was much less attractive than for a permanent easement. Pennsylvania subsequently dropped the term easement option. Some farmers have sold 30-year term easements under the federal Wetlands Reserve Program at 75 percent of the appraised value of a permanent easement. But most landowners have sold permanent easements on their wetlands.

Some farmers have expressed interest in term easements because they are uncertain about what will happen to the neighborhood and would not want to continue farming if they were surrounded by development. The clear challenge to farmland preservation programs is to create large contiguous blocks of preserved farmland that keep non-farm development away and maintain a good local business climate for farming. The farm with the terminated easement in Lancaster County is adjacent to a permanently preserved farm, thus detracting from a contiguous block. However, the farm with the terminated easement is still zoned for agriculture at one house per 25 acres, so only one additional house could be built on the property. But the property conceivably could be re-zoned to another use. 

Pennsylvania, following Maryland’s lead, included a clause in the Deed of Easement that allowed a landowner to apply to buy back the easement at its appreciated value any time after the easement had been in place for at least 25 years. The thinking was that a landowner would have to prove, to the satisfaction of multiple decision-making bodies, that the property could no longer host a viable farm operation. Maryland deleted this option in 2007 as did Pennsylvania last year. Still, this deletion is not retroactive. Maryland‘s farmland preservation program is more than 25 years old. Pennsylvania’s is 23. Thus, it may happen that some farmland owners in Maryland and Pennsylvania will try to turn their permanent easements into terminated term easements.

This is a situation that bears watching. 

 

Delaware reaches 100,000-acre milestone

Delaware’s program was well established before a single acre was preserved through easement, due to the difficulty of getting the program funded. But over time, funding has been fairly consistent and adequate to the task, if not as high-dollar as in other states. Of the state’s three counties, farms located in the middle county – Kent – have been the most eager to participate over the history of the program. All purchases have been at a deep discount – an average of 55 percent of fair market value. The average price per acre over the last five years has been $4,352, and $1,741 since the program’s beginning.

The Delaware program has been progressive and innovative. A recent addition is the Young Farmer Program, funded with $3 million last year. The program helps beginning farmers purchase land that is put into conservation easement, similar to the Critical Farms programs operated in several Maryland county-level programs. The Delaware easement program was budgeted at $10 million for FY 2012.

“Delaware’s achievement of over 100,000 acres in permanent farmland preservation easements closed is a notable milestone,” said Michael McGrath, who retired as program director last year. All of the acreage preserved in Delaware was completed or begun under McGrath’s tenure. McGrath was also responsible for planning and setting up the program in the late 1980’s and early 1990s, when the Maryland program, just next door, already had more than 10 years of ag easement experience, along with other states, such as Massachusetts and Vermont. Pennsylvania and New Jersey got underway in 1989.

“What’s most remarkable is the relatively short time that Delaware has been in the easement business,” McGrath continued. “My little state has preserved such a large proportion of our farmland that we will continue to be one of the top farm states far into the future.” McGrath said that while Delaware is small, a large percentage of the land is in crops –  “which places us in the top ten farm states with folks like Iowa and Kansas,” he said.

McGrath warns, however, that Delaware and other states, should avoid the temptation to put farmland preservation dollars in other places to shore up weak budgets.

“I’m reminded of the funny tale often told in my Scouting life to warn us about giving up when we are heading for a difficult goal.  In Scouts we always do swim tests at summer camp.  Here’s the scene: we’re down at the bay in the swimming area where there’s a floating dock set up 100 yards from shore.  The swim test consists of swimming out to that dock.  So, one fine day this young Scout sets out on his swim test, lifeguards attentively watching.  The young boy swims out strongly, but after 75 yards or so his arms begin to tire.  He hollers out, ‘I can’t make it!’ He turns around, defeated, and swims back to shore!  Get it?  Like this young swimmer, now is no time to turn back!”

McGrath may have been referring to a move, recently thwarted, in Pennsylvania, to divert that state’s dedicated farmland preservation fund to help the state survive dwindling revenues and a tightening budget. And in Maryland, farmland preservation funding is buckled down in its fifth year of fund losses as the governor and legislature continue to prop up that state’s general fund.

McGrath noted that farmland preservation has more political power than its proponents may know. He noted that Delaware Gov. Jack Markell’s reelection campaign literature features agriculture, open space, young farmer programs and farmland preservation as programs he fervently supports.

“Smart political strategists know that these issues play well with a broad electorate.  Almost unique among leading political issues, food and farmland resonate with farmers, rural folks and urban dwellers.  These issues are a political bonanza for leaders who embrace these causes.  Preservation professionals need to capitalize on these pluses and push political leaders to continue swimming toward the goal:  preserve all the farmland we can.”

Since McGrath’s departure, the farmland preservation program has been overseen by agriculture department deputy director Austin Short.

 

Wisconsin approves new Ag Security Areas

MADISON, WI – Wisconsin has approved five new Agricultural Enterprise Areas (ASAs) and expanded two others under an order signed by Ben Brancel, Secretary of Agriculture, Trade and Consumer Protection.

The new areas total about 171,600 acres in seven counties and 28 towns, with 330 landowners petitioning for the designation, which will become official Jan. 1. Wisconsin now has 22 agricultural enterprise areas statewide, totaling almost 510,000 acres in 17 counties and 55 towns. Nearly 750 landowners have signed petitions seeking the designations.

Agricultural enterprise areas, or AEAs, are part of Wisconsin’s farmland preservation program, which also includes purchase of development rights, income tax credits for land protection and certification of farmland preservation zoning.

ASAs were designed to encourage agricultural land retention and to promote agricultural economic development. Farmers owning land within an AEA can receive tax credits in exchange for signing an agreement to keep their land in agricultural use for at least 15 years.

This is the third round of AEA designations. Under the Working Lands Initiative enacted in 2009, the department can designate up to one million acres as AEAs. Local landowners, with support of local governments, must seek the designation, which bestows eligibility for tax credits.

Wisconsin’s Farmland Preservation Tax Credits are offered at $5 per acre for land protected under farmland preservation agreements and located in an AEA, $7.50 per acre for land protected through farmland preservation zoning, and $10 per acre for lands protected by both agreements and zoning. For tax year 2010, approximately $18 million in tax credits were claimed. The average of all claims amounted to $1,145.

Wisconsin’s Purchase of Agricultural Conservation Easements (PACE) program was enacted in 2009 by an enthusiastic legislature and then immediately fell on hard times under then newly elected Gov. Scott Walker’s budget ax. While contracts for PACE were finally allowed to be completed, no new funding has been allocated. The 2010 program round, on ice while fighting to keep its funds, is still finishing up the 15 projects that will put about 5,600 acres under easement.

The new and expanded AEAs put large contiguous areas into eligibility for tax credits. The regions are described as:

Antigo Flats AEA, Langlade and Marathon counties This expands an existing AEA, adding 11,886 acres and bringing the total to 74,104 acres in the towns of Ackley, Antigo, Neva, Peck, Polar, Price, Rolling, Vilas and Harrison. Goals include developing local and regional markets for certified potato and small grain seed, dairy products, wood technology and other local commodities. Petitioners also want to provide technical and educational assistance to agribusinesses, develop agritourism, and help farmers protect natural resources.

Elba-Portland AEA, Dodge County This new AEA covers 38,580 acres in the towns of Elba and Portland. In this cash cropping and dairy region, the petitioners’ goals are to maintain a strong agricultural community that will keep agribusinesses and attract new ones, and encourage new investment in farming operations.

Halfway Creek Prairie AEA, La Crosse County This is also new, encompassing 1,647 acres in the towns of Onalaska and Holland. Cash-cropping and dairy and swine operations dominate agriculture in this region. Along with protecting existing farmland, AEA goals include fostering bio-energy production, preserving land and water resources, and maintaining existing agricultural markets and suppliers.

Heart of America’s Dairyland AEA, Clark and Marathon counties This expands an existing AEA by 36,999 acres, bringing the covered area to 97,984 acres in the towns of Mayville, Colby, Unity, Beaver, Loyal, Brighton and Hull. The AEA petitioners want to preserve the region’s agricultural heritage, assure production capacity, and provide tools to minimize converting farmland to non-farm uses. They also aim to develop markets for local products.

Pecatonica AEA, Lafayette County Parts of the towns of Argyle, Blanchard and Lamont are included in this new 45,776-acre AEA. Petitioners here want to diminish barriers to new farming businesses, encourage multi-generational farming, and attract cottage agricultural industries. They also want to provide training for local workers in bio-products and food industries, and explore the potential for growth of technologies for energy efficiency and renewable energy on farms and in rural areas.

Shields-Emmet AEA, Dodge County 16,051 acres are included in this new AEA, covering portions of the two townships. Petitioners in the AEA seek to encourage farmland preservation agreements and soil and water conservation plans as a means to improve farm operations and support their rural identity. They also encourage non-traditional farming practices and investing in modernized farm equipment.

Vienna-Dane-Westport AEA, Dane County This new AEA consists of 20,681 acres in the three townships. Goals include maintaining strong agricultural land use through the use of land use tools that limit encroachment of nonfarm development by creating incentives for farmers to sign farmland preservation agreements. Petitioners also wish to expand opportunities for new markets and new uses for agricultural products and by-products.