Roundtable 2012

Farmland preservation Roundtable 2012 meets in NJ

LAMBERTVILLE, NJ – Farmland preservation program administrators and others from Maryland, Pennsylvania, New Jersey, Ohio, Delaware and West Virginia met in this Delaware River town in Hunterdon County on Sept. 6 and 7 to get advice from their peers and discuss issues and topics of concern. Eighteen individuals attended the invitational Roundtable 2012, organized by FPR publisher Deborah Bowers.

Mike McGrath, recently retired from directing the Delaware program, said the 25-year release clause serves the public interest and that as long as the land has a high value for agriculture, no property owner would be able to demonstrate it was not viable for agriculture.

First-time Roundtable participants included Brian Schilling, assistant professor of agricultural, food and resource economics at Rutgers University and assistant Extension Specialist of Agricultural Policy at Rutgers Cooperative Extension. Schilling’s research has been focused in recent years on farm viability in New Jersey, farmland preservation and ag economic development at the urban-rural fringe. He recently studied farmland valuation and affordability. Also attending for the first time was Denise King, executive director of the Ohio farmland preservation program, and Ralph Robertson, program manager of the Carroll County, Md. program.

Robertson provided the Roundtable’s first presentation, outlining his program’s innovation on the use of installment purchase agreements, which this year will pay easement sellers 5.25 percent tax free interest for 20 years on offers of 40Ralph Robertson explains his county’s installment purchase programpercent of appraised fair market value. The offer amount for each project is secured through purchase of a zero coupon bond. The high rate of interest doubles the offer amount at the end of the period, and was chosen by half of 32 applicants in the latest application round this Spring. The other applicants chose to receive lump sum payments. Robertson said he and former program assistant Jeffrey Everett, present at the Roundtable, devised the arrangement, referred to as a discounted, leveraged installment purchase agreement (IPA) several years ago when calculations revealed that continuing with traditional IPAs, which paid market rate interest over 10 or 15 years, would not attract the county’s best farm owner/operators and would take too long to reach the county’s goal of preserving 100,000 acres. In 2011, offering six percent interest on a 40 percent of FMV offer, the county preserved 4,598 acres. The interest had to be adjusted downward this year due to the cost of zero coupon bonds, Robertson said.

The installment purchase approach to preserving farmland was originated by Daniel P. (Pat) O’Connell now with Evergreen Conservation Finance, in 1989 for Howard County, Md. A number of local and state governments adopted the use of IPAs over the last 20 years including Harford and Frederick Counties in Maryland, Burlington County, NJ, and the City of Virginia Beach.Most Roundtable participants representing state and local governments said their funding streams appear to be secure for the upcoming year despite the recession.

Jeff Swinehart of the Lancaster Farmland Trust (LFT) said his organization does well with challenge grants from Lancaster County, which have been in amounts of between $500,000 to $1 million “with no strings attached.” The LFT has ongoing corporate sponsors as well, including a local restaurant chain that donates a portion of sales of local-ingredient dishes to LFT, and from Turkey Hill, a Lancaster County ice cream manufacturer whose slogan “Imported from Lancaster County” boasts of the county’s reputation for bucolic scenery. Turkey Hill agreed that LFT’s work in preserving that scenery was worth a dedicated portion of their sales, amounting to about $50,000 annually.

Tom Daniels, FPR senior contributing editor and professor at University of Pennsylvania’s Department of City and Regional Planning said even government programs could be looking to private funds to support their efforts, and that private money from entities that benefit from preserved land could be the driver of land preservation in the future.

Doug Wolfgang of the Pennsylvania Bureau of Farmland Preservation said an attempt to divert his program’s $20.5 million in dedicated cigarette tax revenues to the state’s general fund during the legislative and budget session this year was itself diverted much to the relief of program proponents.

Carol West of the Maryland Agricultural Land Preservation Foundation (MALPF) said that program continues to lag from having its funding diverted. The program was established with a dedicated source of revenue from the state’s real estate transfer tax and an agricultural land conversion tax, but both sources have lost their status as dedicated streams and have been siphoned off by the legislature for the last six years. “Backfilling” the hole with bond funds that don’t match the amount taken has left the program board repeatedly opting to skip a program year in order to combine two funding years.

New Jersey is operating on ample bond funds approved by voters in 2009 and released by Gov. Christie this year and last. Susan Payne, executive director of the State Agriculture Development Committee, said the program this year will reach its 200,000-acre milestone. The program continues to struggle with uses on preserved farms allowed by the legislature, and violations that require legal action. One violation involved excavation that removed a hilltop to build greenhouses. Another involves a winery owner’s onsite promotional activities that pit the definition of agriculture against commercial uses.

Carol West said the Maryland program is dealing with violations involving subdivision of land, particularly properties that include multiple parcels. Under the law, owners must receive permission to subdivide, and remaining acreage must be 50 acres or greater. Doug Wolfgang of the Pa. program said a deed of merger at settlement could avoid subdivision problems.

Denise King said the Ohio program has benefitted greatly from the federal program, receiving the second highest amount of the funding from the Farm and Ranchlands Protection Program.

Matt Knepper, director of the Lancaster County Agricultural Preserve Board, said his program has $3 million in bond funding from the county commissioners and $2 million from the state this year. While a permanent source of dedicated revenue is desired at the local level, there is continued difficulty in identifying the source, he said. There are 200 farms waiting in the program, which has preserved more than 70,000 acres and had an average cost per acre of $2700 last year, down from the year prior.

Lavonne Paden said the West Virginia program is supported by a recordation tax that brings in $800,000 yearly and is “very stable.” Of 55 counties, 20 have now created programs supported by the state-enabled local real estate transfer tax. Those county programs, along with the West Virginia Agricultural Land Protection Authority, have preserved to date 17,129 acres. In 2011, $3.4 million was spent on easements.

Mike McGrath presented Delaware’s new Young Farmer Program that provides no-interest loans to farmers between 18 and 40 to purchase a farm in Delaware with at least 15 tillable acres and zoned for agriculture. The assistance will pay 70 percent of easement value up to $500,000 in the form of a 30-year loan.

Jennifer Dempsey of the American Farmland Trust presented an outline of how the farm bill will change how the NRCS assists with the cost of easements. The farm bill will merge the former Farm and Ranchlands Protection Program with the Grassland Reserve Program to create the new Agricultural Land Easements (ALE) program. Changes that limit federal involvement in acquisitions and valuation are expected to improve collaboration with localities and land trusts.

Roundtable participants spent two days exchanging ideas and aiding each other with advice and ideas on solving problems and addressing issues.

The group also heard from Steve Finn and Jane Magne of the Bucks County Foodshed Alliance that works to promote use of local foods, some of which comes from preserved farms. Bucks County, across the Delaware River from Hunterdon County, has preserved about 12,000 acres.