Agricultural Easements

An agricultural conservation easement is a voluntary, legally binding agreement between the landowner and a qualified third party that is placed on agricultural land to ensure that the land remains in agricultural production by removing most or all of its residential development potential. The parameters of this transaction are determined on a case by case basis to reflect the unique characteristics of each situation. Some owners of farmland donate the value of the development rights, some require compensation of the full value of the rights being removed and most fall somewhere in between by donating varying percentages of the value. The particular details of each transaction offer opportunities for compensation in many ways ranging from tax benefits from donating value, tax benefits from reducing the value of the farm "estate", to proceeds or income that may be received. The easement is a restriction that is recorded with the property deed. The length of time for easements can vary. Farmland easements that receive County or state funds must be permanent. The terms of the easement remain in effect for the duration of the easement regardless of any changes in ownership.

cowsIn Chester County, a majority of agricultural conservation easements are held and enforced by the Brandywine Conservancy (Brandywine). These transactions were consummated privately without public funding. Since the late 1980's Chester County government has been actively involved in purchasing agricultural conservation easements and has preserved almost as many acres as Brandywine. The County's involvement in this endeavor is linked to the Commonwealth of Pennsylvania's statewide Agricultural Easement Program which was established in 1988 to protect productive farmlands from development through the use of agricultural easements. This Program was built on the Agricultural Area Securities Law (also known as PA Act 43 of 1981) and was established PA Act 149 of 1988 and is administered by the State Department of Agriculture. It initially provided $100 million in bond funds for the purchase of development rights on agricultural land. In 1993 two percent of the tax on cigarettes was dedicated to fund the state's farmland purchase of development rights program. This was eventually changed to a fixed amount of $20,485,000. Additional state funds have been allocated from the Environmental Stewardship Funds and interest on Clean and Green rollback taxes. Since 1994, this program has funded the preservation of 4,364 farms comprised of 470,155 acres statewide through February 2013.

In 1989, Chester County established the Chester County Agricultural Easement Program with a $400,000 investment dedicated to the state program and continues to fund a variety of farmland preservation efforts on an annual basis. The partnership with the Commonwealth, and its corresponding enabling legislation, required establishment of an Agricultural Land Preservation Board (ALPB) to oversee the expenditure of farmland preservation funds provided through Act 149.

The responsibilities of the County's ALPB has evolved over time. The most significant change occurred in 2001 when the ALPB took on additional duties. The Chester County Commissioners asked that they initiate and oversee a second farmland preservation program dedicated to the northern part of the County. In roughly three years 16 farms were preserved totaling 1,242 acres in partnership with local/township governments. In 2004 this successful new program was expanded to the remainder of the County as a complement to the Commonwealth. An additional 81 farms totaling 5,561 acres have been preserved through the Countywide Challenge grant program. Since the first agricultural easement was purchased in 1990 over 300 farms comprised of over 30,557 acres have been preserved through ALPB administered programs.

All County programs administered by the ALPB include a ranking system that takes in to account the agricultural productivity of the soil, the degree to which best management practices are implemented, the percentage of value the owner is able and willing to donate, the size of the farm, its location relative to other preserved farms, and other relevant quantifiable characteristics. All ALPB programs analyze the soil productivity using the Land Evaluation Site Assessment technique developed by the United States Department of Agriculture. Land Evaluation Site Assessment evaluates farm properties based on soil type, slope and other features. For example, farms that have gently sloping prime farm soils receive higher scores when applying for the program, while farms with steeper topography receive lower scores. To be eligible for consideration in any of the ALPB administered programs, farms must be at least 10 acres and be located within an Agricultural Security Area. This program has proven to be so successful that the list of applicants has averaged approximately 100 in recent years while available funding can only begin to address this interest. For example, fourteen (14) farms were preserved through ALPB administered funds in 2012. While there has never been enough funding to work with all of the landowners who wish to participate, the number that can be preserved varies based on many factors such as the size of the farm and fluctuations in real estate values.

The ALPB accomplishments have propelled Chester County to fourth in the state for farmland preservation, but that is only part of the story. Chester County is unique not only in its Challenge Grant Program, but it also funds preservation of farmland through its Municipal Parks & Open Space Grants (Municipal Grants) as well as grants to nonprofit conservation organizations through the Preservation Partnership Program (Conservancy Grants). Three County grants over $1 million in total have been spent through the Municipal Grants program to preserve 277.5 acres. Roughly $2 million has been granted to the Brandywine Conservancy (8), Natural Lands Trust (5), and French & Pickering Creeks Conservation Trust (1) resulting in the permanent preservation of 773 acres of farmland. Through this unique combination of programs and partnerships, Chester County is ranked fifth in the country when it comes to locally operated farmland preservation programs.

When a municipality or another organization protects a parcel of farmland they are also protecting all of the open space benefits that the farmland provides to its surrounding community. These benefits may not be as extensive as those found in natural woodlands or marshes, but they are nonetheless valuable. Conversely, when farmland is developed, its open space benefits are irrevocably lost. For this reason the protection of farmland should be viewed as a mechanism for protecting not just the location of a farmer's business, but also the open space benefits that farmlands provide to the entire community.

The farmer also benefits from this tool in a variety of ways. From the perspective of the farmland owner, they may benefit from diversifying their asset base from just real estate. The sale of the development rights creates a situation that allows the owner to continue to farm and live on the property and receive income from the farming business after being compensated for the farm's development rights.

The sale of development rights can also be very helpful in managing the assets of a farming enterprise. Selling development rights can provide an influx of cash for upgrading equipment, expanding the business (whether that is by acquiring additional land, buying additional livestock, constructing or expanding buildings that house the farm operation, buying new equipment), solidifying the finances by paying off or reducing debt burden, expanding advertising for the products or any number of purposes beneficial to the farmland owner and operator. Selling the development rights can also serve to lower the value of the land – thereby making it affordable for other farmers to purchase.

Advantages

produceProtecting farmlands through agricultural conservation easements have the following advantages:

Limitations

Protecting farmlands through agricultural conservation easements have the following limitations:

How to Use This Tool

Municipalities can facilitate the use of the agricultural conservation easement programs in many ways. One fundamental step is by adopting Agricultural Security Areas and keeping them up to date. These areas should be directed to areas with slight or moderate slopes and with productive agricultural soils, and should also be located on currently-productive farmlands. Townships can also provide funding in partnership with the County which will increase its priority in the County programs and help each municipality stretch limited conservation dollars. They can support continued County, state and federally funding for these programs and they can also make sure to allow for the full array of land uses that are required to provide a farmer friendly environment.

Agricultural conservation easements are most commonly used in agricultural or rural settings. However, advances in technology and the "buy local" movement have made it possible to cultivate farm produce in urbanized areas and an urban farm that meets size requirement and other criteria could possibly be eased. It is this constantly evolving nature of farming that has led to the wide variety of programs and funding opportunities at the County level.

Examples

Municipalities who have the largest amount of acres protected by an agricultural conservation easement through the ALPB are Highland, West Fallowfield, East Nottingham, Lower Oxford, Upper Oxford, and West Nantmeal Townships. West Marlborough also contains significant amounts of agricultural easements if the Buck & Doe/Brandywine Conservancy is included.

Related References

Related Tools

Landscapes2 Relevance

Agricultural Easements can apply to any Landscape but usually occur on Agricultural or Rural Landscapes. The protection of viable farmland is consistent with the Landscapes2, agricultural goal: Promote environmentally and economically sustainable agriculture through which agricultural soils are conserved, agriculture is recognized as an economically viable land use, and the industry of farming is encouraged at an appropriate scale throughout the county.

The protection of farmland in Chester County creates opportunities for sustainability by establishing food production in close proximity to the major population centers of Philadelphia, New York City and the Baltimore/Washington DC area. The proximity of the County to the major markets reduces transportation related fuel consumption.