Farmland Access Hub Network Navigators

Transcription

1 Farmland Access Hub Network Navigators

2 Agenda The problem Le1 - vs- Right Financial/Asset Readiness Basics of Land Tenure Financing Basics FSA Next Steps Q&A

3 What s the Issue? Farmland is Less Available: In Minnesota alone farmland availability (# of parcels sold per year) is down 69% since (Source: MN Land Economics) Farmland is More Expensive: In Iowa, farmland is three Tmes more expensive than it was in 1990, even a1er adjustng for inflaton. (Source: Iowa State Farmland Values Survey) Farms are ConsolidaDng: In Wisconsin since 1990, the number of farms has decreased by 14%, a net loss of over 400 individual farms per year. (Source: USDA NASS) Access barriers gender, race, marital status, age

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5 Asset Readiness Financial Personal Technical

6 Basics of Land Tenure DefiniTon to hold Farmer will need Security Equitability Affordability Path for building equity Flexibility

7 Land Access Methods This decision tool organizes the common and less common farmland access methods that you might consider on your path to secure land tenure into three basic categories. The essential variables for each are: the division of interests (rights) in the property; the legal instruments and arrangements; and the parties to the agreement. Most traditional and innovative land tenure arrangements will fit into one of these three categories. The purpose of this tool is to provide an organized way of thinking about and comparing land tenure methods to help you make informed decisions. For more details, see our resources online at LandForGood.org on the Farm Seekers page under Toolbox. WHAT IS MY GOAL FOR ACCESSING MY FARMLAND? I want to own a farm now (OWNERSHIP) I want to own a farm in the future (PATH TO OWNERSHIP) I want to rent a farm (TENANCY) WHICH ARRANGEMENTS MIGHT WORK FOR ME? Sole Ownership Whole Shared Ownership Interests Partial Ownership Interests Path-to-Ownership Options No Interests (Rights) in Land Leasehold Interest in Land Farmer acquires title to land; known as Fee Simple Ý Outright Cash Purchase Ý Financed purchase with conventional or alternative financing Ý Seller-financed Ý Gift from a family member or other Ý Inheritance from a family member or other A group of farmers, or farmers with non-farmers, forms a legal entity to own the farmland. Farmers run individual or joint operations on land rented from the entity Ý Cooperative Ý LLC Ý Corporation Farmer and other entities own different interests or rights in the land Ý Ground lease where entity owns land; farmer owns structures and rents land Ý Life estate where nonfarmer retains rights to occupy Ý Easement where entity holds: Ý Development rights Ý Other easement Farmer purchases a specific farm over time Ý Lease-to-own with right of first refusal or purchase option Ý Land contract (aka installment sale) where farmer pays landowner toward purchase Ý LLC, coop or corporation within which equity in the land is gradually transferred to the farmer Ý Gift of land over time Farmer has agreement granting permission to use the land (technically not a tenant) Ý License Ý Permit Ý Memorandum of Agreement Farmer (tenant) has a contractual agreement assigning use rights and responsibilities; may be written or oral Ý Short-term lease Ý Long-term lease Ý Ground Lease where entity owns land; farmer owns structures and rents land WHO MIGHT BE INVOLVED? Ý Private bank Ý State/Federal lender Ý Seller-financer Ý Community/Alternative lender Ý Family/trust Ý Employer Ý Other private landowner Ý Other farmers Ý Community members Ý Investors Ý Family members Ý Community land trust Ý Conservation land trust Ý Other Non-profit Ý Public agency Ý Private party Ý Investors Ý Private landowner Ý Family Ý Non-profit Ý Government entity Ý Investors Ý Private landowner(s) (individual, family or group) Ý Public/Gov t entity Ý Non-profit Ý Other landholding entity Ý Private landowner(s) (individual, family or group) Ý Public/Gov t entity Ý Non-profit (e.g., land trust, school) Ý Investors Ý Retired farmer 2017 Land For Good

8 LEASE vs OWN Income/Expense own rent TOTAL FARM INCOME $330,000 $330,000 OperaTng Expense $240,500 $240,500 DepreciaTon $20,000 $10,000 Interest $25,000 0 Rent 0 $21,000 Taxes $9,000 $1,500 TOTAL $297,500 $273,000 Income $32,500 $57,000 Principal $25,000 0 ResidenTal Rent 0 $12,000 NET INCOME $7,500 $45,000

9 Finding your Farm Define it Talk about it Look for it in obvious places Be creatve and look in not so obvious places Be flexible on the non essentals but not on what you really need Be ready for it (skills, finances, knowledge, mentors, experience)

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12 Necessary Desirable OpTonal

13 Land Suitability

14 Lease Examples One year lease Three year rolling lease Five year lease Ground Lease When possible match your lease type to your specific land tenure needs for appropriate land tenure security.

15 Elements of a good lease 1. The ParDes 2. DescripDon of the Property 3. DuraDon of the Lease 4. Rent 5. Taxes 6. UDliDes 7. Permi[ed and Prohibited Uses 8. Entry 9. Maintenance 10. AlteraDons and Improvements 11. Stewardship and ConservaDon 12. SubleVng 13. TerminaDon 14. Default 15. Monitoring and ReporDng 16. Insurance and Liability 17. Dispute resoludon

16 Buying Farmland

17 Financing Understand your farm finances Understand your personal finances Understand the costs of rentng vs. owning Does your chosen opton match what you can afford? If not, how can you re- create your goals? Long term lease? ConservaTon easement? Co- ownership? Understand financing optons USDA- FSA- Direct Farm Ownership Loans, (Loans up to $300,000) Can be combined with other financing. Farm Credit (non governmental lending agency) Banks Compeer Non traditonal - Iroquois Valley Crowd funding (gi1) Investors (debt, equity, revenue share, RegulaTon A Jobs Act) Family Loan Agriculture ConservaTon Easments

18 FSA Loans Micro Loans/OperaTng Loans- generally used for equipment or operatng expenses, up to 7 year term Farm Ownership Loan OpTons 100 % FSA loan bank/fsa loan (5% down payment by farmer) Can be used at a land aucton if working with an FSA agent ahead of Tme Loan approval is on a per property basis, not a blanket approval for any property Guarantees Used to guarantee the loan that others (bank or other source) is lending

19 Le^ - &- Right Face your finances Own or lease? Decide on necessary The right arrangement Knowing what you need Finding good land possibilities Finding just the right one Negotiating lease or purchase Make friends with your finances Know yourself, your family Tap your community Own the desirable and optional Good relationship = good land access arrangement If leasing, follow the lease and adapt

20 Fill out intake form goaarmland.org How are you hoping we can assist you with land access or tenure? What are your goals for farming? Briefly describe your background in farming. What is your Tmeline for farmland access?

21 Iowa Kate Edwards Renewing the Countryside Minnesota Brer Olson Renewing the Countryside Minnesota Bob Kell Main Street Project Se habla español Wisconsin Jennifer Nelson Midwest Organic & Sustainable EducaTon Service Cell: goaarmland.org