Appendix J Agricultural Land Preservation in Other States

Appendix J Agricultural Land Preservation in Other States

Appendix J Agricultural land preservation in other states Many states across the U.S. are working to protect agricultural land from development. The traditional approach of regulatory zoning combined with innovative financial instruments and tax incentives have led to a number of successful programs across the country. This section provides a review of policy tools and programs for protecting agricultural land, focusing on those most relevant to the Kaua i IAL study. A. Overview of Policy Tools Exclusive agricultural zoning is the most restrictive technique for preserving farmland, and often the least popular to implement. This regulatory approach to zoning raises the potential issue of eminent domain, or the involuntary but compensated taking or threat of taking of lands for a public purpose. The 2005 HDOA report to the Legislature on Act 233 states that legal review did not discern a satisfactory method of protecting IAL against this threat. While specific areas designated by Agricultural Protection Zones are often referred to as districts, they should not be confused with voluntary agricultural districts created by farmers. Agricultural Protection Zones are imposed by local ordinances that specify residential densities and permitted uses, and sometimes include site design and review guidelines. Agricultural districts are designed to stabilize the land base for agriculture and are created voluntarily by landowners wishing to protect commercial agriculture in their area. Programs are authorized by state legislatures and implemented on a local level. Agricultural district programs are intended to be comprehensive responses to the challenges facing farmers in developing communities. There are currently 19 district programs operating in 16 states. Conservation easements are legal agreements between a landowner and a government agency or land trust organization to protect land from development. The landowner maintains possession of the property, but pays lower taxes in exchange for restrictions on real estate development and certain types of activities. As of May 2009, 27 states have authorized statelevel purchase of agricultural conservation easement (PACE) programs. State purchase of conservation easements is often accompanied by the creation of agricultural districts, to ensure that productive farmland is preserved in contiguous blocks. While Hawaii s IAL policy differs from PACE programs on the specifics of landowner compensation, the criteria and process of land selection and acquisition in various states established PACE programs provides insights for Hawaii. Purchase of Development Rights (PDR) programs are similar to conservation easements in that they also allow the landowner to retain ownership of the property and all remaining rights to the land, including the right to farm. With PDRs, however, the purchaser (in many instances a land trust or a state agency) buys the right to develop the land as opposed to purchasing an easement restricting development. That purchaser may then transfer the right to develop the farmland to another location better suited for development or may retire the right to develop the farmland through a voluntary conservation easement. Transfer of development rights (TDR) programs allow landowners to transfer the right to develop one parcel of land to a different parcel of land. Local governments undertake TDR programs to use the market to implement and pay for development density and location decisions. TDR programs allow landowners to sever development rights from properties in government designated low density areas, and sell them to purchasers who want to increase the density of development in areas that local governments have selected as higher density areas. TDR programs do not reduce the need for zoning and are typically more complex to administer. Communities may not support TDR programs, and local governments may have to invest in community education programs to explain them to the public. Although the permanency of TDR programs can be an advantage, it may also be a liability, since a community s land use needs change over time. Right to farm laws to protect farmers from legal actions related to the agricultural use of their property. The incompatibility of new residential and commercial developments with existing farm activities can lead to complaints and even legal actions against farmers. Right to farm laws Kaua i IAL Study Page J 1

seek to preserve agricultural operations, alleviate neighbor on neighbor conflicts, and protect established agricultural operations from nuisance lawsuits. B. State by State Review The following section provides a state by state review of some existing farmland protection policies. Maryland and Pennsylvania have well established programs involving agricultural conservation easements, while California and Oregon have effective agricultural districts. Other states examined include New York, New Jersey and West Virginia. Maryland Background. Maryland s two highly successful farmland protection programs have collectively preserved over 336,000 acres of prime farmland at a cost of $552 million (Farmland Information Center 2009). Created by the Maryland General Assembly in 1977, the Maryland Agricultural Land Preservation Foundation (MALPF) was the first statewide farmland preservation program in the US (MALPF website 2010). In 1997, the Rural Legacy Program began to provide local governments with funding to purchase transferable development rights, helping direct development away from important agricultural land. Both programs are part of the state s Smart, Green and Growing initiative to contain urban growth and boost economic vitality (Maryland Department of Agriculture website 2010). Structure and Funding. MALPF is administered through the Maryland Department of Agriculture, and is based on a partnership with local governments that appoint advisory boards of five members to assist in the administration of the selection process and review requests in each county. State agricultural districts initially helped counties control the rate and location of development, acted as a mechanism to ensure eligibility for program participation, provided a pool of "pre approved" potential applicants for each year's easement acquisition cycle, and helped counties and the State anticipate future funding requirements. However, in 2007 MALPF decided to phase out state level districts in favor of county level districts, as they had become more of a barrier to preservation than a benefit (MALPF website 2010). Criteria. The eligibility criteria for conservation easements through MALPF are: 1) Size minimum of 50 acres (among one or more landowners), to preserve enough contiguous acreage for productivity and nearby farm related businesses; 2) Productivity based on soil classes, ground cover and specialized production; 3) Location land within the boundaries of a 10 year water and sewer service plan is generally not eligible; 4) Conservation and Management Plans for soil and forest; and 5) Commitment not to change the conditions of the property while the application is being reviewed. These minimum state level criteria may be superseded by the county requirements. One house per 100 acres for tenants fully engaged in the operation of the farm may be constructed after approval by MALPF (MALPF website 2010). Insights. Maryland s successful farmland preservation strategies are: build a broad base of support by involving the public, incorporate farmland preservation into comprehensive development plans, establish a working interface between state and county level administrators of the program, and be flexible to changes such as phasing out state level agricultural districts once they are no longer helpful. Pennsylvania Background. Pennsylvania is the most productive agricultural state in the Northeastern US with more than 50,000 farms and 7.7 million acres of crop and pasture land. It is frequently cited as one of the leading states in agricultural land preservation programs. Pennsylvania has invested over $510 million in preserving its farmland through conservation easements, involving county boards in the process (Farmland Information Center, 2009). In 2003 the Governor of Pennsylvania signed an executive order to protect prime agricultural land, which includes lands in active agricultural use currently or in the past three years, farmland (in order of priority) preserved by a conservation easement, located in an agricultural security area, enrolled in the Pennsylvania Farmland and Forest Land Assessment Act of 1974, designated for agriculture in a comprehensive plan and zoning ordinance, and with high land Kaua i IAL Study Page J 2

capability levels and unique farmland. HDOA is the lead agency for implementing the policy described above. A major component of Pennsylvania s strategy is the Agricultural Conservation Easement Purchase Program operated by the state through county Agricultural Land Preservation Boards. Established in 1981, Pennsylvania s Agricultural Security Area (ASA) program encourages individual landowners to collectively place their property in an ASA for seven years in order to gain eligibility for easement funds. This is similar to Maryland s (prior to 2007) inclusion of the Agricultural District component of the conservation easement application process, although relatively smaller in scope. Criteria. The state s minimum eligibility requirements for conservation easement applicants are that they are located in an agricultural security area of 500 acres or more, have contiguous acreage of at least 50 acres, have at least 50% of the soils available and capable for agricultural production, and contain the greater of 50% or 10 acres of cropland or pasture. Farms are ranked according to the Land Evaluation and Site Assessment (LESA) system developed by USDA, which includes soil quality, development potential, farmland potential, and clustering potential. Pennsylvania landowners who sell a conservation easement are required to have a soil and water conservation plan on the property at the time of sale and to update the plan every 10 years. Insights. Like Hawaii, Pennsylvania included specific language to ensure that lands with high soil quality and in active agricultural use are prioritized for protection. Oregon Background. Oregon s well developed farmland protection program began in 1973 with a policy set by the state legislature. The state s main tool for protecting farmland is the Statewide Planning Program, with standards set by the Land Conservation and Development Commission through the Farmland Protection Program. The program requires counties to apply the state standards through local comprehensive plans and land use ordinances. Counties must inventory agricultural land, designate it in the comprehensive plan, adopt policies to preserve it, and zone it Exclusive Farm Use (EFU). EFU zoning limits development that conflicts with farming, prevents fragmentation of agricultural land, and allows landowners to benefit from lower property taxes. Currently, 16.1 million of the state s 17.1 million acres of farmland is located within EFU zones, indicating the widespread implementation that Oregon has achieved (Oregon Department of Land Conservation and Development 2010). Criteria. Oregon allows for farm use and permitted non farm use activities within EFU zones, with the main emphasis on maintaining commercial agriculture. Farm use means the current employment of land primarily for obtaining a monetary profit from crops, livestock or any other agricultural or horticultural use. Farmland is classified according to soil productivity based on the U.S. Natural Resources Conservation Service s Soil Capability Classification System. Allowable non farm uses within EFU zones include commercial activities in conjunction with farm use, home occupations, and utility facilities necessary for public service. The state strives to minimize the amount of non farm use activity occurring in EFU zones. State standards now strictly limit new non farm dwellings in high value farm areas (Oregon Department of Land Conservation and Development 2010). The statewide Farmland Protection Program places limitations on the ability of any governing body to enact laws or ordinances that would restrict or regulate farm structures or accepted farming practices in farm use zones that are not within an urban growth boundary, unless the practices affect the health, safety and welfare of the citizens of the state (Oregon Land Use Law website, 2010). Insights. Oregon provides a good example of a long term strategy of incorporating farmland protection into the Statewide Planning Program. The more cooperation there is between different levels of government, the more likely IAL policy is to succeed at protecting viable commercial agriculture. The inclusion of certain non farm uses within the EFU zones accommodates a viable farming industry, and is flexible to changing needs and definitions. Kaua i IAL Study Page J 3

New York Background. New York was the first state to create a comprehensive agricultural district program to protect farmland and support the farming business (USDA website). Since 1996, the New York State Farmland Protection Program has spent $77 million to preserve 30,088 acres of farmland. According to a June 2010 Farmland Report from the American Farmland Trust, the Farmland Protection Program suffered a 50% budget cut for 2010 2011. With a backlog of $70 million in committed projects, this severe budget cut threatens the program s ability to preserve New York s farmland (American Farmland Trust 2010). Structure and Funding. The state s Farmland Protection Program created county farmland protection boards, which advise local officials about agricultural districts and PDR funding opportunities and create county land protection plans. Funds for the Farmland Protection Program are currently allocated from the state s Environmental Protection Fund, a dedicated environmental fund paid for with revenue from the state real estate transfer tax. Rensselaer County provides an example of a successful local effort to incorporate agricultural land preservation into a comprehensive county land use plan. Key aspects of their success are: broad support and consensus building process, a focus on the most strategic land, a mix of incentive based and regulatory land use techniques, techniques for agricultural economic development, and policy and funding support from the state. The plan identifies further goals: exploring funding sources for a PDR program and urging towns to consider funding mechanisms for local farmland protection efforts; developing a directory of technical assistance sources for farmers; promoting and/or providing tax relief incentives through towns, such as using agricultural assessment values when taxing farmland for services; expanding a farmer to farmer network and exploring shared farm labor arrangements. Insights. Rensselaer County hit obstacles along the way to a comprehensive plan, such as the challenge of forging consensus among disparate groups and finding staff time to work on the project. Through matching grants of $50,000 from the state, the county was able to construct a successful plan starting with some easily achieved elements, then use momentum to work toward more difficult policy goals. California Background. California has over 45 million acres of farmland, representing the country s largest farm industry. While the tax incentive program through the Farmland Security Zone legislation is the most relevant to Hawaii s IAL policy, the state has also preserved 40,784 acres of farmland since 1995 through its California Farmland Conservancy Program (CFCP), an agricultural conservation easement program administered by the state Department of Conservation (FIC Fact Sheet 2009). CFCP provides grants to local governments and private nonprofit organizations for the purchase of easements and for planning projects related to the preservation of farmland. Sonoma and Marin counties are cited as exemplary in their preservation of farmland through easement programs. Founded in 1980, Marin Agricultural Land Trust (MALT) was the first land trust in the US to focus on farmland preservation, providing a model for other counties (MALT website 2010). Easement Criteria. All applicants for an easement through the CFCP must meet the following minimum criteria: 1) the land must be large enough and located in an area with adequate infrastructure, market and services to sustain commercial agriculture, 2) the city or county has a general plan that shows commitment to farmland preservation, and 3) without conservation, the land would likely be developed in the foreseeable future (CFCP Enabling Statutes). Once the landowner has applied for an easement, the director of Conservation evaluates the proposal based on more specific site based criteria (CFCP website 2010). Tax Incentives. California has provided tax incentives to preserve farmland since the 1965 passage of the California Land Conservation Act, or Williamson Act, which taxes farmland within agricultural preserves based on the production of the property rather than its fair market value. The boundaries of an agricultural preserve, which must be at least 100 contiguous acres, are established by local governments and allow landowners to enter 10 year minimum Kaua i IAL Study Page J 4

agreements to keep land in agricultural use or open space in exchange for a 20 75% reduction in property taxes (National Governors Association Issue Brief 2007). In 1998, the state established Farmland Security Zones (FSZ) within existing agricultural preserves, to target productive agricultural lands for protection. Landowners within the FSZ enter into 20 year conservation easements in exchange for property tax assessments at 65% of the original assessment under the Williamson Act. Land that qualifies for FSZ: 1) must be currently in a Williamson Act contract, 2) must be requested by the landowner, 3) land must be designated as prime or unique farmland of local or state importance, 4) not within a city s sphere of influence unless expressly approved by resolution. (California Farm Bureau Federation 2010). Insights. California s Farmland Security Zones policy has effectively protected large contiguous blocks of agricultural land for commercial production. New Jersey New Jersey s State Agricultural Development Committee (SADC) administers a number of programs to protect agricultural land. The Farmland Preservation Program (FPP) provides grants to local governments and non profit groups to fund conservation easements, directly purchases farms and easements from landowners, and offers grants to landowners to fund up to half of the cost of soil and water conservation projects. The FPP has preserved 173,346 acres since 1985 through $757 million of conservation easements (Farmland Information Center 2009). SADC also administers the Right to Farm Program, oversees the Transfer of Development Rights Bank, and operates the Farm Link Program, which helps connect farm owners with farmers seeking access to farmland and farming opportunities (SADC website 2010). The program that most distinguishes New Jersey from other states is the State Transfer of Development Rights (TDR) Bank, which supports development potential transfers by acting as a clearinghouse to connect credit sellers and purchasers. The bank provides matching grants of 80% of the value of development potential from properties with in TDR sending areas (the areas targeted for development), financial guarantee for loans secured using development potential as collateral, planning assistance grants, and service as a development transfer bank for participating municipalities and counties (SADC website 2010). Another notable program is the County Easement Purchase Program, which allows landowners to sell development rights directly to their county. SADC funds the county through grants, providing 60 80% of the costs of purchasing development rights (National Governors Association Issue Brief 2007) Criteria. The main factors considered in easement purchase are: 1) soil quality as determined by USDA soil conservation service and NJ Department of Agriculture, 2) tillable acres, 3) boundaries and buffers with compatible uses, 4) local commitment, 5) size and density, and 6) degree of imminence of change to nonagricultural use and impact of conversion. The criteria list includes weight factors to indicate relative importance of specific criterion in relation to other criteria. Boundaries and buffers are given a higher weight than soil quality, which is likely more appropriate in New Jersey than in Hawaii. Structure. The SADC consists of 11 members six citizens appointed by the Governor with the advice and consent of the Senate, and five ex officio members. Four of the citizen members must be actively engaged in farming, and the other two represent the general public. Insights. New Jersey has a very comprehensive set of statutes found on the SADC website: http://www.nj.gov/agriculture/sadc/rules/ The TDR bank is a novel approach to directing development away from farmland, and is also well documented on the NJ Department of Agriculture website. West Virginia Background. The West Virginia Voluntary Farmland Protection Act was passed in 2000 with the intent of sustaining the farming community, making local products available to state residents, controlling urban expansion, protecting open space and enhancing tourism. The Act establishes a two tier system to allow landowners to voluntarily protect their farmland. A state Land Kaua i IAL Study Page J 5

Protection Authority was established under the Department of Agriculture to accept conservation easements from landowners. In addition, the Act allows the County Commission of each county to establish a county Farmland Protection Board to develop a local protection program and to hold easements. A conservation easement offer can be made to either the state Land Protection Authority or to the local Farmland Protection Board (West Virginia Farmland Protection Website 2010). Under the Act, landowners may offer by written application to the state authority or their county board to sell or donate a conservation easement on all or a portion of their property. This application must include an asking price, if any, and a complete description of the land including any secured debt or liens on the property. The easement may be held or co held with any 501(c)3 charitable corporation, or governmental body empowered to hold real estate. This is a common practice in many other states because it provides additional protections and benefits to the landowner. Criteria for ranking the acquisition of easements. Each of the county programs design their own ranking system based on the following criteria: 1) imminence of development, 2) total acreage offered, 3) presence of prime farmland, unique farmland or farmland of statewide importance, 4) productive capacity of acreage, 5) whether the property offered is adjoining or related to working farms, 6) ratio of the asking price to the fair market value of the easement, 6) the historical, architectural, archeological, cultural, recreational, natural, scenic, source water protection or unique value, and 7) the existence and amount of secured debt upon the property. Funding. In 2002, the West Virginia Legislature modified the Voluntary Farmland Protection Act to allow each county with a Farmland Protection Program to provide funding for the program through a real estate transfer tax. The maximum rate allowable is $1.10 per $500 ($2.20 per $1,000) or fraction thereof of the real estate transfer value, which must be used exclusively for the purpose of funding farmland preservation (WV Code 8A 12 21). Kaua i IAL Study Page J 6