Apr 7, 2007

New Jersey Undertakes Farmland Preservation

This article is the first in a series looking at farmland preservation efforts in a number of states.

When modern transportation made it possible for the West Coast to provide fresh fruits and vegetables to folks on the East Coast, the transformation of the Garden State into the Bedroom State went into high gear.

Today, New Jersey is the most densely populated of the 50 states – with 8.7 million people packed at 1,134 per square mile – and much of its wonderfully productive farmland is gone. But not all of it. And for families that really want to continue farming and don’t want to sell the farm for development, New Jersey is more likely than most states to help them. With transportation costs rising, New Jersey farmers are looking at good markets close by – real opportunities, especially in fresh-market fruits and vegetables.

Statistics compiled by the American Farmland Trust, which seeks to protect farmland from non-farm development, show this about New Jersey:

•While it is the fourth smallest state in area, it has spent more money than any other to buy development rights from farmers and permanently deed-restrict farm property against development. Since 1985, the state has spent $465 million in public funds and another $237 million from non-public funding sources on purchase of development rights (PDRs). It has another $137 million in the bank earmarked for spending. That is more than a quarter of all PDR spending nationally.

•New Jersey has protected 113,733 acres by PDR easements restricting development. That is about one-sixth of its remaining 800,000 acres of farmland. Only 17 percent of the state’s land remains in agriculture. New Jersey has lost more farmland, as a percentage, than any other state.

While the record is definitely mixed, New Jersey provides lessons and models for other states that want to protect farmland from development.

Susan Craft, who heads the New Jersey State Agriculture Development Committee, said New Jersey learned one lesson the hard way:

“If you wait until the wave of development hits you, it’s too late. The risk of waiting is that you lose large contiguous land masses.”

Farmers need open spaces to operate without ongoing conflicts with non-farm neighbors who don’t understand farm odors, noise, lights, spraying, all-hours operations and slow-moving vehicles on the roads. Once everybody has moved into the countryside, conflicts are inevitable, Craft said.

Another reason to move quickly is that development values rise. It costs more the longer it’s put off. While New Jersey has spent just under $700 million to buy development rights on 133,733 acres, adjoining Pennsylvania has protected 295,447 acres by spending $650 million.

The cost to preserve an acre in New Jersey was about $5,250 compared to $2,200 for Pennsylvania land. Pennsylvania moved when pressure – and the development value per acre – was lower.

Why Save Farmland?

There are three essential reasons the citizens of a state might choose to preserve farmland, Craft said.

1. To preserve a land base for the future of the agriculture industry, both as business enterprises (economic activity) and as providers of food for the state’s people (lower cost for local food and security).

2. To preserve rural character and way of life and to avoid the costs of development of infrastructure and social services. Communities are only beginning to realize the true costs of non-farm development in rural areas. Local taxes go up, not down, when more people move to the country, Craft said.

3. To preserve overall quality of life. People want locally grown produce and flowers and space in which to breathe. Birds need a place to land, as Craft put it.

Despite the massive development that has taken place, New Jersey will capture some of these values, Craft said.

Why did New Jersey wait so long? It wasn’t as if nobody saw the problems coming.

“Since the 1960s, advocates of land preservation have gone to the voters with bond issue proposals, but they were not passed,” Craft said. “You have to have enough of the population see a significant threat to the land base.”

In 1983, New Jersey passed laws that authorized purchase of development rights. The first purchases were made in 1985, but there was no solid funding for PDRs until 1998.

“In 1997, Gov. Christine Todd Whitman created a council on the outdoors,” Craft said, “which brought together a larger group of stakeholders. They recommended that the state make a long-term commitment.”

The coalition brought together farmland preservation groups with others that wanted to save green space and historic areas. They all needed money to fund purchase programs. The goal, according to Craft, was to preserve 500,000 acres of farmland and 500,000 acres of green space and historic places.

In 1998, New Jersey voters approved a proposal that created the Garden State Preservation Fund and dedicated $98 million per year in state sales tax revenues to the fund for 30 years. Because of the need for speed, the actual spending was to take place in 10 years, using funds generated by the sale of bonds that would be paid back over a longer term from sales tax revenue.

“Time was the greatest enemy of the Garden State’s agricultural land,” Craft said. “We couldn’t spend 30 years doing it.”

“We are rapidly coming to the end of our 10-year ag horizon,” she said. “We have just asked for our eighth year’s money.”

That leaves $75 million in the pool for next year, and that will exhaust the fund, she said.

The program has been successful, she said, but the question coming up is, “where do we go now?” Will the citizens decide to commit new funds to continue buying rights on the remaining land? So far, they have protected 17 percent of agriculture’s remaining 17 percent, or just under 3 percent of the farmland New Jersey once had.

The citizens of New Jersey communities seem proud of their efforts. Salem County held a celebration in May when it officially preserved its 20,000th acre.

The county has preserved 120 farms since 1990, spending $700,000 in 2004 alone. Salem County citizens have set their sights on outdoing nearby Burlington County, which holds the New Jersey record for preservation, with 21,216 acres. The counties have to generate 20 percent to 40 percent of the cost to gain state funding for the remainder.

Preservation Incentives

Bob Wagner is the managing director of field programs for American Farmland Trust, an organization started in 1980 with the mission of preserving farmland across the United States.

When it started, U.S. farmers still proudly considered themselves the possessors of the breadbasket of the world, the place with the largest collection of good land anywhere. Since then, good land has popped up all over the world and even China, once considered overpopulated and devoid of good land, suddenly seems willing – and able – to feed its billions and us, too. Will we pave over the Corn Belt as we did the East Coast?

While there has been some erosion of the image of the American farmer as food provider for the world, “There’s still a recognition that we need to maintain the land base,” Wagner said. “America has some of the best land in the world.”

Still, the American tradition – which considers land a private commodity rather than a community asset – has left the United States short of the land ethic that protects farmland in China, Europe and countries around the world. Add to that the American aversion to “government planning,” and urban sprawl and land conversion proceed unabated.

Farmers are often the land speculators fostering development. While inflation has eroded the dollar’s value by five times since the middle 1960s and many farm commodity prices have gone up only two or three times in the same period, the price of land has gone up 10 times – making owning land a better source of investment income than farming it.

Why, then, should farmers sell their development rights?

Wagner answered this way: “The development potential of farmland is basically a non-performing asset.”

To make it perform, you have to sell it or borrow against it.

Many of the farmers who have sold development rights have used the money to improve or expand their farm operations, he said. Usually, farmers who do that are those with hope and faith in the future of their farm. They have children who are in the farm operation or who want in.

New Jersey’s Susan Craft agreed. Those who say “farming’s dead” are not the ones who sell their development rights to preserve the land, they sell the farm for development. Fifty years of farmers telling their children to look to other careers has further eroded the land-preservation ethic.

Still, many people are looking for the opportunity to farm. Craft’s department also operates the Farm Link Program, which matches people who own farmland with those seeking access to farming opportunities.

Preservation Tools

For states that want to save farmland, there are many preservation tools, Wagner said. These include:

•Purchase of development rights. When farmers sell PDRs, they accept a deed restriction against non-farm development in the future in return for the cash value of the development rights today – the difference between the farm value and the development value. In New Jersey, farmers have to apply to local units of government for approval. Not all land is considered savable for farm use.

•Use-value taxation. In many states as land values rise, property taxes rise, because they are based on assessed true-market value. New Jersey uses use-value taxation, holding taxes on farmland down as long as it is used for farming.

•Other states use similar mechanisms to hold down taxes on farmland. In Michigan, farmers who contract with the state not to sell their land for development get property-tax breaks. But these breaks are related to household income from all sources, not just farmland value, which works against the program’s overall goals.

•Agricultural districts. Some states provide tax relief and other benefits for farmers in special agricultural preserves. In New Jersey, farmers in a “cluster” can sign eight-year contracts and receive special conservation cost shares and other benefits for agreeing not to develop their land.

•Planning and zoning. In areas where agriculture is thriving and “issues aren’t as contentious,” Wagner said, planning and zoning, strictly enforced, can keep farmland from being developed. This works in Lancaster County, Pa., he said, because local farmers want it to work. Zoning tends to fail when local support for it fails.

•Transfer of development rights. Some communities, seeing the need for space for housing and other development but wanting to control where it occurs, allow transfer of development rights. A developer buys development rights from a farmer and by that gains the right to develop a different parcel more densely. These programs use development-value dollars, not public dollars, to carry out community plans.

•Federal efforts. Most states that are working with PDRs require local communities to provide matching funds – and they don’t have the money. Some get local funds from federal grants.

In 1990, Wagner said, the Farm and Ranchland Protection Program was started as a pilot grants program, which has gradually expanded. In 2002, funding levels were established at $97 million per year for 10 years. Last year, only $75 million was allocated.

That’s less than tiny New Jersey spends each year, but it is a start of national, federal efforts to save farmland.