Apr 7, 2007

Pennsylvania Leads Nation in Rescuing Farmland

It wasn’t Jane Gordon Fletcher’s fault she got rich.

Over the years since her birth in 1901, the value of the family farm near Malvern, Penn., just kept rising as people pressure from Philadelphia, 24 miles away, just kept increasing.

In 1993, she and her family realized they had estate problems. Unless they did something, the farm would be destroyed when she died. A combination of inheritance taxes and developing the liquidity to give shares to heirs would require the family to sell the farm that had done so well since 1896.

“We knew we wanted to protect the farm,” said Bob Lange, who’s known today as “Farmer Bob” at Sugartown Strawberries.

That year, they sold the development rights on 58 acres through a farmland preservation program administered by the Pennsylvania Department of Agriculture.

“We took $10,000 an acre – the most ever paid at the time but that was only a quarter of what the land was worth for development,” he said.

Mrs. Fletcher died in 1997 at age 96, and by then she had gifted away most of the money to the children and grandchildren who were her heirs. It allowed her grandson, Bob, to keep the farm.

“I farm full-time,” he said.

He grows strawberries, asparagus, sweet corn, sunflowers, pumpkins and several other vegetables. A combination of u-pick and a farm market, plus school tours each fall, makes it a good business.

“I sell what I grow,” he said. “We’re well located and have an unlimited supply of customers. We make 75 percent of our income in October.”

Lange’s farm contains 218 acres in all, some of it woodland and some pasture for about 20 horses he boards. It makes a scenic place for visitors.

Part of the farmland was preserved in 1963, when his grandmother donated the development rights on 46 acres of the land to a conservation organization called Natural Lands Trust, which Lange said has flourished in southeast Pennsylvania ever since. At the time, it was the organization’s first property gift ever. That kept property taxes down on land that was relentlessly rising in value. The family thus clearly said it was a farm family that wanted to stay that way. They were not in business as land speculators waiting for a good time to sell and develop.

Lange said the farm still has plenty of value for farm use, located where it is and doing what it does.

The Leading State

The state of Pennsylvania will spend about $100 million this year to fund its farmland preservation program, which since its creation in 1989 has preserved more acres of farmland than any other state program in the nation.

That’s according to figures from the American Farmland Trust (AFT), which has compiled numbers on the 20 states that use purchase of agricultural conservation easements as a tool to preserve farmland from nonfarm development. This form of preservation strips away development value – paying the landowner for most of that value – and puts a permanent restriction on the deed.

According to AFT, Pennsylvania had, at the start of 2005, protected 295,447 acres of farmland and spent $460.7 million to do it. It had purchased easements on 2,565 farms.

Sandy Robison, who heads the Bureau of Farmland Preservation in the Pennsylvania Department of Agriculture, amended those figures in July, saying the numbers had risen to 2,883 farms and 328,000 acres in the program – and they’re shooting for 3,000 farms by year-end. The state has a backlog of nearly 2,000 farms wanting into the program.

Like other states, Pennsylvania started its land preservation efforts with a program to protect farmland and open space from the pressure of rising land values and the increasing property taxes it put on landowners. The Clean and Green Act of 1974 authorized the taxing of land according to its use value rather than its prevailing market value.

But Pennsylvania didn’t stop there. In 1988, the state created the Pennsylvania Agricultural Conservation Easement Purchase Program and made its first purchase of development rights the following year.

Kevin Schmidt, who works for American Farmland Trust in Pennsylvania, said the ball started rolling when the state passed a series of bond issues. Currently, bonds generate about $80 million a year. A 2-cent-a-pack tax on cigarettes generates up to $20 million a year.

Counties are putting up more money. Robison said they will add some $45 million this year to save Pennsylvania’s farms.

“We have great support. It’s wonderful. Farmers want in. It’s really a delight,” she said.

The Keys to Action

Discovering why one state successfully preserves farmland while others don’t is not easy.

“I think it’s the mindset of the people in Pennsylvania. Farmers other places want the highest dollar they can get for land. In Pennsylvania, farmers perceive the heritage, the farm itself and have a commitment to the land,” Robison said.

That is a “patriotic” explanation.

But here are some others.

•Even while it’s a highly populated state, agriculture is still the largest enterprise in Pennsylvania, as it is in most states. An industry generating $4 billion at the farm gate is nothing to lightly destroy.

•Residents of a state don’t start saving farmland until much of the rural character has already been destroyed. The Northeast is saving more farmland now that so much as been lost. From 1982 to 1997, an estimated 1.14 million acres of open land in Pennsylvania was developed.

•Only some land gets preserved. There are 59,000 farms and 7.7 million acres of farmland in Pennsylvania, so only about 5 percent has been preserved through use of purchase of development rights (PDRs).

•The people who preserve their farms are farm families with prospects for the future. Farmers who don’t see much future in farming send their children away and are most likely to position themselves to sell out for as many dollars as possible.

A Voluntary Program

One aspect that has probably made the Pennsylvania program work, besides the money for PDRs, is the lack of coercion.

“We do nothing with zoning,” Robison said. “There are no state plans. It is totally voluntary.”

AFT’s Kevin Schmidt noted that farmers are being turned off by “downzoning.” Programs that create special agricultural zones may work as preventive measures, but once land values begin to mount as a result of development pressure, farmers don’t want to lose that value.

That’s what makes PDRs work. Those who sell development rights agree to forgo future speculative land value increases, but they get paid for what has already accumulated.

As part of its program, Pennsylvania has the Farm Transition Program, Robison said, in which it attempts to match exiting farmers with those who want to farm – buying the development rights as the transition occurs.

Communities have a lot to say about whether land qualifies for preservation. Counties participating in the program have appointed agricultural land preservation boards. The state board is responsible for distribution of state funds, approval and monitoring of county programs and specific easement purchases.

To qualify for PDR, land must be part of an Agricultural Security Area (ASA). Farmers must submit a petition to township supervisors to create an ASA.

A minimum of 250 acres from among all the participating farmers is required. New parcels of farmland may be added at any time. An ASA may include non-adjacent farmland parcels of at least 10 acres or able to produce $2,000 annually from the sale of agricultural products.

Being in an ASA provides benefits: special consideration regarding local ordinances affecting farming activities, nuisance complaints and review of farmland condemnation by state or local government agencies.

But only after at least 500 acres is enrolled in an ASA can the land qualify for PDR under the Easement Purchase Program.

Aside from being part of an ASA, the farm must also get a priority rating against other eligible parcels. The local boards rate the parcels, using a point system, and the state board makes the purchases as money is available. The program is perceived as fair.

“We start at the top and go down the list,” Robison said.

Easements may be purchased on farms of a minimum of 50 acres unless they are adjacent to existing preserved farmland or used for the production of crops unique to the area. In those cases, the size limit is 10 acres. At least half the tract must have good quality soil and be in harvested cropland, pasture or grazing land.

Farms are rated on stewardship – the use of conservation practices and best management practices of nutrient management and control of soil erosion.

Farms are also rated on their likelihood of conversion – proximity to sewer and water lines, extent and type of non-agricultural uses nearby, amount and type of agricultural use in the vicinity and the amount of other preserved farmland nearby. Farmers may choose to receive the proceeds from easement sales in a lump sum payment, installments up to five years or on a long-term installment basis. Many farmers use the proceeds from easement sales to reduce debt loads, expand operations and as a way to pass on farms to the next generation, Robison said.