Agenda - 05-06-1998 - 10b - Laserfiche WebLink

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M Are all agricultural conservation easements the same? The basic purpose and structure of all agricultural conservation easements are the same. Each easement is tailored, however, to the specific farm being protected. Exact language in the easement may reflect future expansion plans of the operators including the need of their heirs. How do the easements affect other rights of ownership? The land owner still controls all other rights of land ownership and use of the land not covered by the easement. The land is still owned in -fee by the landowner and can be transferred, deeded, or sold just as any other piece of property. The easement does not require any provisions for public access, unless such access was negotiated as part of the easement purchase transaction. Does a conservation easement affect a farmer's ability to borrow money? The experience of those fanners who have participated in the existing State and local PACE programs is that their ability to borrow operating funds for the farm is not affected by the presence of the conservation easement. If a lending institution holds a lien on a property, they must subordinate the sale of the conservation easement just as they would need to sign -off on any transaction on the property. Since a farm loan is usually based on the ability of the farm operation to carry the loan, a conservation easement, which only affects nonfarm development activities, not the farm operation, would not have a bearing on the performance of the loan. How are the proceeds from the sale of a conservation easement treated for tax purposes? The easement sale proceeds are treated like any other capital gain for Federal, State and local income tax purposes. Some programs have provisions that allow for installment purchases or have utilized securitizable tax - exempt bonds as a method of payment. Are these programs popular with farmers? The collective experience of the existing State and local programs is that they are very popular with farmers. A survey of program administrators from selected counties in Pennsylvania and California, and the States of Connecticut, Maryland, Massachusetts, New Jersey, and Vermont in July 1995, found that demand exceeded available funds to purchase conservation easements by an average of 15 percent; for every farmer who voluntarily sells a conservation easements, 6 more are waiting in line. What if a preserved farm becomes surrounded by development? Can the conservation easement be terminated, and can the landowner buy back the development rights? All state programs, with the exception of New Jersey, have escape clauses that allow a landowner, in extreme circumstances, to repurchase the development rights after a 25 -year period. The burden is on the landowner to prove that farming can no longer be possible without economic loss and considerable conflict with non -farm neighbors. Furthermore, the landower would have to pay for the development rights at the current market value based on an appraisal. The request to repurchase development rights must be approved by the local governing board. Massachusetts requires additional approval by the state legislature and Commissioner of Agriculture. Forsyth County, NC is the only local PACE program that has actually completed a repurchase agreement with a landowner. This case involved a farm being surrounded by an industrial park. The owner paid the County $300,000 to repurchase the easement, and those funds are being used to purchase new agricultural conservation easements. prepared by the Orange County Planning Department for the Agricultural Districts Advisory Board