Preservation of Farmland and Forestlands 2004 Virginia Agriculture Summit Richard Harlow, Michigan Department of Agriculture

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Preservation of Farmland and Forestlands 2004
Virginia Agriculture SummitRichard Harlow,
Michigan Department of Agriculture

• February 24, 2004

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Virginia and Michigan

• Virginia 2002
• Farms 47,615
• Acres 8,666,557
• Average Farm 182
• Average Age 56.7
• Primary Farming 53.6
• Market Value of Ag. (97) 2,343,518,000
• 33 from crops
• 67 from livestock
• Pop. 7,293,542 (02 est)
• 26 million acres

• Michigan 2002
• Farms 53,273
• Acres 10,083,006
• Average Farm 189
• Average Age 54.2
• Primary Farming 54.5
• Market Value of Ag. (97) 3,567,825,000
• 62 from crops
• 38 from livestock
• Pop. 10,050,446
• 37 million acre

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Public Lands in Michigan

• Lands under fee ownership 4,535,340 acres
• State Forests 3,812,136 acres
• State Recreation /Parks 338,760 acres
• State Wildlife and Game 340,324 acres
• Other Areas 44,120 acres
• Federal Forest land 2,000,000 acres

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Techniques for Preserving Farmland and Forest Land

• Creating Tax Incentives
• Providing for Development Rights Purchase
• Enhancing the Economic Viability of Agriculture

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Tax Incentives Temporary Restrictive Covenants

• Voluntary (Non-regulatory)
• Incentive Driven (Property tax reductions or
  income tax credits, assessment exemptions, right
  to farm.)
• Temporary
• Typically a Recapture provision
• May be used for farmland open space

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Land Preservation Programs in Michigan

• Temporary Restrictive Covenants
• Farmland Development Rights Agreements
• Local Open Space Easements
• Designated Open Space Easements
• Commercial Forest Program
• Purchase of Development Rights
• Agricultural Preservation Fund

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Farmland Preservation Agreements

• Established in Michigan in 1974
• Landowner enters into a temporary (10 years)
  agreement with the State, restricting the
  development of the land in exchange for certain
  benefits. (Lease of development rights)
• Agreements may be extended by the landowner.

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Farmland Agreement Benefits

• Benefits
• Landowner may claim a state income tax credit the
  amount by which the property taxes on the
  enrolled land exceeds 3.5 of the household
  income (formerly 7)
• Enrolled land is exempt from special assessments
  for sanitary sewer, water, lights and non-farm
  drainage

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Farmland Agreement Participation

• Currently 47,000 Farmland Development Rights
  Agreements in Michigan.
• This represents about 4 million acres of Michigan
  farmland protected or about 40 of the farmland
  in the State.

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Qualification Requirements to Enroll

• - If parcel is 40 acres or more and more than 51
  in agricultural production.
• - If the parcel is less than 40 acres but more
  than 5 acres and is 51 in agriculture and
  produces more than 200 gross income.
• -If the parcel qualifies as a specialty farm.

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Recapture When a Farmland Agreement is Terminated

• When a Farmland Agreement expires or land is
  removed prior to expiration, it is required to
  repay the tax credits taken during the last seven
  years under the agreement.
• In cases of early termination an interest charge
  is made.

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Required Repayments

• Repayment money goes into the Michigan
  Agricultural Preservation Fund.

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Forest Land and Open Space Preservation
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Local and Designated Open Space Easements

• Local Open Space Easements
• Temporary
• 45 Easements
• 6,000 acres
• Landowner forgiven a portion of property taxes by
  local government

• Designated Open Space Easements
• Temporary
• 16 Easements
• 4,000 acres
• Local government reimbursed for a portion of
  property taxes by State

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Commercial Forest Program

• Private landowners enroll their land.
• Property tax paid per acre by landowner 1.10.
• Local government is reimbursed an additional
  1.20 per acre by the state.
• Enrollment is recorded with the register of
  deeds.
• Land must be made available for public hunting.
• Land removed from the program must pay a penalty.
• In Michigan more than 2.2 million acres enrolled.

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Purchase of Development Rights Program (PDR)
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What are Development Rights?

• Development rights are a severable right in land
  that includes the right to construct buildings or
  to subdivide the parcels.
• Development rights are similar to mineral rights
  in that they can be leased or sold.

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Typical PDR Easement Provisions in Michigan

• The land may only be used for agricultural
  purposes.
• Development is limited to the construction of
  farm related buildings.
• The minimum parcel size for land divisions is 40
  acres.
• The easement is permanent.

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The Michigan Agricultural Preservation Fund

• Grants to local governments for agricultural
  conservation easements.
• Purchases of development rights under the current
  state program.

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How do Local Governments Qualify for PDR Matching
Funds?

• Local government must adopt a purchase of
  development rights ordinance.
• Ordinance must contain
• An application procedure
• Criteria for parcel selection
• Method to establish the price to be paid
• Local land use plan must be updated and include a
  farmland preservation program.

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Enhancing the Profitability of Agriculture
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What can be done?

• Agricultural renaissance zones
• Encourages processing facilities
• Tax incentives for new facilities
• Encourage Value added agriculture
• Promote Diversification
• Promote and encourage exportation of agricultural
  products
• Promote consumption of locally produced farm
  goods
• Encourage local promotion of local agriculture

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Why Preserve Land Based Industries?Michigan Land
Resource Project

• A look at the future of land use in Michigan and
  the impact on its land-based industries

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Michigan Land Resource Project

• The following maps indicate projected land use in
  Michigan for 2020 and 2040 if current trends
  continue.
• A full copy of the report is available at
  www.pscinc.com

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Michigan Land Use, 1980
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Michigan Land Use, 2020
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Michigan Land Use, 2040
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Southeast Michigan, 1980
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Southeast Michigan, 2040
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The 37 million acres of Michigan is all the
Michigan well ever have..

• Former Michigan Governor William Milliken

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The 26 million acres of Virginia is all the
Virginia there will ever be.
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Questions? Contact

• Farmland and Open Space Preservation
• Michigan Department of Agriculture
• PO Box 30449
• Lansing, Michigan 48909
• 517-373-3328
• Web site www.michigan.gov/mda
• Keyword Search - Farmland Preservation