An Overview of Farmland Protection Tools under The Agricultural Development and Farmland Preservation Enabling Act Theodore A. (Ted) Feitshans Department of Agricultural & Resource Economics North Carolina State University ted_feitshans@ncsu.edu 2007

Support Additional support provided through the “Understanding the Farm Business Planning and Tax Implications of Federal and State Conservation Incentives” project funded by the Southern Region Risk Management Education Center

Public Policy: Reasons to Protect Land Used for Agriculture, Horticulture or Forestry Promote important industries and related employment Protect local food and fuel sources Provide recreational opportunities Protect environment Water quality Endangered species Biological diversity Air quality Carbon sequestration

Public Policy: Reasons to Protect Land Used for Agriculture, Horticulture or Forestry (continued) Protect quality of life Limit sprawl and associated externalities Promote efficient delivery of services Protect fiscal soundness of local government Better balance governmental ‘portfolio’ Reduce expenditures on subsidies for development

Voluntary Agricultural Districts (VADs) Available to counties and cities Qualifying land 10-year revocable agreements Agricultural Advisory Board County ordinance covers unincorporated areas/City ordinances cover incorporated area Need for agreements between counties and cities to coordinate farms that fall within both jurisdictions and to address impact of annexations Cities may recognize VADs in their planning jurisdictions

Benefits of VADs Record notice of proximity to farmlands (only in counties with computerized land record systems that can accommodate this) Affect on nuisance actions Official role in county/municipal government Public education about agriculture Abeyance of water & sewer assessments (optional, and may be available under other law) Public hearing on condemnations Municipalities may amend ordinances to provide flexibility to farms in a district

Enhanced Voluntary Agricultural Districts (EVADs) Conservation Agreement Includes all terms of a VAD agreement plus: Irrevocable for 10 years Automatic renewal for 3 years absent notice as required by the ordinance

Benefits of EVADs All VAD benefits Remain bona fide farm exempt from county zoning even if sales of up to 25% nonfarm product (burden of proof on farmer) Eligible for a higher percentage of cost share funds under §143-215.74(b) Priority consideration for grants from state departments, institutions or agencies Abeyance of all county/municipal utility assessments

N.C. Agricultural Development and Farmland Preservation Trust Fund Purposes: Purchase conservation easements (including transaction costs) Public and private enterprise programs to promote profitable & sustainable family farms Fund conservation agreements Fund cost of administering the program

N.C. Agricultural Development and Farmland Preservation Trust Fund Nonprofit conservation organizations – 30% match County with no countywide farmland protection plan – 30% match Development tier two or three county with countywide farmland protection plan – 15% match Development tier one county with countywide farmland protection plan – no match

Agricultural Development Countywide Farmland Protection Planning – statutory elements List & description of existing agriculture Challenges to continued family farming Opportunities for maintaining or enhancing small, family-owned farms & the local agricultural economy Plans for viable agriculture Implementation schedule

Conservation Easements Permanent easements Uniform Conservation Easement Act Avoid common law restrictions Avoid real property marketable title acts Complies with requirements of federal tax law Conservation agreements/Term easements

Conservation Easements Issues: Baseline study Preexisting liens CERCLA/Abandoned underground storage tanks Full discussion of plans/objectives/goals Discussion of plans for transferring rights Lack of flexibility Family wealth maintenance/creation

Conservation Easements: Maintenance of Farming and Forestry Adequate income opportunities Continuation of normal farming, horticultural and forestry practices Flexibility - changes in practices Flexibility - changes in laws

Conservation Easements (Permanent): Taxation Property tax Federal income tax State income tax Federal estate tax State estate/inheritance tax

Resources Land Preservation Notebook American Farmland Trust http://www.cals.ncsu.edu/wq/lpn American Farmland Trust http://www.farmland.org/default.asp