Purchase of Development Rights

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Purchase of Development Rights

Aldrich7Conservation easements can be donated or sold. Depending upon funding availability, ASA may purchase the conservation easement from the landowner (also called purchase of development rights or PDR). The purchase price of the easement is determined by an appraisal prepared by a New York State certified appraiser. The appraisal uses comparable sales and includes a “before” easement valuation and an “after” easement valuation. The difference between the values is the value of the conservation easement or development rights.

For most purchased easements, ASA utilizes funding through the New York State Farmland Implementation Protection Program, a grant program administered by the Department of Agriculture and Markets. This is a highly competitive grant program that typically focuses on larger-scale, commercially viable farming operations with good soil resources. The state ranking criteria also factors in development pressure, if the property serves as a buffer for a significant natural public resource containing important ecosystems or habitat characteristics, acreage and amount of acreage in production, demonstrated farm management, those with business or succession plans, proximity to other protected farms and municipalities’ commitment to maintain local agricultural viability.

The grant provides 75% of the total cost of the project which involves both the cost to purchase the development rights and project-related expenses (such as survey, title report, appraisal, staff time, recording fees, etc.). There is a 25% local match requirement. ASA tries to secure some funding, usually to at least cover the project-related expenses not reimbursed by the state grant. If the local match portion is not completely secured, then the landowner must be willing to do a bargain sale to make up the difference. The state grant process can take up to two years to complete once the grant announcement is made.

There is also a federal program available to purchase development rights called the Federal Farm and Ranchland Protection Program (FRPP), which is administered by the Natural Resources Conservation Service of the U.S. Department of Agriculture. The federal program is also highly competitive and provides 50% of the cost to purchase the development rights but no funding toward project-related expenses. A 25% cash match is also required. Due to the constrictions of this program, it is often best used as the local match with the state program, if permitted by the state.

ASA administers both the Washington County and Rensselaer County Purchase of Development Rights Programs. For each county, ASA provides outreach and workshops to area farmers that may be interested in applying for the state farmland protection program. Interested landowners are asked to submit a pre-application to ASA that provides information on their property and farming operation. The pre-applications are accepted once a year, usually in the spring. The county Agricultural and Farmland Protection Board, in consultation with ASA, selects one or two farms that they feel best meet the state criteria and will be competitive for state funding. ASA writes the grant on behalf of the county and, if awarded, administers the grant and holds the easement. In addition to the county, some towns are eligible for the state grants as well. ASA provides the same support to those towns who apply for a grant.

 

Pre-Emptive Right to Purchase

Conservation easements keep land available for farming and forestry activities. However, they do not necessarily keep land affordable for farmers to purchase. Factors such as the “estate” market in an area and the residential infrastructure on the protected property can increase the market price and prohibit farmers from purchasing the land at the easement value (which essentially would be the agricultural value plus the cost of the improvements on the land). To help encourage agricultural land to remain in active production and be sold to other farmers, ASA offers a Pre-Emptive Right to Purchase, which is often referred to as an Option to Purchase at Agricultural Value in other states. This agreement is entered into voluntarily and is done simultaneously when granting a conservation easement. If the landowner opts to have a Pre-emptive Right to Purchase then they will be paid for this additional right they are conveying to ASA. The amount paid is determined by an appraisal prepared by a New York State certified appraiser. The Pre-Emptive Right to Purchase allows ASA the option of purchasing the property at the agricultural value (plus improvements with limitations) if the seller contracts to sell the land to a non-farmer. ASA may choose to exercise its right to purchase the property and will then find a farmer to sell the land to at the agricultural value. Click here for a sample Pre-emptive Right to Purchase document.


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