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Agricultural Conservation Easement Purchase Program

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Last modified Jul 30, 2014



Experts

Doug Wolfgang
Pennsylvania Department of Agriculture
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Doug is the Bureau Director for the Farmland Preservation Program and oversees and administers the Agricultural Conservation Easement Purchase Program.

Susanne M. Curran
Curran Realty Advisors- Appraisers LLC
215-493-5000
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Over 100 appraisals of farm preservation easements.

Featured Library Items

Act 44 of 2011 (Repeal of ACE 25-Year Clause)
Act 44 of 2011, signed into law by Governor Corbett on July 7, amends the Agricultural Area Security Law to repeal the provision allowing for the extinguishment of agricultural conservation easements after 25 years.

A Guide to Farmland Preservation, 3rd Edition
A Guide to Farmland Preservation will help guide local Pennsylvania organizations through the process of preparing agricultural conservation easement purchase applications for consideration by the State Board. Page 29 describes the installment purchase of agricultural conservation easements by...

Farm Options, conserveland.org
Provides resources for farmland protection, including a comparison of agricultural easements to standard conservation easements.

Pennsylvania Department of Agriculture/Bureau of Farmland Preservation Website
Provides basic information on the purchase program as well additional resources, including a list of farmland preservation county administrators.

Act 149 of 1988 (amends Agricultural Area Security Law)
An Act amending the act of June 30, 1981 (P. L. 128, No. 43), known as the "Agricultural Area Security Law," further providing for agricultural areas, public hearings, evaluation criteria, decisions and reviews of proposed areas, appeals, limitation on local agencies, policy of Commonwealth agenc...

Pennsylvania Code: Chapter 138e. Agricultural Conservation Easement Purchase Program
Chapter 138e of the Pennsylvania Code addresses the state's Agricultural Conservation Easement Purchase Program. It includes the rules for the Land Trust Reimbursement Grant Program.

Agricultural Conservation Easement Purchase Program: A Guide
print version of the ConservationTools.org guide: The Pennsylvania Agricultural Conservation Easement Purchase Program (ACEPP) enables state, county and local governments to pay farmers for agreeing to limit the use of their land to agricultural production, commercial equine activities and certai...

Agricultural Security Areas: Protecting Farms from Condemnation and Unreasonably Restrictive Ordinances
Within an agricultural security area (ASA), farms are entitled to special protection from condemnation and laws and ordinances that would unreasonably restrict farming operations. Local governments in Pennsylvania may establish ASAs but only in response to petitions from landowners interested in ...

Acknowledgements

PALTA staff researched and developed this tool with support from the following resources: The Pennsylvania Department of Agriculture, Bureau of Farmland Preservation website and the USDA Natural Resources Conservation Service.

Disclaimer

Nothing contained in this or any other document available at ConservationTools.org is intended to be relied upon as legal advice. The authors disclaim any attorney-client relationship with anyone to whom this document is furnished. Nothing contained in this document is intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to any person any transaction or matter addressed in this document.

Copyright

Copyright © is held by the Pennsylvania Land Trust Association

Text may be excerpted and reproduced with acknowledgement of ConservationTools.org and the Pennsylvania Land Trust Association.

The Pennsylvania Agricultural Conservation Easement Purchase Program (ACEPP) enables state, county and local governments to pay farmers for agreeing to limit the use of their land to agricultural production, commercial equine activities and certain other uses.

Track Record

Pennsylvania's Agricultural Conservation Easement Purchase Program was established in 1988 and leads the nation in the highest amount of farmland acreage protected. As of October 2009, the program has conserved 425,376 acres on a total of 3,897 farms. 

Fifty-seven out of Pennsylvania's 67 counties participate in the program. The level of purchase activity varies tremendously by county with some counties having only protected one farm and others having protected hundreds.

Typical End Users

State, county and local governments may purchase easements under the program. Landowners with qualifying properties may sell easements on their farms.

Conservation Impact

  • Protects active farmlands for the production of food and other agricultural products.
  • Encourages soil and water conservation.
  • Maintains character and historical integrity of rural communities and scenic openness.
  • Requires counties to think proactively by requiring them to establish criteria for farmland preservation efforts.
  • There is concern that some parcels protected under the program could later be developed due to a provision in the program’s enabling act that allows a conservation easement purchased under the program to be extinguished after 25 years under certain conditions. This is discussed in greater detail in the Main Description. (Editor’s Note: On July 7th, Act 44 of 2011, was signed into law by Governor Corbett, amending the Agricultural Area Security Law to repeal the provision allowing for the extinguishment of agricultural conservation easements after 25 years. This repeal is not and could not be retroactive.)

What You'll Need

  • Willing landowner with at least 35 to 50 acres of eligible farmland (depending on the county program), or 10 acres of eligible farmland contiguous to other preserved property or used to produce crops unique to the area.
  • A county with a program up and running.
  • Since every county program is different, the landowner should contact the agricultural preservation board of the county where the land is located to better understand the application requirements and process.

Obstacles and Challenges

  • There is far more farmer demand for the program than money to fund the program.
  • There is essentially no flexibility in crafting the terms of the easement, which reduces the ability for landowners to address special conservation needs or goals.
  • Strict program deadlines limit landowners’ ability to work at a comfortable pace.

Introduction

The Pennsylvania Agricultural Conservation Easement Purchase Program (ACEPP) is a voluntary program that enables county governments to protect active farmlands by purchasing agricultural conservation easements from willing landowners. (This is sometimes referred to as a purchase of development rights.) These easements limit the use of the farmland to activities compatible with agriculture while keeping the land in the landowner’s ownership and control. All but ten counties participate in the program.

Farmland owners interested in selling a conservation easement apply directly to the county agricultural preservation board where their property lies. The farm must be located in a qualifying Agricultural Security Area. With farmer demand far exceeding available government funding, only farms with the best soils and other key characteristics rank high enough for easement purchase offers to be made. The county may use county funds to purchase easements or seek state funds through the state program.

ACEPP is overseen by the State Agricultural Land Preservation Board and managed by the Pennsylvania Department of Agriculture Bureau of Farmland Preservation.

 

County Agricultural Land Preservation Programs

A county that has within it one or more agricultural security areas may establish a program to purchase agricultural conservation easements on lands within designated agricultural security areas using state funding. The county program must be approved by the state.

The county program is overseen by the county agricultural land preservation board, composed of 5-9 members appointed by the county governing body. The board is typically assisted by a program administrator employed by the county’s conservation district or planning commission.

The county preservation board establishes standards and procedures for the selection of properties from which agricultural conservation easements would be purchased.

Basic Requirements for Property Eligibility

Properties must meet the state’s basic requirements for the purchase program, listed below:

  • The property must be designated as part of an agricultural security area, which is made up of at least 500 acres of viable agricultural land in one or more ownerships.
  • The property must meet a minimum acreage requirement. Counties may opt to establish a minimum acreage requirement of either 35 acres or 50 acres. Parcels as small as 10 acres may be preserved if they are adjacent to existing preserved farmland or used for the production of crops unique to the area.
  • At least half the tract must either be harvested cropland, pasture or grazing land and it must contain 50 percent soil capability classes I-IV, as defined by the USDA Natural Resources Conservation Service.

Ranking of Farms for Easement Purchase

The county establishes a ranking system for prioritizing properties to be appraised based on the state’s minimum requirements. The county board may use additional criteria but must submit to the state board for review and approval.  Key elements of each county’s ranking system include soil productivity, development pressure, farmland potential, and the potential to create a clustering of preserved farmland. Counties must make purchase offers to farmers strictly in accordance with the ranking of applications under the county’s ranking system. A county must offer to purchase the highest scoring farm or farms first.

The state mandates in large part how ranking is conducted but each county makes a number of decisions regarding the scoring and weighting of different property factors.  Counties are required to use the Land Evaluation and Site Assessment (LESA) system. This assessment is based on the land evaluation, which examines the quality of soils and site assessment, which evaluates the development potential, farmland potential and clustering potential of the property.  The weighted values determined during this assessment shall total 100%, and shall be within the following ranges:

 

 

Minimum Value

Maximum Value

 

(weighted)

(weighted)

Land Evaluation (LE)

40%

70%

Site Assessment (SA)

Development Potential

10%

40%

Site Assessment (SA)

Farmland Potential

10%

40%

Site Assessment (SA)

Clustering Potential

10%

40%

 

Land Evaluation

During the land evaluation process, counties shall designate the source of the soils data[1] and measure the value of the soil based on a 100-point scale, with 100 points indicating the best soils for agricultural production. 

Either or both of the following may be used for soils data: (1) The county soil survey, as published by the USDA-NRCS in cooperation with the Pennsylvania State University and the Department; or (2) The Soil and Water Conservation Technical Guide published and updated by the USDA-NRCS. 

Site Assessment

During the site assessment, counties will evaluate three general factors:

  • Development Potential (DP) factors: factors that identify the extent to which development pressures are likely to cause conversion of agricultural land to nonagricultural uses. County boards are required to use three specified factors when scoring DP.  Counties may use up to seven additional factors, if approved by the state board. The three required factors are:
    • Availability of sewer/water services and/or proximity to sewer/water infrastructure
    • Access of property to public roads and road frontage of property
    • Impact from nonagricultural use on farming operations in area
  • Farmland Potential (FP) factors: factors that measure the potential agricultural productivity and farmland stewardship practiced on a tract.  County boards are required to use 4 specified factors when scoring FP. Counties may consider up to 6 additional factors, if approved by the state board. The four required factors are:
    • Percentage of harvested cropland, pasture and grazing land on a specific tract of land
    • Stewardship of the land and the use of conservation practices and best land management practices
    • Size of tract
    • Designation or listing of a tract by local/State/Federal authorities as an historically or culturally-significant location, or a scenic area or open space
  • Clustering Potential (CP) factors: factors that emphasize the importance of preserving blocks of farmland to support normal farming operations and help to shield the agricultural community from conflicts with incompatible land uses. County boards are required to use three specified factors when scoring FP. Up to seven additional factors may be used by the county, if approved by the state board.   The three required factors are:
    • Consistence with county planning office’s designation of important agricultural areas
    • Proximity to land already under agricultural conservation easement, regardless of who holds the easement(s). 
    • the percentage of a tract’s boundary that adjoins land in an agricultural security. The higher the percentage, the higher the score shall be. 

Easement Appraisal and Purchase Price

The county appraises the value of proposed conservation easements in descending order of their farmland ranking score.

The county board must base the appraisal value on an analysis of comparable sales and be in accordance with the most recent edition of the Uniform Standards of Professional Appraisal Practice that estimate both the market value and the farmland value. County boards may choose to refer to one or more appraisal reports that have been conducted by a state-certified general real estate appraiser. The maximum value of an easement is the difference between the market value and the appraised farmland value. The purchase price offered for the purchase of an easement may not exceed, but may be less than, the value of the easement.

County Funding

A county may fund the purchase of agricultural easements in various ways. The county may use county general funds or proceeds from a bond or other form of indebtedness to fund the program. The board may seek support of the State Agricultural Land Preservation Board for state funding through the Agricultural Conservation Easement Purchase Fund and/or federal reimbursement from the United States Department of Agriculture (USDA) Farm & Ranchland Protection Program. They may receive funding from municipalities and/or private sources. Counties may also use the 6% interest repaid by landowners on rollback taxes of properties removed from the Clean & Green Program to fund their easement purchase program.    

Purchase Development Rights

People often use the term “purchase development rights” instead of “purchase conservation easement”. It may be more accurate to say that the landowner places a restrictive covenant on his land that restricts the land’s use to agricultural production and certain other activities. This is accomplished by recording a “Deed of Agricultural Conservation Easement”. In this same deed, the landowner grants the relevant government units the right to enforce the restrictive covenant. For this, the government pays the landowner.

State Administration

The Pennsylvania Department of Agriculture Bureau of Farmland Preservation manages the Agricultural Conservation Easement Purchase Program and oversees county board activity. 

The State Agricultural Land Preservation Board oversees the Agricultural Conservation Easement Purchase Program, reviews, approves and denies recommendations of county boards to purchase agricultural conservation easements and executes the purchase of agricultural conservation agreements on behalf of the Commonwealth.  The board consists of five members appointed by the Governor and nine members appointed by the House and Senate leadership. In addition, the board has eight ex officio members: the Secretary of Agriculture, who serves as the board chairman; the Secretary of Community Affairs, or his designee; the Secretary of Environmental Resources, or his designee; the chairman and the minority chairman of the House Agriculture and Rural Affairs Committee, or their designees; the chairman and the Minority chairman of the Senate Agriculture and Rural Affairs Committee, or their designees; and the dean of the College of Agriculture of The Pennsylvania State University.

Enabling Act and Legislative History

The program was created through state legislation, Act 149 of 1988, which amended Act 43 of 1981. Act 43, last updated in 2006 (as of this writing), enables the state and participating counties to protect farmland by purchasing agricultural conservation easements on eligible properties. 

Permanency Issue

(Editor’s Note: On July 7th, Act 44 of 2011, was signed into law by Governor Corbett, amending the Agricultural Area Security Law to repeal the provision allowing for the extinguishment of agricultural conservation easements after 25 years. This repeal is not and could not be retroactive.)

The state’s Agricultural Conservation Easement Purchase Program regulations require each deed of easement to state that it “shall be a covenant running with the land and shall be perpetual in duration.” (Pa. Code §138e.241(4); emphasis added.) The approved form of easement used for every agricultural conservation easement contains this language.

However, “perpetual” is a loose concept in this case. ACEPP is authorized and governed by the Agricultural Security Area Law, Act 43 of 1981, 3 P.S. §§ 901-915. All ACEPP easements are thus subject to the following provision in the Agricultural Security Area Law -- whether or not this section is included or cited in the easement document itself:

3 P.S. §914.1(c) Restrictions and limitations --  An agricultural conservation easement shall be subject to the following terms, conditions, restrictions and limitations:

(3)    if the land subject to the agricultural conservation easement is no longer viable agricultural land, the Commonwealth, subject to the approval of the State board, and the county, subject to the approval of the county board, may sell, convey, extinguish, lease, encumber or restrict an agricultural conservation easement to the current owner of record of the farmland subject to the easement after the expiration of 25 years from the date of purchase of the easement …. (Emphasis added.)

Whether the farm is “viable agricultural land” is further defined in the Pennsylvania Agricultural Security Area Law:

3 P.S. §903 “Viable Agricultural Land” – Land suitable for agricultural production and which will continue to be economically feasible for such use if real estate taxes, farm use restrictions, and speculative activities are limited to levels approximating those in commercial agricultural areas not influenced by the proximity of urban and related nonagricultural development.

Many believe that the hurdles are too high for an ACEPP easement to be extinguished. Some of the reasons they cite include but are not limited to the following:

  • Both the state and county would have to approve it.
  • Clean and Green tax relief prevents any tax-based viability argument.
  • Agricultural Security Area protections against farm nuisance laws prevent farm restriction viability arguments.
  • Compensation requirements placed on landowners who would have an easement extinguished remove any financial incentive to seek extinguishment.

Others are more pessimistic, believing that state law should be tightened to ensure no room for interpretation by the courts that could be hostile to the conservation intent of program advocates.

2008 Program Audit by the Legislative Budget and Finance Committee

In 2008 the Legislative Budget and Finance Committee conducted a Review of the Agricultural Conservation Easement Purchase Program per Senate Resolution 2007-195. The audit report’s 67 pages (and nine-page summary) covers a wide array of issues and concludes that:

Pennsylvania has one of the most successful, if not the most successful, farm- land preservation programs in the country. The ACE program, with its emphasis on quantitative rankings and local land use decision-making, is widely viewed as a model for selecting and preserving agriculturally important farms.

Among its findings, the audit report noted that the provision in the program’s enabling law that allows easements to be extinguished after 25 years – albeit not easily – causes concern: “Virtually all, if not all, of the county program directors we spoke to favor the removal of the 25-year provision to clarify that the intent of the law is to create perpetual easements.” Attached to the report is a letter from the Pennsylvania Department of Agriculture expressing support for legislation to remove the 25-year provision. (Editor’s Note: On July 7th, Act 44 of 2011, was signed into law by Governor Corbett, amending the Agricultural Area Security Law to repeal the provision allowing for the extinguishment of agricultural conservation easements after 25 years. This repeal is not and could not be retroactive.)

The audit report also noted concerns about the program in regard to Internal Revenue Code requirements for federal charitable tax deductions for farmers who sell their easements for less than fair market value:

The Pennsylvania Land Trust Association (PALTA) has expressed concern about several aspects of the ACE program and the applicability of the federal charitable contribution deduction to a bargain sale easement. Specifically, the PALTA cites the existence of a “25-year-and-out” clause in the legislation and the lack of restrictions on agricultural buildings’ size, quantity or location as possibly running afoul of the “conservation purposes” test of Internal Revenue Code §170(h).

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