Farming is part of
the fabric of Dutchess County and DLC is committed to helping local
farmers remain on their land. Open agricultural fields, dairy barns
and grazing cattle are integral to the character of the County and
our quality of life. The value of our local farms is increasingly
recognized and is reflected by the crowds at our local farmstands.
Unfortunately, with
every passing year comes the loss of more of our valuable farmland
to development or disuse, as farmers retire or cannot afford to
continue their operations. Farmers provide immeasurable benefits to
our local communities by providing fresh local products;
contributing more to the local tax base than they use in services;
providing scenic beauty and a sense of community; and stewarding the
land for future generations.
Farmers are keenly
aware of the sensitivity of the land and its importance to them as a
business and to a healthy community. They are often the strongest
advocates for keeping land open and in production, and for
permanently protecting open space and farmland. However, farmers
often do not have the financial resources to donate conservation
easements and benefit from the tax incentives. Often farmers are
land rich and cash poor – their greatest equity is in their land -
the same land that is an integral part of their farm business. If
they want to retire or infuse cash into their business, they often
must sell all or part of their farm.
DLC works with
farmers to explore ways to keep farming a viable business and give
farmers alternatives to selling their farms. DLC can help a farmer
by providing conservation land planning assistance or by helping to
guide them through the process of selling their development rights.
DLC has a strong track record for raising funds and closing purchase
of development rights projects in Dutchess County.
DLC’s successful
purchase of development rights (PDR) program includes collaborating
with local partners such as the County Agricultural and Farmland
Protection Board and Cornell Cooperative Extension. Funds for PDR
projects typically come from the state, county, local municipalities
and private sources. Through our PDR program, DLC has saved
thousands of acres of farmland and provided farmers with funds to
keep them on their land producing the local products that are vital
to sustain our agricultural-based communities.
Farmland Purchase of Development Rights Program
A purchase of
development rights program pays farmers for restricting the future
use of their land. The property is typically restricted in a manner
that protects the most important agricultural land (called “farm
areas”) while allowing additional agricultural and farm related
residential structures to be built in specific locations (called
“farmstead complexes”). The farmer gives up his right to fully
develop the land but retains all other rights of ownership including
the right to farm the land, use it in most normal and customary
fashions, sell it, or otherwise transfer the property.
Farmers can use the
funds they receive from selling their development rights for
whatever they choose, but most use them to enhance the farm
operation, purchase additional agricultural land, or to transfer the
land to the next generation allowing an older farmer to retire.
Selling your
development rights is forever, but a farmer does not have to limit
all future right to build or subdivide the land. When you sell your
development rights, a conservation easement is placed on the land.
The conservation easement is the legal document that spells out what
can and cannot occur on the farm. This document gets recorded by the
County Clerk and runs with the land. Future landowners will also
have to abide by the terms of the easement as set forth by the
farmer when the development rights are sold. Agricultural
conservation easements are written with farmers in mind, allowing
for agricultural activities and the structures to support a working
farm. By reserving some development rights, the farmer is ensured a
future source of revenue for the farm.
The value of the
development rights is determined by a qualified appraiser. The
appraiser values the property as if it was being sold today without
a conservation easement, and then determines the value of the
property limited by a conservation easement (as a farm). The
difference between these two values is the value of the development
rights and the amount to be paid to the landowner.
Landowners can agree
to accept a lesser amount than the full value of the development
rights in what is called a “bargain sale.” By agreeing to a bargain
sale, landowners can potentially take advantage of federal and state
tax benefits by essentially donating a portion of their development
rights. For tax planning purposes, this is often a financially
beneficial way to structure a PDR project.
If you are
interested in learning more about farmland protection options or
DLC’s purchase of development rights program, please contact us at
(845) 677-3002.
This information does not constitute legal or tax advice and DLC
strongly recommends that you discuss your land conservation options
with legal and tax professionals.
