This is a simple overview of a competitive process that starts with a phone call to the Vermont Land Trust about your specific farm and situation. The role of the Vermont Land Trust is to help with the application process, answer questions, facilitate the steps, and help funders identify the best farm conservation candidates.
The Conservation Easement: A Legal Tool
The legal tool that is used to conserve a farm is called a conservation easement. It is recorded in local land records, just like a deed. The easement permanently protects the land from development and contains other restrictions. The landowner continues to own and manage the land and can pass it along to a family member, or sell it. The allowed and prohibited uses are clearly spelled out in the easement. Very generally, uses of the land important to farming are encouraged and those that adversely affect the use of the land for agriculture, like subdivisions and mining, are prohibited. Because conservation easements are forever, it is very important that owners understand and agree to the permitted and prohibited uses of the land.1 Farm easements vary somewhat to accommodate special characteristics of each farm while at the same time carefully protecting the agricultural resource.
An Affordability Option (also called an Option to Purchase at Agricultural Value) is generally included in the conservation easement. This provision helps ensure that farmland remains open and affordable to future farmers. It gives the holders of the easement the right to purchase the farm at its agricultural value if the farm is not sold to a farmer or family member. The agricultural value is set by a formula or appraisal at the time of the sale.
There are minimum criteria for all applications. The farm must be a viable operation or have a sound plan for getting into operation. Farm parcels that are additions to a conserved farm, as well as high quality bare-land parcels, are also eligible. In addition, conservation of the farm must comply with town and regional plans.
If your farm meets these minimum criteria, the first step is to complete a pre-application and/or meet with our staff to discuss the process more completely. This pre-application summarizes the land’s resources, the farm operation, and includes maps and photographs. We will assemble all necessary materials.
Usually twice a year, the Vermont Housing and Conservation Board (VHCB) Agricultural Advisory Committee—a group that includes farmers and agricultural experts—meet to review the pre-applications. If approved, the farm project moves on to the appraisal stage. Those projects not approved the first time may be resubmitted. However, if the application is denied twice, 12 months must elapse before an application can be resubmitted.
All types of farms can receive funding—from small, thriving vegetable operations close to town, to big dairies surrounded by other farms. Regardless of the type of farm, the most important question is, “How likely is this farmland to stay in production into the future?” The answer to this question of long-term viability depends on four criteria listed in priority order:
- Land resource. Substantial acreage in prime or statewide-significant agricultural soils (using NRCS soil values) along with a farm’s topography and field access are critical. Strong potential for diversified agricultural uses increases chances of funding.
- Location. Farms situated in a farming community are key. If the farm is under significant threat of conversion to non-farm use, and if that conversion would be detrimental to other farms in the area, it is given special consideration.
- Farm infrastructure. Buildings and equipment that are in good condition and are suitable to the existing or proposed farm operation are valued.
- Management. Sound resource management practices appropriate to the farm should be in place. These include practices that build the long-term productivity of the farm’s natural resources.
Because every farm and every farm family are different, we encourage you to contact us to talk about conserving your farm, even if these basic criteria do not fit your farm perfectly.
Determining the Easement’s Value
Once the pre-application is approved, the next step is to determine, with VLT staff and funders, what will be included or excluded from the proposed easement, along with any special features or conditions. These special features/conditions may include the option to build future farm labor housing, allow public access on the property, or protect a unique natural area.
VHCB and other funding sources place per-acre and per-project limitations on the price they are able to pay for easements regardless of the appraised value. Some high-value projects that have large acre¬age, or are considered “agricultural resources of outstanding statewide significance,” may be funded even though they exceed the funding limits. Sometimes we can find other funding sources to assist in purchasing easements that exceed these limits.
Once the acreage and conditions of the easement are agreed upon, the value of the conservation ease¬ment must be determined with an independent, professional appraisal. The landowner contributes to the cost of the appraisal. The appraisal value primarily relies on comparable sales of similar farms to establish two figures: the value of the farm with no easement on it (the fair market value), and the farm’s value with the conservation easement (restrict¬ed value). The difference between these two values is the value of the conservation easement.
Final Application, Funding, and Closing
Upon receipt of the appraisal, the landowner and our staff evaluate the conservation easement value. If the landowner accepts the appraisal and decides to sign a sales contract with us to sell a conservation easement, we submit the final grant application to a funding organization. The funding organization makes the final selection of farms based primarily on the quality of the agricultural resource, as described, and the amount of money available for farmland conservation that year. Once approved, a title search, a report that documents the condition of the property at the time of conservation, and final legal documents will be completed. Landowners should review everything with their attorney.
The Vermont Land Trust encourages landowners to take the time to care¬fully consider this important family and business decision. During the application process and definitely before making a final decision, all landowners should consult with their attorney, tax advisor, and farm lender. The sale of a conservation easement:
Often involves income, capital gains and estate tax issues;
- Impacts existing or planned farm financing;
- Raises farm business planning issues; and/or
- Involves substantial legal issues.