VHCB FARMLAND CONSERVATION ACTIVITIES
The Vermont Housing and Conservation Board preserves farmland by:
1. Awarding grants to eligible applicants (non-profit conservation organizations, municipalities, and qualified state agencies) for the purchase of development rights;
2. Building the capacity of eligible applicants to do farmland conservation projects through capacity grants, and payment of costs associated with projects;
3. Providing loans to eligible applicants for farmland acquisition or protection.
The Board will fund a variety of preservation methods including, but not limited to, conservation easements, purchases, direct non-profit ownership with a lease, or resale, to the farmers, and land swaps, as long as the result is the perpetual conservation and protection of agricultural land.
The primary farmland preservation activity of the Board is funding the purchase of development rights and placement of conservation restrictions on farmland. The conservation easement ensures that the land will not be developed, while providing for uses compatible with farming.
Project Selection and Configuration
Minimum eligibility criteria for statewide farm projects:
In order to qualify for VHCB agricultural funds, the land to be conserved must meet the following criteria:
1. The farm or farmland must generally contain at least 50% prime and/or statewide soils, and be actively farmed for income-producing purposes, or have a sound plan for getting into operation. The property:
a. must be a viable farm unit, or
b. must be an addition to a conserved farm which adjoins, or is in close proximity to, the property, or,
c. if farmland without associated infrastructure, must rank high enough in terms of soil resource, location, and management, as to indicate long-term, continued, active agricultural use.
2. The project must conform to adopted regional and/or municipal plans.
3. The sale price of the development rights must not exceed the value as determined by an appraisal acceptable to VHCB staff.
4. The request to the Board (not including the value of the Option to Purchase at Agricultural Value or any other mechanism to achieve future affordability) shall not exceed Two Thousand One Hundred Dollars ($2,100) per acre for the development rights value on farmland unless there is substantial leverage or the project qualifies as an exceptional resource, as defined below, and Four Hundred Thousand Dollars ($400,000) per project unless the farm is an Outstanding Statewide Agricultural Resource as defined below. The VHCB limits are not financial caps for the project. (See Appendix II on VHCB per acre and per project caps for more information.)
The per acre funding caps also apply to Locally Important farms. Except for the per project cap criteria in #4 above, this policy applies to all statewide and local farm projects.
Locally Important farms must meet minimum eligibility criteria 1–3 above and comply with VHCB policy on Local Conservation Projects and per acre caps.
Projects meeting these minimum criteria will be reviewed by a Board Committee advised by an Agricultural Advisory Committee based on the priorities listed below.
Selection Criteria for Statewide and Locally Important Farm projects (listed in order of importance)
Primary Considerations:
1. Land Resource:
- Soils: Generally, all farm conservation projects will have at least 50% prime and/or statewide soils.
- Farmability: consideration will be given to the configuration and ease of farming the land, including access, drainage, topography, location of excluded parcels, etc
- Potential for diversification: a higher priority will be given to land that has a greater potential for diversified agricultural use, such as: ability of the soil to sustain a variety of agricultural uses, presence of a plentiful water supply, drainage, accessibility relative to direct marketing and transportation of products, and evidence of existing diversified uses.
2. Location: (this criteria is not emphasized for Locally Important Farm projects)
- Adds to block of conserved land: higher priority will be given to farms and farmland that adjoin or are in close proximity to other conserved farmland.
- Strong farming community: factors such as the number of working farms, availability of agricultural support services, and the extent to which local planning or other municipal programs support farming will help to assess this factor.
- Development threat: the program will assess the degree of threat of the conversion of the farmland to non-farm use. Factors include: development opportunity (amount of road frontage and access, soil drainage, topography, and flood hazard, views, and proximity to utilities, and municipal water and sewer), and current market pressure.
- Suitability of the type of farming to the surrounding community will be assessed (e.g.. a market garden in a niche market area or a Community-Supported Agriculture (CSA) operation in a suburban area.)
Secondary Considerations:
3. Resource management: Sound resource management practices that maximize the long-term productivity of farmland will be assessed, including: drainage, erosion control, manure handling, crop rotation, stream bank improvement, wetlands protection, and woodland management.
4. Farm Infrastructure: Condition and suitability of buildings for current or proposed farm operation: even when farm buildings are to be excluded from an easement, the buildings may play an important role in the viability of the farm operation, and will be evaluated in that context.
Project Configuration
Goal: The configuration of agricultural conservation projects shall maximize the protection of important agricultural soils, promote the long term, economically viable use of the land for agriculture, and include mechanisms that address and mitigate concerns over the affordability of the property to farmers in the future. (Tools to address future affordability are discussed below.)
For farms that have buildings associated with them, particularly residences, VHCB will favor the “Farmland” configuration (i.e., excluding the infrastructure), unless the “Whole Farm” configuration includes an appropriate affordability mechanism.
General Categories:
· Whole farms – projects that include existing residences and farm infrastructure or reserved residential rights. Whole farms generally include at least 50% prime and/or statewide agricultural soils. Projects may be configured as Whole Farms when:
· Allowing separate conveyance of the farmland and farmstead will make it unlikely that the farm will be owned and operated by a farmer in the future, (such as a farm that is not located in a strong farming community) or
· The farmstead is in the middle of a tract of farmland, and excluding it would invite possible right-to-farm issues in the future, or
· The farmstead includes historic or cultural resources important to the community.
· The farmstead is uniquely related to the agricultural operation, such as a winery on a vineyard.
· Add-ons to conserved farmland – projects that add parcels of farmland to previously conserved farms or farmland. These projects will generally include at least 50% prime and/or statewide agricultural soils, and must be in close proximity to the previously conserved farmland.
· Farmland –projects that either exclude an existing farmstead (house and farm buildings) from the easement, or have no existing residential rights and little or no infrastructure associated with the property. Farmland projects do not include any residential rights in the easement. Farmland projects generally include at least 50% prime or statewide agricultural soils and a high level of farmability, which increase the likelihood of the land being farmed well into the future, even without any associated residential rights or infrastructure. Farmland projects are also typically located in strong farming communities, where the long term need for productive land is more certain. Farmland parcels without nearby access to infrastructure will generally have a higher percentage of prime and/or statewide soils.
Future Affordability of Conserved Farmland
Goal: The Board has adopted a policy goal, which includes making reasonable efforts to assure that conserved farmland is accessible and affordable to future generations of farmers. In addition, the Board’s goal includes encouraging intergenerational transfers that support owner/operated farm projects. This goal will be furthered through the appropriate application of the following tools during the configuration stage of each project.
Affordability Tools:
· Exclusion of Infrastructure Structural improvements on farm properties, especially residences, may contribute disproportionately to the market value of the farm, and therefore will generally be excluded from the easement and made severable from the conserved land in the interest of preserving the future affordability of the protected property. See Configuration Guidelines below for specific guidance on establishing farmstead exclusions.
· Option to Purchase at Agricultural Value VHCB will prioritize projects with the OPAV, and expects it to be included in most farm projects. All farm projects will be appraised both with and without the OPAV, unless the landowner and Grantee agree ahead of time to include the OPAV in the project, in which case only one after value, with the OPAV, is required. If the landowner declines to accept the OPAV, VHCB expects the applicant (the Grantee) to clearly explain why the project does not include it and articulate why the project merits funding and how it meets VHCB’s goals despite this. The Board will weigh factors including, but not limited to, degree of estate risk and potential loss of the resource for commercial agriculture, proximity to other conserved lands (particularly filling in gaps in blocks of protected farmland), and other important resource values, in evaluating the funding of farm projects without the OPAV.
· Shared Appreciation Agreement Similar to the model developed by community land trusts, the farmer and the Holders agree that, upon resale of the protected property, the farmer and the Holders would share any appreciation in the farm’s value, according to an agreed-upon formula. The Holders would then “reinvest” their share of the proceeds to reduce the sale price to the next buyer.
· Nonprofit ownership of conserved farm with CLT approach to house In some cases nonprofit conservation organizations may decide to purchase whole farms or farmland, convey a conservation easement to a qualified holder and lease the land and buildings to a farmer. In such a case, sustainable farming and affordability mechanisms can be built into the lease to insure affordable farming (perpetual access to the farmland by farmers) and resales of houses, if any, which are affordable to future farm households of moderate incomes.
· Design Controls For some projects, the Board may choose to include houses or rights for house sites, but condition the improvements (by limiting size, scale and location) to make the protected property more affordable for future farmers.
Grantees are encouraged to consider some or all of these mechanisms, alone or in combination, to further multiple goals and objectives. Grantees are also encouraged to work with VHCB staff to identify variations on these particular tools, or to develop new mechanisms that can address farm affordability effectively.
CONFIGURATION GUIDELINES:
Applicant procedure - Because existing and future housing and other reserved rights in the easement for farmland conservation projects affect easement value, it is the applicant's responsibility to obtain approval from VHCB staff for all exclusions, reserved house sites, and farm labor housing prior to the time that an appraiser is engaged. The size and location of all proposed excluded and reserved subdividable parcels and the location of all proposed farm labor house sites shall be clearly marked on an ortho-based 1:5000 scale map that is subject to VHCB staff review and approval prior to contracting with an appraiser. Once an appraisal map has been approved, no change of configuration shall be permitted without the consent of VHCB staff or Board.
The applicant shall furnish a copy of the approved map to the appraiser, who shall include it in the appraisal report. The applicant shall also attach a copy of the map to the application form, and if the project is funded by the Board, the map shall become the basis of the farm plan approved by VHCB staff prior to disbursement of VHCB funds. Approval of an appraisal map by the staff should not be regarded by the applicant as pre-approval by the Board of any specific project configuration. If the Board asks for a reconfiguration as a condition of funding, additional appraisal work may be necessary.
1. Excluding farmstead complexes:
In determining the size of an excluded farmstead complex, consideration will be given to:
a. Town zoning
b. Future plans of the farmer (including farm labor housing needs)
c. Soil quality (located to minimize impact on prime and statewide soils)
d. Road frontage and access (may not include excessive road frontage, and may not prevent access to the conserved farmland).
e. Ease of conducting a legal survey in the future
f. Factors relating to the landscape and its use.
2. Non-subdividable Farmstead Exclusions:
In rare cases, the Board may want to focus conservation restrictions on the farmland, but restrict the separate conveyance of the farmstead. This configuration will only be chosen when it appears to be the best option for conserving the farmland while meeting VHCB’s goals of maximizing protection of agricultural lands and addressing future affordability concerns. (For example, a good farm resource in a community with few remaining farms, where the future use of the land by a farmer without an associated house site and farm buildings may be unlikely.)
3. Exclusions/reservations other than farmsteads:
a. Future and existing house site exclusions: are excluded entirely from the easement, and subdividable from the protected property. These sites are generally no larger than 2 acres, or the minimum allowed by zoning, and are located:
i. to avoid interruption of and minimize impact on farm fields, especially those with prime and/or statewide soils, and to avoid interference with agricultural operations; and
ii. to maximize the agricultural potential and scenic and/or historic features of the protected property; and
iii. in a cluster, rather than in a linear pattern along a roadway; and
iv. close to or utilizing existing roads, drives, services and utilities.
b. Future House site reserved exclusions: A designated future building area is identified ahead of time on the Farm Plan, and valued as such in the appraisal. When the landowner wants to exercise his/her right to build, the area is surveyed and released from the easement. (See above, 3.(a) 1 – 4 for location criteria.)
c. House Site Buy-Back: This agreement would allow a farmer to buy-back the right to build one, single-family house of a limited size in the future, if the conserved property did not include any housing, and the farmer could demonstrate that a house was necessary to operate a “stand alone” farm enterprise on the land. This right would be appraised at the time of the sale of development rights, and the appraisal would establish the value of the right, with a cost-of-living index adjustment. The future house, if built, would be non-subdividable, and would trigger an Option to Purchase at Agricultural Value on the whole farm, if one was not already in place. (See above, 3.(a) 1 – 4 for location criteria.
d. Non-Agricultural land: Lands without prime and/or statewide soils, that do not contribute to the economic viability of the farm operation and do not contain significant other values, may be excluded, provided that:
1. potential development of land excluded from the easement will have little or no negative impact on the conserved farming operation; and
2. the excluded portion is clearly depicted on the farm plan and reviewed and approved by VHCB staff.
e. Land in close proximity to a town or village center: Land that is near a village center and existing municipal services, may be excluded from an easement to accommodate future growth needs of the municipality.
Physically discrete parcels of land, that either already have unique tax identification codes, or are geographically separated by a road, river, or other permanent boundary, that could be equally efficiently used independent of each other in the future, may be conserved under one easement that includes the future right to subdivide and convey the conserved parcels separately (with approval from the Holders) if:
a. the parcels are located a distance from each other, and neither is dependent on the other for access, infrastructure, resource management, or other reasons; or
b. either parcel qualifies as “bareland”, representing a valuable soils resource; or
c. there is intention of future separation, at the time of conservation (such as to facilitate a planned inter-generational transfer).
In such cases, the appraisal will include the valuation of the likely future subdivision.
FUNDING PRIORITY
The best projects recommended will be eligible for full review by the Board based on the above mentioned priorities.
In addition, because the Board is charged with achieving the dual goals of creating affordable housing and preserving the state's agricultural land, funding priority will be given to projects that combine the conservation of farmland with the development of affordable housing. These dual goals do not necessarily have to be on the same site. Also, farmland conservation projects which achieve VHCB's other goals of preserving natural areas and historic sites and providing or maintaining recreational opportunities may attain a higher relative ranking for funding.
LEVERAGE FOR FARMLAND CONSERVATION PROJECTS
The Board will seek to maximize the use of its limited funds by leveraging other resources for a project. The Board recommends that applicants attempt to secure leverage with all VHCB farm projects. Once a farm project has been analyzed and ranked under the four Farmland Conservation Priorities (Land Resource, Location, Farm Infrastructure, Management) as determined by the Agricultural Advisory Committee and the Board Agricultural Committee, the amount and type of leverage may affect the relative ranking of the project. However, the Board may consider quality farm applications which were ranked highly by the Agricultural Advisory Committee but do not contain leverage.
(See Appendix II for leverage criteria and definitions.)
APPENDIX 1: SUMMARY OF APPLICATION PROCEDURES
VHCB's Purchase of Development Rights on Farmland program involves a two-step application process: a pre-application and a full application. The Board accepts pre-applications twice a year, and full applications several times a year, according to a schedule established each spring. Application deadline dates may be obtained by contacting VHCB staff.
Pre-application forms are to be completed primarily by the landowner, with assistance from an "eligible applicant" (see below). The pre-application assesses the farm resource, farm community and threat of development. It also asks for preliminary information on the other goals of the Board such as natural habitat protection, public outdoor recreation, historic preservation and affordable housing.
The eligible applicant must also submit a cover letter with the pre-application that highlights notable facts about the property or further details other VHCB goals which may be included in the project. Since the Board will seek to maximize the use of its limited funds by leveraging other resources for a project, preliminary information on leveraging, if available, may also be included in the letter.
Pre-Applications must be sponsored and submitted to the VHCB by an eligible applicant. An eligible applicant is a municipality, qualified department of state government, or non-profit conservation organization with an IRS 501(c)(3) status. Eligible applicants for farm projects include the Vermont Agency of Agriculture (828-2500), the Vermont Land Trust (1-800-639-1709), a statewide non-profit land conservation organization, and towns. Other eligible applicants include local or regional land trusts, such as the Upper Valley Land Trust (603-643-6626), the Hinesburg Land Trust or the Middlebury Area Land Trust.
Eligible applicants may submit to the VHCB all pre-applications that meet the Board's Minimum Criteria and that are consistent with the Board’s Farmland Conservation Priorities.
The VHCB has established an Agricultural Advisory Committee (the "Advisory Committee") to assist the Board in choosing farms for conservation at the pre-application stage. The Advisory Committee consists of two farmers, one of whom has sold development rights, and one representative each from the UVM Extension Service, Natural Resources Conservation Service, Farm Service Agency, and one representative of a farm lending organization. Advisory Committee members are appointed by the Secretary of Agriculture with VHCB approval and subject to term limits set by the Board.
The Advisory Committee makes recommendations to the VHCB Agricultural Committee (the "Board Committee"), prioritizing the farm pre-applications for funding. The Board Committee decides which projects advance to full applications and which do not. Projects which receive an affirmative vote of the Board Committee are also eligible for a VHCB grant of 50% of the cost of an appraisal of a conservation easement on the property. Applicants will utilize an appraiser whose work conforms to the Board's adopted appraisal standards to determine the fair market value of the development rights. Applicants will negotiate a price acceptable to the landowner, and the Board's contribution will not exceed the appraised value or the Board cap (see last section, below).
Applicants will also work with landowners to explore the other goals of the Board that may exist on the farm, and the potential for leverage.
Farm pre-applications that are not approved by the Board Committee are eligible to return as pre-applications and may be considered by the Advisory Committee in the next pre-application round. However, a pre-application that returns in this manner and is not approved a second time is not eligible to return again in the next pre-application round. A pre-application in this category may return after waiting out one round of the Advisory Committee.
To be considered by the full Board, approved pre-applications must be submitted as full applications by the date set by VHCB staff. If an approved pre-application is not submitted as a full application within two years of being approved as a pre-application, the project must return to the pre-application process and be reviewed by the Advisory Committee. If staff determines that extenuating circumstances prevented the timely submission of a full application, VHCB staff may grant an exception to this procedure. To receive such an extension, the applicant organization must have received written approval from VHCB staff prior to the last application deadline for which the project would have been submitted if an extension had not been granted.
Full applications will be reviewed by the full Board with a final decision made based upon the recommendations of the Board Committee, price/acre, leverage and the multiple benefits of the project.
A full application that the Board has voted not to fund is eligible to return as a full application at the next Board meeting. If the application is not submitted in time for consideration at that meeting or if the Board again votes not to fund the full application, the project must return to the normal pre-application process.
The VHCB staff may waive these procedures if the applicant and landowner demonstrate extenuating circumstances in support of a waiver.
APPENDIX II: VHCB FUNDING CAPS
VHCB PER PROJECT CAP
VHCB will not pay more than Two Thousand One Hundred Dollars ($2,100) per acre for the development rights value on farmland unless there is substantial leverage and Four Hundred Thousand Dollars ($400,000) per project. This cap does not apply to the Option to Purchase at Agricultural Value, or other affordability mechanism.
To be eligible for consideration as an “Outstanding Statewide Agricultural Resource”, a farm must fulfill the following requirements:
1. As compared to other farms in the same funding round and farms previously conserved by VHCB, the farm ranks high under the “Land Resource”, “Farm Infrastructure” and “Management” criteria of the Farmland Conservation Priorities.
2. Conservation of the farm would make a significant contribution to the local and/or regional farm community.
3. Conservation of the farm would serve multiple goals because the project includes one or more substantial enhancements within the following categories:
a. an outstanding historical or archeological resource
b. public access meaningful to the community
c. significant natural habitats or ecological resources
d. donation of conservation easements or lands into public ownership with significant non-agricultural natural resource, public recreation, or historic values
e. the farm adjoins and/or would significantly enhance an existing public investment in other non-agricultural natural resource lands owned or conserved by a public or non-profit entity
f. a buffer provision that complies with VHCB Buffer Policy in the easement would conserve the quality of significant state surface waters.
g. inter-generational transfer of the farm
VHCB staff and Board may use the above criteria to determine if a farm is eligible for funding moderately beyond the stated cap. However, large projects which exceed the cap substantially will continue to need to be conceived of and funded in stages.
VHCB PER ACRE CAP
The Board will not pay more than $2,100/acre for development rights on farmland (not including the Option to Purchase at Agricultural Value, or other affordability mechanism) unless there is substantial leverage. However, if the project qualifies as an exceptional resource, as defined below, the Board may at its discretion pay more than $2,100/acre.
To be considered an exceptional resource, the project must include at least 75% prime and/or statewide soils (preferably with a majority of prime soils). In addition, the parcel should be located in a strong agricultural community, or be of particular importance to the community (or the viability of a specific operation). It should be very clear to the Board that this parcel is likely to stay in agricultural operation for the foreseeable future, and will make a significant contribution to farming in the local or regional area. In cases where the Board decides to exceed the per acre cap, it still generally expects the project to include a reasonable amount of leverage (20%, and/or other resource values as listed below).
Substantial leverage is defined as follows:
- Meets at least two of the criteria in the "High" category
- More than 40% of the total project costs contributed by a town, other state or federal programs, private fundraising or bargain sale
- Meets one criteria in the "High" category and two criteria in the "Medium" category
- Leverage in the "Low" category will not be considered eligible for meeting the substantial category
- The Board will evaluate leverage based on the following list, and may consider other forms of leverage not on the list at its discretion. A project must meet at least one criterion in a category to be eligible for the designated category.
High
- Matching funds of more than 15% of the total project costs contributed by a town
- Matching funds of more than 20% of the total project costs contributed by a state or federal programs or private fundraising
- More than 20% of the total project costs matched with the donation of land or conservation easements on adjoining or nearby lands that would enhance the purpose of the project
- The donation of land on an appropriate site in the town for affordable housing where the need has been identified and an appropriate eligible applicant has expressed an interest in developing the site sometime in the future
- A bargain sale by the landowner of more than 20% of the value of the conservation easement by an appraisal or the value set by the Farmland Investment Program
- Project meets at least two of the medium criteria
Medium
- Matching funds of 8%-15% of the total project costs contributed by a town
- Matching funds of 10%-20% of the total project costs contributed by a state or federal programs or private fundraising
- 10%-20% of the total project costs matched with the donation of land or conservation easements on adjoining or nearby lands that would enhance the purpose of the project
- A bargain sale by the landowner of 10%-20% of the value of the conservation easement
- The donation of an easement for public recreational access to water (if not compensated for in the conservation easement value)
- A 50% bargain sale of an appropriate site in the town for affordable housing where the need has been identified and an appropriate eligible applicant has expressed an interest in developing the site sometime in the future
- The donation of appropriate land in town for a natural area protection, public recreation or historic preservation purposes
- The donation of a public access trail easement (if not compensated for in the conservation easement value) if it is part of a community/regional trail network
- Project meets at least three of the low criteria
Low
- 3%-8% of the total project costs contributed by the town
- 5%-10% of the total project costs contributed by the town, other state or federal programs or private contributions
- 5%-10% of the total project costs matched with the donation of land or conservation easements on adjoining or nearby lands that would enhance the purpose of the project
- A bargain sale by the landowner of 5%-10% of the value of the conservation easement
- The substantial donation of in-kind professional services.
- The donation of a public access trail easement (if not compensated for in the conservation easement value)
- The donation of an historic preservation covenant (Outstanding Historic Resources Clause) requiring landowner notification prior to demolishing or altering an outstanding historic resource or an historic resource on or eligible for the National Register of Historic Place.
[In some farmland conservation projects that contain a building on or eligible for the National Register of Historic Places or is considered an outstanding historic resource, the Board may require that an historic preservation notification provision be incorporated into the conservation easement. Such a provision will require that the landowner notify the Grantees 30 days prior to destroying or altering the exterior of the building. In determining whether a building is an outstanding resource, the Board shall give serious consideration to the recommendation of the Division for Historic Preservation.]
