A handful of Maryland counties, long active in easement purchase through the Maryland Agricultural Land Preservation Program (MALPF) have, over the years developed local programs to improve the process of easement sale for their landowners in terms of prices paid, methods of payment, flexibility and processing time.

Carroll County

Located within easy commuting distance of both Baltimore and Washington, DC, Carroll County, Maryland set a goal for itself in the late 1970's of permanently protecting 100,000 acres of farmland. They enacted 1:20 cluster zoning (a change from 1:1 zoning) to stabilize the land base and began vigorous participation in the state purchase of development rights program. To date they have agricultural easements on over 33,000 acres. However, they discovered that the state program could not respond quickly enough when prime land was at the critical point of changing ownership.

The county's response was the development of a 'Critical Farms Program'. It functions as an enhancement to the state PDR program and guarantees a minimum easement value for farms that are being transferred. Applicants must be the contract purchasers or recent purchasers of a farm that qualifies for the state PDR program and that ranks high on the county's preference formula. Based on an appraisal of the value of the easement, the county offers the new owner a payment of 75% of easement value for an option for the county to acquire the easement at the end of the five-year period.

When the new owners receive the money for the option contract, they are obligated to put the farm in a state agricultural district and to offer to sell the easement to the state program for five years. If the state acquires the easement, the county is repaid the exact amount that was provided up-front (no interest payment is required). The money is then recycled into the Critical Farms Program. At the end of five years, if the easement has not been purchased by the state, the farm owner has two options: repaying the County (with interest) for termination of the option agreement; or, accepting the easement as permanent with no additional payment from the county. Since it began in 1992, the Critical Farms Program has entered into 30 option contracts on 3,946 acres. So far, almost all of easements have been purchased by the state and the remainder are in the pipeline.

CONTACT:
William R. Powel, III
County Office Bldg.
225 N. Center Street
Westminster, MD 21157
410-386-2131
1-888-302-8978
ccagpks@ccg.carr.org

Frederick County

Long active in the state MALPF program, in 1994 Frederick County enhanced its efforts with a Critical Farms Program, similar to Carroll County’s to help fulltime farmers buy property when it came on the market. They have also recently begun an IPA (installment purchase agreements) to leverage funds for easement purchase. (See Howard County for concept).

CONTACT:
Tim Blaser
Frederick County Planning & Zoning
Winchester Hall
Frederick, MD 21701
301-694-2513
Fax: 301-694-2054
tblaser@fredco-md.net

Howard County

Faced with rapid suburbanization in the late 1980's, Howard County (located between Baltimore and Washington, D.C.) pioneered a way to fund easement purchases, up-front, while the land was still available, and in a way that used tax benefits to make the county's easement purchase offers competitive with developers' offers. The concept was inspired by the oft-repeated complaint of farmers that 'it's not what you get (for PDR), it's what you get to keep'. Instead of paying with cash, the county offered an installment purchase agreement (IPA), which is a promise to pay in thirty years. By holding the IPA the landowner deferred capital gains and collected an annual stream of tax-free interest on the full value of the easement purchase transaction. The easement is permanent and runs with the land but the IPA is separable from the land and can be securitized and sold on the bond market if needed for cash. The county purchased 30-year federal zero-coupon bonds to fund the balloon payments on the agreements at the end of their terms. A zero-coupon bond requires a small downpayment relative to the face value of the bond and produces no annual interest; instead, the bond pays a lump sum when it matures. In the meantime, the county uses a portion of the local real estate transfer tax that is dedicated by law to farmland preservation to pay the interest to the holders of the IPAs. When introduced, this funding/payment mechanism invigorated the local PDR program allowing them to double in easement acreage in three years what it had taken ten years previously to accomplish. They spent about $9 million of available funds to permanently protect $57 million worth of easements.

While begun in Howard County, use of installment purchase agreements with zero-coupon bond financing has been replicated in Harford County, Maryland, Virginia Beach, Virginia, Burlington County, New Jersey, Peninsula Township, Michigan and is currently being introduced into Pennsylvania's state PDR Program. An interesting side note is that Howard County and others using IPAs received bond rating upgrade by the bond-rating houses and farmland preservation and growth management were specifically cited among the reasons given. To outside investors, buying and extinguishing development rights is a technique for avoiding future, much greater, infrastructure costs.

CONTACT:
Joy Levy
Howard County Planning & Zoning
George Howard Bldg. 1st Floor
3430 Courthouse Drive
Ellicott City, MD 21043
410-313-5407
Fax: 410-313-5407
jlevy@co.ho.md.us

Harford County
Not long after Howard County adopted IPA’s (installment purchase agreements) to leverage their local dollars and provide tax benefits for easement sellers, Harford County instituted a similar program that substantially accelerated their acquisition of protected farms. The local program quickly outstripped their participation in MALPF. They also offer generous tax credits for preserved farmland: 100% on land and buildings with a cap of $35 per acre. The County has a TDR program on the books as well.

CONTACT:
William Amoss
Harford County Planning & Zoning
220 South Main Street
Bel Air, MD 21014
410-879-2000 x3103
Fax: 410-879-8239
wdamoss@co.ha.md.us

Anne Arundel County
In 1999 Anne Arundel County made the decision similar to Howard and Harford counties to ‘front-load’ their buying power by leveraging county dollars with IPA (installment purchase agreements) to secure farmland. In addition, they offer some of the most generous tax credits to farmland preserved by the local program or by MALPF: 100% on land, 100% up to $250,000 of value on structures.

CONTACT:
Barbara Polito
Anne Arundel County Dept. of Recreation & Parks
Box 6675
Annapolis, Md 21401-7080
410-222-7317
Fax: 410-222-7320
barbarapolito@hotmail.com

Calvert County
A rural county in southern Maryland, Calvert County has also integrated development rights transfer (TDR) into their land protection toolbox. Closely coordinated with it is the county’s local easement purchase program known as Purchase and Retire (PAR). An installment purchase program called Leverage and Retire (LAR) has recently begun.
In addition, the County provides a $1 million no-interest revolving loan fund for the local farmland trust to quickly protect at-risk farms.

CONTACT:
Gregory Bowen, Deputy Director
Calvert Co Planning & Zoning
Courthouse Rm 1600
Prince Frederick, MD 20678
(Susie Hance-Wells)
410-535-2348