Robert H. Levin -Attorney at Law         

Big Changes Afoot:  The Purchase of Agricultural Conservation Easements under the 2002 Farm Bill and the Land for Maine’s Future Program

 Copyright 2003, Robert H. Levin, Attorney at Law

Published in The Maine Farmer, February 2003

             Have you ever wondered if a conservation easement might be a good idea for your farm?  Perhaps you have concluded that you simply could not afford to donate an easement.  Or maybe you did not want the state or federal governments to hold the easement.  It’s also possible that in the past, funds were not available to purchase an easement on your farm.  New provisions in the 2002 Farm Bill might lead you to take another look at this option. 

A key feature of the Farm Bill was Congress’ authorization of an eye-opening $598 million over 6 years for the Farm and Ranchlands Protection Program (FRPP), up from $35 million under the 1996 Farm Bill.  In a nutshell, FRPP provides funds through the Natural Resources Conservation Service for the purchase of conservation easements on agricultural lands.  The program requires a 50% non-federal match, which can come from the state, a municipality, a land trust, or a donation by the landowner (up to 25%).  In a major change from earlier versions of FRPP, the easement may now be held by a land trust, rather than a governmental entity.  For those who are wary of government ownership of land, this is an important distinction.  Farmers interested in working with a land trust might consider the Maine Farmland Trust or a local land trust. 

            At the state level, the Land for Maine’s Future Program allocates a certain percentage of its funds for the protection of farm properties.  The LMFP is administered by the State Planning Office, and all farmland projects must be sponsored by the Maine Department of Agriculture, Food & Rural Resources.  As of late 2002, seven LMFP farmland projects covering 2,744 acres have been completed, with more on the way.  Many projects receive both FRPP and LMFP funding.

            To be sure, a conservation easement is not the right move for every farmer.  If you would like to keep open the option of selling your land for development at some point in the future, an easement would probably not be wise.  There are also up-front transaction costs (survey, appraisal, legal/accounting fees) to consider.  Patience is also important, as the typical FRPP and LMFP project takes 18 months to 2 years to complete.  At the same time, I often hear landowners tell me that an easement is not for them because they want to allow their son or daughter to be able to build a home on the property.  They are often surprised when I respond that they can have most of their cake and eat it too.  That is, they can donate or sell a conservation easement that allows for the building of one or two (or perhaps even more) additional residences on the property.  The sale value or charitable deduction will not be as large as for an easement that completely extinguishes all development rights, but it could still be considerable.  Because the sale or gift of an easement also lowers the value of a property, it may also qualify for reduced local property taxes under Maine’s Farm and Open Space Tax Program.

            For those willing to engage in some advance planning, there are many techniques that could help a farmer get the most out of a conservation easement, such as a bargain sale or a like-kind exchange.  (These more complex vehicles may be explored in future Maine Farmer articles.)  In any event, farmers are encouraged to consult with a knowledgeable accountant and attorney in order to determine how an easement would fit into their larger estate planning or business plan goals.  In addition, farmers can gather more information by contacting a local land trust, the Maine Farmland Trust, the Land for Maine’s Future Program, or the Maine Department of Agriculture.  Furthermore, LMFP (www.state.me.us/spo/lmf/index.htm) and NRCS (www.nrcs.usda.gov/programs/fpp) maintain websites that offers a range of useful information.

Copyright 2003, Robert H. Levin, 207-774-8026, white_birch@yahoo.com   

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