Landowners interested in conserving their farmland for agriculture now and in the future through Ohio's most popular farmland preservation program can apply through May 11.
Because 12 county farms already have been accepted into the program and the county's location within the state, Seneca County farms have a good chance to score well on the competitive application for the Agricultural Easement Purchase Program.
The 2009 round of funding through the Ohio Department of Agriculture's Office of Farmland Preservation is under way. Voters in all 88 counties approved the program's extension last fall when they voted in favor of Clean Ohio funding.
The extension provides an additional $25 million for AEPP, but competition continues to be intense for the $6.25 million expected to be available this year.
"Farmland preservation is an important topic in Ohio," said Rob Krain, stewardship manager for Black Swamp Conservancy of Perrysburg during a recent farmland preservation meeting.
The conservancy, the main sponsor in northwest Ohio, has written 33 applications that have been accepted into the program - more than other local sponsors in Ohio.
During the meeting, program manager Kristen Jensen said her office has had a budget of only $1.25 million for past two years to fund AEPP, but the passage of the renewal means there is more money this year.
"2009 will start the first round of new Clean Ohio funding," she said. "Every single county passed the Clean Ohio fund. Currently, we have spending authority for $5 million," she said. She was expecting her office to have $6.25 million available after the state legislature finishes the budget.
AEPP places a permanent easement as deed restriction on a property.
"When you put this deed restriction on your land, you give up the right to develop it for non-agricultural uses," Jensen said.
The easement is recorded with the deed and remains with the land, even it is sold or handed down to heirs.
A local sponsor such as Black Swamp Conservancy monitors the property and make sure the deed is upheld. In all other aspects, the landowner retains ownership rights.
If a farm is accepted, the program buys the development rights for 75 percent of the value of the easement.
"When it says purchase, it really means partial purchase," Jensen said.
To be eligible, a farm must contain 40 acres (or 25 acres if the land is adjacent to a farm that is already enrolled) and must be enrolled in CAUV and the agricultural district program. If there's more than one parcel, they must be contiguous and be owned by the same legal entity. No portion of a farm may be omitted from an application.
The application uses a point system to determine which farms score highest and are accepted for easement purchase.
"We want to protect the most productive farmland," Jensen said. "It's pretty straightforward. We're trying to create large blocks of protected farmland."
For example, as in some parts of Seneca County, being close to farms that already have been placed in the program is beneficial.
"That would, in essence, give you more points," she said.
Location is another factor. Farms that earn the most points are far enough away from cities that they aren't under immediate development pressure.
"But not so far away from development pressure that you're not going to feel pressure in the 50 years or so," she said.
Support from local government and agencies also is important, she said. These include local planning efforts and resolutions of support from township and county officials.
The use of best management practices and a conservation plan also are taken into consideration.
The amount of the easement a landowner or other local entities are willing to donate can make an application more advantageous.
"The higher the percent that you donate or you can get a local organization to match your donation, you will receive a greater amount of points for that," she said.
The second part of the application tries to determine the reasons a landowner wants to preserve farmland. It includes the presence of an agricultural support infrastructure; management, estate and business planning, investments in the farm; past awards and the potential as a showcase for farmland preservation; local government's preservation efforts; and the use of sustainable agriculture actions.
"That gets into the subjective part of the form," Jensen said. "There are a lot of people vying for these funds and we want to make sure you're in it for the right reasons."
Example applications from last year can be found online at www.agri.ohio.gov/farmland to give landowners an idea of what is involved. To help determine how a farm might score on the application, go to the Web site, click on "2009 Application," and click on "Tier One Estimator" in the left column.
Jensen said she balances funding throughout the state.
"I regionalize the state according to the number of applications I receive," she said. "Each quadrant receives an equivalent portion of the funds."
Since its start in 1999, ODA's agricultural easement programs have preserved 167 farms totaling almost 31,000 acres, of which 26,000 has been through AEPP.
Jensen said Ohio lost almost 7 million acres of farmland between 1950-2000. Agriculture continues to be Ohio's No. industry, but she said 200 acres of farmland is lost every day statewide.
"We're ranked second nationally in farmland loss," she said. "We're not growing smartly and that's one of the reasons we're gobbling up our farmland so quickly."
In addition to AEPP, the state office two other programs available - the Ohio Agricultural Easement Donation Program and the Ohio Agricultural Security Area program.
The Ohio Agricultural Security Area program allows a landowner or a group of landowners with at least 500 acres of contiguous land to form an Agricultural Security Area through the county commissioners and the township trustees. There are 23 ASAs in Ohio, including one in Seneca County.
ASAs help protect farmland from non-farm development by setting aside large portions of land. They also can provide a tax benefit for investment on land in the ASA. The locally-controlled program is voluntary and respects property rights.
The Ohio Agricultural Easement Donation Program allows landowners to donate a conservation easement instead of selling it. ODA has 42 donated easements totaling 5,325 acres.
Donated easements must be at least 40 acres and land must be enrolled in CAUV and the agricultural district program.
Landowners don't pay any fees. Administrative expenses such as title work, monitoring and recording fees are paid by the state. If it's a perpetual donation, she said donors might qualify for federal tax deductions.
Kevin Joyce, BSC's executive director, said there are several reasons landowners might consider donating development rights instead of competing for Clean Ohio funds. Maybe land is too close to a town to score well or the landowner doesn't like the easement wording.
"The terms of the easement are set by the state of Ohio. If you don't like those terms, you can choose to go through a donation process," he said. "That's what the federal income tax incentives are all about."
Joyce reviewed examples of the tax incentives available for landowners who are paid for a portion of their easement and those who donate a conservation easement.
In his example, 200 acres of farmland was valued at $5,000 per acre, or $1 million total. The value of the property after the deed restriction would be $400,000 and the ag easement value would be $600,000.
In the example, a landowner would receive $240,000 for a grant at 40 percent of the ag easement value, leaving a tax deductible gift value of $360,000 on the remainder.
In that scenario, Joyce said a landowner with an adjusted gross income of $60,000 could save $13,000 a year in federal income taxes for six years, or $78,000.
Using the same land value example, Joyce said donation of a conservation easement would net the owner $130,000 in income tax savings over a 10-year period.
For more details on tax incentives, contact Joyce at (419) 872-5263 or he suggested consulting a tax preparer.