selling development rights

[jimg]

Whats involved in selling the development rights to a piece of property? The case Im thinking of is dev rights to ag land so it will always be used for that purpose. (I assume thats the only purpose which it could be used for...but is that necessarily true??) I know the state gives some amt of $$ to the land owner for their JH but beyond that Im clueless. I was wondered what the fine print looked like. What happens if eventually no one wants to farm it...does the state take it?

 

[EarPlug]

Do want to encourage Development or Restrict/Protect from Development? If you are trying to Protect the land then look at Conservation Easements.

Jack

 

[jimg]

Yes, I guess they are called conservation easements in some areas but others seem to ref to them as dev rights easements or some such. My state, I believe, has nothing like this. At any rate Im not real interested my self but thought it might be interesting to understand whats involved.

 

[coveredbridge]

Yes, I guess they are called conservation easements in some areas but others seem to ref to them as dev rights easements or some such. My state, I believe, has nothing like this. At any rate Im not real interested my self but thought it might be interesting to understand whats involved.

Here's a link that describes, briefly, the program in PA.
Agriculture: About Farmland Preservation

As I understand it, an easement is recorded (in favor of the state) on property entered into the program that prohibits the development of the property. The owner could still choose not to farm the property, he just couldn't develop it. If he sold the property, the easement would run with the property, binding any buyer to the same conditions.

Since the idea is to preserve "prime" agricultural lands, I can't imagine that the Ag Preservation Board would ever agree to release the easement, but I suppose that there could be circumstances well into the future where it would serve the public interest for the state to cancel the easement. I don't know if the Ag Preservation Board currently has that power, or if it would require legislation granting them that power. I don't believe the easement conveys any rights to the state to assume ownership of the property.

 

[riptides]

Like a previous noter said, the easement runs with the land. No developer can hand you that big fat check. Your options on selling are limited to those folks that like your lot the way it is. You may also have issues sub-dividing if the land cannot be included in parcels according to your county/state laws.

 

[plowking]

Back in the building boom,my town paid a landowner two million dollars for conservation rights to two thousand acres of land,if they didn't there could have been a potential 400-500 more homes in town. The land does have a watersource if the town ever needed it, that was one of the selling points for the easement. Some of the financing came from fundraising with the society of protection for NH forests, rest was the taxpayers . I don't see as much requests for easements with the economy slowing. plowking

 

[Wayne County Hose]

In Pa it's called "Clean and Green." You can develop your land or do whatever you like with it in the future, or, whoever you sell it to can do the same. The only catch is that you have to pay back all the taxes you saved from the date you signed on.

 

[hayden]

There are a number of different kinds of easements and protections for land, and they are all a little bit different. Some are private, and some a state programs and of course vary from state to state. What state are you in?

Here's what I'm aware of in NH and VT.

1) "Current Use", "Use Value", etc. These programs are state run and have different names in different states. They are designed to encourage land owners to keep their land in agricultural or forestry use, and do so by providing a significant property tax break. In exchange for the tax break, you agree to use the property in it's "current use". The deal is secured via a lien on your property and it carries thru to new owners. Often you can get out of these deals, but their is a "change tax" that you pay, so it creates a dis-incentive to development. Unfortunately, developers will often just pay the fee and chop chop chop.

2) Private easements, held by owner: You can place whatever restrictions you want on your property by way of an easement on the deed. You can prohibit sub-division, commercial use, building, etc. Typically these easements are placed on property when you sell it, thereby restricting the new owner. One isssue with such an easement is that only the Grantor (seller) can enforce the easement. For example, let's say your neighbor sells his property and prohibits sub-division in the deed. Down the road, the new owner builds another house and sells it off with an acre of land, thereby violating the subdivision restriction. You have no complaint because the restriction on the deed doesn't benefit you. Only the previous owner can enforce it, and they or their heirs may have no interest in doing so.

3) Private easements, held by a land trust: These are like (2), but the "rights" are conveyed to a third party who's purpose in life is to protect those rights. Now you have an organization owning the rights that you wish to restrict who's job is to monitor and prevent violations. I use the term "land trust" loosely, since there are all sorts of trusts with all different kinds of objectives. They can also be town conservation commissions, or other organization. If you are thinking of granting easement rights to an org, check carefully what their objectives are to be sure they are well aligned with your own.

Another important issue is how the easement in (3) is conveyed to the land trust. They can be donated or sold. A land trust is more likely to accept a donated easement rather than agree to buy one, but donating an easement can have an attractive tax benefit to the donor. The value of the rights being granted can be taken as a tax deduction, assuming the land trust is a 501C3 non profit, which pretty much all are. To get a land trust to buy an easement typically requires that the land being protected has broad public appeal and benefit, or is of critical importance to the mission of the land trust, such that money can be raised for the purchase.

Hopefullly this helps sort out the different replies you have and will get to the question.

 

[riptides]

Nice write up hayden. Excellent point on the State residency.

Did you sleep at a holiday inn last night?

 

[jimg]

'Current use' wasnt what I was thinking about. We do that here but under a diff name and is temporary. What Im thinking about is dev rights bought by the state w/ the idea the land will always be used for some purpose (in this case agriculture). Im guessing the state holds the rights vs a quasi-govt trust. Whats hard to understand is how the state defns 'agriculture' and what happens if no one wants the land w/o the dev rights or the land is allowed to decline. The theory seems good but there seem to be significant pitfalls too. I wonder how many farms were enrolled in such programs for the $$$ only. I think dev rights can be worth a good pile of cash.

 

[riptides]

What state are you in? Virginia has a Purchase of Development Rights. Many counties in the Piedmont participate. The sole purpose is to keep land in Agricultural use. The land may lay fallow, or decline. but the easement remains and runs with the land. Ag use in VA is clearly defined.

Remember in some parts of VA, your talking millions of dollars for acreage, PDR is in the tens of thousands.

 

[hayden]

JimG, What state are you in? It would help a lot to know, and maybe someone knows more about your state program. What you describe sounds like what I described as a "private easement, held by a land trust", where the land trust is the state.

Riptides, No Holiday Inn Express for me, but I'm very involved in this right now in my area trying to protect a bunch of land, including my own. Also, my BIL run the land protection group for the NH Forest Society which was reference in an early post by plowking around some land in Nottingham, NH if I recall correctly. He has done easements on literally 100's of thousands of acres in NH.

 

[jimg]

riptides: I know VA has a program but didnt know details. Thanx for filling those in some. You made an interesting stmt, 'Many counties in the Piedmont participate.'. Does that mean even though this is a state program its up to the county to decide whether theyll participate? Does that mean the county contributes some of the $$ or is it all from the state level? Letting land go into decline w/o any management seems at best marginal to still be called agricultural. It sounds as though they just wanted a means of keeping McMansions from popping up and land use is secondary.

I looked into VA land a number of yrs ago and I didnt think it was too outrageously priced (at least in the rural areas) for what you were getting. NOVA is an all together diff 'beast' and really doesnt reflect the rest of the state. When you say PDR is that the program which buys dev rights? Since youre located in VA have you looked into this program at all?

Here, in TN, we have no such program that Im aware of. The only thing coming close is whats called green belt (aka current use). To qualify the land must be agricultural (min/max size of 15a/1500a + min yearly income), forest (min/max size of 15a/1500a + under a sustainable management program) or open/natural/unmanaged (min/max size of 3a/1500a). If the land is taken out of the program the diff in back taxes to 3, 3 and 5 yrs respectively are due.

Hayden: I see, I didnt think of the state being a private trust nor the land held by them as a private easement. Guess that was part of the purpose of my posting...to understand some of the details.

I lived in NH for a number of yrs not so long ago and at that time current use was the only game in town. There was no dev rights program and I dont think there still is.