I recently participated in a discussion about the possibility of a farmland preservation program for Will County. You may ask, how would a program like that work and why would anyone participate? Let me try to explain.
Assume a farmer would like to retire from a career of farming. They are asset rich, but cash poor. This means they may not have enough cash for a comfortable retirement without selling their biggest asset, the land. Who will buy the land, and what will they do with the land? If the farmland is close to a growing suburban community, it may be worth more than another farmer would be able to justify paying and continue to farm it for a profit.
In this case the landowner could apply for farmland preservation if such a program were in place. Appraisers may determine the farm is worth $21,500 per acre since it has serious potential to be developed for non-agricultural use. If the current average cost of traditional agricultural land is determined to be $12,500 per acre, that means the farm has a value of $9,000 per acre for its developmental potential. 21,500 - 12,500 = 9,000.
Let’s assume the farm is 80 acres. If the farmer could enter an Agricultural Conservation Easement Program, they would receive $720,000 without selling the farm. The farmer has now sold the developmental rights for the farm in perpetuity, $9,000 x 80 = $720,000. They would now have funds for retirement; and if they rent the farm to another farmer, they would also receive additional funds each year from the rental payments. This would go a long way towards securing some financial security for a retirement.
What if the farmer had no family members continuing the farm and wanted to totally exit farming and receive their maximum payout. One could reasonably assume a sale price of $12,500 per acre times 80 acres for an additional 1 million dollars. The landowner would now have $1,720,000 for their retirement, ($1,000,000 from the sale + $720,000 from the conservation payment) and, thanks to the conservation easement the land would still be available for other farmers to purchase without the risk of being outbid by developers.
What if the farmer had multiple children but only one is actively farming and the farmer wants to treat all the heirs equally? A conservation easement would provide funds for retirement. At death, all unused funds received from the easement allocation would be distributed to the heirs. With the financial cap on the value of the land being designated as farmland, this would provide a much easier way for the heir wanting to farm to be able to buy the other heirs’ share of the land and continue to farm the farm that has been in the family for generations.
Perhaps the landowner/farmer desires the land continue as a farm but has concerns their heirs will only seek the highest financial reward. An agricultural conservation easement would also guarantee that a landowner knows their wishes for the future use of their land after death is legally binding upon all subsequent owners. Conservation easements are being successfully used in Kane County. A federal program matches ½ of all funds used for each easement. Can I come up with another possible scenario?
What if a landowner signs their land into a long-term lease with a solar facility. We are all aware that the yearly leases pay much more than anyone can make farming the land. If this land was entered into an agricultural conservation easement, it would guarantee that upon decommissioning the land would once again be actively used for farming.
I have heard people complain that there is too much traffic/congestion, too many trucks or warehouses, too many homes or subdivisions, too much expansion and growth. I have yet to hear anyone complain that we have too much farmland. As of now, we have never implemented any policy to change the status quo. If we do not do anything soon, there will not be many fields for a farmer to be “outstanding” in.
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