Pennsylvania Farmland Preservation Association Prof. Tom Daniels Dept. of City and Regional Planning University of Pennsylvania May 18, 2011 What Role for PFPA? Self-audit: What is working, what isn’t? What needs to be changed? Innovate: Like-kind exchange, TDRs, partnerships, points-based appraisals Update program Share information: successes as well as failures: Celebrate Success Work with Bureau, lobby—state legislature and NRCS (Congress) Don’t get complacent PA Farmland Preservation Funding Source: Warwick Township, PA Issues in the 2008 PA Farmland Preservation Study The Weighting of Soils, Development Pressure, and Other Factors (Since 1994) The current system is a minimum of 40% on soils, and emphasis on preserving farms under a considerable amount of development pressure Two key strategies are missing: Preserving farmland in large contiguous blocks and along growth boundaries or boroughs 25-year Extinguishment Clause Time to remove this Maryland has done this Make easements really permanent Link ag zoning with Ag Preservation Lancaster County APB does this Otherwise, risk of preserved farms acting as a magnet for development Farmland Preservation Report A cap of $10,000 per acre was removed from the program in 2001. As of the end of 2007, according to the audit, the state had contributed funds to 36 projects totaling 2,613 acres costing over $10,000 per acre and a total of $38.3 million. The report stated that those funds would have purchased 23,759 acres using the state’s average per acre cost of $1,612 for easements costing less than $10,000. Pay to Play Require local dollar allocation for farmland preservation in order to receive state matching funds How much $$$ is reallocated each year from counties that are not spending their state funds? Allocation Formula Currently based on county property transfer revenues and county allocation relative to other counties. Should be based on percentage of state ag output and allocation relative to other counties—this is the reallocation formula 1989 Allocation Formula A Recent Study at Penn The real estate transfer tax variable was the most important variable with a Beta value of -.821. This negative value indicates that a higher real estate transfer tax corresponds with a decrease, or smaller increase, in agricultural sales from 1987 to 2007. More Results A county’s share of the state’s agricultural sales had a negative influence on the percentage of acres preserved. This suggests that more funds should be given to counties with high shares of PA’s agricultural industry so that counties with a large amount of ag activity can preserve more farmland. Descriptive Statistics of Variables Variable Change in Agricultural Sales 1987-2007* Acres Preserved Percent Acres Preserved Minimum -70% (Wyoming) Maximum Mean 69% (Schuylkill) 98 acres (Pike) 63,447 (Berks) -2% 7,797 acres 1% (Greene) 29% (Berks) 6% 28 years (Lancaster) 18 years $9,527 (Chester) $3,841 $7,633,13 2 Real Estate Transfer** Tax Proxy 5 years (Pike and Greene) $1,666 (Warren) $211,379 (Greene) County Contribution** $0 (Allegheny $7,772,58 and Indiana) $90,949,415 (Lancaster) 6 Years in Program Value of Farmland* (average of 1992-2007) Portion of State's Agricultural Sales* (average of 1987-2007) Population Change $32,099,063 (Bucks) .4% (Pike) 19% (Lancaster) 2% -6% (Cambria) 66% (Pike) 6% * in 2007 dollars ** in 2010 dollars Other Issues Backlog of applicants Viability of Preserved Farms What uses to allow on preserved farms (especially alternative energy generation) Farmland prices Future funding Monitoring and enforcement, especially with 2nd and 3rd owners Contiguous and Stand Alone Farms by Acreage Farm Blocks in Acres Number of Blocks Acreage in Block 339 71,910 231 65,743 9 20,927 250 or Less 18 37 275 12,112 13,039 25,832 Stand Alone Parcels 108 6,167 Within 1/2 Mile of a Contiguous Block 76 4,382 Beyond 1/2 Mile of a Contiguous Block 32 1,785 TOTAL Contiguous Blocks 1,000 500-999 250-499 Nutrient Trading A possible funding source for farmland preservation? Sewage treatment plants in Chesapeake Bay watershed are being required to lower nitrogen and phosphorus emissions. Sewage treatment plant can upgrade or buy credits from farmers or others with “certified” credits (certified by DEP) Nutrient Trading II Farmer sells reduction in nitrogen from BMPs that exceed “baseline compliance” to sewage treatment plant. DEP and PennVest set up a nutrient trading auction (wrong model) Nutrient Trading III—Results So Far Oct 28-29, 2010: 21,000 pounds of nitrogen removal each year for 3 years at $3.04 per credit (lb) Nov. 4-5, 2010 41,000 pounds of nitrogen at $2.75 per credit (lb). Sellers, E-Town Borough, Lancaster County (7,369 credits), City of Lancaster (29,909 credits), Lycoming County (3,733 credits). Buyer: PPL EnergyPlus, LLC Nutrient Trading IV The big player is Red Barn Trading in Lancaster Website: http://www.dep.state.pa.us/river /Nutrient%20Trading.htm Nutrient Trading V Pat O’Connell’s idea was to have the county buy the credits from the farmers and re-sell them to the sewage treatment plant operators. The farmers would receive payment over 10 years (Installment Purchase Agreement). An “enhanced easement” would include the required BMPs to exceed baseline compliance and generate credits.