Pennsylvania Farmland Pennsylvania Farmland Preservation AssociationPreservation Association

Prof. Tom DanielsProf. Tom DanielsDept. of City and Regional PlanningDept. of City and Regional Planning

University of PennsylvaniaUniversity of PennsylvaniaMay 18, 2011May 18, 2011

What Role for PFPA? What Role for PFPA? Self-audit: What is working, what Self-audit: What is working, what

isn’t? What needs to be changed?isn’t? What needs to be changed? Innovate: Like-kind exchange, TDRs, Innovate: Like-kind exchange, TDRs,

partnerships, points-based appraisalspartnerships, points-based appraisals Update programUpdate program Share information: successes as well Share information: successes as well

as failures: Celebrate Successas failures: Celebrate Success Work with Bureau, lobby—state Work with Bureau, lobby—state

legislature and NRCS (Congress)legislature and NRCS (Congress) Don’t get complacentDon’t get complacent

PA Farmland Preservation FundingPA Farmland Preservation Funding

Source: Warwick Township, PA

Issues in the 2008 PA Farmland Issues in the 2008 PA Farmland Preservation StudyPreservation Study

The Weighting of Soils, Development The Weighting of Soils, Development Pressure, and Other Factors (Since 1994)Pressure, and Other Factors (Since 1994)

The current system is a minimum of 40% The current system is a minimum of 40% on soils, and emphasis on preserving on soils, and emphasis on preserving farms under a considerable amount of farms under a considerable amount of development pressuredevelopment pressure

Two key strategies are missing: Preserving Two key strategies are missing: Preserving farmland in large contiguous blocks and farmland in large contiguous blocks and along growth boundaries or boroughsalong growth boundaries or boroughs

25-year Extinguishment Clause25-year Extinguishment Clause

Time to remove thisTime to remove this Maryland has done thisMaryland has done this Make easements really permanentMake easements really permanent

Link ag zoning with Ag PreservationLink ag zoning with Ag Preservation Lancaster County APB does thisLancaster County APB does this Otherwise, risk of preserved farms Otherwise, risk of preserved farms

acting as a magnet for developmentacting as a magnet for development

Farmland Preservation ReportFarmland Preservation Report

A cap of $10,000 per acre was removed A cap of $10,000 per acre was removed from the program in 2001. As of the end of from the program in 2001. As of the end of 2007, according to the audit, the state had 2007, according to the audit, the state had contributed funds to 36 projects totaling contributed funds to 36 projects totaling 2,613 acres costing over $10,000 per acre 2,613 acres costing over $10,000 per acre and a total of $38.3 million. The report and a total of $38.3 million. The report stated that those funds would have stated that those funds would have purchased 23,759 acres using the state’s purchased 23,759 acres using the state’s average per acre cost of $1,612 for average per acre cost of $1,612 for easements costing less than $10,000.easements costing less than $10,000.

Pay to PlayPay to Play

Require local dollar allocation for Require local dollar allocation for farmland preservation in order to farmland preservation in order to receive state matching fundsreceive state matching funds

How much $$$ is reallocated each How much $$$ is reallocated each year from counties that are not year from counties that are not spending their state funds?spending their state funds?

Allocation FormulaAllocation Formula Currently based on county property Currently based on county property

transfer revenues and county transfer revenues and county allocation relative to other counties. allocation relative to other counties.

Should be based on percentage of Should be based on percentage of state ag output and allocation state ag output and allocation relative to other counties—this is the relative to other counties—this is the reallocation formulareallocation formula

1989 Allocation Formula1989 Allocation Formula

A Recent Study at PennA Recent Study at Penn

The real estate transfer tax variable The real estate transfer tax variable was the most important variable with was the most important variable with a Beta value of -.821. This negative a Beta value of -.821. This negative value indicates that a higher real value indicates that a higher real estate transfer tax corresponds with estate transfer tax corresponds with a decrease, or smaller increase, in a decrease, or smaller increase, in agricultural sales from 1987 to 2007. agricultural sales from 1987 to 2007.

More ResultsMore Results

A county’s share of the state’s A county’s share of the state’s agricultural sales had a negative agricultural sales had a negative influence on the percentage of acres influence on the percentage of acres preserved.preserved.

This suggests that more funds should This suggests that more funds should be given to counties with high shares be given to counties with high shares of PA’s agricultural industry so that of PA’s agricultural industry so that counties with a large amount of ag counties with a large amount of ag activity can preserve more farmland. activity can preserve more farmland.

Descriptive Statistics of VariablesVariable Minimum Maximum MeanChange in Agricultural Sales 1987-2007*

-70% (Wyoming) 69% (Schuylkill) -2%

Acres Preserved98 acres

(Pike) 63,447 (Berks)7,797 acres

Percent Acres Preserved 1% (Greene) 29% (Berks) 6%

Years in Program5 years (Pike and Greene) 28 years (Lancaster) 18 years

Value of Farmland* (average of 1992-2007)

$1,666 (Warren) $9,527 (Chester) $3,841

Real Estate Transfer** Tax Proxy

$211,379 (Greene) $32,099,063 (Bucks)

$7,633,132

County Contribution**

$0 (Allegheny

and Indiana)$90,949,415 (Lancaster)

$7,772,586

Portion of State's Agricultural Sales* (average of 1987-2007) .4% (Pike) 19% (Lancaster) 2%

Population Change-6%

(Cambria) 66% (Pike) 6%* in 2007

dollars** in 2010

dollars

Other IssuesOther Issues

Backlog of applicantsBacklog of applicants Viability of Preserved FarmsViability of Preserved Farms What uses to allow on preserved What uses to allow on preserved

farms (especially alternative energy farms (especially alternative energy generation)generation)

Farmland pricesFarmland prices Future fundingFuture funding Monitoring and enforcement, Monitoring and enforcement,

especially with 2especially with 2ndnd and 3 and 3rdrd owners owners

Contiguous and Stand Alone Farms by Acreage

Farm Blocks in Acres Number of Blocks Acreage in Block

TOTAL 339 71,910

Contiguous Blocks 231 65,743

1,000 9 20,927

500-999 18 12,112

250-499 37 13,039

250 or Less 275 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

Nutrient TradingNutrient Trading A possible funding source for A possible funding source for

farmland preservation?farmland preservation? Sewage treatment plants in Sewage treatment plants in

Chesapeake Bay watershed are Chesapeake Bay watershed are being required to lower nitrogen and being required to lower nitrogen and phosphorus emissions.phosphorus emissions.

Sewage treatment plant can upgrade Sewage treatment plant can upgrade or buy credits from farmers or others or buy credits from farmers or others with “certified” credits (certified by with “certified” credits (certified by DEP) DEP)

Nutrient Trading IINutrient Trading II

Farmer sells reduction in nitrogen Farmer sells reduction in nitrogen from BMPs that exceed “baseline from BMPs that exceed “baseline compliance” to sewage treatment compliance” to sewage treatment plant.plant.

DEP and PennVest set up a nutrient DEP and PennVest set up a nutrient trading auction (wrong model)trading auction (wrong model)

Nutrient Trading III—Results So Nutrient Trading III—Results So FarFar

Oct 28-29, 2010: 21,000 pounds of Oct 28-29, 2010: 21,000 pounds of nitrogen removal each year for 3 years nitrogen removal each year for 3 years at $3.04 per credit (lb)at $3.04 per credit (lb)

Nov. 4-5, 2010 41,000 pounds of Nov. 4-5, 2010 41,000 pounds of nitrogen at $2.75 per credit (lb). Sellers, nitrogen at $2.75 per credit (lb). Sellers, E-Town Borough, Lancaster County E-Town Borough, Lancaster County (7,369 credits), City of Lancaster (7,369 credits), City of Lancaster (29,909 credits), Lycoming County (29,909 credits), Lycoming County (3,733 credits). Buyer: PPL EnergyPlus, (3,733 credits). Buyer: PPL EnergyPlus, LLCLLC

Nutrient Trading IVNutrient Trading IV

The big player is Red Barn The big player is Red Barn Trading in LancasterTrading in Lancaster

Website: Website: http://www.dep.state.pa.us/river/http://www.dep.state.pa.us/river/Nutrient%20Trading.htmNutrient%20Trading.htm

Nutrient Trading VNutrient Trading V Pat O’Connell’s idea was to have the Pat O’Connell’s idea was to have the

county buy the credits from the county buy the credits from the farmers and re-sell them to the farmers and re-sell them to the sewage treatment plant operators.sewage treatment plant operators.

The farmers would receive payment The farmers would receive payment over 10 years (Installment Purchase over 10 years (Installment Purchase Agreement).Agreement).

An “enhanced easement” would An “enhanced easement” would include the required BMPs to exceed include the required BMPs to exceed baseline compliance and generate baseline compliance and generate credits. credits.