What is a Purchase of Development Rights (PDR) Program?

A purchase of development rights program is an economic and conservation tool to protect valuable farmland that is economically important to Michigan’s second largest industry, agriculture.  A PDR program is a voluntary program that compensates owners of agricultural property for their willingness to accept a permanent deed restriction on their land that limits future development of the land for non-agricultural purposes. Landowners are compensated for the fair market value of their land, based on the difference between what it could be sold for on the open market with no restrictions for developmental purposes and what it can be sold for for agricultural purposes.  After an agreement is reached with the landowner, an agricultural conservation easement is executed, protecting the agricultural use of the land for future generations.  Once the easement is in place, the landowner still owns the land, retains all private property rights, can sell the land or pass it on to heirs, and has been fairly compensated for not exercising the developmental rights.  The goal is to create blocks of protected farmland, helping to create a long-term business environment for agriculture.  

Why is preserving farmland important to Isabella County?

The purpose of the farmland preservation program is to enhance the quality of life and viability of our rural and urban communities through the voluntary protection of valuable farmland in Isabella County.  The program targets the following benefits:

• Economic Benefits of Farmland Protection

• Agriculture provides economic diversity as essential contributor to local economy
• Important to create a long-term business environment for the future growth and changing market opportunities of the local agriculture industry
• Insure a safe, adequate local food supply
• Environmental Benefits of Farmland Protection

• Watershed protection
• Wildlife habitat
• Prime and unique soils
• Integral part of natural resource infrastructure

• Social Benefits of Farmland Protection

• Helps maintain a quality of life for all citizens
• Protects rural character, beautiful country side and scenic vistas
• Promote a sustainable and viable urban-rural community relationship

How important is agriculture to Isabella County?

Isabella County is one of the most agriculturally productive counties in the state with a market value of over $56 million annually.  It is an important sector of the economy and provides many jobs.  The farm gate value is multiplied seven fold when one considers the impact on agribusinesses, processors, retailers and the impact of those dollars circulating in the local economy.  Without the farmland base, agriculture cannot thrive or grow. 

Why is a farmland protection program important to agriculture?

Once farmland is converted to development, it cannot be returned to farming.  In today’s marketplace, large blocks of farmland are needed to create a long-term business environment for farm operations.  Essential infrastructure such as farm equipment suppliers, processors, and other agribusinesses will leave if they don’t have a sustainable customer base.  In addition, the investment in farming operations requires a long-term business environment to generate a return over the next 10-15 years.  The uncertainty of land use patterns creates an “impermance syndrome,” whereby farmers are not willing to make additional investments because of the likelihood they will be surrounded by non-farm neighbors who do not understand normal farming practices and the associated noise, dust and odors.  Farmland protection is all about creating a long-term business environment for agriculture, similar to what communities do for other commercial and industrial businesses.

Why is PDR in the best interest of the farmer?

First, it is important to remember that the program is completely voluntary. Not every farmer may wish to participate, but the track record across the country indicates that there are more than 7 farmers on a waiting list for every farm that is preserved.  The following aspects make this program attractive to farmers:

• Participation is completely voluntary and landowners receive fair market value.
• All private property rights remain intact.
• The landowner can access a portion of the land equity while still maintaining ownership and agricultural use of the land without having to sell it for development or non-farm uses.
• Cash from the sale of the development rights can be used for reducing debt, lowering operating costs, improving or expanding farm operations, investing in value-added agriculture initiatives, retirement, or be passed on to heirs with proper estate planning. 
• Proceeds from easement sales are often recycled back into the local economy, supporting agribusiness and creating additional economic development.
• Property taxes and inheritance taxes are based only on the residual agricultural value of the land rather than the full developmental value, reducing the tax burden on farmers and enhancing the annual bottom line and overall profitability.
• Farmland is now more affordable for younger farmers and eases the transfer of property to future generations and other farmers who are interested in farming.  Expanding farming operations is often not an option when competing with developmental values.

The landowner can still borrow against the reduced equity in their land.  Other states’ track records show remaining land retains excellent (and increasing) resale value.