Supporting Their Farming “Habit”

“Know how to make a small
fortune farming?”
“Start out with a large fortune and pretty soon you’ll have a small one.”

This sort of wry humor is standard among farmers when talking about their declining profession. It’s no secret that the family farm is in financial trouble – the nation’s small farms have been disappearing at a rate of thousands per year for decades – but as property values skyrocket in many parts of the mountains, the question of how families that have farmed their land for generations will be able to pass that land on to their heirs is increasingly a concern. To borrow from another farmers’ witticism, landowners are running out of ways to “support their farming habit.”

Scott and Dawn Jensen, whose farm in Valle Crucis, North Carolina, has been in the family for five generations, knew well that farming would never cover the costs of keeping their farm. Nestled into a small mountain valley ten minutes outside of the burgeoning town of Boone, the setting of the Taylor Farm could not be more beautiful – or more desirable for those with an interest in developing houses, condominiums, or golf courses.

If it had just been about money, the Jensens could have easily sold their farm to developers. Instead, the Jensens turned to one of the few remaining tools for cash-poor landowners to keep their land in the family: they sold the rights to develop their land in the form of a conservation easement.

When asked why they would give up the development rights, and the prospect of perhaps millions of dollars if land prices keep rising at their recent pace, Scott Jensen simply looks over at his three year old daughter Erin. “She’s going to be the 6th generation of her family to grow up on this farm,” says Scott. “It’s for her.”

“I’m not trying to change the world,” continues Scott, “I just want my children to be able to grow up on the family farm and share a part of history that is disappearing.”

In order to preserve their farm for their children, the Jensens worked with the High Country Conservancy, based in Boone, NC, to place an easement on their land. While the transaction itself was complex, it boiled down to a purchase of less than half of the easement’s value by the USDA Farmland Protection Program and the donation of the larger part of the easement’s value by the Jensens, who in turn received federal and state tax breaks. While these financial incentives combined didn’t even come close to the development value of the property, they allowed the Jensens to put some money in a trust that will support the costs of the farm well into the future.

According to Scott, those financial incentives were critical for preserving the farm. “I guess this land’s worth a lot on paper, but if you’re not going to sell to a developer, a farm is more of a liability than an asset.” Says Jensen. “Now that there’s an easement on the land, developers won’t buy it and they’re the only ones buying.“

“It’s not like you have that greedy farmer trying to buy up all your land,” he says with a smile.
Land-rich, Money-poor

According to Jeffrey Scott, the executive director of the National Committee for the New River, the decision that the Jensen family came to is becoming common among landowners in the mountains.

“ A lot of people who inherit property in the mountains are land rich but money poor,” says Jeffrey. “If they want to pass their family land down to their children, they need easements for estate planning purposes – that or they’re going to sell to are out-of-state developers.”

Conservation easements come in many forms and frequently include agricultural and working forest easements that allow farming and forestry to continue on the land. The ultimate purpose of an easement is to restrict development on forest and farmland and thus preserve the beauty and traditional character of the landscape, in addition to preserving wildlife habitat, water quality, and other natural amenities.

Although easements tend to be a win-win transaction between private landowners and the public, landowners never donate or sell an easement for purely financial reasons – tax incentives amount to only a fraction of the actual property value. According to Jeffrey Scott, the benefits to the public are clear.

“The reason the mountains are so popular with tourists is because of all the forests and farmland and other intrinsic values like clean-running streams. These are things that we take for granted – at least until they’re gone.”

According to James Coman, the executive director of the Blue Ridge Rural Land Trust, easements allow land to be preserved at a phenomenal value to taxpayers.

“For every $1 of taxpayer money, donated easement programs yield $20 in conserved land value,” says Coman. “These programs allow people without deep pockets to conserve their land at an excellent value to taxpayers.”

The Congressional Threat

Marla Wilson, the executive director of the High Country Conservancy, the land trust that negotiated the easement on the Taylor Farm with the Jensens, believes that voluntary conservation easements have been both crucial and extraordinarily successful at preserving open space across the nation.

“Incentives have been in place for 25 years and have led to voluntary conservation of more than 34 million acres of working forests, agricultural lands, historic properties, recreational areas and wildlife habitat,” says Wilson. “It’s proven. It works.”

Unfortunately, those very incentives that helped preserve tens of millions of acres of open space are now threatened by proposals initiated by conservative leaders in Congress, as well as from a White House that has been stingy at best in proposing funds for conservation programs in the federal budget.

In early February, the Joint Committee on Taxation in the U.S. Congress recommended dramatically decreasing tax incentives for donated easements. Specifically, the proposed changes would allow deduction of only 30% of an easement’s value (as opposed to 100% under current law), and would change the basis for calculating a property’s value from fair market value to the original purchase price of the property. For land that has been owned by families for generations, this would essentially eliminate the entire value of the property for easement purposes.

Land trusts are concerned that these proposals, if enacted, would remove the very underpinnings of the conservation easement program.

“Since government funds are so limited, conservation is almost entirely in the hands of private individuals,” says Marla Wilson. “If they take away the incentives for landowners to donate easements, what’s left? It’s darn scary.”

While the proposals being considered by the Joint Committee on taxation are still just proposals, groups such as the Land Trust Alliance would like to see them killed before they have an opportunity to build momentum. These groups have already been successful in winning some powerful allies, and the Conservation Trust for North Carolina was recently successful in gaining a letter from Senator Elizabeth Dole to the Joint Committee on Taxation that was critical of the proposals.

Back on the Farm

Fortunately for the Jensens and their community the easement on the Taylor Farm has already been finalized and the fate of their easement is not in doubt. Surprisingly, they profess no regrets at having put such binding restrictions on their property. When asked about her “gut-check” before committing her family land to an easement, Dawn Taylor Jensen just shrugs.

“I didn’t really have any reservations because we never had any intention of selling,” she says. “It’s for our children and it’s an asset to the community – I’d be ashamed to do anything else.”

For updates on proposals in Congress that affect conservation easements, visit:
www.lta.org/publicpolicy/ppc.htm