Ag Land Trust

California's Cold War: The Battle
for the State's Prime Farmland

By Joseph Sorrentino
California Real Estate Journal

NOVEMBER 25, 2002

As urban sprawl encroaches on the state's prime farmland the battle between developers and environmentalists escalates.
Both sides use such aggressive Cold War terms as "containment," "unilateralism" and "domino effect" to describe strategies for hegemony over undeveloped farmland.
But everyone was caught off guard when a new player recently entered the urban containment game: the farmer.
In September, eight farmers banded together to create a permanent "farmland security perimeter" on the outskirts of the city of Madera. By selling the development rights to their land through agricultural conservation easements, the farmers protected 440 acres of Central Valley farmland - the most productive agricultural land in the world - and blocked urban development on 42,000 more.
An agricultural conservation easement is a legally binding restriction in the ownership deed that keeps the land in farming for perpetuity in return for tax breaks or a cash payment, according to the American Farmland Trust, the nation's largest nonprofit dedicated to protecting farmland, which negotiated the $3.3 million deal.
"The Madera farmland security perimeter marks the first time that so many adjacent landowners in the western United States have protected their farms from development in this type of simultaneous, mutually binding transaction," said Ralph Grossi, president of the trust.
Developers and city planners acknowledge landowners property rights, but are wary of the use of easements for urban containment.
"An easement isn't normally seen as a growth-limiting tool," said Gene Kjellberg of Ventura County's planning division, "but it can be used that way."
Agricultural land is desirable for building because it tends to be flat and well drained. Generally, developing farmland meets with less community opposition than building new homes within existing neighborhoods.
But preservationists see in Madera a new strategy to stop sprawl.
"If one landowner had decided not to proceed, the whole deal would have come apart," Grossi said. "This goes to show that a group of dedicated farmers, working together, can protect their agricultural livelihoods and shape the future of their community."
Other California farmers have taken notice of the Madera deal, and environmentalists are hoping such grassroots action becomes a trend in the state's farm belt.
The American Farmland Trust is now negotiating with six other Madera landowners to place 200 more acres in easements and plug the gap between the first Madera farmers perimeter and the municipal airport.
The farmland trust isn't the only trust strategically acquiring easements to contain urban growth.
The Monterey County Agricultural and Historical Land Trust is using a similar strategy in King City.
In March, the Monterey County land trust bought the rights to 370 acres of farmland north of the city, an area city planners had designated for housing as King City's population has exploded by 60 percent to 11,094 over the past decade.

Food vs. Homes
Farm preservationists stand in the way of a powerful trend as Californians increasingly move inland to the vast agricultural Central Valley in search of affordable housing.
Madera's population has surged 40 percent in the last decade and it is expected to grow to 203,000 people by 2020 from its current population of 124,000, according to the latest U.S. Census figures.
If current trends continue, the American Farmland Trust concluded that Central Valley would lose 1 million acres of farmland by 2040, nearly one-fifth of the valley's remaining farmland.
The state Department of Conservation reported that nearly 43,000 acres of California agricultural land - an area the size of the city of Modesto - was urbanized between 1996 and 1998.
That transformation made the trust designate California the nation's most threatened farming region, and eight of the state 15 fastest-growing counties are in the Central Valley.
Still, land on the valley floor is predominantly farmland and almost entirely in private ownership.
This potentially puts the future of the Central Valley, and a huge swath of the state's remaining open space, into the farmers' hands.

Forever Is a Long Time
When grape and almond farmer Dennis Prosperi purchased 40 acres of vineyards in the Central Valley four years ago, he knew the farm was in disrepair.
But the third-generation farmer also knew that the city of Madera had slated the area for urban development and that a main sewer line ran right through his property. Prosperi asked the city of Madera to annex his land.
Prosperi's neighbors, many of whom are near retirement age, appealed to him not to give developers a foothold. They wanted to pass their livelihood on to their children.
While wracking his brain on how to save his investment without impacting his neighbors, Prosperi came across an article on easements in a farming magazine, which led him to Greg Kirkpatrick of the American Farmland Trust.
Kirkpatrick, who works a 50-acre citrus farm with his father, explained that through a conservation easement, Prosperi could receive about $16,000 an acre for his development rights.
Conservation easements are a relatively new preservation tool.
The first local agricultural land trust was formed in 1980 by a group of farmers, ranchers and environmentalists in Marin County. The Marin County Land Trust became a model for protecting farmland.
But most of California's agricultural easements were sold in the last five to 10 years, and therefore don't protect much acreage yet, preservationists say.
Land trusts in 19 of the state's 58 counties own farm easements with 137,000 total acres. That's only 0.5 percent of the 27 million acres of crop and grazing land statewide.
"There are many agricultural land owners who don't know about this approach and how it works," said Erik Vink, assistant director for the state Department of Conservation's Division of Land Resource Protection. "The knowledge and understanding has increased in the last five years, but we still have a long way to go."
By contrast, the Williamson Act, passed in 1965, protects 16 million acres of farmland statewide - more than half of the state's agricultural land. The act's protections expire in 10 years, however.
Much has been made about the potential problems that could arise from a parcel that is permanently restricted to farming.
It's hard to guess what the best use for a parcel of land will be 50 to 100 years from now.
"Forever is a long time and things change," quipped Bill Higgins, an attorney with the League of California Cities and author of the "Farmland Protection Action Guide: 24 Strategies for California."
Because conservation easements are permanent, farmers and developers benefit from clear development boundaries, proponents say.
"If I'm a developer looking to buy land to develop 20 years from now," Higgins said, "I know which side of the city to buy it on now."
Another critical aspect is that land trusts only do easements with willing sellers.
"You don't polarize the whole community with a divisive growth boundary proposal," Kirkpatrick said.
Some policy makers want to make easements for less than perpetuity but still long term, according to Alvin D. Sokolow, public policy specialist at the University of California at Davis.
In interviews with 111 Central Valley leaders, Sokolow found that they were "mildly positive but cautious about the merits of agricultural easements and the possibility of expanding their use in California's premier agricultural region," according to the report.
"Farmers usual comment was, in personal terms, how can I commit future generations by signing up for an easement," Sokolow said.
Edward P. Taczanowski, executive vice president of the Building Industry Association of Central California, said a balance between farms and housing can't be achieved by taking agricultural land out of production, Taczanowski said.
"If you really want to preserve agricultural land," Taczanowski said, "the answer is make it profitable for farmers to stay in farming."
The most equitable use of California's resources would be for housing, Taczanowski said.
"If you look at the crops grown in California," Taczanowski said, "we produce luxury crops, like strawberries. Only about 11 percent are row crops - staples like soybeans and wheat. We don't feed the world."

Market-Based Incentive
One feature that sets easements apart from other urban containment tools is they are a market incentive tool, not a regulatory tool.
In 1998, voters in Ventura County and several of its cities created a countywide system of urban containment by placing growth boundaries around the cities.
While the boundaries slowed growth, Kjellberg said they also caused problems.
"Because supply of land is so restricted the price of housing is going through the roof," he said. "The average person can't afford a home in the community. That in turn is chilling the economy because employers can't attract new employees or keep them."
But in Ventura, future rezoning of the county's agricultural land for development is possible through new ballot measures.
Meanwhile, farmers complain about urban growth boundaries because they reduce property values and investment values that have built up, without compensating the owners.
"The thing that I like about agricultural easement," Kirkpatrick said, "is that the land owners are compensated without giving up their development equity."
Prosperi agreed.
"By allowing a farmer to cash in on the equity of the farm, easements can be a sound business decision," he said.
Citing a 1998 report, " Taking Private Land for Private Interests: The Agenda and Policies of the American Farmland Trust Studies," by James D. Riggle and Jonathan Tolman, Taczanowski rebuked the notion that easements are a market-based tool.
According to the report, the American Farmland Trust claims that its land preservation policy proposals are voluntary and compensatory - and thereby "market-based" solutions. But unlike market-based programs, the trust's proposals are predicated on restrictive government actions to preclude free choices and hold down property values, ultimately at the expense of farmers and landowners.
Because private property rights are not the domain of the developer, the only solution, Taczanowski said is to educate the public.
"There needs to be a public understanding that when you preserve farmland in lieu of housing for the general population," Taczanowski said, "prices are going to go up and you won't be able to provide housing."

On the Margin
California has the most varied and productive agricultural industry in the world.
Nearly one-third of the state's 101 million acres of land is devoted to agricultural production, most of which is in the Central Valley.
Many of California's fastest-growing cities started as farm service centers and, therefore, are located on prime farm and ranch land.
As these communities grow, more and more of the best farmland is taken out of production.
Farms in fast-growing urban regions often suffer from the "impermanence syndrome." When farmers perceive that it's only a matter of time before their farm is converted to urban use, they stop making long-term investments in their farming operations.
As a result, the farm becomes less efficient and marginalized, which in turn increases the farmer's willingness to play the development lottery, according to a report by the League of California Cities' Institute for Local Self Government.
Prosperi is a good example. He didn't want to invest in farmland that he assumed the rapidly growing city would use for housing.
Kirkpatrick said the climate of speculation has frightened many farmers into selling their land and giving up their vocation.
"In my experience talking with farmers around the Central Valley," Kirkpatrick said, "If there was an alternative to selling to development, most would prefer to remain in farming."
"Now with easements in place the climate has changed."

Funded Through New Legislation
Recent state and federal legislation has provided farmland preservationists with a treasure trove of funding.
The passage of the California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002 provides $70 million for preserving farm and grazing land.
Meanwhile, Farm Bill 2002, passed in May, expanded the U.S. Department of Agriculture's Farmland Protection Program. The bill allocates $985 million for the full 10 years of the bill's life.
Under the updated farm bill, nonprofits can apply directly to the department of agriculture for aid, which gives them more autonomy.
The federal agency takes community input into consideration before awarding grants, however.
"We don't want to be seen as the Big Brother coming in and deciding what should and shouldn't be protected," said Jim Kocsis, Farmland Protection Program manager for the federal department of agriculture.
But Kocsis also said they award grants on a case-by-case basis.
"We look at the overall picture," he said.
The $3.3 million Madera deal received a $1.1 million federal grant, the largest Farmland Protection Program conservation easement the federal agriculture department has awarded in California.
The Madera deal also was paid for through the state Department of Conservation's California Farmland Conservancy Program, the principal funder of easements in the state.
The state provided $2.2 million for the Madera easements, which was the largest in that program's history as well.
The state program has restrictions. If the farm or ranch land falls within a city's sphere of influence, the grantee needs support from the city and county officials.
This restriction will eliminate most conflicts between nonprofits and cities, said Erik Vink, assistant director of the state Department of Conservation's Division of Land Resource Protection.
"There's nothing that supercedes the city's power of eminent domain," Vink said.
Most experts agree that a city would be reluctant to take land protected by a conservation easement.
"It's one thing for a city to condemn a farm to build a school," said attorney Bill Higgins, "but it would be pretty bold if you're condemning farms to build houses."