Ag Conservation Easements

A Challenging Process, but There’s Hope!

By Bill Martin, Executive director, Central Valley Farmland Trust

The Central Valley Farmland Trust exists because of an overarching concern for the rapid depletion of prime irrigated farmland in the San Joaquin Valley. Our farmland is a non-renewable resource that sustains the most productive agricultural region in the world. Our mission is to work with landowners and conservation partners to preserve agricultural lands in the California Central Valley for future generations.

First Things First

But make no mistake; to further this mission requires the arduous collation and administration of many moving parts. The process starts with the voluntary participation of a willing landowner. Next on the list is to confirm the property meets our basic selection criteria guidelines, driven mainly by available grant funding guidelines – prime farmland under imminent threat of conversion. For one reason or another this process can eliminate up to 50 percent of the properties being considered.

This is followed by a candid and comprehensive conversation with the landowner(s), including the landowner’s family, regarding the implications of placing an agricultural conservation easement (ACE) on the property. The conversation usually must be repeated (sometimes 2-3 times) to flush out questions and concerns raised during the first conversation.

If, after all of the above, the landowner wishes to proceed, our work begins in earnest and the real challenges start to set in. First and foremost is how will we pay the landowner for the value of the ACE? The answer is multi-faceted and varies from area to area and county to county. We hold mitigation funds in certain counties, but our ability to expend those funds is directed by formal agreements with the various jurisdictions. Such agreements may have certain constraints we must adhere to (i.e., must be within X miles from X). In counties where mitigation funding is not available we have had to set aside many ACE applications until viable funding becomes available. In fact, we are still holding some applications from five to seven years ago.

State and Federal Agency Involvement

We have successfully leveraged mitigation funds with state and/or federal grant funding to complete many projects over the last 10 years. But by introducing agency funding into the equation, an already challenging process becomes even more layered. Before we ask the landowner to pay for an ACE appraisal (e.g., $6,000-$8,000) we first approach the agencies with a summary profile of the proposed project to get their initial reaction. If we receive a favorable response we then proceed with a full grant application. To complete this process requires negotiating a draft ACE agreement with the landowner to be attached to the grant application. All this requires time, effort and expenses on our part, as well as the landowner, without any assurance the grant(s) will be awarded. Once submitted, the agency(ies) can take up to four months to render a decision.

It is also important to note that agency grant funding is somewhat dynamic and often changing. For example, the California Department of Conservation has exhausted bond funding relegated specifically to farmland conservation and is now administering funds generated via the new cap-and-trade market. The associated conservation easement funding program is called Sustainable Agricultural Lands Conservation Program, a highly competitive program with a multi-layered application and approval process. Therefore, the selection criteria guidelines for viable farmland conservation projects have changed. Another new program has been developed via the Natural Resources Conservation Service, a federal agency, where several other conservation programs were combined with farmland conservation. This has created greater competition for available funding, which has had a dampening effect for farmland conservation.

Once a grant is awarded we are only about one third to half way done with the project. The appraisal must then be completed and approved by the agency(ies), a purchase and sale agreement negotiated with the landowner, the final ACE agreement drafted and approved by the agency(ies), the baseline report completed, title issues cleaned up, and joint escrow instructions completed. Did I mention this process can take up to two years to complete?

Even after completing all the above, issues can arise that may jeopardize the ability to complete the project. In a recent project federal grant funding was denied, but state grant funding was awarded. This left us with a dilemma that was solved by the landowner voluntarily agreeing to accept a bargain sale (e.g., accept less than the full ACE value) to consummate the transaction.

But There is Hope

I feel like yelling, “Don’t try this at home!” The process of closing an ACE is inherently complicated, extraordinarily protracted, and Murphy’s Law is the norm. You must employ exemplary patience and gut determination to work within this arduous process. If we were not as passionate about what we do and why we do it, I would probably be at a serene mountain lake fishing!

But after 10 years in the conservation business, we have ensured that over 13,000 acres of farmland will forever remain working farms. We are growing to meet the increased demand from landowners and developers who need to mitigate for their impacts on farmland – and we are not slowing down.

The process is challenging and there are always roadblocks to progress, but after 10 years we know what we are doing, how to save farmland and protect family businesses. We encourage you to join us in the journey to 20,000 acres of farmland conserved by 2020. Together we can do this!