Farmland Protection Program

Questions and Answers

NRCS–Natural Resources Conservation Service
USDA–U.S. Department of Agriculture
FPP–Farmland Protection Program

Q. What is the Federal FPP?

A. FPP is a voluntary program that helps farmers keep their land in agriculture. The program provides matching funds to state, local, or tribal government entities and nongovernmental organizations with existing farmland protection programs to purchase conservation easements. The goal of the program is to protect between 170,000 and 340,000 acres of farmland. NRCS has been designated as the lead agency in implementing this program.

Q. What is a purchase of agricultural conservation easement (PACE) program?

A. A purchase of agricultural conservation easement (PACE) program, commonly referred to as a purchase of development rights program, is a voluntary farmland protection technique that compensates landowners for voluntarily limiting future development on their land. Landowners retain many property rights according to the provisions specified in the easement and the right to farm. An easement separates certain land use rights–primarily development as nonagricultural land–and conveys them to another party. PACE programs enable landowners to sell development rights on their land to a government agency or nongovernmental organization, such as a land trust, while retaining full ownership.

Q. How does a landowner participate in FPP?

A. To participate, landowners submit applications to nongovernmental organizations or state, local, or tribal government entities and agree to limit the use of their land for nonagricultural purposes. State, local, and tribal government entities and nongovernmental organizations are asked to submit proposals to partner with USDA in acquiring conservation easements on productive farmland to limit nonagricultural uses of that land.

Q. How is the value of a conservation easement determined?

A. The value of the conservation easement is usually determined through a professional appraisal. A qualified, professional appraiser assesses the difference between the fair market value of the property, often using comparable sales, and its restricted value under the easement.

Q. What restrictions are found in a typical easement?

A. The easements generally restrict nonfarm development and subdivisions. Some allowances for farm-related housing may be allowed. Generally, there are few restrictions on improvements and construction related to the farming operation. The easements become part of the land deed and are recorded in the local land records.

Q. Are all agricultural conservation easements the same?

A. The basic purpose and structure of all agricultural conservation easements are the same. However, each easement is tailored to the specific farm being protected. Exact language in the easement may reflect future expansion plans of the landowners, including the needs of their heirs.

Q. How do the easements affect other rights of ownership?

A. The landowner controls the land and use of the land according to the agricultural conservation easement. The land is still owned by the landowner and can be transferred, deeded, or sold just as any other property. The easement does not require any provisions for public access, unless such access was negotiated as part of the easement purchase transaction.

Q. Does a conservation easement affect a farmer’s ability to borrow money?

A. The experience of those farmers who have participated in existing state and local PACE programs is that their ability to borrow operating funds for the farm is not affected by the presence of the conservation easement. If a lending institution holds a lien on a property, it must review the sale of the conservation easement just as it would need to sign-off on any transaction on the property. Since a farm loan usually is based on the ability of the farm operation to carry the loan, a conservation easement, which only affects nonfarm development activities, not the farm operation, should not have a bearing on the farmer obtaining credit for farming.

Q. What are the local property tax implications of protecting farmland with conservation easements?

A. Because the landowner still owns the property, he or she is still responsible for paying any associated property taxes. Since many states have programs that tax farmland based on its use or farm value, the net effect of the easement on local property tax revenues is little to none.

Q. How are the proceeds from the sale of a conservation easement treated for tax purposes?

A. The easement sale proceeds are treated like any other capital gain for Federal, state, and local income tax purposes. Some state or local programs have provisions that allow for installment purchases or have used securable tax-exempt bonds as a method of payment.

Q. Is additional information available on FPP?

A. NRCS, the Farm Service Agency, Extension Service, or local conservation district can provide more information. Local USDA Service Centers are listed in the telephone book under U.S. Department of Agriculture. Information also is available on the Web at http://www.nrcs.usda.gov/programs/fpp/.

June 2001

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