Whether development pressure is high or low, voluntary farmland preservation tools are investments in the future of agriculture, local communities and Michigan's economy.
Michigan's Farmland and Open Space Preservation program (PA 116) preserves farmland and open spaces and offers tax relief to farmers who voluntarily participate in temporary farmland preservation agreements.
Highlighted here are answers to the most commonly asked questions about the state's farmland and open space preservation program.
The Act enables a farm owner to enter into a development rights agreement with the state. The agreement is designed to ensure that the land remains in agricultural use for a minimum of 10 years and ensures that the land is not developed for non-agricultural use. In return for maintaining the land in an agricultural use, the landowner is entitled to certain income tax benefits, and the land is not subject to special assessments for sanitary sewer, water, lights or non-farm drain projects.
Eligibility is governed by the size of the farm and, in two instances, by the income of the farm. The following are the qualification requirements to enroll land in a Farmland Development Rights Agreement. A parcel may be enrolled if it is deemed "farmland" because it meets one or more of the following requirements:
There are two primary benefits for being enrolled in a farmland agreement:
Agreements must be enrolled in the program for a minimum of 10 years and may be enrolled for a maximum of 90 years. After the initial term, agreements may be extended for 7 or more years.
A landowner who is interested in applying files an application with the local governing body, i.e., city, village, township if the township has adopted its own zoning ordinance, or the county for those townships which have not adopted a zoning ordinance. The local governing body has 45 days within which to approve or reject the application.
To be eligible for tax credits in a given year, the application to enter the program must be approved by the local unit of government on or before November 1.
A landowner is free to sell his or her land. However, the agreement remains with the land. Land in an agreement may be transferred, as long as the new owner agrees to comply with the provisions in the agreement and as long as all of the land described in the agreement is conveyed to the new owner.
A farmland agreement may be split into smaller agreements. To split an agreement, each of the resulting parcels must meet one of these criteria:
At the end of an agreement, the agreement holder will have a choice of whether to extend the agreement or allow it to expire. After the initial 10-year agreement term, the agreement may be extended for a minimum of 7 years. If the agreement holder chooses to let the agreement expire, then repayment of tax credits received during the last seven years under the agreement is required. For new contracts entered into after July 1, 2012, if a lien is allowed to be placed on the property, interest shall be added to the amount to be repaid.
A few provisions exist to allow enrolled farmland to be released from farmland agreement. These provisions are designed to accommodate unusual and extenuating circumstances including death or disability of the agreement holder, a lot with pre-existing buildings, a lot for the construction of a house for a person essential to the farm, factors which would render the farmland economically unviable, factors that would restrict farming or an important public interest. In all cases except death or disability, a repayment of a portion of the tax credits received is required, including 6 percent simple interest. For cases of death or disability, repayment is a pro-rated share of the last 7 years of credits with no interest.
Visit the Farmland Preservation page of the Michigan Department of Agriculture and Rural Development website for more information.