Benefits

The concept is attractive to farmers anxious to remain in the agricultural industry in Suffolk County, but hard-pressed by periodic cash shortages and ever increasing real property taxes, as well as the threat of extensive complications and problems of liquidation upon the death of the farmer.

Through the sale of the development rights, he liquidates the greater proportion of his total equity in the value of his real property and converts it to cash which, in turn, can provide him with operating capital, investment capital or income-producing investments. The conversion of the development rights from real property into cash also places the family in a position of avoiding forced liquidation at a sacrifice price at the time of the death of the farmer. The real property tax picture also brightens for such a participating farmer because assessments of real property must be made in full recognition of actual value. The sale of development rights thus precluding the use of the property for anything other than agriculture in perpetuity reduces the market value of the property by virtue of that limitation.

While the purchase of development rights provides a great benefit to the farmer, it also provides benefits to the people of Suffolk County now, and in the future, through the preservation of a vital industry and extensive open space. Furthermore, the development rights concept provides for the retention of ownership and possession and maintenance of the property with the landowner who, through the pride of ownership and possession can be far more effective in maintaining the physical condition of the property than the county.

Implementation

Early in 1975, the County Legislature approved the hiring of appraisers and subsequently values were submitted to the Legislature based upon a July 1975 valuation date. At that time, the municipal government of New York City was in the throes of financial collapse which consequently affected the municipal bond market and forced the interest borrowing rates to escalate to an exorbitantly high level. This caused the Legislature to decline the approval of the acquisition of development rights because of the exorbitant expense of securing bond monies.

In September 1976, the Legislature completely reversed its position and approved the acquisition of the development rights of 60 farms based upon the original valuation of 21 million dollars. The resolutions that were passed by the Legislature included the bid values tendered by the farmers along with the appraised values that had been submitted the prior year. In October 1976, the total project was turned over to William R. Lockwood of the Department of Land Management for review and approval of the appraisals to justify the expenditure of 21 million dollars for the development rights acquisition. It was at that time that he first became involved with this project.

Pure farm values

The farm expert advised that he would have to go to other comparable farm areas to determine pure farm values. He secured farm sales in areas where development wasn't probable within the foreseeable future. He investigated comparable sales in the entire State of New York, including the Orange County and Mohawk River Valley muck lands, the States of New Jersey, Connecticut and Massachusetts. He secured and categorized comparable sales from all these areas and submitted them to us in a brochure which was voluminous. He discarded many of the areas as not being comparable and finally selected sales in northern Massachusetts, in the Connecticut River Valley, the Orange County muck lands and the extensive South Jersey farmlands. All of the properties selected as being comparable had similar soil characteristics, irrigation problems, modes of transportation and growing seasons. If there were any differences, these items were noted and adjusted when the appraiser submitted his appraisal of the farms after development rights were acquired.

The review appraiser's additional function in this project was one of coordination and guidance. Monthly meetings were held to assure the project's progress. The information accumulated was voluminous and mind-boggling that it was decided instead to use visual displays to assist us in presenting the program to the farmers. As a result, a consultant display expert was hired to develop town wide aerial photograph maps which displayed all of the market data in a simple fashion that could easily be seen and understood. Not only were the comparable sales, subject properties, listings, foreclosures and subdivisions included on the maps color-coded, but also other important data such as zoning, water districts, school districts, major street names, etc. This consultant also prepared individual survey-type sketches of the properties to be acquired. These were drawn on reproducible aerial photographs. They were used by all of the consultants. Copies were given to the property owner and eventually used in preparation of contracts for purchase subject to confirmation by a survey supplied by the County of Suffolk.

Market conditions

The initial accumulation of market data which was gathered by our valuation consultants indicated that the pure farm values in the metropolitan area held steady; however, real estate that was suitable for housing developments or at least had the potential for development decidedly had declined. In September 1973, there was an economic downturn. Comparable sales data indicated in 1974 that the real estate market still was active and the prices were still high. However, this data did not reflect current trends and in 1975 there were few sales. during this time the original appraisals were made on the farm property. Further market analysis indicated that the prices were decidedly low in 1976 and again lower in 1977.

Trying to establish the value of these properties proved difficult in the downward market. Complicating the situation were the offers made to all the owners based upon the original appraised values. These values had to be solidly supported to make the presentations convincing and acceptable to the farmers and speculators. Because it was evident that there was a distinct change in values, an additional real estate consultant and land planner was hired to further investigate the factors that led to the market decline. This resulted in an "Economic and Land Development Study" that included a complete analysis of all of the subdivisions filed in the townships within the past 10 years along with detailed studies of airport development, road development, the bridge construction to Connecticut, population studies and any other factor that would assist us in determining when this land ultimately might be developed.

Verification of the data

Upon receiving this data, appraisers decided they would not only rely upon the consultants, but instead verify this information in the field themselves. The market data was presented and discussed with many real estate brokers in town, the assessors, farm credit service representatives, cooperative extension agents, builders, land planners, vineyard owners and bank representatives. This exchange of information not only verified and gave details and facts about each transaction, but allowed missed facts to be uncovered. This survey was ultimately used in our presentation to the farmer.

An unexpected result was that the real estate experts were convinced that the appraisers were determined to arrive at just compensation and the fair market value of development rights. The real estate appraiser used all of the information received from the experts and ultimately reduced this information into one appraisal report. The report included a before value, the real estate appraised value, an after value that was the pure farm appraisal (appraised as if the development rights were secured by the county) and then ultimately the difference between the two resulted in the value of the development rights. During the presentation, data showed that the potato blossoms in June on farms in Northern Massachusetts and in the Connecticut River Valley were the same size as those in Suffolk and further that they were picking strawberries at the same time. This information was gathered through physical inspection of the comparable farm properties in New York and adjacent states.

Valuation presentation to the farmers

Rather than give the farmer a copy of the appraisal, it was decided to provide all of the market data in a condensed form and a brochure was made up which included market data sales, foreclosures, listings and the broker's survey. This information was a synopsis of what was said in the presentation. This booklet, with an aerial photograph of the subject property, a letter indicating the before and after values plus the development rights value, was given to the farmer to use in decision making.

Phase I of the Farmlands Program was to acquire the development rights of 60 farms. The Legislature allocated 21 million dollars for this phase of the program. The approved appraised value for the development rights to the 60 farms came to $10,175,000, which was a substantial reduction in value from the original offers made to the owners. Farmer Nathaniel Talmadge, the first to sign up for the program, was originally offered $4,525 an acre for his development rights; he settled for $2,725 per acre. His statement to the press fairly well sums up the feelings of most farmers, "I am pretty well convinced that they (the new appraisals) were fair. I would not say I was pleased." Fifty-two of the approved participants have agreed to sell the development rights to their farms to the county.