Urban Encroachment: An Overview

 

Background

According to the U.S. Department of Agriculture (USDA) Economic Research Service (ERS), the United States is primarily an urban population living in a rural nation. Farmland preservation programs have been widely adopted due to concerns about the local loss of farmland.. Food security, preservation of a rural lifestyle, environmental protection, and the prevention of urban sprawl are key motivations driving preservation programs.  Continued urban encroachment into agricultural regions has created tension between new inhabitants and agricultural operations. Both parties have struggled to survive in close proximity. Urbanization can positively affect agriculture by increasing land values, raising the value of farm assets, and providing potential retirement income to producers. In addition, marketing opportunities and access to labor may provide economic benefits to agricultural producers. This overview focuses on farmland preservation programs and the potential legal issues that may arise as agricultural lands become urbanized.

Right-to-Farm Laws

Every state has enacted its own right-to-farm laws, which vary widely from one state to another. These statutes seek to protect qualifying farmers and ranchers from nuisance lawsuits filed by people who move to a rural area with existing farming operations and use nuisance actions to disrupt production.

A landowner in a nuisance suit argues that a neighboring landowner has substantially and unreasonably interfered with the use and enjoyment of their property. A nuisance may be either private or public. In a private nuisance action, only a small number of property owners are damaged in a discrete manner. In a public nuisance action, the community’s rights as a whole are damaged in a more general manner. Courts often use a cost-benefit analysis to determine whether the alleged interference with property rights is unreasonable. The outcome of these cases is often uncertain. If plaintiffs prevail, farmers may be forced to pay damages or even cease operations.

Many of the right-to-farm laws codify the “coming to the nuisance doctrine.” This doctrine is a common law defense to a nuisance action and is often simply a factor in the overall nuisance cost-benefit analysis rather than a complete defense. Under the typical right-to-farm statute, if a farming operation has existed  for more than one year prior to the land use change that allegedly creates the nuisance situation, the producer will be protected from the nuisance claim. However, the producer’s operation must comply with all regulations, permitting, and licensing requirements and must not have been a nuisance to begin with.  Often producers are required to use best management practices or at least generally accepted management practices for similar operations to be protected by the statute.

Another version of the right-to-farm law creates agricultural districts. Agriculture operations located within these districts are protected against nuisance suits and local regulations that limit typical agricultural practices. The agricultural operations protected under these types of statutes are required to comply with all regulations, permitting, and licensing requirements. Some districts require landowner participation through voluntary enrollment for a specified period of time. In addition to nuisance suit protection, some districts may include tax incentives for landowners.

Some right-to-farm laws protect agricultural operations from local zoning restrictions. The exempted agricultural uses are usually broadly defined under this type of statute. Case law interpreting agricultural uses that qualify varies widely from one jurisdiction to another.

Zoning

Some states use zoning to protect farmland. Preservation of farmland through zoning is similar in nature to the use of Urban Growth Boundaries (discussed below) and the creation of agricultural districts (discussed above). Zoning regulations dictate minimum parcel size, limit permissible uses, and deter sale for other uses. Permissible uses are generally associated with the overall agricultural purpose and include farm labor housing, processing facilities, and marketing facilities.  Zoning may create exclusive agricultural areas, or it may create mixed areas that remain substantially rural in character but include noncommercial farms and large-lot residential areas.

In some instances, zoning may be detrimental to agricultural operations. Zoning regulations that prohibit certain agricultural activities in an agricultural area may force producers to move their operations. Unless carefully structured, these types of regulations may result in a regulatory taking under the Fifth Amendment or a violation of due process under the Fourteenth Amendment of the United States Constitution. However, if this type of zoning does survive legal challenge, it may force the urbanization of agricultural lands.

Agricultural Easements

Agricultural conservation easements are used by governments and nonprofit organizations to preserve farmland. Development restrictions are recorded on deeds and run with the land either permanently or for an agreed length of time. Landowners voluntarily restrict their land to receive benefits either in terms of direct cash payments or tax incentives. A few states have adopted the Uniform Conservation Easement Act or parts of the Uniform Act to facilitate conservation efforts. Several programs exist to assist the preservation of farmland through the creation of agriculture conservation easements.

Purchase of development rights programs (PDR), also called purchase of agricultural conservation easements programs (PACE), restrict the development of agricultural land by paying landowners to forfeit their right to develop their land. These purchase programs are operated by both governments and nonprofit groups. Landowners are compensated for the value of the rights they forfeit . Government agencies often purchase the easement directly, and nonprofit organizations take advantage of federal and state tax provisions giving landowners tax benefits when they donate the easements to nonprofit organizations.

Transfer of development rights programs (TDR) create a market for development rights.  Areas are designated as growth areas or conservation areas. Growth areas may be developed at higher rates than allowed by zoning laws if developers acquire additional development rights. These rights can be purchased from agricultural landowners in conservation areas. The sale of the rights takes place in private negotiations between the parties.

The federal government has enacted specific legislation to aid in the procurement of agricultural conservation easements.  TheAgricultural Conservation Easement Program (ACEP) helps landowners, land trusts, and other entities protect, restore, and enhance wetlands or protect working farms and ranches via conservation easements. This program helps conserve agricultural land and protects wetlands by limiting non-agricultural uses that have negative effects on conservation efforts. ACEP has two components. The Agricultural Land Easements (ALE) helps landowners protect agricultural land though conservation easements which prevent conversion of working lands to non-agricultural uses. It works by providing financial assistance to eligible partners for purchasing land easements. These easements are permanent or run for the maximum length of time allowed by law. The Wetlands Reserve Easements (WRE) helps landowners protect, restore, and enhance wetlands. It works by purchasing the right to develop and implement a Wetland Reserve Plan of Operations (WRPO). Enrollment options include permanent easements, 30-year easements, term easements, or 30-year contracts.

In addition to these easement programs, the Wetlands Reserve Enhancement Partnership (WREP) allows agencies and organizations to partner with the USDA through ACEP to protect wetlands in an agricultural landscape. Eligible partners are responsible for providing at least 10% of the costs for easement acquisitions and restoration implementation.

In addition to this program, the federal government is subject to the Farmland Protection Policy Act (FPPA), 7 U.S.C. §§ 4201-4209. This statute requires federal agencies to consider the impact of federally funded programs that convert farmland to non-agricultural uses and to consider other actions that would decrease the adverse effects of such conversion. Other minor federal programs that involve farmland preservation include a program that provides guarantees and interest rate reduction to state trust funds that purchase conservation easements to assist them in borrowing money. Additionally, certain government borrowers that convey conservation easements to the federal government may receive debt principal reductions for the value of the easement.

Special Tax Treatment

Every state has enacted laws that provide agricultural land with differential tax status. Some statutes require local tax authorities to assess agricultural land based on values for its present use rather than values for highest and best use. This benefit is greatest for agricultural lands near cities that are under development pressure. The development pressure could increase taxes to such a degree that agriculture uses for land would not be economically feasible.

Other statutes provide agricultural producers with lower assessments if they agree not to develop their land for a specified period, thereby providing a tax incentive to preserve farmland. Some states provide income tax benefits to producers or agricultural landowners in the form of deductions or credits to add economic incentive for the agricultural use of land.

Urban Growth Boundaries

Urban Growth Boundaries (UGBs) are planning boundaries used to focus urban expansion and growth inward. UGBs set the limits for a city’s projected growth. The urban development cannot extend past the UGB and as a result, more compact and efficient development occurs in already urban neighborhoods within the boundary. For example, under Oregon law, each city and metropolitan area has created an urban growth boundary around its perimeter. Land inside the perimeter is used to support urban services. The perimeter is reevaluated every six years to ensure the boundary meets the needs of the growth forecast. UGBs help reduce the cost of public services and preserve natural resources including agricultural areas while promoting efficient use of land inside the boundary.