Genesee County Agricultural and Farmland Protection Plan

Agriculture and Farmland Protection Plan
only be done with the addition of equal size and quality land to the production zone. The county
also has a rural residential zone that allows one dwelling unit per ten acres. (See Appendix VI for
excerpts from the King County Comprehensive Plan.)
Urban Growth Boundaries in Kentucky’s Bluegrass Country
Lexington-Fayette County Kentucky long ago understood the importance of the agricultural
industry to their local economy and of the resulting landscape to the essential character of the
community. In 1958 they took steps to mitigate the post WWII growth explosion by enacting an
Urban Service Area boundary to absorb the residential and commercial development and in the
early 1960’s placed a zoning district on its agricultural area restricting residential development to
one dwelling unit per ten acres (1:10). Lexington was, at times in the ensuing decades, one of the
fastest growing communities in the country. Nevertheless it was able to maintain its sharply
defined urban boundaries, tree-lined rural roads, world-renowned horse farms and historic rural
settlements. In the early 1990’s, however, the ten acre requirement for a residential unit in the
agricultural zone was no longer a deterrent to widespread subdivision activity and the large lot
requirement was using up farmland at an alarming rate. In 1998, the joint city/county
government, with broad support, including from the agricultural community, placed a temporary
moratorium on development outside the urban service area and completed a comprehensive plan
update. As a result the agricultural districts were rezoned to a residential density of one dwelling
unit per forty acres (1:40) on condition that a local purchase of development rights (PDR)
program be enacted and funded. The PDR program was designed to buy development rights
(easements) at the old zoning density of 1:10 creating an opportunity for landowners to be
compensated for the downzoning. In 2000, the city/county sold bonds and raised $40 million to
launch its PDR program.
PDR Funding Innovation in Howard County, Maryland
Faced with rapid suburbanization in the late 1980’s, Howard County (located between Baltimore
and Washington, D.C.) pioneered a way to fund easement purchases, up-front, while the land
was still available, and in a way that used tax benefits to make the county’s easement purchase
offers competitive with developers’ offers. The concept was inspired by the oft-repeated
complaint of farmers that ‘it’s not what you get (for PDR), it’s what you get to keep”. Instead of
paying with cash, the county offered an installment purchase agreement (IPA), which is a
promise to pay in thirty years. By holding the IPA the landowner deferred capital gains and
collected an annual stream of tax-free interest on the full value of the easement purchase
transaction. The easement is permanent and runs with the land but the IPA is separable from the
land and can be securitized and sold on the bond market if needed for cash. The county
purchased 30-year federal zero-coupon bonds to fund the balloon payments on the agreements at
the end of their terms. A zero-coupon bond requires a small downpayment relative to the face
value of the bond and produces no annual interest; instead, the bond pays a lump sum when it
matures. In the meantime, the county uses a portion of the local real estate transfer tax that is
dedicated by law to farmland preservation to pay the interest to the holders of the IPAs. When
introduced, this funding/payment mechanism invigorated the local PDR program allowing them
to double in easement acreage what it had taken ten years previously to accomplish. They were
able to spend about $9 million dollars to permanently protect $57 million worth of easements.
Columbia, MD
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