Farm preservation going to seed State unable to pay for easements that keep farms intact.

August 01, 1991|By Jay Merwin | Jay Merwin,Evening Sun Staff

Jay Mullican bought his 169-acre farm in Keymar three years ago expecting to sell the development rights on it for cash to finance his mortgage.

But since the state transferred money from its agricultural land preservation program this year to ease the state budget deficit, Mullican doesn't know when his check will come, and he worries about keeping the farm.

Mullican has exhausted two extensions from his bank on a $24,000 mortgage payment, he says. "I kept telling them I'm going to pay this off when this money comes through," he says.

With the bank growing impatient and his development-rights check for $236,600 nowhere in sight, Mullican took out a loan to pay the mortgage. His loan is due today.

Evelyn Peterson is waiting not so much for the check that is due her, but for the assurance that the development rights on her 134-acre farm in Taneytown are firmly in state hands, so she can sell the land without fear that it will be developed.

Peterson, who is 82, wants to sell the farm before she dies. "I couldn't stand the thought of a whole bunch of townhouses on it," she says. "I would be afraid to put it on the market if it isn't in preservation."

Louis and Karen Hobson want to sell development rights to pay off the mortgage on their 123-acre dairy farm, so they can retire and their son Steven, 27, can take it over without that obligation.

Three years ago, they put their farm in Harney in a preservation district, which involves a five-year commitment against selling for development and a precondition for applying to sell development rights. When the appraisal prices seemed right and they called last winter to ask about going through with a sale, they were told the state wouldn't have any money for a while.

"It scares you," Karen Hobson says. "Where are they going to come up with the money?"

Mullican, Peterson and the Hobsons are all from Carroll County, the county that has preserved more farmland from from development than any other since the Maryland Agricultural Land Preservation Foundation began buying development rights, called "easements," in 1981.

The problems these Carroll farmers face are similar to the problems faced my many farmers throughout the state who started the land preservation process, or thought about it, only to be brought up short by this small but significant aspect of the state's budget crisis.

Because of the uncertainty about future funding, more farmers may sell their farms for development, says Bill Powel, who administers the agricultural preservation program in Carroll County. "There will be very little interest in the program until we get to a point where we have enough money to buy easements."

As the state's budget numbers got worse over the winter, $17 million was transferred out of the agricultural preservation program -- its entire fiscal 1991 budget -- to cover shortfalls elsewhere.

That left many farmers in the lurch, including 35 who met the January deadline for the second of two application cycles in fiscal 1990 and accepted the state's financial terms for sale of their easements.

For lack of money after the transfer last winter, the state has been unable to pay on those contracts. Among them are offers to Mullican and Peterson.

Paul W. Scheidt, director of the Maryland Agricultural Land Preservation Foundation in Annapolis, hopes to have the money to cover those contracts by this fall.

After that payment, he expects to have about $8 million eventually this year to spend on 188 applications, appraised at $53 million, for easement applications from July of last year. "It's going to be very competitive," he says.

And 213 more applications that arrived before the January 1991 deadline, in the second cycle of fiscal 1991, have not even been appraised. Scheidt says he would probably return them. No new applications are being taken for fiscal 1992.

Counties participating in the program often supply funds of their own, to be used in the county where they were raised, as a way of attracting more state money for their applicants. In the current financial drought, Carroll is looking into ways of leveraging its matching fund contribution to buy more easements.

Recently, Powel and other county officials have proposed identifying farms that are important to preserve, but where mortgage costs are pressuring the owners toward immediate sale to developers. Under the plan, the county could pay 40 percent of what an easement sale would bring to the owner of what it deems "critical farmland." In exchange, the farmer would keep the land in preservation for five years.

If the state purchases the easement within those five years, the farmer refunds the money the county had advanced. But if the state is still unable to buy the easement, either for lack of money or preference for other land appraised for a lower price, the county could pay the remaining 60 percent on the easement, or accept a refund of its money from the farmer.

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