Vol. 82, No. 12, December 2009
Our lives depend on the land we inhabit. We need agricultural land for food, quality of life, a healthy environment, and a healthy economy (including Wisconsin’s emerging bio-economy). Without a secure food supply, our life expectancy would be measured in weeks. Wisconsin farms and agricultural businesses generate more than $59 billion in economic activity and provide jobs for more than 350,000 people (about 10 percent of the jobs in the state).1
But Wisconsin’s population is growing steadily, and some of the state’s best farmland is being permanently lost at an alarming rate. Dane County, the state’s highest-producing agricultural county, added 60,000 people in the last decade alone. Land-use conflicts are growing, and they will get much worse if not addressed. A sustainable future will require sound planning, wise land-use decisions, renewed agricultural investment, and careful environmental stewardship.
A New Law Sets the Stage
The Wisconsin Working Lands Initiative is a cooperative state and local government and private effort to save Wisconsin farmland, protect the environment, and minimize land-use conflicts. Major legislation enacted as part of the state biennial budget act created the necessary framework for this effort.2 However, community action will determine what actually happens “on the ground.” Farmers and other interested parties have much at stake and may seek guidance from lawyers who work on local government, farm, agribusiness, real estate, tax, and environmental matters.
Overview of the New Law
The new law provides more tools and incentives for county and local governments to preserve agricultural land and promote agricultural enterprise. It provides enhanced tax credits for farmers whose land is protected for agricultural use and who adopt sound environmental practices. It also provides new opportunities for public-private partnerships and encourages a renewed community focus on farmland preservation and land-use planning.
The new law completely overhauls Wisconsin’s 30-year-old farmland preservation law. The farmland preservation program covers nearly eight million acres of land in Wisconsin and provides income tax credits to eligible farmers who are covered by farmland preservation zoning or individual farmland preservation agreements. The new law enhances and simplifies those tax credits and reduces eligibility barriers that have discouraged participation. County and local governments must modernize outdated farmland preservation plans and zoning ordinances in order for farmers to continue claiming tax credits.
The new law modernizes farmland preservation zoning standards and provides more flexibility for local zoning authorities. The new standards encourage compact development rather than wasteful sprawl. The new law also creates innovative farmland preservation options, including locally designed agricultural enterprise areas and agricultural conservation easements.
Promoting Better Planning
Most county farmland preservation plans were written 20 to 30 years ago. The new law requires counties to update their plans and offers planning assistance.3 In counties that fail to update their plans, farmers will lose tax credits (which could total up to $27 million per year statewide). Tax credits are available only in counties that have state-certified plans.4
The Department of Agriculture, Trade and Consumer Protection (DATCP) may certify county plans for up to 10 years.5 The new law streamlines the certification process.6 Plans certified under the old law7 remain temporarily certified under the new law,8 but most counties must renew their certifications by deadline dates ranging from 2011 to 2015 (counties with high population growth face the earliest deadlines).9
A certified plan must meet state standards and must be consistent with the county’s comprehensive plan, if any. The new law makes it easier to integrate farmland preservation plans with comprehensive plans and eliminates inconsistent procedures.10
A plan must identify clearly mapped areas that the county intends to preserve for agricultural and related uses.11 Farmers in those mapped areas are eligible for tax credits if their land is covered by a certified farmland preservation zoning ordinance or an individual farmland preservation agreement.
Effect on Local Zoning
The new law does not create any new state, county, or local zoning authority. It provides incentives for farmland preservation zoning but does not require or limit local zoning. County and local governments make their own zoning decisions and exercise their normal county and local zoning authority.12
The new law offers tax credits to farmers who are covered by an ordinance that meets or exceeds state standards.13 The DATCP certifies county and local ordinances for that purpose.14 Certification does not affect the legal validity of an ordinance – it merely determines whether farmers are eligible for tax credits. The DATCP may certify an ordinance for up to 10 years. The new law simplifies the certification process.15
Towns and municipalities, as well as counties, may adopt farmland preservation zoning ordinances.16 All certified ordinances, including town and municipal ordinances, must be substantially consistent with the county’s certified farmland preservation plan.17 A zoning ordinance does not necessarily have to cover all the farmland targeted for preservation in the certified county plan, but land not targeted for preservation in the certified county plan may not be included in a certified farmland preservation zoning district. Farms in excluded areas do not qualify for tax credits.18
Ordinances certified under the old law remain temporarily certified under the new law, but most certifications must be renewed by deadline dates ranging from 2012 to 2016 (the earliest dates apply in counties with high population growth).19 If a certification expires and is not renewed, farmers covered by the ordinance will lose their tax-credit eligibility.20
The new law spells out minimum standards for certified ordinances.21 A certified ordinance must clearly identify farmland preservation zoning districts (in which farmers are eligible for tax credits) and must describe and limit the types of land uses allowed in those districts.22 The statute limits the types of land uses that are allowable in certified districts.23 A certified ordinance may be more restrictive, but not less restrictive, than the statute.24
Certified farmland preservation zoning districts must be devoted to agricultural and related uses. An ordinance may not allow industrial, commercial, or urban residential uses that are incompatible with farmland preservation. However, there is some flexibility to allow compatible nonfarm uses (supportive infrastructure, farm supply and processing facilities, farm-family businesses, limited rural residences, natural areas, and so on), if that is the local preference.25 A certified ordinance may add specifics, as necessary.
In addition to identifying the types of land uses allowed in farmland preservation districts, a certified ordinance must indicate whether those uses are allowed as permitted uses (without a special permit) or as conditional uses (by permit only).26 Some uses (such as nonfarm residences) may only be allowed as conditional uses and then only if they meet minimum statutory standards (an ordinance may adopt stricter standards).27
The new law makes it easier to design broad, coherent farmland preservation districts. A certified farmland preservation district may include woods, wetlands, and natural areas as well as pastures and croplands and may include nonfarm parcels as well as farms. However, nonfarm uses must meet farmland preservation standards, and only farm owners may claim tax credits.28 A farmland preservation district also might include some legally pre-existing land uses that do not meet the new farmland preservation standards.29 Those prior nonconforming uses may continue but may not be materially expanded or altered in violation of ordinance standards (applied according to current laws related to prior nonconforming uses).30
A certified ordinance may be amended, but certain amendments must be affirmatively certified by the DATCP. The DATCP may also decertify an ordinance if any amendment causes it to violate certification standards.31 A zoning authority may rezone individual parcels out of a certified farmland preservation district, without any DATCP certification, but only if 1) it finds after public hearing that the rezoning meets specific statutory standards, and 2) the person requesting the rezoning pays a statutory conversion fee based on the amount of acreage rezoned.32 The conversion fee does not apply to land removed from a certified farmland preservation district as part of a general zoning map amendment that the DATCP certifies.
Residential Development in Farmland Preservation Zoning Districts
The new law eliminates minimum-lot-size requirements (which often increase the loss of farmland)33 and instead creates new residential density caps in farmland preservation districts.34 It requires conditional use permits for nonfarm residences and encourages compact clustering of residences to reduce agricultural impact.35 It restricts the conversion of cropland and prime farmland for residential use and prohibits nonfarm residences that impair agricultural use.36 It also tightens rezoning standards, to discourage excessive – and often unplanned – spot rezoning of parcels for residential use.
Effect on Farmland Preservation Agreements
Under the old law, a farmer could claim tax credits if the farmer’s land was covered by a farmland preservation zoning ordinance or by a voluntary farmland preservation agreement with the DATCP. Voluntary agreements provided only spotty farmland protection, because the farms covered by those agreements were often widely separated from each other.
The new law eliminates farmland preservation agreements, except in targeted agricultural enterprise areas. Existing agreements remain in effect but may not be renewed when they expire.37 Farmers in agricultural enterprise areas may enter into new 15-year agreements and may claim enhanced tax credits under the new law.38
Agricultural Enterprise Areas
Under the new law, the DATCP may designate agricultural enterprise areas in response to local petitions. An agricultural enterprise area does not, by itself, control or limit land use (it is not a zoning ordinance), but farmers in the designated area may enter into voluntary farmland preservation agreements and receive tax credits.39 An agricultural enterprise area must be a contiguous land area that is primarily in agricultural use. It must be targeted for agricultural preservation and development, consistent with the county’s certified farmland preservation plan.40
A petition to create an agricultural enterprise area must be signed by at least five farmers and by all the counties, towns, and municipalities in which the area is located (other persons also may sign in support).41 The DATCP may designate areas totaling up to 200,000 acres in the first two years of the program and eventually up to one million acres.42
Agricultural Conservation Easements
The new law creates a state program (PACE) to purchase permanent agricultural conservation easements from willing landowners.43 Easements must be in farmland preservation areas designated under certified county farmland preservation plans. An easement does not mandate a specific land use but instead prohibits development that would make the land unavailable or unsuitable for agricultural use. The landowner retains ownership and control. The recorded easement runs with the land and is binding on subsequent owners.
The DATCP must work with cooperating local governments or nonprofit conservation organizations to purchase easements. The DATCP may pay up to half the fair-market value of the easement (typically calculated as the difference between the agricultural use value and the development value of the land),44 plus reasonable transaction costs. The cooperating entity arranges the remaining financing, which may come from other public or private sources (the farmer also may donate part of the easement value, to get favorable federal tax treatment).
Effect on Farmer Tax Credits and Conservation Requirements
The new law repeals the old farmland preservation45 and farmland tax relief credits46 and uses the savings to finance a new and enhanced farmland preservation tax credit (income tax credit) beginning with the 2010 tax year (tax returns filed in 2011).47 This will provide more incentive for farmland preservation, without adding state costs.48
A farm owner domiciled in Wisconsin may claim the tax credit, for a farm that produced gross farm revenue of at least $6,000 in the preceding year (or $18,000 over the last three years), if that farm is covered by a certified farmland preservation zoning ordinance or an individual farmland preservation agreement at the end of the tax year for which the credit is claimed.49 The tax credit is paid as a flat amount per acre,50 depending on whether the farm is covered by an agreement ($5 per acre), a zoning ordinance ($7.50 per acre), or both ($10 per acre).51 There are no minimum or maximum acreage requirements.
A claimant must be a farm owner who is legally responsible for paying property taxes on the farm. The farm must be primarily devoted to agricultural use, but the farm owner may claim the tax credit on the entire farm acreage (including wetlands) – not just acres currently in production.52 There is no longer an income ceiling, and the amount of the tax credit no longer depends on the claimant’s income or the size of the claimant’s property tax payments.
Farmers claiming tax credits must comply with state soil and water conservation standards (including nutrient management and manure runoff standards), regardless of whether they receive any other cost-share payment for conservation compliance.53 Claimants must certify to the Department of Revenue, on their tax-credit claim forms, that they are in compliance.54 New claimants also must attach a compliance certification from the county.55 Counties must monitor all claimants for continued compliance and may suspend tax-credit eligibility for farmers who fail to comply.56
The new working-lands law provides incentives and a modern legal framework for making wise land-use decisions, but it does not dictate a final outcome. The shape of the future will be determined at the local level by the people of the state, including farmers and other landowners, county and local governments, investors, community organizations, and their legal advisors.