League of Women Voters of Montgomery County, MD, Inc. Fact Sheet May 2002
AGRICULTURE IN MONTGOMERY COUNTY
(An index appears at the end of this document.)
Introduction
The League of Women Voters of Maryland has for many years maintained a land use/growth management position supporting preservation of agricultural land by zoning; continued use of farmland assessment laws, including collection of the rollback tax; transfer of development rights, and easement purchases to enable local governments to comply with state goals, guidelines, and standards.
Montgomery County has been a leader in many aspects of agriculture as well as in preservation of agricultural land but has also experienced periods of rapid growth and currently recognizes many pressures for increased development. There was a large growth spurt in the 1960s, and a lot of land gave way to houses. By the 1970s, our land use planners looked into their crystal ball and saw the potential for sprawl to engulf the entire county. Alarmed, and with more than a little foresight, they drew up a preservation plan. Since the plan was developed, the population of the county has increased by more than 200,000 persons and its economy has grown in today's dollars from $19.1 billion to $40.4 billion.
The Functional Master Plan for Preservation of Agriculture and Rural Open Space
In October 1980 the Montgomery County Council was presented with a functional plan for the preservation of agriculture and rural open space, which was adopted by the Council the following year. With the creation of the Rural Density Transfer (RDT) zone, this established the policy that agriculture is the preferred use in the agricultural zones and that no agricultural operation is to be restricted on the grounds of interference with any other use permitted in the agricultural zones. In the previous 30 years 100,000 acres of farmland within the county had been converted to other uses. The preservation plan determined that a critical mass of active farmland that was economically viable still existed within the county, but that development pressure was threatening the agricultural area and that growth could be accommodated in the planned population centers.
The public purposes served by preserving a farmland area include control of costs and prevention of urban sprawl, preservation of regional food suppliers, energy conservation, protection of the environment, maintenance of open space, and preservation of rural lifestyles as well as adherence to the county's growth management systems. An agricultural reserve for the western and northern regions of the county and a rural open space area in the northeastern region were recommended.
The major tool to implement the preservation policy is zoning. A total of 163,000 acres were studied and 110,000 were recommended to be included in the agriculture and open space reserve; however, publicly owned land, municipalities, and planning areas then developing master plans were not rezoned. The RDT zoning in the reserve limited development to 1 residence in 25 acres, with clustering permitted so that a dwelling unit could be built on as little as 1 acre. Implementation of density transfer is discussed below. Approximately 26,000 acres in the northeastern sector of the county that was only 40% farmland at that time was designated a rural open space area. This area is designated as a rural cluster (RC) zone, which permits cluster development of 1 unit per 5 acres with a minimum lot size of 1 acre. The map shows the planning area and recommended zoning.
Permitted uses in the RDT zone include farms, primary agricultural processing, roadside farm markets, granaries, and other uses related to agriculture. Permitted dwellings include single family homes, tenant houses or 1 mobile home, guest houses, and accessory uses. Services permitted include child care residences for not more than 8 children, child or elderly day care for not more than 4 individuals, churches, fire stations and public rescue squads, home offices, and publicly owned or operated uses. Recreational uses permitted include boathouses, hunting and fishing cabins, private riding stables, noncommercial kennels, and private swimming pools. Other activities such as fish hatcheries, forestry, poultry hatcheries, horticultural nurseries, and milk plants are permitted, but commercial stables, service organization facilities, shooting ranges, cemeteries, animal boarding places, and many other uses require a special use permit.
The uses in the RC zone are similar to those of the RDT. The cluster development option is designed to encourage the preservation of scenic and environmentally sensitive areas by permitting the 1 house per 5 acres to be located on 40% of the land with each house and the remaining 60% reserved for agricultural, open space, or other restricted uses. The planning board may approve a higher proportion in residential development if the cluster protects to the maximum reasonable extent the portion of the tract appropriate for farming, reduces nuisance or conflict with agricultural uses, is harmonious with the environment, or protects scenic vistas. Development can be refused if it jeopardizes significant agricultural or farming activity, the integrity of the environment, or scenic vistas.
Historically the soil type and its ability to absorb moisture as measured by a percolation test was a limiting factor in development because septic regulation is based upon the "perk" ability of the soil. Much of the study area has severe limitations for septic systems, but the best farmland is the most likely to "perk" well. The restriction imposed by the RDT zoning thus enhanced the preservation of the best farmland. The plan called for limited extensions of sewer within 2 years in north Clarksburg and in the 7 to 10 year forward time frame around Clarksburg, Olney, and Poolesville. The rest of the reserve not then being served was proposed as category 6, meaning no planned service. Exceptions have been made for private institutional facilities on a case by case basis. The County Council has recently questioned whether this exception policy should apply to the RDT zone. A working group has been established to study this issue.
The extension of water to the RDT and RC zones was limited by the plan, but less severely. Currently a property can be considered for water service in the RC zone if the cluster provision is utilized or if the property is too small for clustering. This decision can be made by an administrative process.
The plan also recommended that roads in the agricultural reserve and RC zone remain in their present condition except for maintenance and safety improvements and that bikeways be encouraged. The county code identifies certain roads as rustic roads based upon location in an area where natural, agricultural, or historic features are predominant and planned land use goals and zoning are compatible with a rural/rustic character. Local use, low traffic volume, and infrequent accidents are criteria in designating such roads.
Agricultural Preservation Programs in Montgomery County
TDRs
Until 1980 the rural western and northern parts of the county were zoned for 5-acre lots, but when the agriculture reserve was established the zoning was changed to one house per 25 acres in the RDT zone. As compensation for the landowners for this downzoning, each 5 acres was deemed to have one "development right", i.e., the right to carve out a lot and build a house on it. These rights could be sold for use in "receiving areas" in parts of the county planned for development, hence the term "Transferable Development Right" or TDR.
The buyer of TDRs could use the transferred rights to exceed the density of development otherwise allowed by the zoning in a designated receiving area. If the zoning allowed 50 houses on a tract, for example, the builder might buy TDRs to increase the allowable number to a maximum specified by the county, such as 60. To the builder, the TDR is worth nearly as much as a lot, so a market was created. A landowner makes TDRs available for sale by "severing" them, a process in which the County confirms their availability, but also acquires from the property owner an easement forever limiting development on the tract to at most one house per 25 acres, regardless of future zoning or annexation by a municipality. When TDRs are severed, the easement is placed upon the entire property. The landowner need not sell the TDRs at the time of severance. Moreover, if there are any houses on the property, or if any are to be constructed, a TDR must be retained for each dwelling unit. If all the allowed TDRs are sold, no development can take place. The easements currently in force protect 41,301 acres. About 60% of the potential TDRs have been sold and prices have ranged from a low of $5,000 per TDR to as much as $11,000.
The number of receiving areas is limited partly because residents oppose the extra density TDRs allow and the receiving areas have been reduced during master plan revisions. Natural features of a site and the county tree planting ordinance often limit the number of buildable lots to less than the zoning allowance, so TDRs cannot be used. The requirement to utilize at least 2/3 of the allowable number of TDRs on the property restricts flexibility in development. Planning officials are considering ways to increase the value of TDRs by requiring the master plan evaluation process to include creation or expansion of TDR receiving areas whenever any additional density is considered. Creating receiving areas in Gaithersburg and Rockville particularly in locations near transit centers, reducing the minimum use requirement, tying TDR extra density to affordable housing, allowing the use of TDRs in commercial zones, and providing more careful study of the natural land features in selection of receiving areas have been suggested for further study.
The Agricultural Services Division of the Department of Economic Development (DED) assists farmers in utilizing the TDR program and tracks the number of TDRs severed and available. The division also helps farmers interpret the regulations associated with other preservation programs. The goal of the division is to add 200 acres of easement by TDRs in each of the next 7 years to bring the total of TDR protected land to 42,701 acres. While other preservation programs currently protect approximately 12,500 acres in the county, by the year 2008 they are projected to cover an additional 14,800 acres to achieve a total of 70,000 acres of protected land.
Other Agricultural Preservation Programs In addition to the TDR program, a variety of other state and local programs exist to preserve agricultural land in Montgomery County. They include: the Maryland Agricultural Land Preservation Foundation (MALPF); the Maryland Environmental Trust (MET); the Montgomery County Agricultural Easement Program (AEP); the Rural Legacy Program, enacted in 1997 as part of the Governor's Smart Growth and Neighborhood Conservation initiative; and the Montgomery County Legacy Open Space Program.
These programs operate by conveying conservation easements on property or by outright purchase. Funding comes primarily from the state open space transfer tax, the local and state agricultural transfer taxes, general obligation bonds, and special grants and donations. A conservation easement is a perpetual legal agreement a property owner makes with a land trust and/or government agency to restrict the development and uses that may take place on the property in order to preserve open space, agriculture use, or wildlife habitats. The goals of the agricultural preservation programs are threefold: to conserve farmland for future food and fiber production; to ensure a continued high quality food supply for county citizens; and to preserve the agricultural industry and rural communities. In addition to the approximately 12,500 acres preserved for continued agricultural and open space use through the various programs, another 514 acres are part of a federal easement program.
The two state programs, MALPF and MET, have existed for the longest period of time. The MET program was established in 1967 to encourage landowners to donate easements on their property to protect scenic open lands. These properties must have agricultural, environmental, or historical conservation value. Conditions for an easement include no industrial, commercial, or residential development, and no dredging, mining, etc. The property may be used for farming or forestry and may be sold in the future. These easements, which cover 2,086 acres, are perpetual; if exceptions are made for term easements, tax benefits are prohibited. Tax benefits include: 100% local and state property tax credit for 15 years for any conservation easement donated after July 1, 1989; reduced inheritance and estate taxes; and the right of the donor to deduct up to 30% of adjusted gross income annually until the value of the gift is exhausted. The donor is responsible for notifying the MET of any sale or changes in use of the property and must permit MET representatives to monitor periodically.
The MALPF was established ten years later by state law because of a growing concern over the disappearance of farmland due to development throughout the state and has preserved 2,306 acres in Montgomery County. Participation in this program involves a two step process. The landowner first applies to the MALPF and to the County Agricultural Preservation Advisory Board to form an agricultural district and then applies to sell the easement to MALPF. Minimum property size for the creation of an agricultural district is 100 acres in one or more contiguous farms. Montgomery County may offer a supplemental payment of no more than 15% of the state easement offer to the applicant. Easement purchase prices in Montgomery County in 1998 averaged $3,878 an acre. Restrictions on property use are similar to those for the MET program except that, in addition, a soil and water conservation plan must be implemented within ten years. One acre of easement credit is subtracted for each dwelling on the property. Although the easement is perpetual, the landowner may apply to buy it back after 25 years if the state and county agree that "profitable farming is no longer feasible".
The Montgomery County AEP was established by county ordinance in 1987, although the defining regulations did not go into effect until 1991. Under this legislation Montgomery County can purchase agricultural land preservation easements if the land is zoned Rural, Rural Cluster (RC), or Rural Density Transfer (RDT) or qualifies for an approved Agricultural Preservation District under the MALPF program. Having this program has permitted the county to move forward in preserving 6,268 additional acres of agricultural land, permitting 50 acre Agricultural Preservation Districts, when the state has exhausted its annual MALPF funding. The conditions for the easement are similar to those under the state program although the soil and water conservation plan must be implemented within five years. Agricultural easement values in Montgomery County have ranged between $800 and $4,500 an acre.
The Rural Legacy Program was established by the state legislature in 1997, in conjunction with the state's Smart Growth program to "protect natural resources, farms, forests, and other sensitive environmental areas while maintaining the viability of resource-based economies...", by preserving 225,000 acres over 15 years at a cost of $600 million. Since FY 1998 it has provided funds from the property transfer tax and general obligation bonds to local governments to purchase property or buy interests in real property in designated Rural Legacy Areas. Only in the last year have funds been used to preserve 1,571 designated acres in the upper northwestern and northeastern sector of Montgomery County. In FY 2001, $28 million in total was allocated by the state for this program.
The newest land preservation program is Legacy Open Space, proposed as a 10 year Montgomery County Planning Board initiative in 2000 to provide different types of open space and protect different types of resources. Protection of farmland and rural open space is only one of six resource categories to be preserved through this program. Included also in this initiative are: protection of environmentally sensitive natural resources; protection of water supplies; conservation of heritage resources; protection of greenway connections; and protection of urban open spaces. The specific goal for farmland is to "develop market based incentives to protect 1,500 acres of at-risk farmland and rural open space in the Agriculture Reserve." To date four properties have been purchased: 215 acres for Bucklodge Conservation Park, a 2 acre Sligo Mill property in Takoma Park, the 16 acre Leet forested property near the South Germantown Recreation Park, and the 30 acre Radl forested property near Poolesville that is part of the River Road Shale Barrens. Funding for these initial purchases, none of which can be categorized as agricultural preservation, has come primarily from general obligation and park bonds.
Agricultural use assessment is a practice in every state; Maryland was the first state to introduce the practice with a law passed in 1959. The purposes of the use assessment are to preserve a readily available source of food and dairy products close to metropolitan areas of the state, to encourage preservation of open space, and prevent forced conversion of open space land to more intensive uses because of economic pressures; however the USDA Economic Research Service reports that most students of the process conclude that it is not effective at preventing development.
The Maryland law provides that lands actively devoted to farm or agricultural use shall be assessed according to that use. In practice soils were divided into three productivity categories and the value was computed according to the estimated value of corn produced on an acre of such land. This resulted in assessed value of $200, $300 or $400 per acre for each acre of farm land. This valuation is set by a guideline of the State Department of Assessments and Taxation. In 2000 when the state changed from a 40% to 100% of assessed value for taxing purposes and reduced the tax rate accordingly, new guidance was given for new accounts to be assessed at $500 per acre. Land currently in agricultural use was grandfathered in at its current assessment. Thus a typical farm is taxed less than a suburban lot.
The state agricultural transfer tax serves a dual role: as a deterrent to the conversion of land from agricultural use and as a penalty when the land is sold for development. This tax is 5% of the sale price of the parcel for those parcels over 20 acres., 4 % for those less than 20 acres and 3% for those less than 20 acres that include a well or septic system. This is a land tax and the value of buildings is excluded. The tax can be waived if the land is to continue in agricultural use and is not applied to a transfer within the family if the parcel is to be used for residential purposes, or to a transfer to a governmental agency. The tax is collected by the county for the state before the deed is recorded.
In addition to the state agricultural transfer tax, when property is sold the county levies a transfer tax on land that has been assessed and taxed as agricultural land any time during the preceding 5 years, the percentage of value being graduated from 2.4% for 1 year to 6 % on land so taxed in 3 of the previous 5 years. If the land is in the RDT zone or has a permanent easement prohibiting development for residential or other nonagricultural uses, the county tax is just 1%. There are no stated exceptions to the county tax.
Trends in Farming Since the Establishment of the Reserve
The County defines agriculture as "The business, science and art of cultivating and managing the soil, composting, growing, harvesting, and selling crops and livestock, and the products of forestry, horticulture and hydroponics; breeding or raising livestock, poultry, fish, game, and fur-bearing animals, dairying, beekeeping, and similar activities." It also includes processing on the farm of an agricultural product to prepare it for market
| Crop Planted | 1980 | 2001 | Acres | Acres |
| Hay | 12,000 | 12,500 |
| Soy Beans | 3,000 | 13,000 |
| Corn-Grain | 39,000 | 12,000 |
| Corn-Silage | 7,900 | 1,100 |
| Wheat | 7,600 | 4,500 |
| Total | 69,500 | 43,100 |
| Table 1 | ||
In 1981, 125,300 acres, about 40% of the land in Montgomery County, was assessed as agricultural; today about 27% is. USDA statistics show a decline in crop land from 69,500 acres in 1980 to 43,100 acres in 2001. Crops planted have changed as shown in Table 1. The average farm size is 147 acres and more than half of all our 526 farms (down from 700 in 1982) are under 50 acres. Most of the profitable farms are large, with a substantial amount of rented land. The number of horticultural enterprises has increased to an estimated 350 while the number of dairy farms has declined dramatically.
The keeping of horses, for pleasure not profit, has increased significantly in recent years, especially in non-agriculturally assessed locations. A study compiled in 2001 by the Montgomery Soil Conservation District in cooperation with the DED Agricultural Services Division estimates that as many as 10,837 horses are housed in the county. A horse owner may keep 2 horses on 2 acres of land and 3 to 10 horses on 5 acres. For more than 10 horses, the requirement is 5 acres plus 1/2 acre for each horse above 10. However, under current zoning a riding stable is permitted to keep no more than 2 horses to be rented out for recreational riding or instruction. A special exception is required if more horses are to be utilized in that way. The annual expenditure within the county for riding, pasture maintenance, and fixed costs for horses is estimated to be in excess of $64 million.
The 350 horticulture firms include nurseries and landscaping companies, arborists, sod farms, lawn care firms, and green house businesses. Landscape businesses account for 120 of these firms. Horticulture occupies over 8000 acres of County land, one-half of this in sod farms. About 7,000 of the 10,000 residents who work in agriculture work in horticultural businesses.
There are many factors that enter into the sustainability of farming in the county: size of the farms, soil quality, cost of land, availability of markets and services, availability of reliable labor, pasture maintenance practices, increased deer damage, and the age of most of our farmers.
There are not many young farm operators in the county. The average age of farmers is 57, and only 6% are under 35, with 32% over 65 years of age. More people apparently enter farming later in life as a second career, and are more likely to engage in specialized farming. Most who grew up on farms have found jobs outside agriculture, and fewer farms are now able to support a farm family. Most farmers hire workers from within the county, but a significant number say they have trouble finding qualified employees. Some resort to hiring immigrant workers, a difficult process today. Many of the sales and service industries (machinery dealers, slaughter houses, seed and supply houses) have left the county, and 50% of the farmers travel out of county to obtain financing, equipment, machinery repair, and supplies. Despite these impediments, two-thirds of the respondents in the county's 1995 study said they planned to continue to farm.
Most farmers rely on some off-farm income. The ability to provide additional income by employment in non-farm activities is important in Montgomery County. Marginal farmers are unwilling to relinquish their farming lifestyle; nearby metropolitan areas make non-farm employment available; and with non-farm sources of income, the ability to operate successful farming operations increases. Thus, the fact that most of our farms are not very profitable does not signal the demise of farming if the lifestyle continues to be attractive.
In 1997, the market value of Montgomery County agricultural products sold averaged $54,303 per farm, with average costs of production of $45,548. Thirty-five percent of the farms had less than $2,500 in sales and only about 8 % sold $100,000 or more. In addition to assisting landowners with the various preservation programs, the DED Agricultural Services Division assists farmers with marketing. Marketing assistance ranges from the development of a network of farm markets for direct sales of produce to consumers to working with the Maryland Grain Producers Association to coordinate its work with the county Department of Public Works and Transportation to establish an Ethanol E-85 program for the county fleet vehicles. The mission of the division includes providing farmers with up-to-date information on technological advancements, cooperative arrangements and foreign trade opportunities. The 2001 estimate of Montgomery County's gross economic activity level is $40.4 billion. Agriculture, as a part of total payroll employment (a proxy for economic activity) is approximately 1%.
Regulations Affecting Farming In Montgomery County
A variety of state and county regulations affect farming in Montgomery County. These range from health regulations governing the handling of food products to environmental laws and forest conservation ordinances. Maryland's Nutrient Management Law was passed by the General Assembly in 1998 as part of the Water Quality Improvement Act in order to reduce nutrient levels in our streams, rivers, and the Chesapeake Bay. The law requires a farmer to implement a plan to manage the application of manure, chemical fertilizers, and other plant nutrients by December 31, 2002. It applies to agricultural operations (including those producing plants, trees, sod, food, feed and fiber) grossing $2,500 or more annually, or livestock operations with more than 8 animal units (one animal unit =1,000 pounds live weight). The plan must be developed by a nutrient management consultant who is certified and licensed by the Maryland Department of Agriculture. Cooperative Extension consultants are provided free and there is cost-share assistance available if the farmer prefers a private, non-government consultant.
An effective plan has several key components: a map or aerial photo, soil analysis, "field history", production goals based upon the average of the 3 highest yields in the past 5 years, and nutrient sources. The plan will recommend the amount, timing and application method of appropriate nutrients. It must be updated once every 3 years. The law provides penalties for failure to develop or implement a plan. Farmers object to the excessive record keeping required, the intrusive nature of inspections for compliance and the lack of enforcement of similar laws in other states that border the Chesapeake Bay.
Montgomery County's Forest Conservation Ordinance, effective November 2001, establishes procedures and requirements to minimize the loss of trees as a result of development and to protect trees during and after land disturbing activities. While agriculture activity is exempt, the law applies to anyone who seeks special exception approval and some activities in the RDT require a special exception. Any site developed through subdivision must retain 25% of the tract in forest. If the site is unforested, 20% of it must be planted in trees. There are many regulations specifying just how this is to be done. /p>
During the period from 1960 to 1980 farmland in Montgomery County was disappearing at the rate of approximately 3,000 acres per year. Following the establishment of the Agriculture and Rural Open Space Reserve, this trend continued until the economic downturn of 1990. In the period from 1990 through 2000, the average annual loss fell to under 1,100 acres per year. Now, however the trend appears to be reversing with 1,953 acres transferred from agricultural use in 2000 and 2,544 in 2001. These figures are based upon the state agricultural transfer tax records and therefore represent a low estimate, but reflect the whole county, not just the Agriculture Reserve.
Maryland National Capital Park and Planning Commission's (MNCPPC) statistics indicate that creation of the Agriculture Reserve led to a substantial reduction in farmland subdivided for residences and other uses within the Reserve. They report that subdivision activity in the RDT zone averaged approximately 300 acres per year between 1981 and 1998. About 7% (5,444 acres) of the land in the RDT zone has been developed, while 14% (2,419 acres) in the RC zone has been converted. MNCPPC acknowledges that not all land division activity is reported as subdivisions; there are a certain number of parcels exempted from subdivision regulations due to "grandfathering" provisions when plans and ordinances are changed.
Our examination of the 9 subdivisions approved in the RDT zone during 1998 through 2001 showed 1 church, 2 cemeteries, and 6 residential developments, none larger than 7 lots although the property approved for 7 lots was initially platted for the 13 lots allowed by zoning. A total of 13 lots was eventually approved for the tract. However, in recent years county officials have expressed concern over the impact of conversion of farmland to residential use in the Agriculture Reserve. The primary concern is the manner of subdivision. While the restriction in the RDT zone is one dwelling unit to 25 acres, the dwelling units can be clustered and built on as little as 1 acre per unit. Theoretically a tract of 125 acres could have 5 houses on 5 acres with the remaining 120 acres continuing to be farmed. In practice a 126 acre tract at Bucklodge and Whites Store Road was subdivided in total into 5 lots of various sizes. When questioned about clustering, the owner responded that the configuration chosen was necessary to meet septic perk requirements.
This common practice led William Hussman, former chairman of the Planning Board, to propose in 1999 that more effort be made to preserve the prime farmland and rural character. The Planning Board's proposal for a "conservation design" concept would require that lots be clustered on subdivisions on 100 acres or more creating 6 or more lots. The proposal recommended that changes be made in the zoning ordinance and subdivision regulations to provide for private roads to enable clustering. It also suggested that alternatives to individual septic tank sewage disposal be considered.
Currently prime and productive farm fields are not required to be evaluated in site design consideration, so they are often lost permanently to residential development. Hussmann pointed out that subdivisions smaller than 6 lots make up 84% of the subdivision in the RDT zone and would not be affected be this proposal. Mandatory clustering has been opposed by the farm community, particularly if not accompanied by changes to permit more flexibility in the septic regulations. No action has been taken on these issues.
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