Rob and Regina Richardson are in their late 50s, and while retirement is still several years away, they feel good knowing that their son, Roy, will continue farming their land.
But, what about the next generation, or another generation down the line?
They weren’t so certain.
As first-generation farmers, the Richardsons have 35 years of sweat equity in their Vicksburg farm in Kalamazoo County. “It’s required a great deal of effort and sacrifice, and we wanted to make sure this farm stays in agriculture forever,” Rob says. “There are unique soil types here. Everything is irrigated, and with abundant water reserves to draw on, it is ideal for many crops, including specialty crops.”
• Richardsons donate largest conservation easement in the state — 906 acres.
• Family wanted to be certain that its prime farmland will remain in agriculture forever.
• Donating easements allows for certain tax credits.
With the world’s growing population, Rob says the need to keep valuable farmland in production is even greater. “This land is needed for food production, now and into the future. We wanted to make sure, even if it gets sold out of the family, that it’s still available for agriculture.”
Late last year the Richardsons donated the largest single agricultural conversation easement, 906 acres, to the state of Michigan. The permanent easement restricts the land to agricultural purposes, preventing any kind of development not consistent with agriculture.
In return, the Richardsons get a tax credit. At the time, full-time farmers who derived all income from the farm could donate development rights to the state and receive a 100% credit for the donation. The donation amount is determined by subtracting the highest and best use (usually development) of the land’s value from its value as farmland. For example, if an acre of land has a development value of $5,000 and its farmland value is $3,000, the credit is $2,000. The credit can be taken over 15 years.
“This was part of the decision-making process,” Rob explains. “But it was not driving our decision.”
Since Jan. 1, the tax benefit for donated easements has changed to 30% of income, which can be rolled over in five years. Conservation groups have been rallying for it to return to previous levels, but have not yet been successful.
The Richardsons farm 3,000 acres and grow seed and commercial corn, soybeans, wheat, hay and green beans.
The 906 acres covered under the easement represents their entire acreage owned. Even though they could have exempted out a few building lots for family, Rob says, “We decided not to do that.”
The Richardsons have taken educational trips to Eastern states with American Farmland Trust to see how they are protecting agricultural lands. “Farmland preservation is something we strongly believe in,” he says.
Change in farmland protection
In the last 10 years, Michigan has changed how it permanently protects farmland. The state continues to accept donated easements, but no longer purchases development rights (see story at left). Instead, the process begins at the local unit of government, generally counties. While several surrounding counties have Purchase of Development Rights programs, Kalamazoo County does not, Rob says. “We helped work on our program for the county, but it hasn’t gotten approval by commissioners. We didn’t want that to stop what we believe in and our desire to keep this land in agriculture,” he adds.
It took a year to get everything in place. “One thing that surprised us is how titles aren’t as clean and clear as you might think,” he says. “Ultimately, we had to get the help of a local attorney, but I wouldn’t want people to be scared off by that.”
Donating your development rights, Rob says, is not a decision you make in a day or two. “We talked about it a lot, and we both feel very strongly that this is the right thing to do. Now that it’s done, it’s given us such a peace of mind.”
power to the farm: Michigan Department of Agriculture Director Don Koivisto (left) honors Regina and Rob Richardson with a proclamation from the state for donating the development rights on 906 acres of their farm in Kalamazoo County.
This article published in the September, 2010 edition of MICHIGAN FARMER.
All rights reserved. Copyright Farm Progress Cos. 2010.