STANTON, Mich. — As subdivisions, strip malls and industrial parks chisel away at Michigan’s farmland for development, land use planners throughout the state are taking steps to preserve the most usable land for agricultural production.

While land use tools such as cluster development and zoning help facilitate land preservation, the state’s purchase of development rights program offers an incentive to farmers to set aside their most productive land for farming.

Michigan’s purchase of development rights (PDR) has been a longstanding policy in the state.

Public Act 116 of 1974, which was recodified in PA 451 of 1994 as Part 361 of the Natural Resources and Environmental Protection Act (NREPA), authorized the state of Michigan to purchase the development rights of certain agricultural land in order to preserve the land permanently.

Michigan’s program ensures that the land will be restricted to agricultural uses in perpetuity, according to Charamy Cleary of the Michigan Department of Agriculture (MDA).

The MDA took over administration of the PDR program from the Michigan Department of Natural Resources with the enactment of PA 262 of 2000, which called for the change.

“Farmland in Michigan is a very valuable commodity that we are losing. To protect that resource is vital,” Cleary said. “This is basically taking those development rights and setting them aside and saying you can’t grow houses.”

Cleary last week spoke to a group of land use planners and members of the Montcalm County Land Use Coalition about the state’s PDR program and how it can be an effective part of a community’s land use planning.

She said some of the reasons to preserve farmland include protecting the agricultural economy, preserving the best farmland for agricultural production, preserving rural character and scenic beauty, and manage urban sprawl and growth.

Cleary said that from 1978 to 2002 Michigan’s farmland was reduced from 11,990,689 acres to 10,142,952 acres, or about 16 percent, due to development.

“To me it’s very frightening. We’re losing our agricultural land to the urban areas,” Cleary said.

To date, Michigan has about 17,200 acres permanently protected through its PDR program. The PDR program financially compensates willing landowners for not developing their land. When buying development rights, the community obtains a conservation easement.

“The conservation easement is a signed agreement that permanently restricts a property’s use in order to protect its conservation value,” Cleary said.

The landowner still owns the land and can use it or sell it for purposes as defined in the easement such as agriculture, hunting and recreation.

However, Cleary said the state follows a strict easement monitoring policy that includes an annual inspection “to make sure the easement is being honored and there is not development occurring on that land.”

The PDR program requires that the land remain in agriculture or available for farming and restricts construction to farm-related buildings.

“You have to negotiate any special use up front,” Cleary said. “For example, if you think you may want to build a house on a piece of property 20 years from now you need to negotiate that in the conservation easement now.

“We can’t make you keep farming it, but we can require maintenance so that it’s still usable for agricultural production,” she said.

To determine the development value of a piece of property, Cleary said the state works with appraisers to determine the land’s value per acre if it were to be sold for development. They then determine the farmland value. The difference between the two is the value of development rights.

“We’re trying to isolate the value of those development rights only,” she said.

The program allows a landowner to be paid fair market value per acre for development rights.

If the PDR value is $5,000 per acre or less, the state will pay 75 percent and the local unit of government must pay the remaining 25 percent. The landowner also can donate the value of that 25 percent.

Amounts exceeding the $5,000 per acre allotment are the responsibility of the local unit of government.

Landowners may use proceeds however they choose. Cleary recommended that anyone considering applying to the PDR program consult with their tax preparer and attorney to learn about income tax obligations. She also said that once development rights have been sold the landowner could benefit from possible reductions in property taxes due to the decreased value of the land.

Another potential benefit of the PDR program is it could reduce future inheritance taxes on the land.

If a landowner wants to terminate a PDR agreement, they must repay to the state all the current fair market value of development rights.

Last year the state of Michigan had 19 PDR qualified programs throughout the state and received 12 applications valued at more than $16.6 million. Five grants were awarded, totaling $1.3 million.

Cleary explained that while the state has limited funds available, it follows a strict evaluation and scoring system when determining where to award grants.

This year there are 21 qualified PDR programs statewide and she expects that about $1 million in grants will be awarded in qualified communities.