State Officials

Use and Fund Conservation Easements to Protect Farmland

Who can implement this: State, county, and city officials; communities; governmental organizations; advocacy organizations; and agricultural producers

To protect land for future generations, state and local policymakers should work together to fund conservation easements. A conservation easement is a legally binding agreement that restricts the uses of land and/or prevents a piece of property from being developed. It limits certain rights—often the owner’s right to subdivide or develop—associated with that property. A private organization or public agency then enforces the landowner’s promise not to exercise the restricted rights. Landowners essentially forfeit these restricted rights in perpetuity, but in certain cases, conservation easements can be established for finite periods of time, though these short-term easements tend to be continually renewed.[1]

An easement selectively targets and restricts only those rights necessary to protect specific conservation values and is individually tailored to meet a landowner’s and community’s specific needs. Because the land remains privately owned with the remainder of the rights intact, an easement property continues to provide economic benefits through its association with job creation, economic activity, and property taxes.

Conservation easements operate similarly to transfer of development rights programs, except that the development rights need not be evaluated by a government agency and sending and receiving areas do not need to be established. Landowners either voluntarily donate or sell an easement, which allows them to trade a portion of their property value for a significant one-time income or tax benefit while still retaining many private property rights. A landowner and an easement purchaser, typically an agency, negotiate the fair market value of the development rights being restricted, and then those rights are sold and documented via the recording of a conservation easement.

Donating conservation easements is considered a charitable donation under the federal tax code, and those who donate are eligible for federal income tax deductions. In 2015, the U.S. Congress enacted an enhanced federal tax incentive for conservation easement donations, which, depending on the value of the easement, permanently increased the tax deductions possible for landowners.[2]

Conservation easements can shield farmers from pressures to sell land to developers and allow them to continue their farming operations or retire with significant income, passing their agricultural operations to those who will continue farming on the land. The reduction in property value resulting from the conservation easement makes selling the land to a farmer, rather than a developer, more feasible.

Conservation easements should be created only on lands that are likely to be viable farms for many years to come. Otherwise, the easement will serve to only restrict development without guaranteeing continued food production.

Because of the limited funding available for conservation easements, it is also important to target the most irreplaceable lands, such as orchards, for preservation.

Implementation:

Although a number of private and public organizations are already involved in managing conservation easements in Utah, Utah County may want to charter its own agricultural land trust with a board of directors comprising local farmers and others. Such a trust would preserve local control of easements. The trust could seek and hold funding, buy development rights of farmland, advise county officials on a variety of agricultural issues, and coordinate with all conservation districts in the county.

  • Existing government and nonprofit organizations should work together to specifically treat agriculture as a valuable resource by promoting conservation easements in Utah County.
  • The Utah Legislature should explore new and existing options and implement long-term mechanisms for buying conservation easements on critical farmland best suited for long-term agricultural production.

The biggest challenge to establishing conservation easements is funding. Below are several options for providing a large and reliable pool of money for conservation easements.

Funding Options for Conservation Easements:

  • Roll-back taxes - When greenbelt designated farm lands are removed from agricultural use, invest the required “roll-back” taxes into a county farmland fund such as one managed by a county agricultural land trust as suggested above. The rollback tax is the difference between the lower taxes paid while the land had greenbelt designation and the taxes which would have been paid without the designation.
  • Property tax fraction - Apply some fraction of the county's share of property taxes to a farmland fund. This funding option could be limited to years with adequate or increased tax receipts to minimize impact on other county responsibilities.
  • Federal matching grants - The 2014 Farm Bill made billions of federal dollars available dedicated to match other conservation funding used to protect farmlands, ranchlands, grasslands, wetlands, and forests across the country. This federal bill and many other funding agencies require matching funds, usually at a 1:1 ratio. The county should therefore set up a mechanism such as the agricultural land trust mentioned above to attract, hold, and manage the funds required to match federal and other available funds.
  • Bonding - Allow county voters to vote on a bond issue for farmland preservation. Critical wildlife and/or recreation areas could be included in the bond if that is more attractive politically. The Trust for Public Lands can advise on the best ways to publicize and organize how to pass such a bond.
  • Tax credits – The Utah legislature could pass a bill awarding state tax credits to those who contribute to a conservation easement.
  • Real estate transfer taxes: To purchase conservation easements, many counties across the country rely on taxes that are generated as a percentage of real estate sales. In Utah, the price of real estate transactions is not disclosed. However, sales are public information, and a small fee could be applied to real estate transfers based on a county assessment before the sale. This tax would essentially require those who benefit from destroying agricultural land to pay a fee to help preserve it in other places.
  • Sales taxes - The state legislature has made attempts to pass a bill allowing for a local sales tax of 1/8 of 1% on the purchase of agricultural land and conservation easements for open spaces.
  • Special district taxation: If agricultural conservation districts were established as “special districts,” they would be authorized to tax or spend public funds that receive tax-exempt status.

The LeRay McAllister Critical Land Conservation Fund provides grants to support the conservation of critical agricultural lands, wildlife habitats, and other lands vital to different communities across the state. This fund is highly dependent on receiving money from the state legislature and is not as reliable a resource as it could be.[3]

County lawmakers and stakeholders are interested in developing a narrower, more focused farmland fund that would receive more consistent funding from the legislature. County and state lawmakers would have to work together to address and resolve challenges resulting from rising real estate prices and the pressures on farmers to sell land to developers.

Examples:

Utah has many conservation easement programs of varying scales and for different areas. Some of these programs and organizations include: the Bear River Land Conservancy, the Ogden Valley Land Trust, the Summit Land Conservancy Easement Program, the Nature Conservancy Easement Program, and the Utah Open Lands Easement Program.[4]

Massachusetts has a conservation easement program specifically designed to benefit agriculture: “The Agricultural Preservation Restriction (APR) Program is a voluntary program that offers a non-development alternative to farmland owners for their agricultural lands who are faced with a decision regarding future use and deposition of their farms. The program offers farmers a payment up to the difference between the “fair market value” and the “fair market agricultural value” of their farmland in exchange for a permanent deed restriction, which precludes any use of the property that will have a negative impact on its agricultural viability.”[5]

Pennsylvania takes an unconventional approach by using a cigarette tax, which funds 45% of the state’s conservation easements. The remainder of the cost is funded by county and state government.[6]

Establish Agriculture Protection Areas in Utah County to Support Farm Operations at All Scales

Who can implement this: State, county, and city lawmakers; communities; governmental organizations; and agricultural producers

Agriculture Protection Areas (APAs) are designed to protect farming and ranching operations. Agricultural operations on land within an APA are given the “highest priority use status,” meaning they are valued from a regulatory perspective above residential and commercial uses.[1] APAs are established for 20 years and can be modified, renewed, or terminated at the end of that period.

APAs help protect farmers against nuisance lawsuits, unreasonable restrictions from state and local agencies on farm structures and practices, changes in zoning designations, and roads cutting through their farms. They also serve to notify adjacent land buyers that they are purchasing land next to a protected farm operation.[2] APAs help prevent smaller farms from being sold to developers, which makes more small farms available to beginning farmers and helps mitigate some of the inherent risks of small farms. These protected areas enable farmers to run their business with greater peace of mind and less worry about external forces disrupting their livelihoods.

Currently the requirements for establishing an Agriculture Protection Area are as follows:

  • Each APA must be a minimum of 20 contiguous acres. A proposal for APA must be signed by the owners of a majority of the land within the area and include the following information:
    • The boundaries of the potential APA
    • Any limits on agricultural production in the area
    • The names of owners of record of the land within the area
    • The number of acres of each parcel within the area.
  • Land may be added or removed from an APA at any time if a proposal to do so is approved by the county commission.

 

Implementation:[3]

  • Government and nonprofit organizations should educate local landowners about the benefits and limitations of APAs to help communities begin the process of establishing APAs.
  • The Utah County Assessor’s Office should make an easily accessible APA application available online to increase the transparency of the process. Uintah County’s APA application is currently available online and breaks the process into steps that are easy to understand and follow.[4]
  • City councils and the Utah County Commission should pass an ordinance allowing for the automatic establishment of APAs that meet the minimum acreage requirement for agricultural production.
  • The Utah legislature should lower the minimum APA acreage to five acres so that more lands can qualify for protections.
  • Agricultural producers should work together to establish APAs in their communities. Though state law allows for the creation of APAs statewide, individual communities are responsible for overseeing the establishment of APAs in their jurisdictions. Cities should establish committees to identify possible APAs and work with landowners to simplify the application process.

Examples:

Utah state law allows for the creation of APAs statewide, with each county adapting and modifying the process to meet their specific needs and to improve implementation.[5] The Utah County Code specifically addresses APAs and establishes an APA Advisory Board to assist in the creation of APAs across the county.[6]

Today Utah County has over 70 APAs on every side of Utah Lake. These APAs are valuable tools for protecting farmland in both urban and rural areas across the county.

 

Encourage More Efficient Agricultural Water Systems and Practices

Who can implement this: State, county, and city lawmakers; communities; governmental organizations; advocacy organizations; agricultural producers; and water conservancy districts

All water in the Jordan River Basin is connected. Water across the basin is used for a variety of residential, agricultural, and other purposes at different points within the watershed. Different cities, communities, and individuals should work together to use this water more efficiently and to conserve water on a basin-wide scale.

However, many of these efficiency and conservation efforts need to first be explored and incentivized by the county, its cities, and regional water agencies. Because changing water usage behavior currently has no personal benefits, many individuals have few incentives to work toward more efficient water use. And though some conservation measures may decrease the amount of water diverted, they may also increase the overall depletion throughout the basin. For this reason, conservation is best looked at from a basin-wide perspective.

Cities across Utah also face challenges in managing water and water rights within their municipalities. Oftentimes these cities end up stockpiling water, which they do not know how to best use. Assisting cities in managing their water rights will help preserve water, encourage a broader understanding of water in the basin, and avoid artificial shortages when allocating water to different uses. Many conservation measures, such as maintaining or lining ditches or canals, could also benefit from greater assistance from the state or other entities.

Regional Water Agencies can fill in these gaps in knowledge and management and allow regions to pool resources. They also allow water issues to be discussed and solved on more local scales, avoiding statewide political battles that are all too common when discussing water in Utah.[1]

Implementation:

  • Lawmakers, government organizations, and nonprofit organizations should support projects that conserve water such as: drip irrigation systems, lining canals, soil management, and developing efficient irrigation equipment.
  • State, county, and city officials should incentivize water conservation at larger scales.
    • Organizations and policymakers should help producers and communities gain a broader understanding of water systems and water management in order to motivate county residents to be more efficient when using water.
    • State, county, and city lawmakers should provide financial motivators like tax breaks and tax credits for producers and community members who conserve water and/or implement better water conservation practices.
  • The Utah legislature, the Utah County Commission, and individual city councils should encourage and support existing organizations that manage and conserve water on a regional scale in Utah County and throughout the state. Organizations like Regional Water Agencies or Water Conservancy Districts can serve as a powerful tool for regions looking to more efficiently use and conserve their water.
    • Based on support from community and local lawmakers, state legislators would need to implement changes to water management structure.
    • Depending on the needs of residents and the goals of implementing changes, individual districts should be created on a basin-wide, county, or community scale. 

Examples:

California’s Department of Water Resources focuses on Integrated Regional Water Management (IRWM) as a way for regional water managers and management groups to make local and regional investments in water infrastructure and tackle local water issues.[2] California has 48 IRWM regions, which cover 87% of the state’s geographic area and 99% of the state’s population. Each region has its own challenges and resources available to address water issues. California’s IRWM served an important role during the 2014 drought, allowing different geographic areas across the state to conserve water and combat unique challenges on both regional and statewide scales.

 

Use Alternative Water Transfer Options to Stop Buy-and-Dry Practices

Who can implement this: State and city officials, governmental organizations, agricultural producers, and water conservancy districts

As residential and municipal development puts pressure on lawmakers to secure water rights, cities will sometimes purchase agricultural water rights and lands, transferring them away from agricultural uses. Because of this pressure from development, producers are incentivized to sell their water rights, often having to take their lands out of agricultural production.[1] Alternative water transfer options will allow cities to allocate water while still preserving agricultural lands. They will also give farmers more options of what to do when their water rights become more valuable because of encroaching development.

Alternative Water Transfer Options:

Fallowing agreements: In a fallowing agreement, farmers and water managers state that the city will pay farmers to let a certain percentage of their land go uncultivated instead of transferring (or leasing) the water that would have been used on that land to urban uses.[2] Fallowing agreements give farmers and ranchers a way to temporarily, rather than permanently, cash in on some of their water rights.

Alternative transfer methods (ATMs): ATMs are structured agreements between agricultural producers, water managers, and local lawmakers that allow water to be transferred to a new use while minimizing impacts on the local economy and providing funding to the agricultural producer.[3] These methods typically outline how to optimize the agricultural and nonagricultural benefits of remaining lands after the water has been transferred. ATMs also generally include mitigation measures to help minimize impacts on the local community and environment.

Transfer of development rights (TDR) programs: TDR programs can be used to dissuade cities from unnecessarily annexing open spaces. Some agricultural lands may be rendered dysfunctional or noncompliant through unnecessary annexation, especially when the annexation only occurs to secure water rights for new development. Utah County’s cities should only annex land when it benefits all members of a community/

Implementation:

  • City councils and planners should work closely with farmers and ranchers to use water transfer options that will keep agricultural lands in production. City councils should pursue alternative water transfer options rather than transferring water rights from agricultural to urban uses without exploring all options.
  • City councils and planners should identify which agricultural lands have been taken out of production through buy-and-dry practices in the past and explore ways to return water rights to farmers so they can again use the lands for agricultural production. All transfers must be under a willing-buyer, willing-seller agreement.

Examples:

A Colorado bill specifically designed to combat buy-and-dry practices was signed into law after the state’s 2014 legislative session.[4] The bill allows local government to approve any development that transfers the water rights from agricultural to domestic uses. To preserve water even as some agricultural lands are developed, the bill also limits the amount of water that can be used for watering grass on residential lots that have replaced agricultural lands.

 

Control Invasive Species That Are Using Large Amounts of Water

Who can implement this: Federal, state, county, and city officials; governmental organizations; and advocacy organizations

Because of the amount of water some invasive species use, removing them from along Utah’s rivers and lakes could greatly improve the amount of water available for urban and rural uses.

Phragmites, for example, are one of the most common invasive species found along shorelines across Utah County. They form a harmful monoculture because of how quickly they spread and how much water they use. Phragmites are considered by Utah County to be a “noxious weed,” resilient to unfavorable conditions and natural disasters, able to outcompete and eventually eliminate native vegetation and crucially important wetlands.[1] Phragmites also serve as untreatable breeding grounds for mosquitoes and, when dried out, become major fire hazards in both natural environments and manmade developments across Utah Lake. Perhaps most significantly, these plants consume large amounts of water. In fact, removing the phragmites along the Great Salt Lake would add the same amount of water to the lake that the construction of the Bear River Pipeline would remove.

Tamarisk (also known as saltcedar) is the other major invasive species commonly found on Utah’s shorelines. Though less common than phragmites, the tamarisk plant has salt-secreting properties that add salt to waters and soils making them infertile for native plant species, thereby reducing the quality of Utah’s shoreline habitats while also using disproportionately large amounts of water.

Implementation:

The tamarisk could be culled with tamarisk beetles, though the beetles are difficult to control once they have been introduced. The tamarisk plant also will die in high-shade conditions while some native plants do not, a phenomenon that Utahns could somehow use to help eliminate the plant. In Utah, controlled herbicide has been one of the most widely used methods for controlling both phragmites and tamarisk.

  • Utah County lawmakers and organizations should expand efforts to remove invasive species and should strive to better understand the impacts that removal will have on the environment.
  • Utah County lawmakers should explore expanding culling efforts by funding groups, bills, and departments that work to control invasive species on Utah Lake and near other key water sources for Utah County.

Examples:

The Utah County Weed Control Board is responsible for enforcing the county’s weed laws, including invasive species.[2] The board includes both lawmakers and farmers (who serve four-year terms) in order to have a balance of perspectives in their discussions. The board meets four times a year to discuss weed control laws and the challenges different weeds pose to the county’s waterways and agriculture.

The Utah Lake Commission launched a major phragmites removal effort in 2014. Its goal was to remove over 95% of phragmites along different stretches of Utah Lake’s shoreline over three years.[3] The commission is currently in the middle of this effort and is expanding removal operations each growing season.

Develop Compact Infrastructure to Encourage Land Development Where Services Already Exist Rather than in Outlying Areas

Who can implement this: State, county, and city officials; advocacy organizations; and developers

Creating and maintaining new infrastructure (roads, water lines, pipes, power lines, etc.) can be costly to cities and developers when constructing new housing developments, especially when those developments are located away from existing road, sewage, and power systems.[1] The corridors that have to be built to connect existing infrastructure to new developments inevitably results in additional development occurring along the entirety of the corridor, often consuming open space and agricultural lands. Maintaining and expanding existing infrastructure in urban areas is often less expensive than funding costly expansions in outside areas. As a result, building developments becomes less expensive for developers and could make Utah’s housing stock significantly more affordable.[2]

Expanding infrastructure into undeveloped areas encourages additional development, especially given the pressures of population growth. This additional development often fragments contiguous areas of farmland and increases the cost and complexity of agricultural infrastructure by enclosing canals, making maintaining easements more difficult, among other negative impacts. If communities want agricultural lands to remain in agriculture, lawmakers and planners must carefully manage the expansion of urban infrastructure—including roads, water pipes, sewer lines, and power lines—into these areas, while still allowing sufficient expansion to meet market demand. One strategy for providing adequate agricultural water without encouraging residential or commercial development is to build infrastructure for secondary water. Secondary water meets agricultural irrigation needs but it is not potable, meaning developers would need to build more costly infrastructure to convert the land into a residential area.

Implementation:

  • Developers and cities should create and adopt infrastructure plans with policies and standards that accommodate both rural and urban needs. These plans may include measures, for example, that limit the amount of new infrastructure or keep development away from canals used for agricultural irrigation.
  • Developers and cities should protect existing agricultural infrastructure assets and take agricultural impacts into account when planning infrastructure. Infrastructure for water and machinery access is crucial to farming operations and should be available without being unduly encumbered by residential and commercial development.
  • Individual city councils and the Utah County Commission should establish regulations and ordinances that encourage development to occur near existing infrastructure rather than in places that disrupt farming operations. When urban development is needed, areas in and near cities should be developed first. In order to minimize leapfrog development where farms and urban development mix, infrastructure plans should be clear and balance the need to expand services like water, sewer, and roads with protecting landowners’ rights. Infrastructure investment should also be properly staged to help landowners understand when services might be extended to their lands and that it may take time for urban amenities to be built in some areas if at all.
  • Lawmakers and planners should connect land use decisions to both local and regional long range plans to better coordinate all infrastructural improvements. Better coordinating the visions and goals of stakeholders and lawmakers at all levels will help ensure infrastructure is developed efficiently and reduce unnecessary costs and construction.

Examples:

Placer County, California, used Equivalent Dwelling Units (EDUs) to model different plans for infrastructure construction showing multiple different scenarios in the city’s future. Their models showed that the cost of sewer services was much lower with compact infrastructure in comparison to other development, helping them decide to develop more compactly.[3] Utah County could adopt a similar model in which areas developed farther away from existing infrastructure would pay a higher price for sewer services than adjacent lands.

Update City Plans and Zoning Practices to Encourage Agriculture, Changing Regulations to Foster Farming and Better Manage Water

Who can implement this: State, county, and city officials; and communities

Cities can help preserve local agriculture by updating their city plans and zoning practices to address and encourage agriculture and water management. Because agriculture is a major component of Utah County’s economy and heritage, specifically addressing agriculture and water will likely result in added protections and a greater emphasis on agriculture in city plans. Cities can provide significant assistance to farming operations, especially if, in their city plans, they make an effort to include farmers’ interests, preservation strategies, and other resources. Long range regional and city plans can promote the identification of prime farmlands that should be protected for future generations.

Implementation

City plans and zoning practices change at the discretion of the planning staff, planning commission, and city governments. In each city, these organizations should decide to support agriculture within their boundaries so that this strategy becomes a more multifaceted one that will need to be implemented by each city.

  • Utah County and its individual cities should consider addressing agriculture in their general plans. If cities are encouraged to think about agriculture, preservation plans are less likely fall by the wayside.
  • City councils and planners should encourage agriculture through their general and land use plans. City councils and planners should note the widespread desire to protect agriculture and begin to focus on better understanding water management.[1] When creating or revising plans, planners should be guided by a number of considerations:[2]
  1. Development trends, plans, or needs in each community that may impact agricultural development and preservation in the community (including population growth, economic growth, housing stock, business development, environmental preservation, and more)
  2. Agricultural uses of land, including key agriculture specialties that are unique to farmers in each community
  3. Key agricultural resources, infrastructure, and facilities
  4. Anticipated changes to agricultural production, processing, supply, and distribution
  5. Goals for agricultural development in the community
  6. Means of increasing housing density in non-agricultural areas
  7. Key land issues related to farmland preservation and specific plans to address those issues
  • City councils and planners should update their municipality’s zoning practices, encouraging more compact development and increasing support for agricultural land uses. These practices preserve water and land throughout the county and can reduce the amount of farmlands consumed by new residential development.

Examples

Santaquin, Utah, has become a regional leader in agricultural preservation through careful planning and consideration of agriculture’s importance in the area. The city created a zoning designation specifically for agriculture in order to allow for specific protections that do not exist under commercial, residential, or industrial zoning classifications.[3] [4] Private landowners, for example, aren’t required to connect to the city’s water system if they are on a private system, an exemption that looks beyond traditional zoning and development practices and reduces the cost of infrastructure construction. Santaquin also works with local farmers to promote agritourism and other commercial agriculture enterprises through official city marketing and annual agricultural celebrations.

Many Midwestern states have robust plans for farmland and agricultural preservation; aspects of these plans can be adopted by Utah County and its cities. Wisconsin, for example, developed a statewide guide for counties to develop their own plans for farmland preservation, allowing counties to save farmland by expediting crucial preservation processes.[5] Iowa County, Wisconsin, developed a farmland preservation plan that implements the strategies found in the statewide guide, creating concrete, real world examples of some of the guide’s concepts.[6]

Ensure That Urban Growth Occurs Where Appropriate and Establish Buffers Between Homes and Agricultural Lands

Who can implement this: State, county, and city officials

Utah County’s crucial agricultural lands are being threatened by constantly-expanding urban growth. To help preserve agricultural land and greenspace, local lawmakers should encourage growth in places that are better suited for development.

Utah County already limits the expansion of urban areas by prohibiting large-scale development in unincorporated areas. The lakes and mountains of the Wasatch Front also serve as natural boundaries to growth in the Salt Lake City and Provo–Orem metropolitan regions. However, population growth and the subsequent need for development is placing pressure on many of Utah County’s natural resources and agricultural lands. Additional protections of these lands may be necessary to mitigate the impacts associated with population growth.

Agricultural buffers provide extra space for typical farming practices to continue even when development occurs near farm operations. Open space buffers are intended to shield farms from nuisance complaints of residents and protect the public’s health and safety from noise, dust, odor, pesticide use, and the normal activities that are part of farming and ranching.

When adopted through the land use review process, buffers are a legally required separation between residences, schools, and other land uses that may potentially be incompatible with nearby agricultural practices.[1] Agricultural buffers can help farms and residences coexist. Having legally mandated buffers to insulate farms reduces complaints and allows farms to operate more freely without having to worry about the impacts of day-to-day business on neighbors.

Implementation:

  • Individual cities must decide where they want most of their urban development to occur and on what densities of development best meet the needs of their communities. Agricultural buffers would likely be implemented in a general land use plan or through zoning laws in different jurisdictions across Utah County.
  • City councils and planners should review and revise annexation laws and other regulations that influence where future urban development may occur to ensure that they adhere to community needs and desired outcomes for future growth.
  • The Utah County Commission should encourage cities to create buffers between their residential/commercial areas and agriculture areas to help dissuade future development and prevent nuisance complaints.

Examples:

The Cache Valley South Corridor Development Plan aims to guide the development of private and public land across the corridor that connects the Cache Valley cities of Wellsville, Nibley, and Logan.[2] The development plan incorporates open space buffers to preserve agricultural land and to maintain the rural feel of the region. The plan’s buffers are in line with the desires of the community and will help direct the inevitable development coming to the region in a way that preserves Cache Valley’s strong agricultural heritage.

Establish a Tax-Base Sharing Program to Encourage Preservation of Agricultural Lands

Who can implement this: State, county, and city lawmakers

Sales tax is one of the largest sources of revenue for cities. A significant portion of money from sales tax goes directly to the city in which the taxed products are sold. As a result, cities often compete with each other to attract retailers (department stores, furniture stores, auto dealerships, etc.). Cities sometimes over-zone commercial areas in hopes of a corresponding demand for retail development, as expressed in the saying, “If you zone it, they will come.”

Agriculture, on the other hand, is considered to be one of the lowest tax generators for a city. Because cities are often led to believe that commercial development is more profitable than keeping land in agriculture, they can be tempted to develop as many businesses as they can, often at the expense of farmland. But cities should also understand that farms require very few services and therefore have reduced infrastructure costs, whereas commercial and residential developments cost more money to maintain. Agriculture also contributes more in revenue than it requires in expenditures.

Studies on the cost of community services done by the University of New Hampshire concluded that residential developments contribute less in revenue than they require in government expenditures. Farmland requires $0.37 in public services for each dollar paid in taxes, while residential land requires $1.11 in services for every dollar paid in taxes.[1] Cities need to understand the value of agricultural lands in relation to their low public services costs; though agricultural lands do not generate major tax revenue, they are less expensive to maintain and provide other services that are often overlooked by purely economic analyses.

One way to ensure that agricultural lands are better protected from tax revenue-based development would be to switch from a local tax revenue structure to a tax-base sharing program. This change to the revenue structure would allow cities to share regional commercial taxes based on population rather than on the amount of commercial development in a city. As a result, cities would be better able to protect their supply of local food and alleviate the pressure to build retail or residential development on agricultural lands.

A tax-base sharing program will help cities cooperate with one another and act in a way that benefits the entire region, instead of fixating on just the interests of their own communities. Cities would be less likely to over-allocate commercial development and unnecessarily destroy farmland because they would be confident that they would receive some portion of the region’s taxes, regardless of what businesses they have. Changing the tax revenue structure will also allow the market to work more effectively, ensuring that the amount of retail in the region matches the actual demand more closely.

Implementation:

  • State and city lawmakers on a statewide scale should work together to change tax policies so that a sharing-based system would be legally viable in their jurisdictions.
  • Cities should cooperate together and be willing to share their commercial tax revenues. Cities that have a large amount of retail would have to be willing to share tax revenues with cities that have less retail, and other cities would likely need to help pay the regional infrastructure costs associated with retail in another city.
    • Tax-base sharing could be explored as an option in Utah County, though it would be a significant change from the status quo and may require unique adjustments to the county and overall state.
    • What constitutes a “region” would first need to be carefully defined, and then regions would need to work closely together to allocate resources and tax revenues.

Examples:

The Twin Cities region (Minneapolis–Saint Paul) has an innovative tax-base sharing program, known as the Fiscal Disparities Program. The large size of the seven-county region and the amount of commercial-industrial taxes shared by its communities make the program unique.[2]

With the support of the Metropolitan Council, the Minnesota legislature created the metro-area program in 1971. The council decided that tax-base sharing supported their goals of:

  • Promoting orderly and efficient growth.
  • Improving equity.
  • Strengthening economic competitiveness.
  •  Encouraging land uses that protect the environment and increase livability.

Tax-base sharing spreads the fiscal benefits of commercial-industrial growth throughout a region, regardless of where properties exist in the metro area. It also reduces differences in property tax wealth between communities with a lot of commercial-industrial businesses and those with little. These wealth differences reflect how commercial-industrial development tends to concentrate near regional infrastructure and services, such as highways, wastewater treatment, and transit.

Started in 1975, the Minnesota legislature created a tax-base sharing program to:

  • Share resources produced by the growth of the metro area.
  • Make orderly development more likely by reducing competition for tax base.
  • Work within the existing system of local governments and local decision making.
  • Give incentives for all to work for growth of the seven-county metro area as a whole.
  • Help communities in different stages of development and redevelopment.
  • Encourage environmental protection.

How tax-base sharing works

Since 1971, local taxing jurisdictions have contributed 40% of growth in commercial, industrial, and public utility property taxes to an area-wide shared pool of tax base. Local property tax administrators distribute the funds in the shared pool to communities based on their population and the market value of all property per person compared to the average market value per person for the metro area. Communities with below-average property tax value per person receive a somewhat larger share of the area-wide tax base.

 

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