Farmland and Open Space Preservation Frequently Asked Questions
What does the Farmland and Open Space Preservation Act do?
The Farmland and Open Space Preservation Act enables a farm owner to enter into a development rights Agreement with the State. The Agreement is designed to ensure that the land remains in an agricultural use for a minimum of 10 years and ensures that the land is not developed in a non-agricultural use. In return for maintaining the land in an agricultural use, the land owner may be entitled to certain income tax benefits, and the land is not subject to special assessments for sanitary sewer, water, lights or non-farm drain projects.
What lands are eligible?
Farmland eligibility is governed by the size of the farm and in two instances by the income of the farm. The following are the qualification requirements to enroll land in a Farmland Development Rights Agreement. A parcel may be enrolled if one of the following items is true:
- it is 40 acres or more in size, and at least 51% of the land is in active agriculture.
- it is less than 40 acres in size but at least 5 acres in size, more than 51 % of the land is in active agriculture, and the agricultural land produces a gross annual income in excess of $200 per tillable acre.
- the farm has been designated as a specialty farm by the Michigan Department of Agriculture, is at least 15 acres in size, and has a gross annual income in excess of $2,000 per year.
How long do these agreements last?
Farmland Agreements must be enrolled into the program for a minimum of 10 years and may be enrolled for a maximum of 90 years. Agreements may be extended in 7 year increments or more after the initial term.
Do I have to provide public access?
Public access is not a requirement for participation in the program.
Specifically, what are the benefits to me as a landowner of being enrolled in the program?
There are two primary benefits for being enrolled in a Farmland Agreement:
- Tax Credits: The benefits under a Farmland Agreement will depend upon the property tax assessed against the property and the income of the landowner. For example, if the owner has an income of $20,000 and property taxes on the farm total $2,000, he/she would subtract $700 (3.5% of $20,000) from the $2,000 property tax for an income tax credit of $1,300. This tax credit is in addition to the Homestead Property Tax Credit, for which the landowner may already be qualified.
- Special Assessments: Lands that qualify and are enrolled in the program are exempted from special assessments for sanitary sewers, water, lights, or non-farm drainage unless the assessments were imposed prior to the recording of the Farmland Agreement. Land which is exempted from the special assessment will be denied use of the improvement unless and until that portion of the special assessment directly attributable to the actual use of the improvement is paid. When the Farmland Agreement is terminated, the local government may require payment of the special assessment, however, the amount of the assessment shall not exceed the amount the assessment would have been at the time of the exemption and shall not include any interest or penalty.
How do I apply to enter the program?
What happens when a Farmland Development Rights Agreement expires?
During the last year of a Farmland Development Rights Agreement, the Agreement holder will be sent a notice asking if they wish their Agreement to be extended or to expire.
Extension: After the initial 10 year agreement term, the Agreement may be extended for up to 90 years total, with a minimum of 7 years at a time.
Expiration: If the Agreement holder chooses to let the Agreement expire, then repayment of tax credits received during the last seven years under the agreement is required. Michigan Department of Treasury will determine the amount of tax credits received during the last seven years. The landowner will be notified of the amount. If it is not paid within 30 days, a lien will be placed against the property. If credits were not taken during the last seven years, then no lien will be placed.
May I sell My land if it is enrolled in a Farmland Agreement?
A landowner is free to sell their land. However, all of the land covered by the Agreement must be sold to one (set of) owner(s). Sales to multiple owners are possible only if the Agreement is successfully split into multiple Agreements that match how the land will be sold. The new owner(s) must agree to comply with the provisions in the Agreement, and, in order to apply for tax credits on their Michigan Income Tax return, they must complete a Transfer of the Agreement.
How do I transfer my agreement?
When enrolled land is conveyed to another party, submit the following to the Farmland Preservation office:
- A copy of the deed or land contract which was used to convey the land to the new owner.
- A copy of the completed TRANSFER FORM.
Once all of the information is received and reviewed for completeness, The Michigan Department of Agriculture and Rural Development will prepare a new Agreement to be sent to the new owner to sign and record.
Yes. A Farmland Agreement may be split into smaller Agreements, but each new agreement resulting from the split(s) must meet one of these two minimum requirements:
- Parcel is 40 acres in size or larger.
- Parcel is less than 40 acres but greater than 5 acres in size, is at least 51% in agricultural use, and the land is capable of producing gross annual income of $200 or more per tillable acre.
How do I request a split?
To request a split of an Agreement, submit the following to the Farmland Preservation office:
- Completed SPLIT FORM.
- Legal descriptions for each parcel that is to be placed in a separate Agreement.
- The number of acres in each parcel.
Upon receipt of this information, and if the parcels meet the requirements, new Agreements will be sent to the Agreement holders to be signed and recorded.
How and when can land be released from the program?