With thousands of acres of Montgomery Country farmland giving way each year to housing developments and shopping centers, county officials have begun efforts to both preserve the farmland and to take bite of the profits farmers reap when they sell their land to developers.
Legislation being drafted for the County Council by Montgomery County Planning Board Chairman Royce Hanson would create a system under which the county would pay farmers if they agree to use their land solely for agricultural purposes. In effect, a farmer who sold his development rights on his land would be forgoing, at least for 25 years, the opportunity to sell at a higher price if the market value of his land increased with time.
State legislation, introduced by Montgomery County delegates, would levy a new tax on farmers who sell their property, giving the county a piece of the farmers' profits.
For the county to buy agricultural easements on all of the 140,000 acres of farmland in the county could cost $500 million, according to Hanson. This would be an average of about $3,500 an acre. However, if the measure is adopted, only a small amount of funds are expected to become available each year.
The state bill, even though it pertains only to Montgomery County, appears likely to face opposition from other parts of Maryland. It would require farmers to pay the difference between the agricultural and residential assessments, up to 14 percent of the selling price.
"The whole farm community in the state regards this as a sensitive question," said Montgomery County state delegate David Scull. "It sets nerves ajingling in the whole state."
"It's a perennial," said Montgomery County State Sen. Victor Crawford about proposed state bills involving farmland assessments. "For the 12 years I've been in the legislature, it's never gone anywhere. We've asked people to vote for it, we've traded votes for it, we've done everything we can do about it."
Montgomery County legislators and officials said they believed both bills should be adopted. "As urbanization moves out, it endangers the outer tier of farms," explained Hanson. "A psychology sets in.'Farming isn't going to make it,' the farmer says. 'I'm moving out.'"
The local bill would mesh with a recently adopted state law setting up agricultural districts. Under the local bill, a county agricultural preservation board, would recommend which farms a state agricultural preservation board should approve for purchase. "We would want to purchase them where subdivision pressure is most severe," said Hanson.
The price a farmer would get for his land probably would be lower than what he would get from a developer, even though his land is not in a key development area.
"But the farmer could invest the money (from the easement) now, instead of waiting years for a developer to buy it," Hanson said, noting that the combination of county funds and state funds would only cover the purchase of development rights on about two farms a year.
Hanson said the local bill is designed to protect the rural zones in the eastern and western bulges of the county, but not stand in the way of development along the I-270 corridor. "You couldn't stop development in the path of development if you wanted to," he said.
Currently, farmers are assessed at 50 percent of the calculated value of the farm products that their land could produce. By comparison, residential property is assessed at 50 percent of full market value of the real estate.
For farm purposes, Montgomery County farmland, especially land in rural zones is valued at about $2,000 to $4,000 an acre, depending on location. Average land is worth about $200 an acre in farm productivity, according to assessors. On a piece of property wourth $2,000, the farmer is thus assessed at $100, instead of the $1,000 it would be assessed if his property were used only for residential purposes.
Council Member Neal Potter and others argue, however, that some farmland, made valuable by its potential for development, sells at prices from $10,000 to $100,000 an acre. The farmers get a tax break they do not deserve, and, moreover, many of them farm just to get that break, they said.
"I think it's a scandalous giveaway of money," said Potter, who is an economist. "You could keep a few cows or plant some corn, and get a farmland assessment."
"The owner gets a tremendous tax break," explained the council's legislative counsel Philip Tierney. "Then he can turn around and sell the land and reap an enormous profit."
As evidence of the inequity in the current farmland assessment law, Potter offered the following examples of the difference between land values for farming purposes and current market values. He said his figures were based on his research of 1975 assessments and approximate land values. (He estimates both sets of figures have risen since 1975):
A 14.19 acre parcel of land at the northwest corner of Shady Grove Road and Route 355 had a $1 million market value in 1975 and an assessment of $2,060.
A parcel of 146.2 acres in the Rockville Gaithersburg area has a market value of about $4 million and an assessment of $21,300 plus improvements of $21,900.
A 191.99 acre parcel in Potomac was worth about $2 million in 1975 but is listed by the assessor's office at $74,420, with improvements of $154,500.
The farmers and the assessors claim things are not so cut and dried. Purcell claims there are no farmers with just a few cows and a couple of stalks of corn. Farmers are warned to produce to the maximum or risk losing their farmland assessment, he said.
Farmers point not only to their productivity but to the taxes on their land that they already must pay if they sell their land, such as transfer taxes (6 percent of sale value of the land) and development taxes paid when land is sold and developed within three years of the sale.