Land Access and Tenure Toolshed: Land Use Regulations
Following is an overview of Vermont state laws and programs that might affect a beginning farmer’s decision to purchase or lease land in a particular area. It also looks into which regulations are most important to consider once access to land is secured. Establishing a farm operation can be an enormous undertaking for the beginning farmer, even without complications. Having a good grasp of state regulations can help the farmer avoid or prevent unnecessary stumbling blocks before they become major issues. Knowledge of certain state programs can also save considerable money in the form of tax benefits for the farmer and/or the landowner. This information is not meant to substitute for sound legal advice. New farmers should seek counsel from a qualified attorney when the need arises.
Included in the overview are:
- Nuisance laws;
- Vermont's Right to Farm law;
- Accepted Agricultural Practices; and
- Vermont’s Use Value and Appraisal Program, otherwise known as “Current Use.”
New farmers are encouraged to take advantage of a wide range of land access opportunities, even if it means farming in some rather unconventional places. But what will the neighbors think of you when you are new to the area and you start farming a piece of land that hasn’t been farmed for 40 years? How will homeowners in a residential development act when your pigs get loose and go on a rampage through their hobby gardens? How will store owners in a commercial district feel about your tractor driving down the road and blocking traffic? Needless to say, it makes sense for farmers to farm in agriculture-friendly areas. Where different land uses coexist, it is important for farmers to know both their rights and their limitations so grievances or lawsuits can be avoided.
While typical agricultural activities are exempt from local zoning regulations, Vermont law protects community members from nuisances or activities that interfere with their ability to use and enjoy their property. Agricultural activity is unfortunately a common target. Nuisances can be classified as either interfering with private interests or interfering with public health and safety. The court will find the activity to be a nuisance if it can be proven that the activity is “unreasonable” and substantial. Courts are more likely to deem the activity “unreasonable” if it is malicious and inexpensively avoidable.
This law presumes that most farming activities are not a nuisance unless proven otherwise by a party bringing a lawsuit. To have the right to farm within this thin safety shield, the agricultural activity must meet all of the following conditions:
- It is conducted in conformity with federal, state, and local laws and regulations;
- It is consistent with good agricultural practices;
- It is established prior to surrounding nonagricultural activities; and
- It has not significantly changed since the commencement of the prior surrounding nonagricultural activity.
For beginning farmers coming onto the land for the first time, item # 3 (above) is especially important. The condition states that a farmer can’t ordinarily be considered a nuisance if the farm operation was in the area of dispute first. It was designed to limit encroachment of urban and suburban development into farm areas. The flip side is that the beginning farmer hoping to set up a new operation in previously non-farmed areas should be cautious—the Right To Farm Law will not grant the farmer protection in nuisance disputes when the surrounding non-agricultural activity was there first. Regardless of when the farming operation first arrived, the Right to Farm presumption can be refuted if there is evidence that the farming activity has a substantial adverse effect on public or private health, safety, or welfare, or a “noxious and significant interference” with the use and enjoyment of the neighboring property.
Agriculture has received the brunt of the blame for polluting Lake Champlain, and despite recent efforts to reduce farmland runoff, agriculture remains one of the most significant potential sources of nonpoint source pollution in the state. In 2006, the Legislature charged the Agency of Agriculture with creating a set of mandatory guidelines for all farmers in the state to follow, known as Accepted Agricultural Practices (AAPs). AAPs are statewide restrictions designed to reduce pollutant discharges through improved farming and land stewardship techniques. According to the statute, the practices must be technically feasible as well as cost effective for farmers to implement without governmental financial assistance. There is no farm size criterion for who is required to follow AAPs.
A full description of AAPs and associated legislation can be found online at www.vermontagriculture.com or call the Agency of Agriculture at (802) 828-2431. Natural Resource Conservation Districts located in each Vermont county also have information on AAPs.The Association of Conservation Districts has an “Abbreviated Outline of the Accepted Agricultural Practices. Each county has a Natural Resource Conservation District office—visit www.vacd.org for office contact info. A detailed description of each restriction or practice is beyond the scope of this fact sheet, but below are a few examples of AAPs:
- Vegetative Buffer Zones… “Adjoining surface waters shall be buffered from annual crop lands by at least 10 feet of perennial vegetation…no manure shall be applied within vegetative buffers…harvesting the vegetative buffer as a perennial crop is allowed…”
- Construction of New Farm Structures… “Construction…that disturb[s] one or more acres of land must obtain authorization from the [Agency of Natural Resources] before commencing with land disturbance or construction activities…Authorization by ANR is not needed for construction or land disturbance related to cultivation, irrigation, drainage, and fencing.”
- Manure Storage and Spreading… “Manure spread on annual crop land that is subject to annual overflow from adjacent surface waters shall be incorporated within 48 hours…manure shall not be spread between December 15 and April 1 unless the Secretary grants an exemption…”
- Soil Testing and Cultivation… “All fields receiving mechanical application of manure shall be soil tested at least once every five years…Nutrient applications shall be consistent with university recommendations, standard agricultural practices, or a nutrient management plan for the farm…Cropland shall be cultivated in such a manner as to limit soil loss…”
- Well setbacks… “Livestock shall not be pastured within 50 feet of a private well without the permission of the well owner, nor shall application of manure occur within 50 feet of a private well unless there is a legal document that provides for a different isolation distance…
- Animal Mortalities… “Animal mortalities buried on the farm property shall be sited so as to be: at least 150 feet from property lines, wells and surface waters…at least 3 feet above the seasonal high water table…covered with a minimum of 24 inches of soil…Animal mortalities composted…shall be sited…at least 100 feet from property lines, wells, and surface waters…
- Ground Water… “Farm operations shall be conducted so that the concentration of wastes in groundwater caused by agricultural operations do not reach or exceed…groundwater quality enforcement standards identified by Appendix One of the Groundwater Protection Rule…
By extending tax benefits to certain land owners, this state program provides an incentive to keep land in agricultural and forestry production. Its purpose is also to slow development on such lands and achieve more equitable taxation for undeveloped lands. About 2.2 million acres, or one third of Vermont, is enrolled today. Why is the program important for new farmers? The Current Use Program can make or break the start-up business, depending on whether or not the farmer’s land qualifies for the tax benefits. The program also has a significant penalty for developing portions of the farm or forestry land enrolled in the program. The “land use change tax,” as it is known, has significant implications for how a farming landowner decides to balance personal and agricultural or forestry uses of the land. Farmers who lease land should also know what is authorized by state law in the Program; to date, landowners can qualify for the tax benefits if they lease their land to a “farmer” with a 3-year, written lease agreement. This represents one more way how landowners can benefit from having a farmer on the land.
Land enrolled in the program is taxed at its agricultural or forestry “use” value instead of the current fair market value. The state determines this “use” value annually based on the economic return from agriculture or forestry. In 2009, for example, the “use” value of enrolled agriculture and forest land was assessed at about 88 percent less than fair market value. Depending on the size of the property, having it enrolled in the Program can result in significant annual savings for the land owner tax payer, often thousands of dollars.
A word of caution, however: there are fee penalties associated with subdividing or developing enrolled land, which would trigger a mandatory withdrawal from the program. Depending on how long the land is enrolled before the change, the penalty, known as the Land Use Change Tax, could cost more than the savings from having the land enrolled.
Here are the basic requirements for having land and buildings enrolled:
1. The land must be “agricultural land,” meaning it is:
- In active use to grow hay or cultivated crops, pasture livestock or to cultivate trees bearing edible fruit or produce an annual maple product, and which is 25 acres or more in size except as provided below. There shall be a presumption that the land is used for agricultural purposes if:
- It is owned by a “farmer” and is part of the overall farm unit (a “farmer” is one who earns at least one-half of the farmer's annual gross income from the business of farming as that term is defined in Regulation 1.175-3 issued under the Internal Revenue Code of 1986); or
- It is used by a farmer as part of his or her farming operation under written lease for at least three years; or
- It has produced an annual gross income from the gross sale of farm crops in one of two, or three of the five calendar years preceding of at least:
- $2,000 of parcels of up to 25 acres; and
- $75 per acre for each acre over 25, with total income required not to exceed $5,000
- exceptions to these income requirements may be made in cases of orchard lands planted to fruit producing trees, bushes or vines which are not yet of bearing age.
2. The land can also be managed forestry land, meaning it is:
- Any land, exclusive of any house site, which is at least 25 acres in size and which is under active long-term forest management for the purpose of growing and harvesting repeated forest crops in accordance with minimum acceptable standards for forest management
3. Farm buildings enrolled in the Current Use Programare taxed at 0% value for property tax purposes. They are eligible to be enrolled if they are:
- farm buildings and other farm improvements which are actively used by a farmer (see definition of “farmer,” above) as part of a farming operation, are owned by a farmer or leased to a farmer under a written lease for a term of three years or more, and are situated on land that is enrolled in a use value appraisal program or on a house site adjoining enrolled land.
- A farm facility processing farm crops, a minimum of 75 percent of which are produced on the farm. "Farm buildings" shall include up to $100,000.00 of the value of the facility.
- dwellings in use during the preceding tax year exclusively to house one or more farm employees, and their families, as a nonmonetary benefit of the farm employment.
The Current Use Program presents an opportunity for beginning farmers to invest tax savings from the Program into their start-up enterprises. However, some beginning farmers might not meet the above listed criteria. Knowing the statute will enable you to plan accordingly. It is worth also noting that at the time of this writing the Vermont Legislature was drafting significant changes to the Program, which might not be included in this fact sheet. This is in line with a history of the Legislature making frequent changes to the Program since it was first established in 1978. Please check in with the Vermont Department of Taxes, for the most recent updates and changes to the Current Use Program.
Last modified June 20 2013 09:45 AM