COURTHOUSE — City officials are working to offset interest rates to encourage participation in the Agricultural Reserve Program, which pays farmers for development rights but has been in a slump due to low interest rates.
A proposal to improve participation may be briefed to the city council this month. During the budget process this spring, a portion of the reserve program’s designated tax funding was reduced. Justification for this, in part, centered on few new closings.
When interest rates that determine payments to program participants were far more robust and the program was new, the program topped 2,600 acres in 1998 and 800 acres in 1997. This past year, 42 acres came in, lower than an average of about 250 acres in preceding years.
David Trimmer, the city’s agriculture director, said in an interview that closings have brought less than the 300 acre-per-year goal of the program. One property is soon set to close, and others applications are in the works. The program is meant to support the city’s agriculture industry by keeping land farmed.
“The biggest hurdle has been the interest rate,” Trimmer said.
Discussions of incentives have been under way for some time among agricultural and city leaders, including members of the Agricultural Advisory Commission. Members reviewed the proposed changes during a meeting on Monday, Oct. 12. A key change is locking in a “floor,” or lowest-possible interest rate.
“I think this is going a long way toward making people more comfortable,” said City Councilmember Barbara Henley, who represents the Princess Anne District, during the meeting. “Of course, if the rates go up, you get to go up. But if the rates go down, you’re protected.”
Lucy Whitlow, an associate city attorney, discussed efforts to get applicants to respond to offer letters within time limits specified by the letters or to limit how many times applicants can extend. Some have extended a number of times, usually waiting for higher rates before they close.
Under discussion are:
► Raising the minimum interest rate on installment purchase agreements to the rate when the offer is prepared. Currently, it can go down to the current rate minus 1 percent.
► Working with city finance officials to make the treasury strips used in the program more marketable so landowners can later sell the T-strip if they choose to do so.
► Tighten the time it takes to complete the process of offering and closing a deal.
► Considering properties not eligible because they presently are not developable for residential purposes.
John Cromwell, a farmer and member of the commission, said in an interview that the program helps farmers stay on land and keep farming, which benefits the city as a whole.
“It’s not just for those involved in it, but for all of us,” he said.
Better understanding of what farming is helps, too.
“Agriculture is an industry,” Cromwell said, speaking at his farm stand. “It’s no different than a medical practice or an engineering firm. When you look at a harvested field that seemingly is not doing anything, it’s an industry getting ready for next year.”
During the meeting on Oct. 12, members of the advisory commission also had an opportunity to review a draft version of the chapter on the rural area that will be included in the ongoing comprehensive plan update.
Ed. — For more information on the program, including breakdowns of properties involved, read its annual report for 2015 at this link.