Purchase of Development Rights

The purchase of development rights (PDR) involves the sale of that right while leaving all the remaining rights as before.

PDR is a voluntary program, where a land trust or agency buys the development rights on the parcel and ensures that the parcel will remain agricultural, or as open space forever.  A permanent deed restriction is placed on the property which restricts the type of activities that may take place on the land in perpetuity.  The land trust or agency that bought the property then retires the development rights upon purchase.   The deed restriction may also be referred to as a conservation easement, or, since most PDR programs are designed to preserve agricultural use, an agricultural conservation easement. As a result, PDR programs are occasionally called PACE programs (purchase of agricultural conservation easements).

One of the main benefits of PDR  is that it is completely voluntary. Under PDR, the landowner is not deprived of any of the value of the property. This is very important because many farmers rely on their property in order to fund their retirement. Simply depriving them of the opportunity to realize the full economic value of their property has important ethical, socioeconomic, and perhaps legal ramifications.  Since it is completely voluntary, no landowner is coerced into giving up or selling the land or the development rights.

Another benefit of PDR is that it makes it much easier for one farmer to pass the farm on to an heir interested in continuing to farm. Once the development rights have been separated from the land, the value of the parcel typically declines to its agricultural value. This generally has an enormous effect on reducing the inheritance tax liability. If taxed at the full development value, many parcels are simply taxed out of agriculture, because the heirs are not able to pay the taxes without selling the land.

The establishment of a PDR program often begins at the local level, accompanied by enabling and/or funding legislation at the state level. An agricultural preserve board is usually a county-wide organization consisting of a few members of the community who act as volunteers on the board. Membership may be by appointment by elected officials, such as county commissioners, and should reflect the makeup of the community, with representatives from agriculture, industry, etc. The board is in charge of reviewing applications of landowners who wish to sell development rights, obtaining appraisals, prioritizing parcels, negotiating agreements, and ensuring that deed restrictions are enforced.

It is up to the members of the board to determine how to operate the program so that the public gains the most from its investment. The PDR programs which seem to have had the most success have been those where the objective has been to use this tool to create large contiguous areas with permanently preserved open space and farmland as opposed to selecting individual parcels piecemeal. This type of strategy has several advantages. One is that it allows for a "critical mass" of farms which have the potential to preserve agriculture as a viable industry. If the number of farms in an area becomes too small, there is not enough demand for agricultural supplies (fertilizer, equipment, etc.) to sustain the industry. Another advantage to this approach is that the preservation of large contiguous areas maintains open space and the sense of place that many Americans believe are the goals which are most appropriate for farmland protection programs.