MINUTES
TRUSTEES
PRESENT:
Lloyd C. Jones, Jr., Chairman
Allen H. Cohey
Daniel W. Colhoun
Jerry Klasmeier, representing Comptroller Shaefer
Lewis Logan, representing Treasurer Kopp
Judith C. Lynch
James Pelura, D.V.M.
Vera Mae Schultz
Audrey E. Scott, Secretary,
Maryland Department of Planning
Joseph F. Tassone, representing the Secretary,
Maryland Department of Planning
Douglas H. Wilson, representing the Secretary,
Maryland Department of Agriculture
TRUSTEES ABSENT:
Mildred H. Darcey
Shirley W. Pilchard
OTHERS
PRESENT:
Bill Amoss, Harford
Erik Balsley, Maryland Department of Planning
John Robert Burk, Horse Industry Board
James A. Conrad, Executive Director
Peggy Cunningham,
Karen Duhoule,
W. Simpson Dunahoo,
Nancy Forrester, Assistant Attorney General
Iva L. Frantz, Administrative Officer
Robert Hirsch,
David Kelleher, Department of General Services
Joy Levy, Howard
Ben Markline,
Carla
Craig Nielsen, Assistant Attorney General
Bill Powel, Carroll
Jim Rutledge,
Kevin Schmidt, American Farmland Trust
John R. G. Stanley,
Elizabeth Weaver, Administrative Officer
Art Wood, prospective
John Zawitoski,
Lloyd
C. Jones, Jr., Chairman, called the meeting to order at
I. APPROVAL
OF MINUTES/ADDITION OR DELETION OF AGENDA ITEMS:
A. APPROVAL OF MINUTES,
Vera Mae Schultz and Dan
Colhoun, Board members, pointed out a correction to the text of the minutes to
be changed in the final version.
Motion #1: To approve the minutes of
Motion: Joe Tassone Second: Vera Mae Schultz
Status: Approved
B. APPROVAL OF EXECUTIVE SESSION MINUTES,
Motion #2: To approve the Executive Session
minutes of
Motion: Allen Cohey Second: Vera Mae Schultz
Status: Approved
C.
ADDITION OR DELETION OF AGENDA ITEMS:
Mr. Conrad, Executive Director, noted that there
are no additions or deletions to the regular agenda. The order of meeting will be changed slightly
to hear the presentation from Horse Industry Board first, rather than waiting
until later in the meeting, because the presenters are present. He reminded the Board that the Foundation is
in the middle of revising its “acceptable use and activities” policies on
Foundation properties. This presentation
is part of that ongoing discussion of what “use” policy is going to look like.
IV.
PROGRAM POLICY
A.
Horse Industry Board Presentation: Allowable Uses on MALPF Properties
Rob
Burk, Executive Director of the Horse Industry Board, and Crystal Kimball from
the Maryland Horse Council, addressed the Board. Mr. Burk started by placing the horse
industry in the context of
The
Horse Industry Board was asked to put together a Task Force to study the
industry and make recommendations. One
of the Task Force’s recommendations was to find ways for farmland preservation
to support the horse industry.
Mr.
Burk made some observations on how the MALPF program currently works with the
horse industry. First, he noted that
categorizing different uses related to horse farms necessarily leaves a number
of facilities out. Commonly, horse farms
are made up of a number of interrelated and interdependent uses, some of which
appear to be acceptable and others unacceptable or only acceptable with
conditions to the program. Trying to
differentiate among and categorize these uses necessarily discriminates to keep
certain horse farms out of the program.
Second, the small size of many horse operations could pose problems,
both in terms of qualifying for the program (50 acres minimum are necessary)
and because of size-related use restrictions.
For example, the use condition based on limitations on impervious
parking could pose problems, as could the restriction on what percentage of the
property could be covered by structures such as a riding and show arena. Third, the proposed restriction on the number
of shows per month may be a problem for some horse operations.
Mr.
Burk mentioned the case of Idelwild Farm in
Ms.
Kimball, Maryland Horse Council, presented the case of Shawan Downs in
Mr.
Burk concluded by asking the Board to work to assimilate the horse industry and
horse farms more generally into the MALPF program to reinforce the objectives
of both the MALPF program and the Horse Industry Board.
Mr.
Conrad pointed out that the guidelines handed out for approved uses and
activities are for administrative approvals.
They do not imply that nothing can be done on horse farms beyond the
uses and activities set forth in the guidelines, but that anything that goes
beyond the guidelines could not be approved administratively and would have to
be approved by the Board. The discussion
is still early in the process, so the guidelines are far from finalized. Any proposals to the Board of the sort on
these properties may well pass muster with the Board, depending on the nature
of the operation. There is a long
history of horse operations on MALPF easement properties. Indeed, the very first MALPF easement was on
a horse farm in
Mr.
Conrad also addressed the issue of impervious surfaces. One of the considerations, he stated, is that
the Foundation is relying increasingly on federal money. It is the federal requirements that are
changing for impervious surfaces. If the
Foundation can fund easements with local and state money, then only Foundation
rules apply. However, when federal funds
are involved, the Foundation must follow the federal guidelines in qualifying
properties in which case impervious surfaces become one of the critical factors
in qualifying horse operations or expanding activities on existing horse
operations in the program where the easement was funded with federal
money. This same restriction will also
affect chicken operations.
L.
C. Jones thanked Mr. Burk and Ms. Kimball for the presentation to the Board.
II. DISTRICT/EASEMENT
AMENDMENTS
Mr. Conrad presented the
district and easement amendment agenda items.
A.
1. 06-09-80-10E BARNES, Lloyd L. 137.40 acres
Request to release 3.79
acres included in the easement in error.
The Foundation staff requests a review
of this item. This agenda item dates
back several years and was picked up recently by Bill Powel in a monitoring visit
that this had never been adequately addressed.
This acreage was included in the deed of easement by mistake. It was never paid for by the Foundation. It must be formally released by the Board of
Trustees and approved by the Board of Public Works before the issue can be
resolved.
Motion #3: To approve the release of 3.79 acres of
the Barnes property included in the easement in error.
Motion: Doug Wilson Second: Judith Lynch
Status: Approved
2. 06-03-91-45e COOK, Walter F. & Delores R. 113.87 acres
Request to exclude 1.15
acres for a child’s lot.
This is a request from Walter and
Delores Cook to exclude 1.15 acre for a child’s lot for their son, Joseph. This is on a 113-acre parcel. They own no other district or easement
property, and there have been no lot exclusion requests on this property. The lot size of 1.15 acre is required because
the County requires a dedication of .15 acre for the roadway. The proposed lot is to be located on the road
next to an existing lot. Access is
directly from the road. The request was
approved by the local advisory board and is consistent with local zoning
regulations. Staff recommends approval.
Motion #4: To approve the release of 1.15 acres of
the Cook property for a child’s lot for their son, Joseph.
Motion: Joe Tassone Second: Dan Colhoun
Status: Approved
3. 06-11-91-31Be FRITZ, Daniel D. & Sharon W. 58.33 acres
Request to exclude 1 acre
for a child’s lot.
This is a request from Daniel and
Sharon Fritz to exclude one acre for a child’s lot on a 58-acre parcel. They are the original owners of this easement
property. It is for the personal use of
their daughter, Jessica. The proposed
lot is to be located in the corner of the property next to a steeply wooded
area. Access is from the road by a
driveway. The request was approved by
the local advisory board and is consistent with local zoning regulations. Staff recommends approval.
Motion #5: To approve the release of one acre of
the Fritz property for a child’s lot for their daughter, Jessica.
Motion: Douglas Wilson Second: Joe Tassone
Status: Approved
4. 06-02-80-12e
Request to exclude three
one-acre child’s lots from an easement property, the original owner of which is
deceased, based on the intent of the original owner as expressed in affidavits
of persons who knew the landowner during his lifetime.
This is a request from John Stanley, the
executor of the estate of Everett Stanley, to allow the exclusion of three
child’s lots from easement property. The
original owner is deceased. The basis
for the request is the intent of the owner expressed in affidavits. It is a 118.37 acre parcel. Mr. Stanley is the original owner of the
property. He sold the easement to the
Foundation in 1985. He died in June,
2003, without documenting his intent to create child’s lots for his
children. A reminder of the standard
process is to put the intent of the owner in the will or write a letter to the
Foundation to which the Foundation will respond. Because neither of these have been done, this
request is based on affidavits of persons who knew Mr. Stanley during his
lifetime that are presented in the agenda documentation. The lots requested are for the personal use
of Mr. Everett Stanley’s children. There
have been no other lots requested on this property. At the time of district establishment, 2.2846
acres were excluded. A tenant house was
approved by the Foundation in 1994. An
equal area exchange of 1.116 acres of easement for non-easement property was
approved by the Foundation in 2003 to resolve septic issues on the area
withheld from the easement. The County
advisory board approved this request based on the documentation presented. The lot locations would be determined if the
Board approves the request, and the request would placed before the Board for
review of the location at a later date.
The request conforms to local zoning regulations. If the request is approved, the payback would
be based on a per acre amount of $741.25.
Staff makes no recommendation based on the fact that no precedents can
be found concerning such a request.
Mr. Nielsen, Assistant Attorney
General, stated that the Foundation is running a statewide program, and the
problem is that Mr. Stanley died without a written application. Because the easement is a personal covenant,
unfortunately the right to make written application dies with Mr. Stanley. There is no right to grant a child’s lot
without an owner’s request. That’s the
law. The Foundation has never deviated
from that. The Foundation does not have
the authority to grant such a lot under the law. If the Foundation grants this based on
affidavits, you will have to grant lots whenever affidavits come in to support
requests after the Grantor’s death.
Mr. Wilson, representing the Secretary
of Agriculture, noted that Mr. Stanley came to the Foundation to resolve some
issues as late as March, 2003, soon before he died. He was clearly involved in resolving issues
on the farm. If he was aware he was
missing an opportunity, he could have resolved it then. He may have thought his lots were already
protected, but we can’t know. Mr. Wilson
asked Mr. John Stanley, the son of Everett Stanley, to explain the structure of
the trust. Mr. Stanley explained the
legal nature of the trust arrangement.
Mr. Wilson stated that his primary interest was whether or not the trust
was set up to carry out what Mr. Everett Stanley was looking for. Mr. Wilson clarified with Mr. John Stanley
that the trust was set up by Mr. Everett Stanley, not just how the property is
being held subsequent to his death. Mr.
John Stanley explained the existing conditions on the farm, including the state
of the pre-existing dwelling in which his sister has been living.
Mr. Nielsen noted that the continuation
of the trust from before to after Mr. Everett Stanley’s death does not imply a
continuation in ownership allowing other members of the trust to request
child’s lot on behalf of the Grantor.
The Foundation looks behind the corporate veil when ownership changes to
determine the nature of the ownership and whether or not the corporation is a
family corporation or not, and who the original Grantor or owner actually
is. Subsequent owners – that is the
children who are now the trust owners – are not eligible to request the
lots. When the owner never applies for
the lots, the children are out of luck.
Mr. John Stanley explained the history
of the easement sale to the Foundation and the position of the family on the
intent of his father. He felt that his
father was consistent and clear in expressing to all of the people he knew his
intent for the children to have lots on the property. He felt that his father had not been
adequately informed of the need for written application.
In response to a question from Ms.
Audrey Scott, Secretary of Planning, Mr. Nielsen noted that the need for
written application is explicit in Mr. Stanley’s deed of easement. Mr. Conrad noted that, today, a landowner is
notified how to secure a child’s lot in the application for the sale of an
easement to the Foundation, in the fact sheets provided by the program
administrators, and in information posted at the web site. Obviously, the Foundation must rely on
counseling to potential and actual participants in the program by the program
administrators. Additionally, easement
sellers are instructed to read and discuss the deed of easement with legal
counsel to understand fully their commitments under the easement.
Ms. Scott asked if any kind of monitoring
takes place of whether or not program participants are counseled by program
administrators. Mr. Conrad stated that
there is no monitoring at this point that program participants are counseled.
Mr. Nielsen stated that allowing subsequent
owners to obtain child’s lots based on affidavits after the original owner has
passed away without the owner having made written application is not just
setting a precedent, but it is setting a dramatic precedent. It places the Foundation in a difficult legal
situation, because it would not be acknowledging the language in its own deed
of easement, how the program has been operating, and that the deed is a
personal covenant. It’s not the child’s
right to a lot, but it’s the owner’s right to have child’s lots.
Mr. Wilson noted that the written
application can be the statement in a will or simply a letter placed in the
landowner’s file. The issue is “intent”
– you don’t have to exercise your intent, but it’s the intent that has been
protected in case something happens to you as a landowner. Mr. Wilson is convinced that Mr. Everett
Stanley probably intended for his children to have lots. However, legally that isn’t enough. That is why Mr. Wilson asked his questions
about the trust and whether the intent is expressed in the language of the
trust. Nothing he has heard suggests
that the trust language is likely to help.
Mr. Conrad asked Mr. Stanley if there
is anything in the language of the trust that might suggest the expectation of
lots going to the children. Also, Mr.
Conrad noted that the reason something must be put into writing is that intent
can change. The Foundation cannot assume
intent. Parents sometimes clearly intend
for the children not to have lots on the property. In a certain case, there is a landowner who
keeps changing his mind about whether his children should have lots on the
property. He has provided regular
updates of his current state of mind to be placed in his file.
Mr. Stanley reiterated that his father
made it very clear what his intent was and never expressed any contrary
intention concerning these lots.
John Zawitoski, program administrator
for
Mr. Wilson stated that the problem is
that tomorrow he could have 2,000 children submitting documentation stating
that their parents intended for them to have lots on the farm. Would Mr. Zawitoski’s local program in
Mr. Tassone, representing the Secretary
of Planning, asked Mr. Stanley about the existing house. Mr. Stanley reiterated the poor condition of
that house. Ms. Judith Lynch asked if it
wasn’t really the case, given that there is a pre-existing dwelling on the
property, that the
Mr. Wilson suggested that the staff
take everything that has been presented to the Board at this meeting and
consult with legal counsel to see if there is any avenue that might work to
provide the
Mr. Conrad asked Mr. Stanley if there
were any restrictions, historic preservation, etc., that would keep the
existing structure from being torn down, renovated, or otherwise used. Mr. Stanley stated that it has no such
restrictions on it.
Motion #6: To table the
Motion: Douglas Wilson Second: Lewis Logan
Status: Approved
B.
1. 12-04-84-01 MARKLINE, Benjamin H. & Marta Y. 115.00 acres
Request to redesignate a pre-existing
dwelling as a tenant house on easement property (note: this item was tabled during the April Board
meeting).
This item will be revisited from last
month after being tabled for Mr. Nielsen, Assistant Attorney General, to be
available to the Foundation to provide counsel.
This is a request to redesignate a pre-existing dwelling to be a tenant
house and to move the pre-existing dwelling elsewhere on the property to be
located as shown in the documentation.
Mr. and Mrs. Markline are the original owners of the property. Mr. Nielsen’s memo is available in the agenda
documentation.
The Woods are contract purchasers of
the farm. The tenant of the proposed
tenant house would be fully engaged in the operation of the farm as a groom and
trainer for the Woods 8-15 horses, and as a worker for the planned crop
operation. The relocated pre-existing
dwelling would be located along the edge of the property with access via an
existing farm lane. The request has been
approved by the local advisory board with concurrence from Planning &
Zoning. Foundation staff and counsel recommend
denial of the request.
Mr. Rutledge, the attorney representing
the Woods and Marklines, addressed the Board.
He made several points, among which the old house is inadequate to serve
the necessary functions of a principal dwelling on a high dollar horse farm for
entertaining potential clients, even after being rehabilitated and being made
more environmentally friendly.
Additionally, he is requesting that one-acre be excluded around the
pre-existing dwelling so that the specific location can be made by
surveying. The material presented shows
the proposed location of the house more clearly than what had been provided
previously. He would like the Board to
rule on the relocation as a separate item from the conversion of the existing
home to a tenant house. He would like to
point out that using this structure as a tenant house is consistent with the
language in COMAR that states that the tenant house should be located in the
vicinity of other farm structures and may not be located on a farm field. Also, he notes that this proposed tenant house
would be an accessory structure to the main house which would be substantially
larger. Mr. Rutledge also noted that the
landowners would be willing to make an affirmative waiver of the 25-year
termination clause as part of the transaction.
Mr. Rutledge was asked by Mr. Tassone
what the ultimate objective of this request is.
He responded that the intent is to have the main residence relocated and
to obtain a tenant house to meet the requirements of the proposed farming
operation. Mr. Wood would live in the
new house, and the tenant would live in the existing dwelling.
Mr. Nielsen noted that this situation
is exactly like the Newsome request in
Mr. Tassone noted that requesting the
new location as an owner’s lot would not work, because it is not the owner who
is building on the owner’s lot, but the subsequent owner who would not be
permitted to use the lot as its use is restricted to the personal use of the
original Grantor. The acre released
would have to be the acre connected to the pre-existing dwelling.
Mr. Conrad stated that we have to be
clear what is being requested here, because if it is different than what was
reviewed by the County and forwarded with the County’s recommendation to the
State, then it must be returned to the County to be reviewed again for a
recommendation. Mr. Conrad directed the
question to Bill Amoss, program administrator for
Mr. Amoss clarified that there are two
requests: (1) relocation of the
pre-existing dwelling, and (2) redesignation of the existing dwelling as a tenant
house. These are what were reviewed by
the County.
Mr. Nielsen stated that the only way to
resolve this request is the same way the Newsome request was resolved: the pre-existing dwelling can be relocated,
but the original house must be torn down and returned to agriculture or open
space. If the landowners wish a tenant
house, it must be submitted as a separate request, documenting the need for a
tenant and giving the Board size and location review.
Mr. Wilson suggested that what the
landowner is likely to do is to ask for the tenant house to be located in exactly
the same spot that the existing house is now located. The Board recognizes that honest landowners
end up paying the cost of the logic of the policy that forces the existing
house to be leveled and returned to agriculture or open space.
Mr. Nielsen stated that the issue is
ultimately with the control that the Foundation must exercise over the
easement. Otherwise, the Foundation will
end up facilitating additional development beyond what is allowed under the deed
of easement, and that development will be for subsequent owners who do not
qualify for new development rights.
Control must be exercised over who lives in the tenant house, the size
of the tenant house being appropriate for the number of tenants to live on the
property, and the location consistent with the requirements of the farming
operation.
Discussion followed.
Mr. Wilson noted that a fundamental
problem is that subsequent owners will come to view eligibility for a tenant
house as essentially a right to build another house for the subsequent owner,
claiming the need for a tenant house, asking for redesignation, whether a
tenant is needed or not on the property.
The Foundation would best continue to make decisions as it has made
decisions about this issue before, or it will have a hundred new similar
requests.
In response to a question from Mr.
Rutledge, Mr. Nielsen stated that the agency is bound by fiduciary
practices. The only way it can change is
to adopt a regulation. The agency can
change its policy, but it would have to adopt a regulation to implement that
policy. It has the legal authority to do
so.
Motion #7: To approve the buyer to relocate the
pre-existing house to the new location as specified, and to tear down the
existing house and return the area to agricultural use or open space. If a tenant house is required, the tenant
house should be applied for as a separate request.
Motion: Lewis Logan Second: Douglas Wilson
Status: Approved
Opposed: Allen Cohey
C.
1. 22-15-87-03 DUNAHOO, W. Simpson 166.50
acres
Request to
exclude up to 2.00 acres for a child’s lot.
Mr.
Dunahoo is the original owner of the easement property. The current request is for the release of up
to 2 acres for a child’s lot for the personal use of his daughter, Carla. There have been no other lot requests on this
property. Mr. Dunahoo does not own any
other district or easement properties.
A
lot size of approximately 1.15 acres is requested to meet Health Department
requirements. The proposed lot will be
located in an area of the farm that is wooded and was previously partially
cleared for the construction of an implement storage building. Access will be directly off the road.
The
request was approved by the local advisory board. The request conforms to local zoning
regulations. If the request is approved,
there will be a required payback to the Foundation of the per acre amount of
$527.96. The full amount will be
determined when the landowner submits a metes and bounds and a final letter
from the Health Department indicating the amount of land required to meet the
septic requirements. Staff recommends
approval of this request.
Motion #8: To approve the exclusion of up to 2.00 acres for a
child’s lot on Mr. Dunahoo’s easement property.
Motion: Lewis Logan Second: Joe Tassone
Status: Approved
III. AGRICULTURAL
PRESERVATION DISTRICT PETITIONS
A.
1. 23-02-04-01 DAVIS, William E., Sr. 120.90
acres
This is a 120.9-acre parcel north of
Snow Hill in
2. 23-02-04-02 DAVIS, William E., Sr. 150.76
acres
This is a 150.76-acre parcel north of
Snow Hill and contiguous to the former parcel.
It is almost entirely in cropland, and has one dwelling on the
property. It is also a grain farm that
is part of the larger owner-operated farming operation. It has 94% qualifying soils. Zoning density is
3. 23-02-04-03 SHOCKLEY, Howard L., Sr. 176.60
acres
This 176.60-acre parcel is in the
community of
Staff recommends approval of these
three districts, with the recommendation that Mr. Shockley obtain a forestry
management plan.
Motion #9: To
approve the requests of William Davis and Howard Shockley to establish
agricultural land preservation districts on their properties, with the
recommendation that Mr. Shockley obtain a forestry management plan.
Motion: Judith Lynch Second: Joe Tassone
Status: Approved
B.
1. 03-06-04-01 DUNNING, James, et al. 52.76
acres
This 52.76-acre parcel is in the
community of Freeland in
2. 03-06-04-02 SAFELY HOME LLC 71.00
acres
This 71-acre parcel is in the community
of Upperco in
Staff recommends approval of these two
proposed districts.
Motion #10: To
approve the requests of James Dunning and Safely Home LLC to establish
agricultural land preservation districts on their properties.
Motion: Douglas Wilson Second: Dan Colhoun
Status: Approved
C. SAINT MARY’S
COUNTY
1. 18-04-04-01 HERRIMAN, James A. 23.34
acres
This 23.34-acre parcel is in the
community of Helen in St. Mary’s County.
All of the acreage is in woodlands.
There are no dwellings on the property.
It is a timber operation, part of a larger owner-operated
operation. It has 59% qualifying
soils. Zoning density is 1:5. No acreage is being withheld. This parcel is considered to be under a
moderate level of development pressure.
It is contiguous to already preserved acreage and is in an area with
substantial preserved acreage (over 1,000 acres).
2. 18-04-04-02 HAYDEN, Philip B. 27.00
acres
This 27-acre parcel is in the community
of Avenue in St. Mary’s County. All of
the acreage is in woodlands. There are
no dwellings on the property. It is a
timber operation, part of a larger owner-operated operation. It has 100% qualifying soils. Zoning density is 1:5. No acreage is being withheld. This parcel is considered to be under a
moderate level of development pressure.
It is contiguous to another MALPF district, allowing this parcel to
qualify for participation in the MALPF program.
3. 18-04-04-03 HARVEY I. BAILEY REVOCABLE TRUST 199.00 acres
& MARY
R. BAILEY REVOCABLE TRUST
This 199-acre parcel is in the
community of Avenue in St. Mary’s County.
69 acres are in cropland, and 125 acres are in woodlands. There are two dwellings on the property. It is a crops and hay operation; it is not
part of a larger operation. The cropland
is rented, but the hay operation is owner-operated. It has 65% qualifying soils. Zoning density is 1:5. No acreage is being withheld. This parcel is considered to be under a low
level of development pressure.
Staff recommends approval of these
three proposed districts with the recommendation that all three parcels obtain
forestry management plans.
Motion #11: To
approve the requests of James Herriman, Philip Hayden, and the Harvey and Mary
Bailey Revocable Trusts to establish agricultural land preservation districts
on their properties, with the recommendation that each obtains a forestry
management plan.
Motion: Douglas Wilson Second: Dan Colhoun
Status: Approved
D.
1. 07-01-04-03 JOHN F. COLEMAN REVOCABLE TRUST 155.00 acres
This 155-acre parcel is near Cecilton
in
1. 07-01-04-04 JOHN F. COLEMAN REVOCABLE TRUST 118.50 acres
This 118-acre parcel is near Cecilton
in
Staff recommends approval for these two
district petitions.
Motion #12: To
approve the requests of the John F. Coleman Revocable Trust to establish agricultural
land preservation districts on its two properties.
Motion: Douglas Wilson Second: Joe Tassone
Status: Approved
IV. PROGRAM POLICY
(continued)
B.
Ranking Guidelines
The ranking guidelines
presentation and discussion will take place after the end of the Executive
Session of the Board meeting. This will
return to the Board of Trustees after full discussions with the county program
administrators.
C.
Retention of
To Family Corporation, Partnerships, Trusts, etc.
Elizabeth Weaver, MALPF Administrative
Officer, presented the retention of lot rights policy to the Board of Trustees. Program
Administrators have requested clarification, in the form of a policy, on the
issue of the retention of lot rights in certain situations where property is
transferred to family entities, such as trusts, family corporations,
partnerships, etc., for estate planning and farm financing purposes. Because such entities have become more common
in recent years, Program Administrators would like to avoid the current
practice of examining each entity to determine lot rights, which can be quite
onerous and may cause undue delay for program administrators and landowners.
MALPF
staff, in consultation with Craig Nielsen, MALPF counsel, and Nancy Forrester,
Assistant Attorney General, DGS, proposes the Foundation adopt the following
policy to address the concerns raised by Program Administrators:
Retention of lot rights when property is transferred
to family corporations, partnerships, trusts, etc.
Transfer
of less than 100% of the ownership of the property to family members:
When
the original landowner transfers less than 100% of the ownership interest in
land, e.g. a parent transfers a percentage of the ownership to his or her
children, where the original owner retains partial ownership, the original
landowner will retain the lot eligibility, i.e. the eligibility to request an
owner’s lot and the eligibility to request lots for his or her children. However, the owner’s lot eligibility expires
upon the death of the original owner(s), regardless of whether or not the
original owner requested a lot. If the
original owner documented his or her intent to create lots for his/her children
before his/her death, the children may request child’s lots for as long as the
family maintains ownership of the easement property. The Foundation recommends the original owner
also document intent to create lots in his or her will, along with provisions
necessary to facilitate the execution of the intent. A preliminary and/or final
release may be requested at any time subsequent to the Foundation’s approval of
the lot, for as long as the family maintains ownership of the easement
property.
Transfer
of part or all of ownership to a “family controlled entity” (defined as a
corporation, limited liability company, partnership, or limited partnership in
which all the shareholders, members, or partners are family members):
When
a landowner transfers all or part of his or her ownership interest in land to a
family controlled entity, where the original owner either retains partial
ownership in the land, or at least has partial ownership in the family
controlled entity, the original landowner will retain the lot eligibility, i.e.
the eligibility to request an owner’s lot and the eligibility to request lots
for his or her children, for as long as the original owner is living. The owner’s lot eligibility expires upon the death
of the original owner(s), regardless of whether or not the original owner
requested a lot. If the original owner documented his or her intent to create
lots for his/her children before his/her death, the children may request
child’s lots for as long as the family controlled entity maintains ownership of
the easement property. The Foundation
recommends the intent also be documented in the original landowner’s will,
along with provisions necessary to facilitate the execution of the intent. A preliminary and/or final release may be
requested at any time subsequent to the Foundation’s approval of the lot, for
as long as the family controlled entity maintains ownership of the easement
property.
Transfer
of part or all of ownership to a trust:
In
this situation, a landowner transfers the property from himself/herself to a
trust that names him or her as the sole trustee (or husband and wife as
co-trustees). The successor trustee(s)
becomes the owner of the property immediately upon the death of the trustee,
and there is no estate settlement period with regard to property owned by the
trust. The original owner will retain
lot eligibility (owner’s lot and child’s lot) until his or her death. The owner’s lot eligibility expires upon the
death of the original owner(s), regardless of whether or not the original owner
requested a lot. If the original owner
documented his or her intent to create lots for his/her children before his/her
death, the successor trustee may request children’s lots for as long as the
Trust (or beneficiaries of the Trust) maintains ownership of the easement
property. The Foundation recommends the
intent also be documented in the original landowner’s will, along with
provisions necessary to facilitate the execution of the intent. A preliminary and/or final release may be requested
at any time subsequent to the Foundation’s approval of the lot, for as long as
the Trust (or beneficiaries of the Trust) maintains ownership of the easement
property.
Testate
or Intestate Inheritance:
Upon
the death of the original owner(s), the owner’s lot eligibility expires,
regardless of whether or not the original owner requested a lot. If the original owner documented his or her
intent to create lots for his or her children before his or her death (whether
by Last Will and Testament or otherwise), the personal representative of the
estate (or the heirs if the estate is closed) may request child’s lots for as
long as the estate or heirs of the estate maintain ownership of the easement
property. The Foundation recommends the
intent also be documented in the original landowner’s will, along with
provisions necessary to facilitate the execution of the intent. A preliminary and/or final release may be
requested at any time subsequent to the Foundation’s approval of the lot, for
as long as the estate or heirs of the estate maintain ownership of the easement
property.
Conveyance
of a “remainder” interest to children, or “joint interest with right of
survivorship”:
In
this situation, a landowner conveys a “remainder” interest to his or her children,
or a “joint interest with right of survivorship”. Under the landowner’s deed, the children
become owners of the property instantly upon his or her death. There is no estate settlement time period for
the lot rights to be exercised. If the
original landowner documented his or her intent to create lots for his/her
child(ren), the child(ren) may request child’s lots for as long as the children
maintain ownership of the easement property.
The Foundation recommends the intent also be documented in the original
landowner’s will, along with provisions necessary to facilitate the execution
of the intent. A preliminary release may
be requested at any time subsequent to the Foundation’s approval of the lot,
for as long as the children maintain ownership of the easement property.
The
Board may wish to consider imposing time limits for requests and/or releases of
child’s lots when the original owner is deceased. The Board has discretion to impose certain
conditions, such as a time limit on the release of a lot, upon approval of a
lot request.
Also,
the Foundation has required the landowner to establish the intent to create
child’s lots either with a provision in the will as discussed above and/or a letter
of intent to the Foundation that is acknowledged by return mail and placed in
the property file.
Mr. Nielsen noted that the intent of the legislature is to allow
the children of the original Grantor to live on the farm to help in the farming
operation. An original owner or Grantor
who was a member of the family corporation or trust will continue to be
eligible to request an owner’s or child’s lot, though the form of ownership may
change. We will follow the connection of
the original Grantor to the form of ownership, even if the ownership changes
from, for example, family corporation to a trust, or from ownership by a single
individual to a family corporation. The
staff feels this is a commonsense solution that has, to now, been implemented
administratively. The staff is
presenting it now to work out rationally and explicitly the conditions under
which lot rights are retained.
Nancy Forrester noted that, today, the eligible Grantor and those
children eligible to request lots are explicitly named in the easement document
to eliminate the question of who qualifies to request a lot.
Doug Wilson noted that it is not unusual these days for the form
of ownership to change without an actual sale of an interest in the property,
such as setting up a trust for inheritance purposes, but the original Grantor
is still the owner of the property. No
one wants this to create a situation where the change in formal ownership
results in the loss of lot rights.
Mr. Conrad stated that the staff is requesting for the Board
members and program administrators to read the draft policy on the retention of
lot rights over carefully and relay any comments to the staff. Unless there are no serious concerns, the
policy will be adopted as administrative practice. Mr. Nielsen suggested that it be put into the
register.
In response to a comment, Mr. Conrad noted that there are cases
where the Board has required the exercise of a particular lot right to take
place within a certain set period of time, and other cases where the Board has
imposed no time limit on the exercise of a lot right as long the form of
ownership remains consistent with the requirements for lot retention. The issue of time limits by which a lot right
must be exercise is discretionary for the Board. Mr. Wilson noted that, if a family unit sets
up a trust and the Mom and Dad die with no written request for a child’s lot,
lot eligibility will not survive, even though the form of ownership may remain
unchanged for some period of time. The
key is the written application stating the intent to create child’s lots.
Mr. Nielsen noted that the practice by the Foundation has been
quite liberal. All one has to have is a
letter in the file stating that you want the children to have lots. Then the Foundation will bend over backward
to grant the lots to the children.
Mr. Wilson reminded the Board that, even with the letter in the
file, this has to be handled in the estate.
Once the estate is settled and the property is transferred on the open
market, the child cannot come back in the future to claim the right to a
child’s lot. The probate system or the
person settling the estate must settle this issue at that point, or it is too
late once the ownership has transferred.
Mr. Nielsen noted that there have been instances where the Grantor
received approval for a child’s lot and then conveyed the property to someone
else. The child then came in later to
claim the lot. The Foundation denied the
request because the purpose of the child’s lot is for the child to live on the
family farm. The family no longer owns
the farm, so the purpose can no longer be met.
If there is no farm, you do not get the lot. The legislative intent is to allow the farmer
and his children to live on the farm, not to create a lot.
Mr. Conrad noted that it is possible that the family will inherit
through the estate and the child’s lot will carry over because the Foundation
tries to be flexible. However, it is
also possible that there may be disagreements within the family over who gets
the lots or that a certain family member is not wanted on the property. Part of the point of trying to settle these
issues while the property is still in the estate is to keep these issues from
later becoming contentious because of the new ownership structure. Even with the best possible intentions, the
family situation could be messy later on down the road. It is not that the door is closed to create
child’s lots under such a situation, but the family may close the door itself
because of disagreements under subsequent family ownership.
It was commented that this kind of information should be more
generally available to program participants.
Mr. Wilson stated that the Foundation is going to have to come up with a
better way to communicate with its thousands of clients to keep them informed
of these kinds of issues dealing with lot eligibility and retention. Mr. Conrad noted that the web site now has
this information available to anyone seeking it. Mr. Nielsen also noted that the Foundation
has also relayed this information with the fact sheets that have been
available.
Motion #13: To
adjourn regular session and go to executive session.
Motion: Lewis Logan Second: Douglas Wilson
Status: Approved
The regular session Board meeting was
adjourned at approximately
Respectfully
Submitted:
_____________________________________
James A.
Conrad, Executive Director
_____________________________________
Elizabeth
Weaver, Administrative Officer