COURT DOES ABOUT-FACE, SIDES WITH LANDOWNER IN PRESERVED FARM DISPUTE

October 19, 2016 | No Comments
Posted by Paul H. Schneider

Scattered throughout rural New Jersey are signs that say “Preserved Farmland – Private Land, Public Legacy.” A preserved farm is land that remains under private ownership, but is subject to an easement restricting the property to agricultural use, typically in perpetuity. A common means of preserving farmland is through New Jersey’s Agriculture Retention and Development Act (ARDA). Using funds from the sale of voter-approved bonds, the State Agriculture Development Committee (SADC) or a county agriculture development committee purchases a deed of easement (DOE) restricting future use of the property to agricultural purposes.

Down the road, disputes may arise between a farmer and the SADC as to what is a permitted agricultural use on the property. In SADC vs. Quaker Valley Farms, David den Hollander purchased a 120-acre preserved farm long used as harvested crop land. Faced with the economic realities of contemporary farming, Mr. den Hollander switched to growing mums and other flowers to sell to big box stores. He grew some of the flowers in greenhouses but most were grown in open soil. After suffering a multi-million dollar crop loss when a hail storm damaged the mums in the open air, Mr. den Hollander decided to cover an additional 20 acres of the land with 72 large hoophouses, greenhouse structures made of plastic sheeting attached to hoop-like supports. The DOE specifically permitted the construction of buildings and structures for agricultural purposes, as well as the removal of soils to construct these structures.

The hoophouses require level ground, and Mr. den Hollander regraded the land to eliminate the sloping nature of the farm by moving roughly 50,000 cubic yards of soil, cutting into existing land contours by as much as 12 feet. The SADC sued, claiming this massive regrading of the property destroyed the agricultural value of what had been prime agricultural soil, and thus violated the DOE. A trial court in Hunterdon County agreed, and in July 2015 the Appellate Division of New Jersey Superior Court issued a decision affirming the trial court. The farmer asked the Appellate Division to reconsider its decision, and in a rare move the court agreed. On October 13, 2016, the court reversed itself in a comprehensive decision.

Preserving farmland in perpetuity may conjure up bucolic images of rolling hills and open space covered with planted crops. Yet the ARDA describes agriculture as an “industry” that needs “strengthening”, and declares that “[a]ll State departments and agencies, therefore, should encourage the maintenance of agricultural production and a positive agricultural business climate.” Maintaining such a positive agricultural business climate in order to strengthen the agricultural industry in New Jersey requires that agriculture adjust to the economic realities of our times and not cling to an agrarian stereotype of past centuries.

In its recent decision, the Appellate Division recognized that there is an inherent tension between conserving the agricultural value of the soil, a key purpose of the ARDA, and agricultural and economic development, which is another of the law’s objectives. “Although protecting the productive soil resources is key, so is shielding the land from non-agricultural development, maintaining agriculture’s economic role, and enabling New Jersey’s agricultural sector to compete economically.” The court observed that the ARDA promotes “dual, if sometimes competing goals . . . : soil conservation and agricultural economic development, which may include expansion of greenhouse farming and other agricultural activities that do not rely on soil resources.”

Striking a balance, the court concluded that under the easement and SADC regulations, Mr. den Hollander is entitled to grade the farmland for installation of hoophouses, provided he conserves the soil he removes in the grading operation “to the extent practicable.” The court ruled that determining this is fact sensitive and requires expert testimony as to whether Mr. den Hollander had conserved the soil he removed in the grading operation to the extent practicable, and that the trial court was wrong to have decided the case by summary judgment without hearing testimony on the issue.

Farmland preservation is one of a number of programs by which New Jersey property owners agree to accept deed restrictions on the use of their land, whether in return for a direct monetary payment, a donation and corresponding tax deduction, or as a condition of securing a needed development permit. While it is important to assure these restrictions are enforced, it is also important to assure that the property rights the landowner retains are respected. The initial court decision in SADC v. Quaker Valley Farms appeared to be an unduly deferential response to a complaint by a State agency. It is refreshing to see a court that is willing to reconsider its decision and recognize the importance of private property rights.

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