By Sarah Everhart
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Last summer I posted about the Next Generation Farmland Acquisition Program (Next Gen Program) administered by the Maryland Agricultural and Resource-Based Industry Development Corporation (MARBIDCO). The Next Gen Program helps qualified young and beginning farmers purchase farmland. The Next Gen Program was able to fund six farm purchase applications during the program’s first year (2017), with a secondary objective to help permanently preserve nearly 800 acres of agricultural land on farm properties located in Frederick, Prince George’s, Talbot and Washington Counties. This year, the State Government approved a second year of funding ($2.5 million for Fiscal Year 2019) for the Next Gen Program, matching a similar amount of funding that was provided in Fiscal Year 2018.
The Next Gen Program has redefined who qualifies as a beginning farmer as one who:
Has not owned a farm or ranch (or currently owns less than 10 acres of agricultural land); and
Has not operated a farm or ranch as a principal operator for more than 10 years; and
Has at least one year of farming experience or has completed a qualified farm management training program that includes substantial fieldwork experience (must be documented in an appropriate fashion); and
Expects to substantially participate in the farm operation on the subject property.
A participant in the Next Gen Program is eligible to receive a down payment to help meet the equity requirements of a commercial lender (up to 51% of the fair market value of the land from MARBIDCO (with a cap of $500,000)) and following the land sale transaction the Next Gen participant will then have a period of several years to sell the permanent easement to a rural land preservation program that is able and willing to hold the permanent easement (thus extinguishing the development rights on the property forever). Once a permanent easement has been acquired, the Next Gen Program participant is obligated to repay MARBIDCO the original Next Gen Program Option Purchase amount, plus a 3% administrative fee.
Although a firm bank loan commitment is not required until the Next Gen Program funding is approved, a Next Gen Program applicant will need to seek the participation of a commercial bank or Farm Credit Association to provide a portion of the farm purchasing financing. A Next Gen Program applicant will have a short window of time after being notified of approval to arrange for commercial lender financing and submit a loan commitment letter to MARBIDCO. Therefore, MARBIDCO strongly encourages prospective applicants to contact a commercial lender during the application process to get a clear sense of the lender’s financing requirements.
A farmer interested in taking advantage of the Next Gen Program should consult their respective County Agricultural Land Preservation staff by no later than Friday, June 29, 2018, to discuss the suitability of a subject farm being permanently preserved. To apply for the program, an applicant will need a contract of sale for the subject farm property with a long enough term (at least 6 months) to allow for the process to be approved, a provision for the return of the down payment to the applicant in the event the Next Gen Program funding is not approved, and a farm business plan. It is also suggested that a contract of sale specify whether the buyer and/or seller will be responsible for paying the costs of a potential property survey, as well as other closing costs. The Next Gen Program application deadline (including submission of all required forms and related attachments) is Tuesday, July 31, 2018; by no later than 4:00 P.M., at the MARBIDCO office in Annapolis. According to MARBIDCO, late applications will not be accepted.
According to MARBIDCO, the purpose of the Next Gen Program is to help facilitate the transfer of farmland to a new generation of farmers, while also effectively helping to preserve the subject agricultural land from future development. Further information about the Next Gen Program may be obtained by contacting Allison Roe, Financial Programs Associate, by telephone at: (410) 267-6807, or by email at: aroe@marbidco.org.