Kentucky Department of Agriculture

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PACEKentuckys Farmland Preservation Program
Kentucky Department of Agriculture
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What is PACE?
The Kentucky General Assembly in 1994 established
the Purchase of Agricultural Conservation
Easement Corporation and authorized the state to
purchase agricultural conservation easements in
order to ensure that lands currently in
agricultural use will continue to remain
available for agriculture and not be converted to
other uses. Although PACE was established to
purchase conservation easements, landowners also
are encouraged to donate easements in order to
dedicate their land to agricultural uses. Donors
of conservation easements may receive federal and
state income tax and estate tax benefits.
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Lesser known or emphasized features andbenefits
of the PACE program

• Participation is strictly voluntary
• Enables landowners to realize a portion of the
  equity in their land without having to sell it.
• Proceeds from the sale of an easement can be used
  for any purpose.
• Examples
• Help pay off the mortgage
• Start a new enterprise or expand an existing one.
• Purchase more land or equipment.
• Capital for needed environmental, structural, and
  infrastructure improvements/investments.
• Set up a retirement fund.
• Can contribute significantly to the
  diversification and expansion of our farm
  economy.
• Can make land farming more affordable to
  children and other young farmers by effectively
  reducing the value of the land.
• Can aid in the transition from one generation of
  farmers to another.

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What is a Conservation Easement?
A Conservation easement is a legal agreement a
property owner makes to restrict the type and
amount of development that can take place on his
or her property.
Who is eligible?
All landowners who hold title to farmland which
is being used, or is available for use, for
agricultural production.
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How is the Easement Value Determined?

• First, determine the fair market value of your
  land according to its development potential.
• Next, estimate the value of your land if its use
  is restricted to agriculture. The easement value
  for any given acreage will fall somewhere between
  the two.
• Landowners can use these two figures to help them
  determine an asking price. The landowner and the
  PACE Board will then negotiate the final
  conservation easement value.
• All transactions are subject to negotiations and
  restrictions established by the Board.
• An example of a 200 acre farm is on the next
  page.

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Determining Easement Value?
Example a 200-acre farm Appraised at fair
market development value 2,500 per acre
500,000 Estimated farmland restricted value
1,200 per acre 240,000 Potential
conservation easement value 1,300 per acre
260,000 Note Values are variable, subject to
established appraisal procedures (302 KAR
100.020) for purchasing agricultural conservation
easements
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What are the tax benefits of PACE?
Landowners may donate a conservation easement,
which is a tax-deductible, charitable gift,
provided the easement is perpetual and donated
exclusively for conservation purposes.
Conservation purposes include preserving open
space and farmland. The example below
demonstrates possible tax benefits of donating a
conservation easement. Example a 200-acre
farm Appraised at fair market development
value 2,500 per acre 500,000 Estimated
farmland restricted value 1,200 per acre
240,000 Potential tax-deductible charitable
gift value 1,300 per acre 260,000 The
landowner is eligible to deduct an amount equal
to 30 of adjusted gross income each year for a
total of six years or until matching the value of
the gift. For the purposes of this example, the
landowner has an annual federal adjusted gross
income of 100,000. Therefore, the landowner may
deduct 30,000 a year for the next six years if
the income does not change. Six years at 30,000
amounts to a 180,000 total federal tax
deduction. NOTE State income tax deductions for
charitable gifts follow the same guidelines as
for federal tax deductions. Thus, the potential
state tax deduction is an additional
180,000. Individual tax situations differ
therefore, you should seek legal counsel for
specific details.
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State Rankings by Acreage and Rate of Non-Federal
Land Developed
Natural Resources Conservation Service USDA
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Percentage of Non-Federal Land Developed in
Kentucky for 1982, 1987, 1992, 1997

• Of Kentuckys total non- federal land acres,
  developed acreage has significantly increased
  from 1982 to 1997.
• In 1982, 4.7 was developed into urban areas and
  roads.
• In 1997, the percentage developed increased to
  7.2

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PURCHASE OF AGRICULTURAL CONSERVATION EASEMENT
CORPORATION Seventh Floor Capital Plaza
Tower Frankfort, Kentucky 40601 FAX (502)
564-2133 AGRICULTURAL CONSERVATION
EASEMENT APPLICATION FORM .GENERAL
INFORMATION Name(s)______________________________
_________________________________________ Address
__________________________________________________
_____________________ Telephone__________________
_________ County________________________ (The
name, address and telephone number must be
provided for all owners of the property. If
necessary, attach a separate list of owners to
the application.) Road Location of Farmland
Tract_____________________________________________
______ Directions from nearest state
route_____________________________________________
________________________________________________
___________________________________ Deed
Reference_________________________ Total acreage
of farmland tract___________
The PACE Application
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.AGRICULTURAL PRODUCTION Type and quantity of
crops grown on farmland tract during last two
growing seasons (attach additional pages if
necessary)________________________________________
______________ Number and kinds of livestock
(attach additional pages as necessary)____________
__________ Acreage of land leased from others
for agricultural production_______________________
_____ If the farmland tract is not currently used
for agricultural production, attach a written
statement of the short and long term proposals
for use of the land for agricultural
production. Name(s), address and telephone
number of person(s) to contact to view the
farmland tract______ .DOCUMENTS REQUIRED The
landowner is required to provide the following
documents/maps as part of this application .Loca
tional map A United States Geographical Survey
Topographical Map showing the location of the
farmland tract to be considered for purchase and
contiguous acreage under same ownership to be
excluded. USDA Natural Resources Conversation
Services Soil map and farm plan
The PACE Application
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State any contingencies which may affect the
retention of this farmland tract in
agricultural production (e.g., health of
landowner, estate settlement, financial
stress) Proposed property interest to be
conveyed to Commonwealth (e.g., fee simple,
easement, life estate) ___________________________
________________________ Asking price
__________________________________________________
_______ Has the tract been appraised within
last 12 months?_______(Please attach A copy of
the appraisal.) Preferred method of payment
(e.g., lump sum, installments)____________________
List any liens and encumbrances on farmland
tract____________________________ List any
existing surface or mineral leases or easements
on farmland tract._________ V.
SIGNATURE(S) I (We) hereby consent to the
inspection and/or appraisal of the farmland tract
that is described in this application. (It is
necessary for all owners of the farmland tract to
give their approval and consent to this
application.) Signed_____________________
___________ ______________________________
(Date) ______________________
__________ ______________________________
________________________________ ____
__________________________
The PACE Application
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I. A. SOIL TYPES - CAPABILITY CLASSES ( of
parcel in each class) (MAX. 55 Points)   Class
I Class II Class III 0-25(15 pts.)
0-25(10 pts.) 0-25(5 pts.) (8 pts.)
26-50(20 pts.) 26-50(15 pts.) 26-50(10
pts.) 51-75(25 pts.) 51-75(20 pts.) 51-75(15
pts.) 76-90(30 pts.) 76-100(20
pts.) 76-100(20 pts.) 91-100(Max. 55
pts.)   B. SOIL TYPES - ( of parcels either
Prime or Statewide) (MAX. 75 Points)   Prime
Farmland Statewide or Unique Important
Farmland 0-25(10 pts.) 0-25(10 pts.)
26-50(25 pts.) 26-50(15 pts.) 51-75(20
pts.) 51-75(45 pts.) 76-90(65 pts.)
76-100(25 pts.) 91-100 (Max. 75 pts.)   C.
SOIL TYPES - YIELD INDEX (Soil Survey Yield
Data) (MAX. 45 Points)  Productivity Group 1 -
3 Productivity Group 4 - 6 0-33(10 pts.)
0-33(10 pts.) 34-66(20 pts.)
34-66(10 pts.) 67-100(30 pts.)
67-100(15 pts.)   II. SIZE OF EASEMENT
PARCEL (acres) (MAX. 45 Points)   0-25
acres 26-50 acres 51-75 acres 76-100
acres 101-200 acres (2 pts.) (4 pts.) (6
pts.) (8 pts.) (20 pts.)   201-300 acres 301-
400 acres 401-500 acres 501-1,000 acres 1,000
PLUS (25 pts.) (30 pts.) (35
pts.) (40 pts.) (45 pts.)
Criteria for Evaluation - Total Possible Points
400
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III. LAND IN AGRICULTURAL PRODUCTION
WITHIN A RADIUS OF 1.0 MILES OF PARCEL? (MAX. 15
Points) More than 90 percent - 15 points 89 to 70
percent - 12 points 69 to 50 percent - 9
points 49 to 20 percent - 5 points Less than
20 percent - 0 points   IV. PERIMETER OF PARCEL
BORDERS IN NON-URBAN USE? (MAX. 15 Points) More
than 90 percent - 15 points 49 to 20 percent -
5 points 89 to 70 percent - 12 points Less than
20 percent - 0 points 69 to 50 percent - 9
points V. PARCEL DISTANCE FROM URBAN BUILT-UP
AREAS? (MAX. 20Points)   2 miles or more -20
points 1 mile to less than 2 miles - 15
points Less than 0.5 mile - 5 points 0.5 mile
to less than 1 mile - 10 points   VI. PARCEL
LOCATED IN A CERTIFIED AGRICULTURAL DISTRICT OR
NEAR CERTIFIED DISTRICTS? (MAX. 20
Points)   Parcel included in a certified
Agricultural District - 20 points Parcel located
within 1 miles of certified Agricultural District
- 10 points
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VII.           CONTIGUOUS BLOCK OF EASEMENTS AND
APPLICATIONS OR CLOSE PROXIMITY? (MAX. 20
Points) Parcels adjacent to permanent
agricultural conservation easements 20
points Parcels located within ½ mile of permanent
agricultural conservation easements 10
points Parcels located within 1 mile of permanent
agricultural conservation easements 5
points Parcels located more than 1 mile of
permanent agricultural conservation easements 0
points VIII.        PARCELS LOCATED IN STATE
DESIGNATED AGRICULTURE PROTECTION AREAS DEFINED
AS HIGH QUALITY FARMLAND UNDER HIGHEST THREAT.
(MAX. 15 Points) Parcel located in Protection
Areas 1 60 to 100 Prime Farmland and High to
Medium Population Density 15 points Parcel
located in Protection Areas 2 20 to 60 Prime
Farmland and High to Medium Population Density
10 points Parcel located in Protection Areas 3
0 to 20 Prime Farmland and High to Medium
Population Density 5 points   IX.             
PARCELS LOCATED IN TOBACCO DEPENDENT
COUNTIES?(MAX. 15 Points) Parcel located in
counties ranked 1 through 40 15 points Parcel
located in counties ranked 41 through 80 10
points Parcel not located in counties ranked 81
through 120 5 points  
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X. HOW MUCH OF THE SITE HAS BEEN FARMED (MANAGED
FOR A SCHEDULED HARVEST, INCLUDING FARM
SET-A-SIDE PROGRAMS AND/OR IN FORESTLAND) OR
TIMBER ACTIVITY) MORE THAN FIVE OF THE LAST 10
YEARS? (MAX. 50 Points)   A. Farmed - Percentage
of Total Points 100-75 (25 pts.)
74-50 (20 pts.) 49-25 (15 pts.)
24- 0 ( 5 pts.)   B. Forestland -
Percentage of Total Points   100-75 ( 5
pts.) 74-50 (15 pts.) 49-25 (20
pts.) 24- 0 (25 pts.)   XI.         LOCAL
CONSERVATION DISTRICT BOARDS REVIEW AND
RECOMMENDATION? (MAX. 10
Points)   Conservation District Board reviewed
and recommends approval - 10 points Conservation
District Board reviewed and does not recommend
approval - 0 points Conservation District Board
reviewed and recommends not approving - (-10
points)
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Purchase of Agricultural Conservation Easements

• PACE PROGRAM STATUS(As of November 13, 2007)
• The PACE Corporation has purchased agricultural
  conservation easements on 88 farms totaling
  20,927 acres for 17,873,444. The easement costs
  have averaged 854 per acre. The farm size has
  averaged 238 acres. In addition, 34 easements on
  4,638 acres have been donated to the program,
  bringing the total inventory to 122 farms
  containing 25,565 acres.
• Since the inception of the program, the
  Department has received 816 applications from 75
  counties statewide totaling over 160,000 acres.
• A total of 667 applications are currently pending
  for a total of over 129,000 acres with an
  estimated easement value of over 100 million.

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KentuckyPurchase of AgriculturalConservation
Easements
Counties with Applications 1 to 3 Applications 4
to 9 Applications 10 to 20 Applications Over 20
Applications Stripes Indicate Counties Where PACE
Easements Are Approved
816 Applications from 75 counties
As of November 13, 2007
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Status of Selected State PACE Programsas of
January 2005
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Status of Selected State PACE Programsas of
January 2005
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PACE Purchase of Agricultural Conservation
Easements
192 Acre Dairy Farm - Shelby County
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PACE Purchase of Agricultural Conservation
Easements
215 Acre Dairy Farm - Shelby County
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PACE Purchase of Agricultural Conservation
Easements
183 Acre Beef Cattle/Tobacco Farm - Shelby County
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PACE Purchase of Agricultural Conservation
Easements
155 Acre Grain/Vegetable Farm - Trigg County
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PACE Purchase of Agricultural Conservation
Easements
100 Acre Grain Farm - Daviess County
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PACE Purchase of Agricultural Conservation
Easements
226 Acre Grain/Tobacco Farm - Larue County
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PACE Purchase of Agricultural Conservation
Easements
325 Acre Dairy/Tobacco Farm - Shelby County
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PACE Purchase of Agricultural Conservation
Easements
311 Acre Grain/Livestock/Tobacco Farm - Mercer
County
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PACE Purchase of Agricultural Conservation
Easements
74 Acre Grain/Tobacco Farm - Mercer County
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PACE Purchase of Agricultural Conservation
Easements
692 Acre Grain Farm - Fulton County
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PACE Purchase of Agricultural Conservation
Easements
184 Acre Grain/Tobacco Farm - Logan County
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PACE Purchase of Agricultural Conservation
Easements
285 Acre Grain/Tobacco/Livestock Farm - Franklin
County
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PACE Purchase of Agricultural Conservation
Easements
184 Acre Dairy Farm - Shelby County
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PACE Purchase of Agricultural Conservation
Easements
90 Acre Grain/Tobacco/Livestock Farm - Woodford
County