A package of farmland-related bills now moving through the Legislature includes two measures that are sure to accelerate the rate at which crop, orchard, and pastureland are slated for development. Those proposals, Senate Bills 1246 and 709, provide developers and land speculators with a taxpayer-funded subsidy to buy and develop farmland at markedly reduced property tax rates.

The proposals reward land speculators by intentionally failing to make an important distinction between land used for farming and farmland carved up for development. Other states address this problem by requiring those who convert the land to repay the taxes they avoided before developing it. The two Michigan proposals are patterned after that idea. But their tax repayment requirements are so low that this "recapture fee" would mean nothing to speculators, whose intention is not to keep the land agricultural but to develop it at the most profitable opportunity.

If approved, S.B. 1246, and S.B. 709 would accelerate the loss of farmland in Michigan, erode the foundation of the state's $4 billion farm economy, and transform miles of rural countryside into ugly and damaging sprawl. Moreover, they would defeat the purpose of Gov. Engler's proposed Farmland Preservation Fund. Money for the fund is supposed to come from a tax recapture fee on farmland that is developed. But if those recapture fees are negligible, the fund will be useless.

The Michigan Land Use Institute has analyzed S.B. 1246, and S.B. 709, as well as the other proposed farmland protection bills. We conclude that, with the exception of these three bills, the package is strong and will go a long way toward helping farmers lower their costs, stay on their land, and keep Michigan agriculture strong.

The Institute recommends that the Legislature amend the developer-friendly bills significantly to eliminate the incentive for developers to speculate on agricultural land at the public's expense. The Institute calls on the Legislature to establish a credible agriculture tax recapture fee so that the state's new property tax policy produces the farmland preservation voters want.

The Institute proposes a farmland recapture fee for Michigan of 20 percent of market value phased in over four years. Such a fee would give farmers the tax breaks they need but discourage speculation on agricultural land. The Institute's recapture fee recommendation also would ensure that the Governor's proposed Agriculture Preservation Fund would actually work. The Institute estimates that posting the recapture fee at 20 percent of market value would generate $80 million annually, which would give Michigan the kind of money many other states already are investing in farmland protection.