Conservation easements have long been a part of the agricultural real estate scene in Vermont. They essentially strip away development rights from a property, while allowing continued agricultural use. These easements often have additional restrictions on allowable uses of the property and a fairly recent twist is the option to purchase at agricultural value, the “OPAV.” The OPAV gives the easement holder (usually the Vermont Land Trust and co-holders) the option to purchase the property for an agricultural value if the owner wishes to sell to property to anyone other than a family member or bona fide farmer. This is an additional encumbrance on the property which impacts its value.
It is important to be able to accurately value these properties since most new easements now being written contain the OPAV provision. This has obvious implications for Yankee when OPAV encumbered properties are offered as mortgage collateral. As noted, OPAV easements are a recent innovation and determining the value of an OPAV encumbered property is particularly difficult because of an insufficient number of arm’s length market sales.
Geoff Yates, VP and Director of Appraisal Services for Yankee, together with his appraisal team, recently undertook a study of selected OPAV encumbered property sales in an attempt to understand market reaction to the OPAV. Geoff and his team worked with Ethan Parke of the Vermont Housing and Conservation Board, the lead funding agency for easement purchases. The study involved extensive field work and a considerable amount of analysis.
Geoff presented the results of the study at a seminar for appraisers in Montpelier during December. Present were many of the leading agricultural appraisers in Vermont, most of whom do contract appraisal work for Yankee. A good discussion ensued and the opportunity for the group to interact with each other and with staff from the Vermont Housing and Conservation Board, Vermont Agency of Agriculture, Vermont Land Trust and Upper Valley Land Trust was invaluable.
