January 01, 2018

Unlocking Urban Agriculture’s Potential with Municipal Policy

Nick Leonard

For many of Detroit’s longtime residents, the neighborhoods they grew up in are no longer recognizable. City blocks that used to have dozens of homes now have only a handful. Homes that were once the lifeblood of a neighborhood have become abandoned, dilapidated, and demolished, with untended lots being left in the wake. As residents have left, local businesses also have shuttered their windows leaving residents with few places to socialize and do basic things like purchase fresh and healthy foods. In response to this local crisis, residents frequently have taken matters into their own hands by cleaning up and transforming the vacant and untended lot in their neighborhood into an urban farm or garden.

For more than a half of a century, many American cities have struggled with a basic but very challenging problem: What can be done to return a large amount of vacant real property to productive use? By now, the underlying basis for this problem is well known. The populations of many American cities, particularly in the Midwest, have experienced large declines over the past several decades. Several cities, including St. Louis, Cleveland, Pittsburgh, and Buffalo, have experienced a population decline of 50 percent or more from their peak in the 1950s. In Detroit, this problem has been particularly pronounced as the city’s population has declined from 1,849,568 in 1950 to its most recent estimate of 672,795 residents. These population declines have created large swaths of vacant land. According to a 2010 survey, of the 343,849 residential parcels within Detroit, 27 percent were vacant. Data Driven Detroit, Detroit Residential Parcel Survey: Citywide Reports for Vacant Parcels: Improved and Un-Improved, Feb. 17, 2010, available at www.detroitparcelsurvey.org.

Vacant land creates a multitude of problems in the urban setting. For city governments, vacant land is a missing source of tax revenue and makes the provision of basic city services less efficient as already scarce resources are stretched across a dispersed, low-density population. For residents, vacant properties can cause several negative externalities, including depressed property values, increased instances of crime, and a fraying of the social fabric of the immediate neighborhood. These negative externalities create a larger problem that gets to the heart of why cities have struggled to develop an effective solution: Past a certain point, a neighborhood with many vacant properties is viewed as unsuitable for commercial or residential development. Industrial development is also difficult, given that many vacant properties are zoned for residential use. As such, many of these parcels will remain vacant for decades absent an alternative form of development that can fill the void.

Urban agriculture has long served as a response to a crisis. During World War II, Americans were asked to plant “victory gardens” as a way to increase the food supply for American forces abroad. In the nineteenth century, Detroit Mayor Hazen Pingree put 430 acres of vacant land to use for agricultural cultivation and enrolled 1,546 families in the “potato patch program” as a work relief measure during an economic depression. Melvin G. Holli, Reform in Detroit: Hazen S. Pingree and Urban Politics 70 (Richard C. Wade ed., 1969). While this modern iteration of urban agriculture is also a response to a crisis, it is distinct from past iterations in two key ways. First, this current crisis facing cities is by no means short term as it has already spanned several decades. Second, the response to this crisis has not come from local government but has grown spontaneously from the residents who wanted to improve their own communities when they viewed local government as unable or unwilling to do so.

Multifaceted Benefits, Potential for Growth

The allure of urban agriculture for residents is its multifaceted benefits. Studies have found that urban farms can raise neighboring property values by as much as 9.2 percent. Ioan Voicu and Vicki Been, The Effect of Community Gardens on Neighboring Property Values, 36 Real Estate Econ. 241 (2008). Having a visible outdoor garden or farm also reduces incidents of illegal dumping on the property and gives the community a place to rebuild its social fabric. Lastly, it provides a source of fresh food in neighborhoods where quality grocers, along with other private enterprises, have left. In Detroit, the combination of the prevalence of vacant land and the dire need for solutions has led to the development of a robust network of nonprofit and for-profit urban farms of varying sizes and purposes. The one thing that almost all of them have in common is that they serve as community assets by effectively repurposing vacant property for which traditional development is largely infeasible.

While Detroit and many other cities have developed robust urban agriculture networks, there is enormous potential for further growth. Urban agriculture been a resident-driven phenomenon and rose to prominence without the necessary regulatory or policy frameworks in place. One of the foremost initial obstacles in many cities was that agriculture was not expressly allowed as a primary use pursuant to local zoning ordinances. As such, urban agriculture was subjected to overly restrictive regulations regarding new or unlisted uses. Of course, this did not stop many residents from starting their own urban farm or garden. The last question on many people’s minds when they start an urban farm or garden is “Is this legal?” or “Who owns this property?” because many residents simply wanted to turn the vacant property in their neighborhood into something positive. Because of the grassroots, do-it-yourself nature of many urban farmers, a shocking number of them have no legal interest in the property they are farming. Nonetheless, urban agriculture has continued to grow from its humble beginnings. Farms that were started on one lot have expanded onto five lots, and many have continued to grow to cover acres of property. Others, while not expanding in size, have become important fixtures of the community. As farms have grown, people have invested an increasing amount of their time, sweat, and money into their urban farms to the point of wanting to make sure those investments are protected and recognized.

Obstacles from a Real Property Perspective

Unfortunately, there are numerous obstacles involved in starting an urban farm or garden from a real property perspective alone that can create a significant start-up barrier. One common issue is soil quality and contamination. Brownfields are a common problem in urban areas, and an urban farmer must always be wary, particularly of neighborhood-based businesses that are notorious for contaminating nearby soils, such as dry cleaners. The largest concern, however, is lead contamination. Many now-vacant properties were once the site of lead-painted houses, and, when those structures were torn down, much of that lead paint went into the soil. Even if soil is not contaminated, there is still the issue of soil quality as many urban soils require substantial amendments to make them productive for agricultural use. For prospective purchasers, another common issue is whether the title for the property is marketable. Most vacant properties that are in the inventory of a local municipality have gone through property tax foreclosure at some point. In Detroit, the property tax foreclosure process is very detailed, and the foreclosing governmental unit will commonly make some error in serving notice to the property owner, resulting in a deficient tax foreclosure. Christine MacDonald, Lawsuits Claim Wayne Co. Keeps Botching Foreclosures, The Detroit News, Apr. 4, 2016. Given the frequency of deficient real property tax foreclosures in Detroit, many title insurance companies simply will not insure properties with a recent property tax foreclosure history, which can make it challenging for an urban agriculture enterprise to obtain the loan necessary for the start-up or expansion of a farm. Lastly, if a farmer does manage to conduct a baseline environmental assessment of the property and determine its suitability for farming (and the farmer is able to confirm the title is clear and marketable), one last obstacle remains: he or she must clear the lot. Above the soil, vacant land is frequently overgrown by shrubs and trees that must be removed before the land can be prepared for cultivation. Below the soil, frequently there is a significant amount of demolition debris that must be excavated and relocated. In short, starting an urban farm is not for the faint of heart.

Stabilizing Neighborhood Enterprises

Nonetheless, many urban farmers are starting to think about how they can move from being hobby farmers or guerilla farmers with little regard for the legality of their operations to enterprises that can be a stabilizing presence in the neighborhood for years to come. Commonly, this is where government comes in with policies to lend a helping hand. Many states and cities have realized the obstacles present in certain types of development and have enacted policies to alleviate those obstacles. A common example of this can be seen in brownfield redevelopment policies. Michigan’s Brownfield Redevelopment Financing Act provides a financing mechanism for redevelopment activities on brownfields, given the challenges such projects typically encounter. Brownfield Redevelopment Financing Act, Act 381 of 1996, MCL 125.2651 et seq. Another example in Michigan is the Obsolete Property Rehabilitation Act, which provides property tax exemptions for the development and rehabilitation of commercial housing properties that are blighted or functionally obsolete. Obsolete Property Rehabilitation Act, Act 146 of 2000, MCL 125.2781 et seq. However, cities have been slow in creating policy focused on fostering the growth of agriculture as a permanent land use. To date, the most common urban agriculture policy pursued by cities concerns zoning. Many cities across the country, including Detroit, have expressly legalized agriculture as a primary land use in their zoning ordinance. Detroit took this step in 2013, and now urban agriculture is allowed either as a by-right or conditional land use in most zoning districts. Detroit, MI, Code § 61-12-79 (1984). Further, many cities have been more than willing to grant license agreements to urban farmers to allow them to use property temporarily for agricultural operations. However, these agreements provide a minimal amount of security and are inadequate for the many urban agriculture enterprises that are seeking to expand and invest in their operations.

City governments play an enormous role in the growth of urban agriculture for one primary reason: they own a lot of property. In Detroit, the Land Bank Authority holds title to approximately 95,000 parcels of residential property, much of which is vacant. Local governments also are particularly well-positioned as partners for urban agriculture real estate transactions. As detailed above, vacant properties present several problems for cities—including both their leaders and their residents—and urban agriculture can address many of those problems. Further, the costs of developing an urban farm is very cheap relative to traditional residential or commercial projects, making an urban farm a viable development model even in heavily vacated neighborhoods. Unfortunately, many local governments have been slow to embrace urban agriculture as a permanent land use and have been slow in creating the local policy aimed at specifically promoting and incentivizing urban agriculture. As a result, urban agriculture’s development in many cities has been stifled.

Planning and Public Land Disposition

To ensure that urban agriculture continues to grow and provide a viable solution for the repurposing of vacant land, cities must address two main policy gaps regarding urban agriculture. The first policy gap pertains to planning and public land disposition. As mentioned above, Detroit’s zoning ordinance has been amended to allow for urban agriculture as a by-right or conditional land use in most zoning districts. However, integrating agriculture into cities as a permanent land use as opposed to a temporary land use has proven to be more difficult than many urban agriculture advocates suspected. Despite zoning ordinances legalizing agriculture as a primary land use, most cities have been reluctant to sell land for agriculture projects. One of the main reasons for this reluctance is the fact that agriculture is a unique land use in the urban setting and is generally not viewed as the highest and best use for property. Despite many cities having struggled with the same problem of how to return an enormous amount of vacant land to productive use, there has been a surprising lack of innovative solutions from city government regarding this problem. In many instances, cities are still hoping for a large-scale industrial, commercial, residential, or other type of developer to provide a solution. However, the reality is that the problem, particularly in Detroit, is simply too vast to rely on traditional development alone. If cities such as Detroit want to address the vacant land immediately, they must also encourage low-cost, small-scale developments such as urban agriculture.

For many cities, the first step is identifying land that may be suitable for long-term urban agriculture use. One city that has done this is Baltimore. As part of the urban agriculture plan adopted by the city, the Department of Planning conducted a GIS mapping exercise to identify municipally owned properties that may be suitable for urban agriculture. Through this exercise, the city identified 35 acres of potentially suitable land for large-scale agricultural operations on a total of 16 sites. Baltimore City Planning Commission, Homegrown Baltimore: Grow Local Baltimore City’s Urban Agriculture Plan (Nov. 2013). Additionally, the city of Baltimore also identified smaller plots that may be utilized for smaller-scale or shorter-term urban agriculture sites. Lastly, the city of Baltimore’s Department of Recreation & Parks also assessed underutilized parklands and determined that 24 sites totaling 56 acres were underutilized and suitable for agriculture. Id.

In surveying potentially suitable property, it is important that cities recognize the many different iterations of urban agriculture, including community farms where numerous residents come to grow food together on a common piece of property, nonprofit farms that are operated for some charitable or educational purpose, hobby farms that are operated largely to produce food for personal and family consumption, and for-profit farms that are operated to generate revenue and that frequently sell their produce to local restaurants and residents. Typically, community farms and personal farms are smaller. Nonprofit farms vary in size based on the charitable or educational mission of the organization. For-profit farms tend to be at least one acre and can be much larger. Certain forms of urban agriculture may be more suitable for certain neighborhoods.

The second step is to create clear and transparent policies for the transfer of a variety of legal interests in real property for agricultural use. Cities commonly stall here, to the dismay of urban farmers and gardeners across the country. As mentioned above, when urban agriculture operations grow and expand, they require an increasing amount of investment. As an urban farm becomes more sophisticated, it may decide to purchase expensive pieces of farm equipment or install permanent structures such as greenhouses or drip irrigation systems. Beyond these financial investments, many urban farms also invest in the soil of the farm itself. As mentioned above, soil quality is frequently an issue on many urban farms. However, many urban farmers steadily improve the condition of their soil over a period of several years, thus increasing their crop yields, which makes them even more hesitant to move their operation elsewhere. Before making these significant and permanent investments in a piece of property, many urban farmers understandably will want some assurance that their legal interest in the property will not soon be terminated. Unfortunately, many cities still prefer to offer urban agriculture operations real property license agreements or short-term leases. These types of agreements are not suitable for many urban agriculture operations that are looking to make substantial investments in their enterprise and farm property. What is needed is a suite of real property conveyance options, including license agreements, lease agreements, fee simple title as well as clear and transparent policies that describe how a person interested in starting new urban farm or expanding an existing urban farm may acquire that legal interest.

Financial Incentives for Urban Farmers

The second large policy gap that must be addressed is financial incentives for the start-up or expansion of urban farms. This is particularly important for for-profit farmers, and, once again, real property issues are front and center. As discussed above, for-profit farmers need to make substantial, permanent investments to develop their farm and, as a result, many such farmers in Detroit have a strong desire to purchase their farm property. This presents a bit of an obstacle for local governments and urban farmers. In Detroit and most other urban areas, there is no property that is specifically zoned for agricultural use. Instead, properties are commonly zoned for residential, commercial, or industrial uses to varying degrees of intensity. However, agriculture is typically a less valuable land use than more traditional urban land uses. For example, a survey of Michigan agricultural land values conducted by Michigan State University in 2016 found that the average value of nontiled agricultural land for field crop production was approximately 8 cents per square foot. Christopher Wolf and Eric Wittenberg, 2016 Michigan Land Values and Leasing Rates, Michigan State University Department of Agricultural, Food, and Resource Economics, Report No. 649 (Aug. 2016). However, for-profit farmers in Detroit are required to pay at least twice that valuation (and often more) because they are farming land frequently zoned for residential use and not just agriculture.

One concern for local governments is that if they sell land at a low valuation based on agricultural use, it may encourage speculation and impede potential future development. While this concern is not completely unfounded, it should be relatively easy to work around. Local governments could include contractual requirements, either in a deed or some other type of agreement, that the purchaser of the property develop and maintain the urban agriculture project promised or the property will return to the local government. Such a system currently exists in Detroit, as the Detroit Land Bank Authority commonly requires urban agriculture developers to submit regular reports regarding the development of their urban farm and to complete the development within one to two years of purchase. If the project is not completed within the agreed-upon timeframe, the property reverts to the Detroit Land Bank Authority. Further, local governments could establish a clear policy that limits the amount of property that one person or entity may purchase at a reduced agricultural valuation. Most urban farms are small operations that are under one acre. Even for-profit urban agriculture operations typically will not be larger than three to five acres. Such a policy, combined with a contractual requirement to develop and maintain an urban farm, would provide sufficient safeguards to local governments regarding speculative land purchases.

Lastly, a few states and cities are seeking to incentivize urban agriculture through a variety of financial programs. Some cities have developed loan programs specifically for urban farms to help them overcome start-up costs. For example, a key start-up cost for many urban farms is installing a new water line. When homes are demolished, the water line to the property frequently is removed. If the farmer wants to be able to have a direct supply of water available on-site, they must install a new water line, which can cost upward of $10,000. For many urban farmers, this is a significant expense, and finding a loan can be challenging. To help urban farmers overcome this obstacle, the Philadelphia Water Department offers interest-free loans for the installation of water service lines to urban farms through its HELP program. Philadelphia Water Department Guide for Urban Gardens & Farms: Getting Water Access, Philadelphia Water Department (Aug. 2017).

Another way cities are seeking to incentivize urban agriculture is through property tax incentives. For example, Missouri’s Urban Agriculture Zone (UAZ) Act allows for local urban agriculture enterprises to apply to their local government for the establishment of an urban agriculture zone in blighted areas, which provides a multitude of benefits. Mo. Rev. Stat. § 262.80 et seq. (2017). According to the act, real property taxes within a UAZ are limited to an amount not greater than the tax due during the preceding year in which the UAZ was designated for a period of 25 years. Mo. Rev. Stat. § 262.900.10 (2017). The cost to hook onto the municipal water supply is half the standard rate for UAZ properties. Mo. Rev. Stat. § 262.900.11 (2017). Lastly, any local sales tax revenues, less 1 percent that is to be retained by the director of the Department of Revenue, from the sale of agricultural products produced in a UAZ is to be deposited into an Urban Agricultural Zone Fund, which is required to be used by local school districts for the development of curriculum on or the implementation of urban farming practices. Mo. Rev. Stat. § 262.900.12 (2017).

Illinois state representatives introduced a bill very similar to the UAZ Act in 2017. H.B. 3418, 100th Gen. Assembly, (Ill. 2017). California has taken a bit of a different approach. The California Urban Agriculture Incentive Zone Act allows local governments to establish urban agriculture incentive zones. Within those zones, local governments may enter into contracts with landowners to restrict the use of the landowner’s property to agricultural uses for a term of at least five years, and, in return, the land will be valued for tax assessment purposes at the rate based on the average per-acre value of irrigated cropland in California. Cal. Urban Agriculture Incentive Zones §§ 51040–42 (West 2017)

Ultimately, the principal determination for cities is how best to utilize urban agriculture as a tool to address the problems that vacant properties present. For many local governments, the overriding concerns are that urban agriculture will block future, traditional forms of development and that urban agriculture enterprises are unstable and will fail. However, these concerns are overblown. First, cities that have experienced heavy population losses should not expect significant amounts of private investments to return to their most vacant neighborhoods. Real estate markets in heavily vacant neighborhoods have been stagnant for decades because of the many obstacles to traditional forms of development. Second, if development does encroach on urban farms in the next several decades, those urban farms will likely be sold to traditional residential or commercial developers. Most for-profit urban farmers have no desire to impede future development; they simply want to contribute to the revitalization of heavily vacant communities that have struggled to attract private investment. If development does encroach on a for-profit urban farm, many growers will take the opportunity to secure a financial return once they are ready to retire from their farming enterprise. Similarly, nonprofit urban farms often desire to stabilize heavily vacated neighborhoods and play a role in their revitalization. If development does encroach, many would welcome it. Further, an urban farmer who sells the farm will be turning over property that is far readier for development than what they originally purchased. As detailed above, an individual starting an urban farm typically will have to clear the lot, ensure that the title is marketable, and install a water line. If the property is sold down the line, it will be immediately ready for development, thanks to the farmer having addressed those obstacles. As for the second concern, the risks to the local government of a failed urban agriculture enterprise are relatively low because most do not involve the development of any permanent structures. Therefore, even if an urban agriculture enterprise does fail, the local government will not have to be concerned about a structure being abandoned and creating blight. Instead, the worst-case scenario typically is that the property returns to the city in the same or better condition than when it was sold to the urban farmer.

A Serious Strategy to Address the Vacant Land Problem

It is time cities took urban agriculture as a serious strategy for addressing the problems of vacant land. To do so, local governments must first lend serious thought and planning resources to determine how the different iterations of urban agriculture fit as a permanent land use within the city’s landscape. While this planning work has been done in some cities, it is important to emphasize that different city’s visions for urban agriculture can vary widely. City planners must connect with existing urban agriculture networks that have been established by nongovernmental organizations to create clear and transparent land-use planning frameworks and disposition policies that provide urban farmers and gardeners with the opportunity to acquire a secure legal interest in city-owned property. Cities also must enact policies that help urban farmers and gardeners overcome the start-up obstacles that are encountered frequently when developing distressed properties. As detailed above, states and cities often have helped promote the development of distressed properties by offering incentives to developers, and some states have begun to pass laws to create similar incentives for urban agriculture developments. While urban agriculture has shown promise as a tool for repurposing long vacant land, such developments are not without their obstacles. To realize fully the multitude of public benefits that urban agriculture provides, cities must enact and advocate for innovative policies that help urban agriculture enterprises overcome common obstacles. If successful, cities will have taken a major step toward solving the persistent problems presented by vacant properties.

Nick Leonard

Mr. Leonard is a staff attorney at Great Lakes Environmental Law Center in Detroit, Michigan. He may be reached at nicholas.leonard@glelc.org.