By Ron DaParma
TRIBUNE-REVIEW REAL ESTATE WRITER
Sunday, December 12, 2004
Jack Miller remembers well the day in 2000 when he met Lucille Tooke on her family farm in Pine.
Tooke stopped the tractor she was riding and in the subsequent conversation she eventually told Miller, “I think God sent you to me.”
“Talk about pressure,” said Miller, director of gift planning for the Pittsburgh History & Landmarks Foundation.
His mission — to find some way the nonprofit preservationist organization could help Tooke preserve her farm, and save it from ending up as part of either another new housing development or a commercial project in the fast-growing suburban North Hills.
Starting with Tooke’s farm, the Landmarks Foundation has used novel financing strategies as part of its Historic Farm Preservation Program to save five historic farms in Allegheny and Westmoreland counties, encompassing some 1,300 acres of property and 10 different farm structures.
It did so with the help of a $500,000 grant from Richard King Mellon Foundation, which the foundation matched with an additional $600,000.
Using bargain sales and sometimes complicated gift strategies, the Landmarks Foundation has been able to leverage that $1.1 million to protect structures and land with an estimated value of about $6 million, said Arthur P. Ziegler Jr., head of the organization since its inception 40 years ago.
“Farms are disappearing at a very rapid clip in Allegheny County and Southwestern Pennsylvania and urban sprawl is gaining even though we have a declining population,” Ziegler said. “Our program has been important both in terms of slowing sprawl and preserving farms and farm buildings and that way of life.”
“Some of these historic farms that can show how people lived 100 or 200 years ago need to be preserved,” Miller said.
That doesn’t mean economic development has be stopped in the process.
“They can be developed around rather than developed on,” Miller said.
One problem is that the program now is out of funds. And the foundation has identified at least 10 more farms it says are “architecturally significant.”
Nine are in Allegheny County and one is in Washington County. In addition, it has had inquiries about other farms in Butler, Fayette and Westmoreland counties.
If the organization had another $1 million, it could save another 2,000 acres and five of those properties, Miller believes.
Landmarks has approached other foundations in hopes of raising more funds, Ziegler said. In addition, Miller said the foundation is hoping to work with others dedicated to preserving farm properties, including the Allegheny County Agricultural Land Preservation Program, in an effort to attract more private support.
The farm preservation program got its start when Tooke donated her 64-acre Hidden Valley Farm on Old State Road. It features a farmhouse built in 1835 that was awarded an historic landmark plaque in 1979.
“She (Tooke) wanted to see if there was a way she should get the funds she needed to retire without having to prostitute the farm,” Miller said.
At his suggestion, Tooke agreed to establish what is known as a charitable remainder unitrust, or CRUT.
With this form of gift, a donor transfers cash, securities or other properties to the trust, and in the process avoids capital gains tax, receives a federal income tax deduction, and a percentage of the trust’s value in income annually over a set period.
Because federal tax laws required the trustee to entertain bids to assure the highest price for the assets, Tooke could not just give the farm to the foundation outright. But she was legally permitted to specify that any organization willing to preserve the property would have the right to match the highest offer.
Thus, Landmarks ended up as the highest bidder, paying about $580,000 to purchase the property. The foundation then placed preservation easement on the farmhouse and the land to prevent any nonagricultural development.
Tooke was able to retire in Chambersburg, Franklin County, with a revenue stream that will last a total of 20 years. Her three daughters will receive the payouts if she dies before that period expires.
Landmarks Foundation’s objective was not to own the property, only to preserve it, Miller said. “So we had to find someone to buy it who would honor the terms of the easement.”
That turned out to be William Versaw, of Fox Chapel, who is also interested in preservation.
“I have five children and wanted to find a place we could use and enjoy close to home,” said Versaw, who has restored the historic farmhouse and enjoys gathering apples on the property for apple pies.
“It also had an appeal to it because it can never be developed, so it can be passed on to future generations,” he said. “I’m not opposed to development, but if we can save some green space in this area, it makes for a good balance.”
Versaw purchased the property for about $400,000, and he gave the foundation an additional $10,000 to endow the preservation easement. The funds cover Landmarks’ expense in monitoring the property annually.
“We lost about $200,000 on the deal, but we should get that back from the funds that remain in the trust at the end of the 20-year period,” Miller said. That is because Tooke made the foundation the irrevocable beneficiary of her trust.
The foundation found other methods to preserve other farm properties.
One example is the O-Shea-Hausen farm in Donegal, Westmoreland County, a property owned by two priests, Jeremiah O’Shea and C. William Hausen, which traces its roots back to the early 1800s.
Landmarks helped the owners pay off a mortgage (about $50,000) on the 62-acre site, generate some additional income for their retirement through a charitable gift annuity and provide $10,000 to endow the monitoring costs for a preservation easement.
The foundation will get back the gift portion of the annuity when the donors die.
O’Shea said he and Hausen purchased the Geary farm in 1992. It contained a barn that dated back to the 1890s, which was built by the Geary family, and a log cabin, which dates to the mid-1800s.
O’Shea said he contacted Landmarks after getting information about its program from American Farmland Trust.
In another case, Landmarks assumed a mortgage on a farmhouse owned by James and Dorothy Wycoff, descendants of the original owners of the Van Kirk Farm in Elizabeth in order to obtain a preservation easement. Horses used in the Lewis & Clark Expedition once were boarded on the 71-acre farm property.
It also saved two other properties in Elizabeth, one a 214-acre farm off Park Avenue owned by the estate of Helen R. Wycoff by negotiating a preservation easement.
The other property was an adjoining 54-acre parcel off Rothey Drive. The organization purchased the property at fair market value and conveyed it to owner of the Wycoff farm, who accepted the land as payment for an easement.
“Every situation is different,” said Miller. “It depends on the owner’s life situation, their family situation. But I think it’s important for people’s personal advisers to help them recognize that sometimes they can help them achieve their goals by showing them how they can give away their assets rather than keeping them.”
In the case of preserving an historic farm property, “You don’t have to give it away and lose it; you can give it away and keep it,” he said.
Ron DaParma can be reached at email@example.com or 412-320-7907.