Converting agricultural land to commercial land is becoming increasingly more common as the demand for space to develop continues to grow.
The process of converting agricultural land to commercial land involves obtaining the necessary permits from local and state zoning boards, conducting soil testing for hazardous substances, and submitting a development plan that includes any needed infrastructure changes.
Many landowners are considering land conversion in order to maximize their profits. The conversion process takes a lot of forethought and planning, but may be worth pursuing if the future advantages are considered. Here is everything you need to know about rezoning your land.
- When changing your land use, careful planning should be undertaken.
- Rezoning land for non agricultural purposes requires review by the city planner and open conversation with neighbors about impact.
- Environmental impact assessments must be undertaken to even ensure a change can be made.
Table of Contents
What is Land Conversion and When Does it Occur
Agricultural land conversion (or rezoning) is a process that typically happens when an area is no longer suitable or profitable for farming or pastoral use.
It occurs most often when environmental, economic or political conditions change in such a way that makes maintaining an agricultural presence impossible, or if the profits to be had from non-agricultural activity become greater than those seen through agricultural activities or it’s simply no longer fertile land.
Agribusinesses also look to convert land into avenues of economic profitability such as development of malls, housing construction and even green energy initiatives. But these changes are not always positive: they can lead to soil erosion, decrease in water quality and loss of wildlife habitats.
What to Consider When Rezoning Your Land
Converting agricultural land to commercial land can bring many economic advantages.
By creating commercial developments, businesses and local governments can increase their tax revenues, while creating jobs and revitalizing cities through construction.
When land is rezoned from agricultural to commercial, taxation naturally changes as well. Commercial zones are typically taxed at a higher rate than agricultural ones, since businesses developing in the areas may have more resources to contribute to government taxes.
As such, individuals and companies that own land in these commercial zones will first have to consider the specific taxation rates for each city or state that applies before purchasing or leasing the property.
Additionally, when it comes time to file income taxes for the year, if profits were made from commercial properties, then these profits must be declared and added on top of other taxable incomes.
Rezoning important land from agricultural to commercial is an important decision for buyers and sellers alike to make as properly understanding taxation rates can determine whether or not a purchase or lease of such a zone would be beneficial in the long run.
- Economic Growth
This in turn can create a cycle of economic growth, by providing people with increased incomes which they can then use to purchase goods and services. With the rapid rate of technological advances in recent years, society as a whole has experienced a shift in the economic landscape.
This has presented itself as an opportunity to convert much of the world's agricultural land into commercial zones, bringing forth a new source of taxable revenue and job opportunities. Investing in new infrastructure within those zones can make them attractive to businesses while drawing more people into the local economy.
Proximity to certain amenities such as shopping centers and transportation hubs can prove invaluable for businesses looking to make their mark in the region, providing them with a greater capacity for reaching potential customers.
All of this contributes substantially to unlocking greater economic potential for surrounding districts or regions that have shifted from agriculture to commercial use.
- Carbon Footprint
Rezoning agricultural land to commercial land can work wonders in reducing a business’s carbon footprint. By allowing businesses to set up shop on existing plots of land that have already been cleared and maintained, less deforestation is needed from potential future development. Additionally, the amount of pollution caused by industrial activities that would have ended up polluting critical agricultural land can be drastically reduced or eliminated altogether.
As a result of this increased efficiency, companies can successfully reduce their emissions and take other environmentally conscious measures to ensure compliance with their sustainability goals.
Additionally, converting agricultural land to commercial land can be beneficial because it allows businesses to relocate closer to the people they serve, potentially cutting down on transportation costs or labor costs associated with traveling far distances. This also factors into companies carbon footprint when reducing transportation related carbon emissions while increasing local employment.
Ultimately, rezoning from agricultural to commercial use is an effective way for businesses to lessen their impacts on the environment.
Converting land from agricultural purposes to commercial land may be particularly useful in rural areas where there is a lack of economic development and access to jobs elsewhere.
How To Convert Agricultural Land to Commercial Land
Before considering the conversion of agricultural land to commercial land, it is important to weigh the costs against the benefits carefully.
Rezoning land from agriculture to commercial use can be a lengthy process with many steps.
- Research: Before converting agricultural land to non agricultural land, owners must determine the zoning changes desired and then research local regulations to make sure their plans are possible.
- Surveys: According to local regulations, owners may need to create surveys, soil borings or other reports for their area in order to rezone with full approval. These include environmental surveys to determine any potential issues, mineral resource surveys that pinpoint any important minerals and property boundary surveys which determine exactly where the boundaries of the land are located.
Additionally, a surveyor also needs to create an official plat of the area, which includes all relevant information such as measurements, geographic and topographic details. Finally, zoning information must be obtained by consulting local documents and records. Without these important surveys and documentation, it would be impossible to accurately rezone a piece of land from agricultural to commercial use.
- Submit Zoning Application: Next, they often need to gain approval from the county for the change in zoning and show evidence that the change will be beneficial. Property rezoning processes will vary from city to city. Meet with a city planner to ensure you have all the required documents before submitting your application.
- Local Planning Commision Review: After submitting the application, you’ll undergo a committee review which will likely involve a hearing before the city planning authority. You’ll hear from neighbors if they want more information or request changes and thereafter, the committee will make a decision or recommendations.
Once all the necessary paperwork is filed and approved, rezoning could be complete within a few months depending on the size of the property.
With careful preparation and diligent adherence to local laws and regulations, an owner should be able to achieve their goal of changing zoning from agricultural to commercial use.
Having the Correct Easements in Place
Rezoning land from agricultural to commercial use is a lengthy and complicated process that starts with an assessment of the local landscape. A paramount step in this process is obtaining the various easements required for construction and development on the land.
Depending on the projects planned, typical easements needed can include rights of way, utility locations, stream crossings, access to roadways, pooling parcels of land through multiple ownerships, and more.
Alongside these legal parameters that must be met before any re-zoning can take place, there may also be environmental concerns to address before any changes are approved. It is important to ensure that due diligence is exercised and all of these processes are faithfully followed in order to avoid costly delays and unexpected obstacles during the rezoning journey.
Adjacent Agriculture Property Concerns
Additionally, it's prudent to consider the amount of disruption that this conversion may have on nearby communities and plan accordingly.
The impact of changing uses of agricultural land goes beyond just one party, when deciding to make changes, it is important to consider how those changes influence not just our own land but that of our neighbors.
In particular, drainage through open ditches can cause downstream landowners concern if the water is polluted or has too high nitric levels. These impurities can have a major impact on soil protection reviews as well as agriculture subsidies from the Single Payment Scheme and any other environmental schemes in place.
Although accounting for every factor may seem daunting, careful awareness of the entire situation could prevent harm to both our own and adjacent land--as well as your wallet.
What is a Land Conversion Certificate
A land conversion certificate is a vital document that facilitates a smooth transition in disputes related to land-ownership.
It serves as evidence, usually provided by the local government, showing that land has been approved for changing ownership or use, such as changing farmland into residential areas or earthwork construction sites.
This certificate can be required when selling any kind of real estate property, or if you are proposing development plans to local authorities. It also serves as a guarantee for buyers confirming that their purchase is legitimate and meets all regulations. Having a valid land conversion certificate is always beneficial for anyone who wishes to buy or develop real estate property.
What is a Land Conversion Fee
A land conversion fee is the tax that must be paid when one wishes to change the use of a certain piece of land, regardless of whether it be from agricultural to residential or vice versa.
The amount charged can vary greatly from region to region to convert agricultural land, depending on what the proposed use is and taking into consideration factors such as local development costs and plans from real estate developers. This type of charge helps fund infrastructure improvements in the area, both for existing and potential residents.
As such, land conversion fees are crucial for managing sustainable growth over time that ultimately benefits all communities involved.
Is there a conversion penalty in addition to a conversion payment?
When it comes to converting agricultural land for commercial purposes, there are two key factors to consider, the payment to be given in exchange for the conversion and a potential penalty for doing so.
In many cases, conversion payments tend to be higher than the fines associated with rezoning agricultural land. As such, some developers may see conversion payments as a worthwhile investment; however, they should be aware of any potential penalties that may also apply, depending on specific zoning regulations in their locality.
Ultimately, understanding both the payment due and potential costs associated with this conversion can help ensure smooth and successful completion of these projects.
About THE AUTHOR
Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling