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Fighting Fake Farms

Wed, 06/01/2016 - 13:25
Peter Dankowski

HE HAS ONE of the last great farms in the Hamptons, 33 acres in Wainscott north of old Main Street, and he is, in fact, East Hampton's last bona fide potato farmer. Strong and healthy at 58, Peter Dankowski plans to work those acres —and 400 more that he leases between Mecox and Amagansett —another decade or so. But at some point, he'll have to sell, and when he does, he fears farming here will cease.

No subdivision will rise from this loamy land: Peter's father and uncle sold development rights for it some 40 years ago. The threat isn't that condos or McMansions will sprout where potatoes and corn once grew —but that a polo pony stable, vineyard, or, simply, giant-sized lawn will.

On a fine spring Sunday in his barn, Peter finds a stool for his visitor and perches on a box to explain his dilemma. He's a stocky figure in faded overalls, genial and blunt but inclined to look off: a man who spends his days alone. It was in 1933 that his Polish grandfather came out from Queens to buy these 30 acres and live his American dream. By the early 1970s, nearly 90 percent of the East End's 100,000 acres of farmland were gone, and a new generation of preservationists had set about saving the rest. 

John Halsey, 64, from a twelfth-generation East End family of farmers and eventually doctors, was one of those who took up the fight. Raised in Southampton Village, he came home in his 20s from California to see a large neighboring farm sold off for estate taxes. Shocked, he founded the Peconic Land Trust with a circle of friends and started working to save farms by helping arrange the purchase of their development rights (P.D.R., as it came to be called). The farmers got a substantial payment for tendering those rights. They then benefited from low taxes on agricultural land, and low estate taxes. They knew they were giving up future value on land that was sure to rise in price. After all, acreage in these parts is more expensive than nearly any place else in the country. But the land would stay in production, and their children could keep the farm. 

Only things didn't work out as planned. "Back then, the covenants were written so loosely," Peter Dankowski explains. "That's why you got people like Matt Lauer doing what they're doing on agricultural land." 

 A few miles northwest of Peter's working barn lies a different sort of farm with very different buildings. Bright Side Farm is a new equestrian center built by the television anchor Matt Lauer and his wife, Annette, on 40 acres of protected land. It has an indoor riding ring with a girdered roof like that of an airline terminal, under which, on another spring Sunday morning, young women on horseback are practicing their English-saddle form. It has a beautiful barn with fine wood stalls for 36 Thoroughbreds. Bright Side is open to one and all for lessons and boarding (if they can afford it), and to its neighbors it offers panoramic views that have boosted their property values. But this isn't what Halsey and the preservationists had in mind for P.D.R. land. 

Matt and Annette Lauer's Bright Side Farm equestrian center, north of Bridgehampton. Doug Kuntz photo

The problem lies in how New York State agricultural law defined what the owner of a P.D.R. field could still do with his land. Along with planting potatoes or corn, he could grow and market fruits and flowers, or operate a nursery or vineyard. He could keep livestock, too, "including cattle, sheep, goats, horses, and poultry." What exactly the state meant by "horses," in a farming context, was left unclear. 

"No one anticipated that anyone other than a farmer would want to buy the field that way," Halsey says with a sigh. "So there was no thought of, 'How do we insure that this land remains in farm use?' Everyone just assumed it would." 

Until a decade ago, it did. 

Shorn of development rights, the price of a farmland acre dropped from about $100,000 to $10,000. As Halsey had predicted, the only buyers were fellow farmers.

Meanwhile, preservationists used another tool to protect open land, one that soon acquired the force of law throughout the county. When unprotected fields were sold for development, houses were clustered; some 70 percent of each field was kept green as agricultural reserve. Once, Halsey imagined that farmers would work those ag-reserve fields while weekenders waved from their patios. But the weekenders, who owned the reserves, found farming a nuisance. They planted grass seed instead, creating 40-acre lawns, and sent the farmers on their way. The towns had no power to stop them.


The eureka moment

At some point, some unsung lawyer for a wealthy client must have had a eureka moment. Farmers weren't the only ones who could buy P.D.R. land for agricultural use. Anyone could! Not for growing potatoes and corn: for horses. A whole farm field might be turned into pasture with a horse or two at one end. 

Or, as at Bright Side, an equestrian center might arise, with dozens of horses and nearly 50,000 square feet of enclosed structures, two and a half times the 20,000-square-foot limit on residential development. The structures, after all, weren't residential. They were agricultural! All the new owners had to do to abide by the code was not live on the set-aside land. That was easy: They just bought a mansion down the road or, even better, a property next door. 

In short order, Madonna bought a Bridgehampton field on Mitchell Lane, just off the Scuttlehole Road traffic circle. "Who knew Madonna would have horses and a tree nursery?" muses Scott Wilson, head of East Hampton's Community Preservation Fund, which handles the purchase of open land and development rights with the revenue from that 2-percent property-transfer tax that Hamptons homebuyers know so well. "Is it agricultural? By New York ag-market law it is. I don't know that I would personally call it agriculture, because she's not doing it for business, she's doing it for fun." 

For the new owners of P.D.R. land, fun was the point. Farther up Scuttlehole, at the corner of Lumber Lane, the fashion photographer Steven Klein bought a field to use as an outdoor horse ring. Off Head of Pond Road, Joe DiMenna, a hedge funder, installed a string of polo ponies in his sprawling stables, alongside a regulation polo field. Melanie Cirillo of the Peconic Land Trust estimates that there are 24 equestrian centers in Southampton Town on about 720 acres on land protected as ag reserve or through the P.D.R. process. (Figures for East Hampton Town were not available.)

These are picturesque, well-tended stretches of green, part of the open view-scape in accordance with state ag-market law. They have, of course, displaced food farming on their properties. Over time, they've also pushed the price of P.D.R. land throughout the East End far beyond what farmers can afford: to as high as $200,000 an acre. 

That's a market that cuts both ways. How can Peter Dankowski afford not to sell his land at some point for $100,000 to $200,000 an acre? His savings of $250,000 are gone for estate taxes, now that his uncle has died and Peter has inherited the farm outright. His two daughters are currently in college at full tuition. Neither wants to take over the farm; why should he sell his land for $10,000 an acre and shortchange his family, when he has a choice? A rich equestrian could solve his money problems tomorrow. So could a nursery or vineyard. 

That's Peter Dankowski's dilemma. His solution may lie in how the Peconic Land Trust saved Sagaponack's favorite farmstand family, the Pikes. 


Farmland back to $22K an acre

"It was tortuous," John Halsey recalls, "a campaign that lasted for years." 

Jim and Jennifer Pike, first-generation farmers, had managed to buy six acres just off Sagg Main, but leased nearly 60 more to sustain their business. Then an owner died, and some of that land, adjacent to the Pikes' acreage, was put up for sale at full value: initially $8.3 million for 7.6 acres, and then, after the recession hit, $6 million.

Jim and Jennifer Pike, left and right, with the Peconic Land Trust's John Halsey, center. Durell Godfrey photo

 The good news was that Southampton Town and Suffolk County agreed to pitch in $4.3 million to buy the development rights. The Peconic Land Trust had to raise the balance of $1.7 million, which it did, to purchase the land's secondary development rights (for equestrian centers, vineyards, nurseries, and the like). 

But the Pikes could no more afford to pay $1.7 million for it than $6 million. The Pikes were lovely people, all agreed. If he could have, Halsey would have just sold those 7.6 acres to them for the $20,000 an acre they could afford, and allowed the trust to take a loss on the rest. But he couldn't do that. As a function of its nonprofit status, the trust had to offer the land to all interested buyers. What it could do was slap one restriction after another on the land to discourage those buyers. 

First came the ban on equestrian use. That brought the price per acre way down, but not far enough. "We then eliminated nurseries," Halsey says. Then vineyards. "But even that didn't result in the reduction we needed." The trust was still fending off developers who wanted to buy the land as ag reserve and make it a nice lawn for adjacent houses. "We had to knock that out," Halsey says. "We had to require that the farmland be farmed. If it was out of production for two years, that would trigger the trust's power to lease it to a farmer." 

With all those restrictions, the land at last sank to $22,000 an acre. The Pikes now became the perfect buyers: farmers who knew the land, wanted nothing more than to farm it, and could afford to buy it at that price. Which was, of course, how the trust had hoped the story would turn out all along. 


Start of the revolution

What's happened since is nothing less than a revolution in East End land preservation, inspired by the Pike deal. Five more agreements have been struck, restricting some 86 acres in and around Water Mill, Bridgehampton, and Sagaponack to active farming by the purchase not just of development rights but all those secondary rights. 

In these new deals, Southampton Town has played a huge part. It's gone so far as to race to a closing, on a weekend's notice, with a check for $11.1 million to rescue 33 acres from a Water Mill estate with developers circling. 

That deal, done in July 2014, marked the first time that any town in New York State purchased both development and secondary rights. That was what the $11.1 million bought. The trust then paid $1 million for the land stripped of all rights but active farming —and sold it, at $26,000 an acre, in two chunks: 19 acres to the Southampton farmer Hank Kraszwewski, and the balance of 13.5 acres to the Pikes, a deal just now closing. That gives the Pikes 27 acres in all, enough to keep their farmstand going without leased land if need be. 

Since then, five more Southampton farmers have come forward to sell their secondary rights and assure their acres stay actively farmed: another 50 acres in all. 


East Hampton farmland, forever

Peter Dankowski's farm, as it happens, lies just east of Town Line Road, the ancient border between Southampton and East Hampton. East Hampton has far less remaining farmland than Southampton: 1,470 acres versus 6,800, though each town has protected about two-thirds of its acreage, and is working hard to save more. So far, East Hampton has balked at paying secondary rights to farmers who've already been paid for development rights. Which is to say, to Peter Dankowski. 

There is, Halsey admits, a perception that this amounts to paying farmers again. "Some say, 'We already bought the development rights, why give them two bites of the apple? " 

But Scott Wilson of East Hampton's Community Preservation Fund is not one of those. "They're not coming because they want to get paid again," he says of the farmers. "They want to assure the business is viable." 

The East Hampton Town Board is expected to decide early this summer whether secondary rights, and the buying up of them with Community Preservation Fund money, is officially a new tool it can use to save land. "Peter is the test case," Wilson says. 

Alex Balsam, an East Hampton farmer and lawyer, as well as head of the town's ag advisory committee, is optimistic. "The town has plenty of money for this type of use," he says. "The money would come from the Community Preservation Fund, which is doing pretty well." It would never be a law, he adds, "simply a tool the town could use." 

This isn't a role Peter sought, but he hasn't a choice. "I want to keep this farm," he says. "My dream is to keep it in rote crop production forever. So this is why I'm trying to get the town to buy the extended rights. I could pay off a mortgage I have, and make plans, and have a few bucks, and then if something happens to me, my kids would be protected. And they would still have the land."

As would we all.


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