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Riverhill Farm’s succession achieved with a creative lease

Helping another farm plan for the future

December 20, 2017 – Farmers everywhere are grappling with the question, “How do I retire?” For those without heirs interested in farming, this is a particularly vexing question. California FarmLink has worked to organize solutions through its project, Agrarian Elders and the Next Generation, and this fall we were honored to combine our lease and succession expertise to support an inspiring farm transition.

Located three miles outside Nevada City at an elevation of 2500 feet lies Riverhill Farm, with ten acres in cultivation among “woodland and chaparral, pine forest and grassland,” as described on its website. It’s a place that inspires respect and has been shaped as a community-based farm since it was started by Alan Haight and Jo McProud in 2001. Fast forward 17 years, and 85% of their sales are made within ten miles of the farm, and they are acting on their farm transition with great care and deliberateness.

Alan had known for some time that he was not likely to farm into his 70s. As he approached 60, he started thinking about what the future may hold, and how Riverhill Farm could be sustained in its role as a source of locally grown food in Nevada County. But the question facing him, and so many farmers, was how to manage a transition in a way that maintains or enhances the value of the business and upholds the community and ecological values that he and Jo grew into it.

Nearly eight years ago, on a field trip from Soil Born Farms, a farmer training program in Rancho Cordova, Antonio Garza stepped onto Riverhill Farm. Alan explained, “Antonio was exploring options and indicated he might have an interest in coming to work at Riverhill. I realized that if he was going to come to work at Riverhill, I had to create a job that he would like.” They structured a job for Antonio that included deliberate growth of responsibilities over time. Alan continued, “The assumption in creating that position was that this wasn’t just a short-term position; that it was part of a process of enabling him to work on a farm for many years and ultimately, if possible, to succeed me as farmer.”

During two years working together, Alan described that he found Antonio to be “a thoughtful person, serious-minded and very curious and engaged in farming from the standpoint of the method, the technique, not just the lifestyle.” He continued, “I was interested in turning the day-to-day management of the farm over to him. That’s a process.” Antonio embraced the opportunity. Beyond his farming duties, he and his girlfriend took over operation of the farm stand, open one day weekly, and Alan helped him for more relationships with customers at farmers’ markets and retailers.

When it came to finding a way to structure the farm transition, Alan called upon FarmLink. He had been accessing operating loans from FarmLink’s loan program, and was the recipient of the organization’s second farmland loan to restructure his mortgage. Alan wanted to work with FarmLink for lending because he knows that doing so will contribute to serving more farmers.

This fall, FarmLink’s Liya Schwartzman worked closely with Alan to design a unique lease agreement that would enable Alan to retire from his role. As Alan and Jo wrote in their farm newsletter, “…we’ve worked out a lease agreement with Antonio that provides the best circumstances and likelihood of his success as an independent young farmer. Included in the lease is virtually everything that we have created over the 16 years we’ve been in business: the good soil, the wells, the greenhouse, the farm stand, the tractor and equipment, the relationships with the [BriarPatch] co-op, Three Forks [Bakery and Brewing], the farmers markets…and you.”

The value of the business combined with the value of the land is such that Antonio may not be able to buy both, and their creative lease was the next best solution. They are starting with a three-year lease. Alan believes that as long as he and Jo live at Riverhill Farm in a way that is compatible with the operation, Antonio should be able to lease the farm. If Antonio does well financially, he may be able to accumulate savings to serve as a down payment.

FarmLink helped develop the lease provisions to support the shared goals of Alan and Jo as well as Antonio. It calls for quarterly meetings to bolster regular dialogue and monitoring of the farm business and operation. It sets a target to maintain sales within 20% of 2017’s total gross. It also calls upon Antonio to maintain the marketing relationships established over the years. Alan explained, “It’s really been critical to support Antonio and his understandings of these relationships.” All of this was aided by sharing the financials and their templates so that there’s a seamless transfer in terms of income and expenses, and a common framework for future monitoring.

On the day of the lease signing, Jo said, “We feel really gratified and excited that Antonio is entering into this lease with us because it ensures that the farm is going to be maintained as we’ve envisioned it, and as the community enjoys it.” Alan pointed out that they do so with a deep sense of satisfaction rather than a sense of loss. Antonio added, “It’s an exciting time for me, with the opportunity to assume stewardship of this place. For me, sustainable farming is a multigenerational endeavor and hopefully in another 30-40 years I’ll be able to do the same thing for someone else.”

Alan reflected on the loans and other services the farm has received from FarmLink. “Now FarmLink has assisted us in the creation of a suitable lease to provide the terms going forward. That’s a remarkable set of services FarmLink has provided to our farm. To think of how many farms they’re doing this kind of work with is a real measure of their value.” [Photos by Liya Schwartzman]

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