Next Round of REAP Coming in August

Chris Torres
Staff Writer

Another $10 million is expected to be made available to farmers who chose to participate in Pennsylvania’s Resource Enhancement and Protection (REAP) tax credit program.

Mary Bender, administrator for the State Conservation Commission’s REAP program, said during an online seminar Wednesday that she expects applications for the third round of REAP tax credits to go out on July 1, when the new fiscal year begins.

Gov. Ed Rendell’s budget for the next fiscal year calls for the program to remain at its baseline funding of $10 million.

The Pennsylvania General Assembly, which is currently holding hearings on the next budget, will ultimately make the final decision on the level of funding it will get.

Pending final approval, applications will be accepted on or around Aug. 3.
There will be some minor changes in the next round.

Any piece of equipment that is bought this spring and delivered within a year will be eligible for this round.

Anyone that did not make last year’s cut will be eligible to reapply without going through the verification process.

Since each application is put into a lottery once the commission decides how it will allocate the money it receives, Bender said the commission is also considering only accepting applications that are mailed in.

“There was no advantage for people lining up at the office early since everything was selected using a lottery system,” Bender said.

A final decision on that has not been made.

First approved in 2007, REAP has been a hit with farmers interested in financial incentives for conservation practices.

The program provides tax credits for farmers that put in approved “best management practices” on their farms or purchase equipment, such as no-till planters, to carry out the BMPs.

Practices must be maintained for the number of years established in the guidelines.

Eligible applicants may receive between 50 and 75 percent of project costs as state tax credits for up to $150,000 per agricultural operation. The amount of tax credit available is dependent on the type of practice implemented.

Only approved projects or equipment purchases that were made after Oct. 23, 2007 are eligible.

Once a farmer receives their credits, they must apply the credits to their own taxes the first year. After that, they can either choose to sell their credits to a buyer or keep the credits and apply it to their own taxes for the next 15 years.

Farmers can also work with a sponsor that helps finance a best management practice or equipment purchase. In exchange, the sponsor receives the tax credit. To date, there have been 12 projects that have been sponsored.

The first applications were accepted in December of 2007, with the credits running out within 10 business days. A total of 643 projects were approved for that round for a total of $9.8 million.

The second round of REAP applications was accepted last August with the credits running out on the first day.

A total of 942 projects were approved in the second round. Bender attributes the increase to more people requesting credits for nutrient management plans.

Bender and eight other staff members from the conservation commission and the Department of Environmental Protection (DEP) will be conducting the first round of REAP compliance checks this spring.

Participating farms across the state will be selected at random.

She also expects the first sale of tax credits to happen sometime this spring.

The market for other tax credit programs in the state has been anywhere between 80 and 90 cents to the dollar, depending on if there is a broker fee. Farmers do not have to hire a broker to make a sale.

Recently though, Bender has heard that the market may have gone down to as low as 65 cents to the dollar.

Bender pointed out that there is no way of knowing how good or bad the market is until the first sale is made. The first REAP credits were awarded last March, meaning they would be eligible to sell this month.