In May 2023, a nonprofit called Trails of Purpose began leasing part of One Red Maple Farm at 1628 Mill Landing Road in Pungo. It planned to offer equine-assisted therapy for military members and their families. The farm had a barn and indoor and outdoor arenas. The group submitted site plans, hosted a site visit and posted public hearing signs. Then the city attorney's office and the zoning administrator found that the use was "recreational and was not consistent with the ARP easement." The application was withdrawn. A former owner had enrolled all 38 acres in the City's Agricultural Reserve Program back in 2008.
That case is three years old, but the mechanism behind it applies to every enrolled farm. An ARP farm is really two assets. The land, with a permanent restriction attached, goes to the buyer. The money the City pays for that restriction is a financial instrument that can stay with the seller or go to whoever bought it. Buyers who price a Pungo farm like unrestricted acreage are paying for a right that someone else already sold.
How the City Prices What It Bought
Since 1995, Virginia Beach has bought development rights on southern farmland and left ownership with the farmer. As of the City's latest figures, the program holds 992 development rights across 11,358 enrolled acres.
The pricing formula shows what a buyer is left with. An independent appraiser sets the farm's fair market value from comparable sales. The City then subtracts an agricultural value and buys the difference. The City's own worked example on its program FAQ looks like this:
| Line item | Per acre | 100-acre farm |
|---|---|---|
| Appraised fair market value | $10,000 | $1,000,000 |
| Agricultural value the owner keeps | $1,800 | $180,000 |
| Development rights the City buys | $8,200 | $820,000 |
That is an illustration, not a reported sale. Still, the structure is set by ordinance: after closing, the owner holds the agricultural value of the land and nothing above it, apart from any building sites the easement reserved. The program's current application package uses the same $1,800-per-acre deduction. No public dataset compares sale prices of enrolled and unenrolled Pungo farms. So the honest way to price an enrolled parcel starts with what the land can legally become, not with the price per acre of the unrestricted farm down the road.
Where the Payments Go
The City doesn't pay cash at closing. It signs a 25-year Installment Purchase Agreement. The owner receives interest twice a year, in June and December, and the full principal at the end. To cover the principal, the City buys U.S. Treasury STRIPS that mature in 25 years. For the two FY 2026 closings, $2,531,034 in easement value cost the City $727,703.36 in STRIPS, about 29 cents on the dollar.
The City's program page explains what happens to that agreement after closing:
Property owners may not transfer their installment purchase agreements for a period of one year from closing. Thereafter, the installment purchase agreement is a negotiable instrument, and property owners may securitize and sell their interest in the installment purchase agreements.
The FY 2026 annual report shows this happening in practice. Among the landowners who received final principal payments that year are First Clearing LLC and Raymond James & Associates Inc., each listed as "enrolled by Robert Arnold." The person who enrolled the farm and the account that collected the principal were different parties.
The City answers the buyer's question directly. When enrolled land is sold, "the landowner who enters the agreement with the City will continue to receive the payments," while the perpetual easement "transfers with the sale of the land." The deed brings you the restriction. The interest and principal stay with the enrolling owner or whoever that owner sold the agreement to. If a listing mentions ARP income, ask in writing who holds the agreement today.
For sellers, timing now matters more. FY 2026 closings averaged 5.07% interest, the highest annual average since 2004, up from 2.42% in 2021. The rate is locked for the full 25 years at closing. Recent enrollments include Bonney Bright's 5548 Buzzard Neck Road and a parcel at 5853 Blackwater Road. The two applications together added 229.13 acres and 28 development rights in FY 2026. The City describes the interest as exempt from federal, state and local income tax. Out-of-state owners should confirm that with their own advisor.
What the Easement Allows for Horses and Homes
Once the City holds the easement, the owner can develop the land only for agricultural use, plus houses on any building sites the easement reserved. Appendix J of the City Code defines agricultural use to include:
- crops, livestock, poultry, and horticultural, silvicultural and aquacultural production
- repair, expansion or replacement of no more than one dwelling that the landowner or a tenant occupied as of the date the owner applied to enter the program, plus no more than one freestanding mobile home where allowed
- riding academies, horses for hire, horse boarding, and incidental sales of tack and riding apparel, as allowed under Section 401(a) of the Zoning Ordinance
- agritourism activities allowed under Section 401(a)
- health-department-approved septic tanks and drainfields that can't be placed on unencumbered land
For an equestrian buyer, this list is generous on paper. Boarding, lessons and horses for hire are all named. Mill Landing Road shows where it stops. A program built around agricultural production treated therapy delivered in a barn and arena as recreation, and the zoning ordinance had no category for equine-assisted therapy. The Agricultural Advisory Commission decides whether a proposed agricultural-related use fits the program's purpose. Any plan that goes beyond keeping, raising, boarding or teaching should get that answer before the contract does.
Housing is narrower still. A new home on enrolled acreage needs a building site reserved in the easement. The owner has to ask for that site when accepting the City's offer to buy the development rights, and reserving rights requires City Council approval. Once a site is approved, it is surveyed and subdivided later, when the owner is ready to build. The ordinance says that lot should hold no more than three acres of encumbered land to the extent possible, and the site still has to meet the planning department's development requirements. A buyer hoping to build a second home for family or carve off a lot later should find out whether that right was kept or sold back in 2008 or 1997.
Twenty-Five Years Is When You Can Petition
The 2023 coverage of the Mill Landing Road farm described a "contract" that would expire in another decade. That matches the payment schedule, but not the restriction. The ordinance defines the preservation easement as "perpetual in duration," and the City's annual report says enrolled acreage stays protected in perpetuity after the final payments.
What changes at year 25 is procedure. The owner may then petition City Council to buy the development rights back at their current fair market value. Approval takes at least three-fourths of the Council's members. If the City used state or federal money to buy the easement, Council has to find the repurchase essential to the city's orderly growth under the Comprehensive Plan, and the City must also acquire substitute easements or open-space land of at least equal value and comparable usefulness. If no state or federal money was used, substitute easements are required unless Council finds three things by ordinance: the repurchase is essential to orderly growth, the property is no longer needed for open space, and substitution isn't feasible.
The policy direction behind those votes was restated this year. The imagineVB 2040 Comprehensive Plan, adopted April 21, 2026, reaffirms the Green Line and the Rural Area Boundary to its south as places where the City intends to limit urban services and steer growth away from farmland. The earliest agreements started paying final principal in February 2022, so some easements have already passed the 25-year mark. Our review of public Council and commission records found no documented buyback. Price an enrolled farm as permanently agricultural.
Reading One Parcel Before You Offer
- Pull the recorded deed of easement and its exhibits through the Virginia Beach Circuit Court Clerk's land records system. Searching the index is free, remote access requires sign-in, and the official records are kept at the Clerk's office. The exhibits show any reserved building sites and excluded land.
- Call the ARP Coordinator. Sarah Grimstead Cotten can be reached at 757-385-8697 or [email protected] to confirm enrollment and identify the controlling documents. The City's VB Map is useful for screening, but its public easement layer doesn't flag ARP status.
- Map your intended use against Appendix J, then ask the Agricultural Advisory Commission about anything beyond the listed uses before inspection deadlines run.
- Write the Installment Purchase Agreement into the contract by name, stating whether it conveys and who holds it now.
- Check the dwelling count. The easement covers one home that was occupied as of the enrollment application date, plus reserved sites. An extra cottage or apartment on the property needs documentation.
FAQ
Can the public come onto an ARP farm? No. The land stays private property and trespass laws apply.
Does the easement protect the land from road projects? No. The City says the easement can't stop eminent domain, although it should look first at sites outside the program, and owners are paid for land that is taken.
Can I get a loan on an enrolled farm? The City says owners haven't had trouble getting loans after selling their development rights, and that lenders treat the interest payments as positive cash flow. That only helps if you hold the agreement, so a buyer who doesn't receive it should talk with their own lender.
If you're looking at a Pungo farm with an ARP easement, or deciding whether to enroll land you own, I'll pull the recorded easement, confirm who holds the payment agreement, and test your plans for horses and buildings against the ordinance before you sign. Jasmina West works through these details for land and equestrian clients across southern Virginia Beach. Let's Connect.
