Hoffners say outcome of land sale will determine their farm’s future

Published 12:00 am Friday, December 21, 2012

MT. ULLA — This time of year, Chris Hoffner said, is when he would normally be prepping the pasture he leases for next spring – adding lime and other nutrients, making sure it’s ready for spring grazing.

Instead, he said while driving out by that land late Wednesday afternoon, he’s playing a waiting game.

“Uncertainty is difficult to deal with,” Chris said. “It’s harder to make plans.”

Chris and wife Tara own and operate Hoffner Organic Farms. Along with his father, Alan “Buddy” Hoffner, three generations of the family have worked land off Kerr Mill Road since 1956.

Their plan is to go on as organic farmers, something they said has helped build ties with their community and create opportunities they might not have as conventional farmers.

About 30 years ago, “Buddy” Hoffner had a chance to buy some of the land they’re now leasing — part of what’s now a 191-acre parcel owned by the city of Kannapolis.

At the time, the elder Hoffner said, the cost would have been $1,100 an acre — “too much,” he said, for what he felt it was worth at the time.

“That was a mistake,” he added.

Originally assembled as part of a plan to build a reservoir for Kannapolis, 2,800 acres of Second Creek land passed from Cannon Mills Co., by way of David Murdock,

When plans to create a large state-owned game preserve through the LandTrust for Central N.C. failed, a nearby 368-acre parcel of Second Creek land was sold to a partnership, Smith Moore LLC, for $1.7 million — $2,717 an acre.

At that time, the Hoffners put down $50,000 and signed a purchase agreement with the city for the land they’d been leasing.

“We were willing to take a gamble on it,” “Buddy” Hoffner said, “but the bankers weren’t interested.”

Unable to borrow the $1 million-plus they might need, the Hoffners have gone on leasing the land.

Both Chris Hoffner and Kannapolis City Manager Mike Legg said the relationship has been an amicable one.

Reached by phone Wednesday evening, Legg said the city has not been in a hurry to sell the land — the last parcel still in city hands, following the sale of 708 acres to Ron Horton in April 2011.

“The city of Kannapolis has been really good to work with. They’ve been really good landlords,” Chris Hoffner said.

In recent months, with an organic dairy business that’s doing well, Chris and wife Tara decided it was time to make a move that they say will determine the future of their family business.

Through their relationship with the Organic Valley co-op, Chris Hoffner said, they learned about an investment group, New Spirit Farmland Partnerships.

The group’s website describes New Spirit, founded in 2009, as “a social finance organization … fostering land stewardship and a social ethic that will protect and nourish the Earth for future generations.”

Reached by phone Wednesday at his Milwaukee, Wisconsin office, founder Robert Karp said his agency is “a matchmaker,” not a financial intermediary.

Karp said his 15-year career in agriculture had shown him the importance of sustainability.

Working with organic growers, Karp said, “I discovered that one of the difficulties farmers face is access to what I call friendly and affordable capital.”

He said New Spirit works with investors who support the idea of organic farming, and who also want to include farmland in their investment portfolio.

To do so, Karp said, New Spirit offers “farmer-friendly leases,” taking part in two or three transactions a year, he said.

Typically, investors buy farmland to help organic growers expand or maintain their farms, Karp said. They then lease that land to farmers.

On December 10, the Kannapolis City Council voted to accept an offer by Chris Hoffner and Wendy Biggs-Ratcliffe, a New Spirit investor, to purchase the Second Creek land for $602,000 — $3,152 per acre.

That’s less than what a city staff report said the land would be worth if it had full development rights.

But the land carries restrictive covenants, due to its proximity to Second Creek. No residential development is currently permitted, nor any use other than agriculture.

Although the Kannapolis City Council has voted to allow a limited number of home sites on other Second Creek parcels, it’s unclear whether that would be part of the plan in this case.

Karp said Biggs-Ratcliffe is an investor who “essentially helped me start New Spirit.”

If the bid for the Second Creek parcel is successful, Karp said, Biggs-Ratcliffe would own the land.

“All of our leases have been 15-year leases,” Karp said. “Technically, they’re five-year leases with an option to renew for a further 10 years if the lease is in good standing.”

Though it is not a lease-to-own arrangement, Karp said the agreement would be written so that, if and when Biggs-Ratcliffe wants to sell the land, “the Hoffners have the right of first refusal.”

If she does not want to sell after 15 years, Karp said, the Hoffners will have the option of another 15-year lease.

The Post could not immediately locate contact information for Biggs-Ratcliffe, whom Karp described as “a very private person.”

During Wednesday’s interview, Karp said he would pass along the Post’s request for comment, but no response had been received as of press time.

Chris Hoffner confirmed the details of the lease plan. Although he declined to say how much they’d be paying under the new lease, he said it would be more than they’re currently paying Kannapolis, and higher than average for the area.

But, he said, “I’m willing to pay more, to secure (the land), and I also have the option to buy. And I’m willing to pay more money because of that.”

Chris also said he has not yet been in contact with Biggs-Ratcliffe, though he said he hopes to speak with her in the near future.

For his part, Karp described his investor as the spouse of an organic farmer.

“She’s very passionate about supporting organic agriculture,” Karp said. “And, you know, she’s willing to enter into long-term leases and take a very modest return in many cases.”

Karp did not detail the terms of the lease, but said it was “about average” among the deals New Spirit has been involved in.

“My mission is to help farmers. Yes, I’m trying to help investors as well, but our core mission is to help farmers,” Karp said.

The Hoffners said New Spirit has a good reputation among the organic farmers they know, and that being able to stay on the land will give them time to plan their future.

At its December 10 meeting, the Kannapolis City Council voted to accept the New Spirit-backed offer and start the 10-day upset bidding process.

By law, Legg said, Kannapolis cannot sell the land outright to private investors.

Instead, the public has to be notified of the offer through notices placed in newspapers. There’s then a period of 10 business days during which competing buyers would have to offer at least $632,150 for the land.

Allowing for weekends and the Christmas holidays, the upset bid period will end at close of business on Monday, December 31.

Legg said no bids had been received as of Thursday evening, although there had been some inquiries.

The waiting has made this a tense Christmas for the Hoffners, Chris said.

At dusk on Wednesday, he, Tara and sister Amy Hoffner Poirier headed out to feed the nursing calves that will soon form part of their dairy herd — close to 300 cattle in all.

Chris and Tara Hoffner’s farm has one full-time and two part-time employees, he said, and produces organic milk and beef.

He estimated that his farm produces about 580 gallons of milk per day, on average. “If I cut back on my numbers, that affects the co-op,” he said.

Also, he said, both he and his father use part of the land to farm crops, such as barley, for sale elsewhere.

There’ve been other uses as well, Poirier said. A portion of the leased land was used in September’s Dairy Dash 5K trail run, a fundraiser for the LandTrust of Central N.C.

Having the option to go on leasing the land, they said, will give the Hoffners the ability to make decisions about their farm’s future.

Chris said it’s not clear yet whether they would eventually buy the land or continue to lease it.

Right now, he said, they’re focused on maintaining their herd and thinking about the future.

“This (lease) would let me build equity in other directions,” Chris said.

But if another buyer gets the land, and the Hoffners can no longer lease it, the results would be immediate.

“You’ve got to figure, if I lose this tract, I lose more than half of my operating land,” Chris Hoffner said.

Right now, he said, “we’re not 100 percent self-sufficient, but close.?

And losing that much grass would most likely mean selling off part of his herd, he said, because the organic grain he would have to buy to make up for it would be too costly.

“And it doesn’t just affect us. It affects the entire organic group,” Chris said.

Legg confirmed that Kannapolis had no immediate plans to seek a buyer.

By making their offer now, the Hoffners will find out whether they can plan on another 15 years, or more, on the land.

The hardest part, they all said, is the waiting.

“Am I nervous? Absolutely,” Poirier said, as the calves nearby nursed from the large bottles she, Chris and Tara had just put out for them.

“It’s just hard when you’ve put so much into something,” she said. “You just want to keep on doing what you’ve been doing.”

Contact Hugh Fisher via the editor’s desk at 704-797-4244.