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CEA 02-24-11 Meeting Agenda'`CEA Frederick County Conservation Easement Authority MEMORANDUM TO: Conservation Easement Authority .i FROM: Eric R. Lawrence, CEA Secretary';' SUBJECT: February Meeting DATE: February 17, 2011 The Frederick County Conservation Easement Authority will be meeting on Thursday, February 24, 2011 at 8:00 a.m. in the Board of Supervisor's Executive Session Meeting Room in the County Administration Building, 107 North Kent Street, Winchester, Virginia. The Conservation Easement Authority will discuss the following agenda items: AGENDA 1. September 22, 2010 Meeting Minutes 2. November 18, 2010 Meeting Minutes 3. Annual Organizational Meeting: a. Election of Officers b. Adoption of Bylaws c. Selection of Meeting Dates and Times 4. Fundraising Efforts a. GIFT— Give $1 for Frederick's Tomorrow b. Establishing matching fund source 5. Discussion: Potential Use of Discount IPAs for Easement Financing 6. Nomination for new CEA member 7. Next meeting date 8. Other Please contact the Planning Department (540-665-5651) if you are unable to attend this meeting. ERL/bad C/O Frederick County Planning Department, 107 North Kent Street, Winchester, VA 22601 (540-665-5651) MEETING MINUTES OF THE FREDERICK COUNTY CONSERVATION EASEMENT AUTHORITY Held in the Executive Session boom of the Frederick County Administration Building at 107 North Kent Street in Winchester, Virginia on September 22, 2010 at 8:00 a.m. PRESENT: Diane Kearns, Chairman; Jim Lawrence, Treasurer; Robert Solenberger; Elaine Cain; Todd Lodge; and Gene Fisher, Board of Supervisors Liaison. ABSENT: Ritchie Wilkins, Vice -Chairman; John Marker; and Charles Triplett, Planning Commission Liaison. STAFF PRESENT: Eric R. Lawrence, CEA Secretary; and Bev Dellinger, Secretary III. OTHER: Sortis Pappas, Citizens Against PATH. PUBLIC MEETING: 1. August 26, 2010 Meeting Minutes On a motion made by Mr. Solenberger and seconded by Mr. Jim Lawrence, the August 26, 2010 minutes were approved, with one change initiated by Chairman Kearns. 2. Update on Potomac Allegheny Transmission Highline (PATH) Mr. Eric Lawrence presented an update. On Monday, September 20th, the PATH organization submitted to the State Corporation Commission their application for approval. The information provided by Mr. Lawrence in the agenda packet is consistent with what was submitted to the State on September 20t'. The proposed location hasn't changed. The maps that are available to the public are generalized so Mr. Alex Gray, of the Planning Department, and Mr. Lawrence used the information they could find from PATH and their local knowledge and mapped it out. PATH proposes to follow an existing power line corridor for the most part; they do deviate to go around an existing conservation easement. They haven't acknowledged any of the rural preservation lots, which are set-aside portions of rural preservation developments. It's important to point out that the Board of Supervisors recently changed the Frederick County ordinance to reflect 60% of a rural subdivision as preservation lots, with no development rights. Parcels that Frederick County views as being important as preservation lots are not being acknowledged by PATH. Mr. Lawrence further stated that the basis for PATH is they need to provide a better network of power. It doesn't stop in Frederick County; it's providing energy from the power plant in West Virginia and it's working its way to the northeast area of the country. Frederick County doesn't see a local benefit to our power grid. Based as it's coming through Frederick County, they're proposing to be adjacent to the existing power corridor. As you come from the west, they're going to have to expand the easement and, as they get to the eastern part of the County, Conservation Easement Authority Page - 146 - September 22, 2010 they're going to do what they call double tracking, which means they're going to replace the towers and go higher within the existing corridor. Basically, on Apple Pie Ridge and Welltown Road east, they'll just put up larger, higher towers than what is currently there. In reading about this project, Mr. Lawrence has found that whenever they have an area where they can't get additional casement because of houses or some obstruction, they do what they call an alternative jog, and they go north or south of it, or they jump from one side of the easement to the other. At the State level, they're saying they want to follow this general location but they want the flexibility of ten miles from the existing corridor. They already own the access, so the easiest thing for them to do is to stay in the existing easement and put up the higher towers. Mr. Lawrence stated that what he has been able to discern from the application is they feel they've got a good argument for why we need power and the corridor they're looking at is one least impacted. The application is a seven volume application and they only submitted one volume to the County. Mr. Lawrence talked to our County attorney, Mr. Rod Williams, yesterday about how to get the other six volumes because they haven't been responsive. Chairman Kearns asked the relationship between TRAIL and PATH. Mr. Eric Lawrence responded that TRAIL is 500 kv and PATH is 765 kv and TRAIL is going to Northern Virginia. Mr, Lawrence understands that once TRAIL is built and on line, they can install PATH, because they're going to have to shut down the existing corridor that PATH is going to follow and re- route the power through TRAIL to by-pass this area while they're building PATH. Mr. Fisher stated that the big difference he sees between TRAIL and PATH is that TRAIL will benefit southwestern Frederick County. Chairman Kearns stated she understands the concept behind this, but we're setting ourselves up for big problems in the future by not attempting to conserve on energy use. Mr. Pappas gave members a hand-out, titled `'Path is "Greed, Not Need!" He stated that Pennsylvania stopped PATH to ten miles inside the border. Chairman Kearns asked members if they would like to endorse the Resolution Opposing Potomac Allegheny Transmission Highline that Mr. Eric Lawrence has prepared. Mr. Jim Lawrence made a motion to support the Resolution. Mr. Solenberger seconded the motion and the vote was unanimous for approval. Chairman Kearns stated the Federal Government gave PATH the authority to get a 14% profit off of this project, and that's where we need to try to stop them. It's all about money and if they're not guaranteed a certain percentage on the project, we may be able to stop them. 3. Fundraising Efforts a. VDACS FY2011 Matching Grant Application Chairman Kearns told members that the State has more money to grant than they anticipated. Unfortunately, she didn't find out until just recently. Chairman Kearns feels it would be a good idea to publicize this fact, even though Frederick County is not able to contribute any funds toward purchasing the Hill High easement, which has approval from FRPP and becomes void in March, 2011. Conservation Easement Authority Page - 147 - September 22, 2010 Mr. Eric Lawrence stated that the FRPP program does not require County funds; it just requires a $130,000 match. The VDACS program requires County funds. At this point, VDACS has only $100,000 to split among 18 jurisdictions with programs that qualify. Mr. Jim Lawrence feels that with the VDACS time -frame, it's an exercise in futility. But maybe the CEA can forward a memo that points out what the leveraging opportunities are with this type funding for the future. Mr. Fisher thinks this is a positive point. If the CEA can get funds through fundraising activities, it's more palatable for the Board of Supervisors to contribute funds. Mr. Fisher suggested that CEA members take the opportunity to talk with Board members, giving them information and answering questions they may have. Individual contact allows an exchange of thoughts. b. GIFT -- Give $1 for Frederick's Tomorrow Chairman Kearns brought a bundle of rack cards and encouraged members to take some for placement in businesses. 4. Next Meeting Date October 28, 2010 5. Other Chairman Kearns stated that Ms. Kelly Watkinson of the Potomac Conservancy has a meeting to education the public on what their special designation areas are scheduled for tomorrow night in Star Tannery at the Volunteer Fire Department from 6:30 p.m. to 8:00 p.m. There being no further business, the meeting adjourned at 8:40 a.m. Respectfully submitted, Diane Kearns, Chairman Eric R. Lawrence, CEA Secretary Conservation Easement Authority Page - 148 - September 22, 2010 MEETING MINUTES OF THE FREDERICK COUNTY CONSERVATION EASEMENT AUTHORITY Held in the Executive Session Room of the Frederick County Administration Building at 107 North Kent Street in Winchester, Virginia on November 18, 2010 at 8:00 a.m. PRESENT: Diane Kearns, Chairman; Robert Solenberger; and Charles Triplett, Planning Commission Liaison. ABSENT: Ritchie Wilkins, Vice -Chairman; Jim Lawrence, Treasurer; John Marker; Elaine Cain; Todd Lodge; and Gene Fisher, Board of Supervisors Liaison. STAFF PRESENT: Eric R. Lawrence, CEA Secretary; and Bev Dellinger, Secretary III. PUBLIC MEETING: 1. Scptember 22, 2010 Meeting Minutes There was not a quorum present; therefore, the minutes of September 22, 2010 were not acted upon. 2. 2010 Frederick County Comprehensive Plan a. Rural Areas Section Update Chairman Kearns stated that the Rural Areas section of the Comp PIan has been written and it's ready to go through the public process. Mr. Lawrence said it should be adopted by February. Chairman Kearns is pleased with the way it has turned out. The format now is much more succinct and people can understand what they're reading. It doesn't change anything, but it delineates some of the concepts that we've been trying to get across. One of the policies is "Support Voluntary Land Preservation Tools", which mirrors what this Committee is doing. Mr. Lawrence stated this clarifies what is already in the Rural Areas Section of the Comp Plan. It's not any new information; it's gathering everything we've done and talked about as a community for a number of years. The Comp Plan has not been updated since the Ceniffii4eeEA was created. Chairman Kearns stated that the entire Comp Plan is being updated using the same format. 3. Update on Power Line Projects, as Applicable a. Potomac Allegheny Transmission Highline (PATH) b. Dominion Power's Rebuild Mr. Lawrence stated as far as PATH goes, nothing has changed since the last time the Committee met. The County previously opposed PATH and still is opposed to PATH. Mr. Lawrence continued that the Board's Resolution said that Frederick County doesn't appear to be getting any benefit from it. It's impacting our land values and our rural preservation lots and it Conservation Easement Authority Page - 149 - November 18, 2010 shouldn't be allowed. Also, the Board feels that PATH keeps holding public meetings in odd places; they went to Handley High School. A citizen spoke at one of the Board meetings saying that a lot of the older population of the County doesn't want to come into the City. So holding a public meeting for PATH at Handley discourages people from attending. The Board of Supervisors said when you hold a meeting, make sure it's in the County, like Tames Wood High School. The rebuild, which was presented to the Board of Supervisors last week, is completely different. In Mr. Lawrence's perception, PATH has never said anything about the rebuild. Mr. Solenberger asked if there's any common ownership. Mr, Lawrence stated he thinks there could be at some point, but the way rebuild is coming forward, it's Dominion Resources and they're rebuilding their existing corridor. There's an existing 500 kV that runs through northern Frederick County which, indirectly, PATH wants to parallel, but Dominion owns that existing 500 kV. Dominion Resources is clear in saying they are not PATH. Chairman Kearns asked about the concept that because of the greater capacity, Dominion could carry more and, therefore, reduce the necessity for PATH. Mr. Lawrence responded that Dominion wouldn't commit to that, but there's certainly perceptions that if you're creating greater capacity, do we need PATH..? That's probably an argument that anti -PATH and other organizations will use to fight PATH. One thing that Dominion pointed out last week at the Board meeting was they said they're replacing their existing corridor. We'll get more power to flow through it, but that's not the intent. The intent is to replace an aging system. 4. Fundraising Efforts a. GIFT — Give $1 for Frederick's Tomorrow Chairman Kearns said she has made some contacts with people about participating in the program. She talked with Julie Armel of the Museum of Shenandoah Valley and they are completely in support of the program. Ms. Armel said that any event the Conservation Easement Authority holds, the Museum of Shenandoah Valley would like to participate. 5. Overview on Tax Benefits of Conservation Easement Donations Mr. Lawrence stated that he attended a conference last month where he was on a panel with Kevin Schmidt, who's the State PDR person we've dealt with, and Rex Linfield, who's with Piedmont Environmental Council (PEC). PEC presented an excellent power point as far as information on conservation easements and the tax benefits of donations. Mr. Lawrence handed out to members a copy of that power point presentation. Mr. Lawrence stated that he's going to tailor the presentation, crediting PEC, and make it available on our CEA wcbpage. Chairman Kearns read some notes and comments that Ms. Cain provided. One item to note is, "Conservation easements can be placed on property by the Executor or Trustee after death. If estate tax exemption returns to $1,000,000 in 2011, this could provide significant estate tax savings." Another item is, "Virginia is no longer accepting or approving applications for state land preservation credits. Early next year would be the perfect time to submit these applications. Then sales could occur as soon as approved by the State. They set an annual limit for approval of $50,000,000. Back in July, one individual placed a high value conservation easement and gobbled up any room that they had remaining for 2010." Conservation Easement Authority Page - 150 - November 18, 2010 6. Nomination for New Member to Replace Jim Lawrence Chairman Kearns stated that she, Mr. Fisher and Mr. Jim Lawrence talked about what sectors of the population would fit into place with the Committee. Chairman Kearns thought someone in real estate would be a good segue. Mr. Lawrence suggested someone in the engineering community. Chairman Kearns stated that hopefully by the next meeting, someone will have come up with a name. 7. Next Meeting Date It was decided that the next meeting will be held in January 2011. 8. Other Mr. Triplett told members that now when you file for tax relief in land use, you have to present a farm schedule and a copy of your tax return, which you didn't have to do before this year. Mr. Triplett thinks this is a wonderful idea because that will weed out three, five, fifteen and twenty acre farms that don't have a farm commodity or any income from the farm. There being no further business, the meeting adjourned at 8:35 a.m. Respectfully submitted, Diane Kearns, Chairman Eric R. Lawrence, CEA Secretary Conservation Easement Authority Page - 151 - November 18, 2010 AGENDA ITEM 3 : Annual Organizational Meeting During the first meeting of the calendar year, the Conservation Easement Authority conducts its annual election of officers, adoption of Bylaws, and selection of CEA meeting dates and times for the ensuing calendar year. Officer positions to be filled include: Chairman, Vice Chairman, Treasurer, and Secretary. The Chairman, Vice -Chairman, and Treasurer must be voting members of the Authority. The Secretary shall be a member of the Authority or a county employee. The Bylaws for consideration are consistent with those utilized by the CEA in 2010, a copy of which is attached. In 2010, the CEA held its monthly meetings on the 4th Thursday of the month, at B:OOAM in the Frederick County Administration Building. CONSERVATION EASEMENT AUTHORITY County of Frederick, Virginia Bylaws Adopted February 4, 2010 ARTICLE I — AUTHORIZATION 1-1 The Frederick County Conservation Easement Authority is established by and in conformance with Chapter 68 of the Code of Frederick County, and under the Public Recreational Facilities Authorities Act, Chapter 56 of Title 15.2 (§15.2-5600, et seq.) Code of Virginia 1-2 The official title of this body shall be the Frederick County Conservation Easement Authority, hereinafter referred to as the "Authority". ARTICLE H — PURPOSE 2-1 The purposes of the Authority are to acquire and/or receive conservation easements, by purchase, gift, or other conveyance; to hold and enforce conservation easements conveyed to it; to facilitate the acquisition or receipt of conservation easements by other qualified organizations; to disseminate information concerning conservation easements to landowners and other interested parties; to administer the Frederick County Conservation Easement Purchase Program pursuant to the ordinance establishing the Program; and to exercise any powers authorized by the Public Recreational Facilities Authorities Act. ARTICLE III — MEMBERSHIP 3-1 The membership of the Authority shall be determined by the Frederick County Board of Supervisors, per the Conservation Easement Authority's Article of Incorporation, adopted August 24, 2005. Methods of appointment and terms of office shall be determined by the Frederick County Board of Supervisors. ARTICLE IV — OFFICERS 4-1 Officers of the Authority shall consist of a chairman, vice-chairman, treasurer and secretary. The chairman, vice-chairman, and treasurer must be voting members of the Authority, The CEA Bylaws Adopted February 4, 2010 secretary shall be a member of the Authority or a county employee. 4-2 Selection 4-2-1 The officers shall be elected by the voting members of the Authority at the first meeting of the calendar year. 4-2-2 Nomination of officers shall be made from the floor at the first meeting of the calendar year. Elections of officers shall follow immediately. A candidate receiving a majority vote of the entire voting membership shall be declared elected. 4-3 Duties 4-3-1 The Chairman shall: 4-3-1-1 Preside at meetings. 4-3-1-2 Rule on procedural questions. A ruling on a procedural question by the chairman shall be subject to reversal by a two- thirds majority vote of the members present. 4-3-1-3 Report official communications. 4-3-1-4 Certify official documents involving the authority of the Authority. 4-3-1-5 Certify minutes as true and correct copies. 4-3-1-6 Carry out other duties as assigned by the Board of Supervisors and the Authority. 4-3-2 The Vice -Chairman shall: 4-3-2-1 Assume the full powers of the chairman in the absence or inability of the chairman to act. 4-3-2-2 Carry out other duties as assigned by the Board of Supervisors and the Authority Chairman. -2- GEA Bylaws Adopted February 4, 2010 4-3-3 The Treasurer shall: 4-3-3-1 Be responsible for the safekeeping of all funds of the Authority. 4-3-3-2 Maintain the financial records of the Authority. 4-3-3-3 Pay approved bills. 4-3-4 The Secretary shall: 4-3-4-1 Ensure that attendance is recorded at all meetings. 4-3-4-2 Ensure that the minutes of all Authority meetings are recorded. 4-3-4-3 Notify members of all meetings. 4-3-4-4 Prepare agendas for all meetings. 4-3-4-5 Maintain files of all official Authority records and reports. Official records and reports may be purged in accordance with applicable state codes. 4-3-4-6 Give notice of all Authority meetings, public hearings and public meetings. 4-3-4-7 Provide to the Board of Supervisors reports and recommendations of the Authority. 4-3-4-5 Attend to the correspondence necessary for the execution of the duties and functions of the Authority. 4-4 Term of Office 4-4-1 Officers shall be elected for a one-year term or until a successor takes office. Vacancies shall be filled for an unexpired term by a majority vote of the Authority. In such cases, the newly elected officer shall serve only until the -3- CEA Bylaws Adopted February 4, 2010 end of the calendar year or until a successor takes office. 4-5 Temporary Chairman 4-5-1 In the event of the absence of both the chairman and the vice-chairman from any meeting, the Authority shall designate from among its members a temporary chairman who shall act for that meeting in the absence of the chairman or vice-chairman. ARTICLE V — MEETINGS 5-1 Regular meetings shall be held at the time and place set by the Authority at the first meeting of each calendar year. 5-2 Special meetings may be called by the chairman or by the secretary after due notice and publication by the secretary. 5-3 Notice of all meetings shall be sent by the secretary with an agenda at least five days before the meeting. 5-4 All meetings of the Authority shall be open to the public except for Closed Sessions held in accordance with the provision specified of the Code of Virginia, 1950, as amended. ARTICLE VI — VOTING 6-1 A majority of voting members shall constitute a quorum. No action shall be taken or motion made unless a quorum is present. 6-2 No action of the Authority shall be valid unless authorized by a majority vote ofthose present and voting. ARTICLE VII — OPERATING RULES 7-1 Order of Business 7-1-1 Call to Order 7-1-2 Consideration of Minutes -4- CEA Bylaws Adopted February 4, 2010 7-1-3 Public Hearings 7-1-4 Public Meetings 7-1-5 Oiscussions 7-1-6 Citizen Comments on Items not on the Agenda 7-1-7 Other 7-1-8 Adjournment 7-2 Minutes 7-2-1 The Authority shall keep minutes of each meeting. The Chairman and Secretary shall sign all minutes following approval by the Authority certifying that the minutes are true and correct. Minutes made available to the public prior to formal approval by the Authority shall be clearly identified as a draft version of the meeting. 7-3 Procedures 7-3-1 Parliamentary procedure in the Authority meetings shall be governed by Robert's Rules of Order, except where otherwise specified in these procedures. 7-3-2 Whenever an agenda item involves a recommendation to the Board of Supervisors, the Authority shall continue to consider the item until a definite recommendation is made. If a motion has been made and defeated, additional, different motions may be made concerning the item under consideration. 7-3-3 Business items on the agenda shall be considered using the following procedures: 7-3-3-1 Report by County Staff 7-3-3-2 Presentation by Applicant _5- CEA Bylaws Adopted February 4, 2010 7-3-3-3 7-3-3-4 7-3-3-5 7-3-3-6 Citizen Comment Rebuttal by Applicant Discussion by Authority Motion and Action by Authority 7-3-4 Public comment shall be allowed in all cases required by the Code of Virginia, 1950 as amended, or the Code of Frederick County. In other cases, the Chairman may allow public comment. 7-3-5 The Authority members may ask questions of clarification and information after the staff report, applicant presentation and citizen comment. 7-3-6 Petitions, displays, documents or correspondence presented at a meeting may be made part of the official record of the meeting by motion of the Authority and are to be kept on file by the secretary. Such items need not be made part of the published minutes. 7-3-7 Public Hearings 7-3-7-1 The Authority shall hold public hearings on all items which require a motion to accept a Conservation Easement. 7-3-7-2 The Chairman may establish special rules for any public hearing at the beginning of said hearing. These rules may include limitations on the time of staff report, applicant presentation and citizen comment. 7-3-7-3 The Authority may hold public hearings on any matter which it deems to be in the public interest. In such cases, the public hearings shall follow all procedures described for public hearing in these bylaws. 7-3-8 Tabling 7-3-8-1 The Authority shall have the authority to table agenda items if any one of the following situations occurs: GEA Bylaws Adopted February 4, 2010 A) The agenda item does not meet the requirements of the Code of Virginia, 1950, as amended. B) The agenda item does not meet the requirements of the Code of Frederick County. G) Insufficient information has been provided for the agenda item. D) Issues or concerns that arise during formal discussion of the agenda item warrant additional information or study. E) The applicant provides the Authority with a written request to table the agenda item. F) The Authority is advised of an emergency situation that prevents attendance by applicant. G) The applicant fails to appear at the meeting in which the application has been advertised to appear. 7-3-8-2 The applicant shall be permitted to request that an agenda item be tabled from a scheduled Authority meeting. 7-3-5-3 An application that has been tabled for an unspecified period of time shall be re -advertised for consideration by the Authority once the following steps have been completed: A) The applicant has requested in writing that the agenda item be considered by the Authority, B) The applicant has provided all required information to the Authority which addresses all concerns of the Authority. 7-3-8-4 The Authority shall have the authority to act on an agenda item that has been tabled when the agenda item has been re - advertised for a subsequent Authority agenda. CEA Bylaws Adopted February 4, 2010 ARTICLE VIII -- AMENDMENTS 8-1 These bylaws may be amended by a majority vote of the entire voting membership after thirty days prior notice. 8-2 Authority shall conduct an annual review of these bylaws to ensure their accuracy. All amendments to these bylaws shall be considered by the Authority in November of each calendar year. The Authority shall adopt their bylaws during the first meeting of each calendar year. -8 AMERICAN FARMLAND TRUST • FARMLAND INFORMATION CENTER X1111 FANU,ND INFORMATION CENTER 1141iry FACT INSTALLMENT PU IRC LIAS E AGREEMENTS .MO -PA —1t, Amc imi F viland Thist TEcHmCAL As5isTA.NcF Herrick.Mill, One Short Street Northampton, MA 01060 'Fel; (413) 586-4593 Fax; (413) 586-9332 Web:.vww.farmlandinfo.org NATIONAL OFFICE 1200 18th Street, NW, Suite 800 Washington, DC 20036 Tel: (202) 331-7300 Fax: (202) 659-8339 Web: wvww1armland.org September 1999 DESCRIPTION Purchase of Agricultural Conservation Easement (PACE) programs compensate property owners for restrictions on the future use of their land. One of the biggest challenges in administering PACE programs is figuring out how to pay for them. This fact sheet describes an innovative financing plan that helps jurisdictions stretch available funds while offering unique benefits to landowners. What it is An installment purchase agreement (IPA) is an innovative payment plan offered by a handful of jurisdictions with Purchase of Agricultural Conservation Easement (PACE) programs. IPAs spread out payments so that landowners receive semi-annual, tax-exempt interest over a term of years (typically 20 to 30). The principal is due at the end of the contract term. Landowners also can sell or securitize IPA contracts at any point to realize the outstanding principal. The IPA financing plan won the Government Finance Officers Association Award for Excellence in 1990. How it works The day before settlement, the jurisdiction sets the rate for the interest paid to the IPA holder. The rate is typically pegged to the current return on U.S. Treasury bonds. However, counties and local governments can set a minimum interest rate, or "floor," to provide participating farmers with additional security. Jurisdictions can purchase zero-coupon bonds to cover the final balloon payments. "Zeroes" do not generate regular interest income. Instead, they yield a lump sum when the bond matures. Because zero coupon bonds cost a fraction of their face value, the public entity leverages avail- able funds. "Zeroes" with a face value equal to the purchase price are usually purchased the day before settlement. At settlement, the landowner grants the jurisdic- tion a permanent agricultural conservation easement in exchange for an IPA. Then the jurisdiction begins making tax-exempt interest payments twice a year. The balance of the purchase price is paid to landowners at the end of the agreement. The landowner may sell or "securitize" the IPA on the municipal bond market to recover the outstanding principal before the end of the agreement. HISTORY Howard County, Maryland, pioneered IPA as a strategy to fund its PACE program in 1989. By 1987, the county's five-year-old farmland protec- tion program had stalled. Lump -sum payments were no longer a competitive option for farmers due, in part, to dramatic increases in land prices. Later that year, county officials met with a finan- cial advisor to explore ways to make the most of accumulated tax revenues and reinvigorate the program. The advisor combined installment pay- ments and the purchase of zero coupon bonds with the county's traditional funding mecha- nisms. Working with the county executive, county agencies and bond counsel to refine the proposal, the plan was announced in May 1989. Workshops were held for interested property owners over the next few months and the County Council approved the first round of IPAs in November. To date, 81 agreements have been executed in Howard County, adding 9,2.00 acres to the 7,500 protected before the IPA program was created. Based on the Howard County model, Harford County, Md., Burlington County, NJ. and Virginia Beach, Va. have developed IPA programs to stretch public funds for farmland protection. In addition, Pennsylvania's statewide farmland preservation program is crafting an IPA program. In the spring of 1999, Pennsylvania legislators earmarked $500,000 to support this effort. The Farmland Isl fotonation Center is a publiclpiivate partnersbip betweept American Far7tiiand Trust and the USDA Manual Resources Conservation Sevice that provides technical in formation about farmland protection. AML- RICAN FARMLAN D TRU ST • FARMLAN D INFO RMATION CENTL- R INSTALLMENT PURCHASE AGREEMENTS For more information on install- ment purchase agreements contact: Evergreen Capital Advisors, Inc. 34 Chambers Street Princeton, New Jersey 08S42:-3700. Tel: (609) 279-0068 Fax: (609) 279-0065 Email: patocoranellC�wmsword co. corn For in formation about farmland protection techniques contact AFT's technical assistance service. At»ericnn Ramilind 7h1st FUNCTIONS AND PURPOSES IPAs are intended to make PACE programs competitive with developers by providing unique financial and tax advantages. In addition, this payment option enables jurisdictions to use accumulated and future dedicated revenues to protect land while it is still available and relatively affordable. ISSUES TO ADDRESS Authority and Approvals In general, state and local governments can enter into IPAs if they have the authority to issue general obligation bonds. Because IPAs constitute long-term debt, agreements typically require the same approval process as bonds. Laws governing the issuance of bonds vary from state to state. Some states require approval by the legislature, the voters or both. For more information, contact state agencies that regulate municipal bond issuance, bond counsel or independent investment banking or public financial advisory firms. Funding An IPA program requires dedicated funds to cover the interest and principal payments. Howard County uses proceeds from a local real estate transfer tax and the county's share of a statewide agricultural transfer tax to support its program. Virginia Beach relies on revenue from a property tax increase and a tax on cellular phone use. BENEFITS Landowners may defer capital gains taxes until they receive the principal for the purchase price. This keeps a larger proportion of the proceeds "working" or earning interest. The semi-annual interest paid on the outstand- ing balance of the purchase price is exempt from federal, state and local income taxes and can provide a supplementary income stream. Landowners can liquidate their IPA prior to the end of the agreement. IPAs can be transferred to heirs and are useful in estate planning. The package of financial and tax benefits offered to landowners could enable them to net more than they could through a traditional cash sale. These benefits may encourage landowners to accept less than the appraised value for their easements. TPAs stretch public funds, By deferring principal payments, public entities can buy more ease- ments while land is available and relatively affordable. Also, by purchasing "zeroes" jurisdictions spend a fraction of the negotiated purchase price at closing and leverage available funds. DRAWBACKS IPAs require a dedicated funding source to cover the interest payments. An IPA program may take up to six months to develop. Bond counsel, a paying agent and a financial advisor will have to assist in each settlement. The estimated cost of each transaction includ- ing fees and charges by rating agencies ranges from $S,000 to $20,000. These costs can be higher—on a percentage basis—than the costs to issue bonds for a cash -purchase program. Because IPAs are backed by the full faith and credit of the jurisdiction, each agreement may require the same approval process as general obligation bonds. American Farmland Dust works to stop the doss of productive fa)7nlaud and to prornrote fa»ning practices that lead to a healthy environment.