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CEA_02-23-12_Meeting_MinutesUA 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 February 23, 2012 at 8:00 a.m. PRESENT: Diane Kearns, Chairman; Ron Clevenger; Robert Solenberger; John Marker; Gene Fisher, Board of Supervisors Liaison; and Charles Triplett, Planning Commission Liaison. ABSENT: Elaine Cain, Treasurer; and Todd Lodge. STAFF PRESENT: Eric R. Lawrence, CEA Secretary; Candice Perkins, Senior Planner; and Bev Dellinger, Secretary III. OTHER: Kelly Hopkins, Conservation Partners; and Ellen Murphy, Commissioner of the Revenue. PUBLIC MEETING: 1. Welcome and Introductions • Everyone introduced themselves to two prospective CEA members. 2. November 17, 2011 Meeting Minutes On a motion by Mr. Solenberger and seconded by Mr. Clevenger, the minutes of November 17; 2011 were unanimously approved. 3. Presentation from Conservation Partners — Kelly Hopkins Chairman Kearns introduced Ms. Hopkins of Conservation Partners, who is filling in for Mr. Taylor Cole. Ms. Hopkins stated that the basics and legal requirements for holding a conservation easement, whether they are personal, governmental or a privately owned trust, are the same. She handed out a folder prepared by Conservation Partners, named "Benefits to Virginians of Purchasing Land Preservation — Tax Credits" containing information about tax credits and quality standards. Also included in the folder are pamphlets named "Conservation Easement Donors and Their Professional Advisors ", "Easement Donor's Guide ", "Introduction to Conservation Easement Donations in Virginia ", and a CD named "Your Land Legacy ". The summary template talks about what you have to know about an easement. What are the restrictions? What do you want to hold back for your own? What is the responsibility of the community to make sure the stewardship is done properly? Conservation Partners has "Quality Standards" and every time they help someone do a conservation easement, they not only review the deed of easement against their Quality Standards template, they also review the appraisal. ® Ms. Hopkins stated you will hear a lot of bad things about appraisals and that's what is causing Conservation Easement Authority Page - 170 - February 23, 2012 • the IRS to come in and devalue or eliminate the deduction all together. The State of Virginia, within the last two years, has instituted a transfer fee when somebody sells tax credits and the State is enforcing that stringently. Audits are definitely on the rise. Ms. Hopkins stated that Conservation Partners does educational outreach each year, not only for appraisers, but also for people who prepare deeds. Ms. Hopkins stressed that when the CEA does get into holding conservation easements, the CEA must understand the importance of our template and we must understand that the deed is something that can cause scrutiny. Conservation Partners helped the Virginia Department of Forestry with their template, which is an excellent example, and they will be happy to help us. Mr. Jim McLaughlin, Taylor Cole's partner who works in Utah, will help us set up a template at no charge. Ms. Hopkins further talked about helping us by reviewing deeds before they're recorded. Conservation Partners has relationships with banks who will help do subordinations. If there is a lien on the property, the bank has to agree that they're going to allow the devaluation of the property to make sure their loan to value is protected. Many banks won't allow that, but they have a couple of banks who feel that if Conservation Partners is part of the process, as long as the numbers come out right, they're comfortable subordinating, refinancing or doing a bridge loan. Farm Credit has been very good about doing this; they really understand the importance of this and they understand how the appraisal process works. There are several very large cases that are being challenged right now and that is because of an over - valued appraisal. Some appraisers may be missing some of the methodology and comparisons are not done properly. Or they may take one of the comps and adjust it improperly. They may forget to address enhancements. Conservation Partners tries to educate the appraisers in making sure they understand what they're doing right and what they're doing wrong. Everyone on their list of appraisers has had one of their appraisals reviewed by a national expert to make sure their methodology is right. Conservation Partners has a list of experienced CPA's, accountants, attorneys and appraisers who they have worked with and who are knowledgeable about easements and will be able to help farmers or anyone thinking about placing an easement on their property. Conservation Partners takes care of tax credits and they manage the profits for people. They have also been involved in bargain sales, which means the County may give a small percentage donation toward a conservation easement and then VOF, the Department of Forestry or someone else may pick up the balance. Ms. Hopkins stated that she would be happy to come back and talk to other groups or donors as to how Conservation Partners can help design a program that works for them. They will be involved as little or as much as we want. People can save a lot of money buying tax credits and that is the way that Conservation Partners gets paid. They don't charge anything extra for the consulting work they do. They want to put all their efforts toward finding more people to do conservation easement work. They have sold over $115,000,000 in tax credits since they opened in 2002 and they have never had a • devaluation or a successful challenge on any of their easements. Conservation Easement Authority Page - 171 - February 23, 2012 ® Chairman Kearns asked Ms. Hopkins how advanced funding works. Ms. Hopkins explained they don't give out money like a grant program. They advance the amount and when the donor sells their credits, it is paid back. The advanced funding amount has been increased from $10,000 to $15,000. Mr. Solenberger asked Ms. Hopkins about their fees. Ms. Hopkins used an example of a property, with no houses, that's worth $1,000,000. Typically the average in Virginia is a 30% reduction in value, so the value would be $700,000 and the tax credit is $300,000. Virginia gives you 40% of that, so the tax credits would be $120,000. Conservation Partners will sell your $120,000 tax credit for a rate of 6 %, Virginia charges a transfer fee of 5 %, so that's t 1 % of what the buyer pays. Last year, buyers paid 86 cents on the dollar - that's a 14% discount. Given this example, the donor would net $90,000. Mr. Solenberger asked Ms. Hopkins if a property owner is interested in an easement, but he wants to know ahead of time about it, how do you handle that? Ms. Hopkins stated that Wesley Woods is one of the few appraisers in Virginia who will give you a preliminary, which is usually about $500. He already has the comps in the areas that he works in. But whatever county you're in, if you call her, she'll tell you which appraiser works that county. Ms. Hopkins stated if we're interested in doing an outreach event, they have one planned in Front Royal. She doesn't have all the information yet, but it will be within the next couple of months. She'll let Chairman Kearns know. • 4. Fundraising Efforts a. WWW.GIFT. ore— Give $1 for Frederick's Tomorrow Chairman Kearns didn't have anything new to report on GIFT. b. Establishing matching fiord source Chairman Kearns stated that she had a meeting with Mr. Richard Shickle, Chairman of the Board of Supervisors. Chairman Kearns asked Mr. Shickle if this would be a good time for the CEA to request a percentage of the County's rollback taxes. Mr. Shickle doesn't feel that this is the appropriate time. He will, however, talk to people about when they feel the timing may be right for this request. 5. CEA Membership Chairman Kearns stated there are four individuals who are interested in becoming CEA members and two of them are here today, Ms. Lisa LaCabita and Mr. Jeff Green. They briefly spoke about themselves. Ms. LaCabita stated that since there are three other people interested in becoming a member, she would defer to one of them. Mr. Green currently holds two easements in Frederick County and has worked with Conservation Partners, which was a very positive experience. Chairman Kearns thanked Ms. LaCabita and Mr. Green for their interest and for coming to the meeting. After a brief discussion, Mr. Solenberger made a motion to appoint Mr. Green to the Conservation Easement Authority. Mr. Marker seconded the motion and the vote was • unanimous. Conservation Easement Authority Page - 172 - February 23, 2012 ® 6. Next Meeting Date March 22, 2012 n LJ 7. Other Chairman Kearns stated she attended a meeting of the Shenandoah Advisory Council last week. Along with Mr. John Gavitt's easement on Hogue Creek, Potomac Conservancy has closed on one easement and waiting to close on a second easement, close to Mr. Gavitt's property. This is due largely to Mr. Gavitt talking to his neighbors. They're working on a potential function with Shenandoah County and Frederick County to be focused on the Cedar Creek area. Chairman Kearns showed members a brochure that Shenandoah County created showcasing the arts, agriculture and lodging available in Shenandoah County to people who may not be aware of what Shenandoah County has to offer. It's titled "Unique Lodging Open House" and is scheduled for March 25, 2012. This is a one day open house, with each one being an individual event. This is being promoted by Shenandoah County partnering with Virginia Living and Shenandoah Caverns. The Shenandoah RC &D, an agency which had been receiving funding from the federal government that totally got cut this year, is putting on a "Women in Land" type seminar. Basically, it's a half day clinic for women who own property and educating them on the different levels of conservation. There being no further business, the meeting adjourned at 9:10 a.m. Respectfully submitted, C &I� , �} .z,< , aulla, Diane Kearns, Chairman — (,-� I Eric It. Lawrence, CEA Secretary Conservation Easement Authority Page - 173 - February 23, 2012