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CEA_03-19-09_Meeting_Minutes• 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 March 19, 2009 at 8:00 a.m. PRESENT: Diane Kearns, Chairman; Jim Lawrence, Treasurer; Robert Solenberger; and John Gavitt. ABSENT: Ritchie Wilkins, Vice - Chairman; John Marker; Cordell Watt, Planning Commission Liaison; Todd Lodge; and Gene Fisher, Board of Supervisors Liaison. STAFF PRESENT: Amber Powers, CEA Secretary; Eric Lawrence, Planning Director; and Bev Dellinger, Secretary III. PUBLIC MEETING: 1. Minutes. There was not a quorum of members in attendance; therefore, the minutes of the February 26, 2009 meeting were not acted upon. 2. Guest Speaker, Chris Price, Discussion Regarding TDR's 3. Open Transfer of Development Rights Discussion. Ms. Kearns turned the meeting over to Mr. Price. Mr. Price introduced himself as the Executive Director of the Northern Shenandoah Regional Commission and stated that he had been involved in administering a new TDR program from scratch in Pennsylvania. Mr. Price stated that basically a TDR program is similar to Purchase of Development Rights, but it's difficult to find money for a PDR Program. In the TDR Program, the private sector makes the purchases. From the County's perspective, it's better to get development where roads, water and sewer, schools and parks exist. From the farmer's perspective, a lot of times they don't want to sell their property but they have to sell their property, and given an option people would like to keep their land. There's a benefit for the land holder to have someone be able to purchase their development rights. From the developer's perspective, houses can be built in a recognized development area and this decreases infrastructure costs. This program is a win -win situation for the jurisdiction, the land owner and the developer. You've taken the development rights from the farmer's land and you're putting them into areas that the County has decided has appropriate infrastructure. Mr. Price noted that not all properties are going to be appropriate to receive the development rights. Neighborhoods, road systems and schools will have to be looked at in order to get the greater good of preserving farm land somewhere else. From a mechanism standpoint, what seems to work best is that the County would identify the lands where you can send development rights from and identify the lands where you can receive them and create a spreadsheet which balances these rights on the sending side and receiving side. When a transaction happens, the County makes sure that it gets recorded properly on the easement Frederick County Conservation Easement Authority - 102- Minutes of March 19, 2009 • agreements, on the land development plans and subdivision plans. The County also has to make sure the land owner is not selling more rights than he has available to him and that the developer is not building more units than the rights he's eligible to build. It's a daunting task at first to set it up, but after the fact, it's fairly easy to administer. Mr. Price continued that one of the difficult things up front is figuring out the value of the development rights. The land holder may feel that the land has certain value and the developer probably thinks the land is worth less than the land holder. The typical way of figuring the value is to have an appraisal done and you take the value of the land as ag land and the value of the land if it was developed, and the difference in those valuations is the easement value. Mr. Solenberger asked Mr. Price how the program worked out in Pennsylvania. Mr. Price responded that when he was there, it was at the infancy stage — the ordinances had just been created. The County where Mr. Price worked had 35 different municipalities and Pennsylvania law allows you to transfer across jurisdictional lines. In Frederick County, one of the things you will find is people in adjacent neighborhoods might not want that extra density. Ms. Kearns asked typically how often appraisals are done. Mr. Price stated it's up to the County; if the ordinance says that an appraisal will be done up front, you can assign the value of those development rights up front, and even if it takes 20 years to move those properties along, you've set the value or it could be market driven where at the time of transaction, you get an appraisal and that's going to dictate the transaction. The problem is every time the appraisal comes up, that's a new cost, or barrier, to do the transaction and you want to make the barriers to do the transaction as low as possible. Typically, you find either one up -front appraisal and that controls the transaction through the life of the process or you find that the County, over time, sets the values. Ms. Kearns asked if anyone in Virginia has something like this functioning and Mr. Price responded no. Mr. Gavitt stated that unless a TDR program applies to an entire County or there's some other incentive for a developer, wouldn't the incentive be for the developer to skirt the TDR purchase and hit other areas, or does the County say you have to purchase development rights in order to develop in the UDA. Mr. Price answered that the State missed a significant opportunity in the legislation this past year. They require a strict one -to -one ratio, so for every unit you're going to sell, you can build one unit in the receiving area. Most states that are progressive and have been doing this a while allow for a greater ratio. For every one you sell, you can build two or three and that's a real incentive. From a developer's perspective, the most significant benefits would be decreased development costs, and in the development area typically those properties have a high rate of return because they have access to the amenities. You also have negation options available through the rezoning process so you can incentivize this transaction to happen through the land development planning process by saying this is our policy and we're going to make it easier on you if you participate in this program. If the developer believes the tenet that time is money, the County can save him a considerable amount of time if this is all pre - planned. So per • unit costs and time and planning costs would be the biggest benefits to the developer. Frederick County Conservation Easement Authority - 103- Minutes of March 19, 2009 • Mr. Gavitt stated it's been his impression that developers have gone to rural areas because the costs have been less and it seems like the County is going to have to make things more uncomfortable for a developer to go to rural areas as opposed to the UDA. Mr. Lawrence responded that generally there are two different kinds of developers — the local builder and the national builder. The national builders aren't going to the rural areas; they're doing mass and urban projects. In the last five years, the builders who have gone to the rural areas are the local builders who weren't able to get lots. That's why the County talked last year about changing the density, which has been nixed because of a lot of opposition, but the idea was that changing the density would cut out half the houses. Mr. Price pointed out that time is money. As an example, Mr. Lawrence cited the Silver Lake rezoning which went to the Planning Commission last night. It got through the PC with endorsement and it will go to the Board next month. They have spent close to three years going through the planning process to get a rezoning approved. Under the TDR concept, it could be as easy as the County having a map which shows properties that have the right to sell their development rights, and instead of going through a rezoning, the developer could go directly to a farmer and strike a deal fairly quickly, without cash expectations for schools and road infrastructure improvements. Mr. Lawrence believes the County should come up with an easement agreement to eliminate everybody negotiating what goes into the agreement so if you want to do TDR rights, the County has the agreement. Basically, you put the property owner's name, property identification number, purchaser's name and how many rights are being purchased. Mr. Gavitt asked if these are like conservation easements — they cannot be reversed, they're permanent. Mr. Price stated that's correct — it's in perpetuity. Mr. Lawrence stated that everyone believes it needs to be perpetual easement. He's been tasked with the question of a deed covenant, making it easier to manage than an easement. Mr. Solenberger stated the Court can overturn those. Mr. Price said there was interest in some jurisdictions in Pennsylvania that would have participated in the program but decided against it because the easement had to be held in perpetuity. They felt they would like an easement to maybe be in perpetuity except that the easement holder could change the terms if conditions change over time. As you're building out a comprehensive plan, if conditions changed, they wanted to be able to be responsive to those changes in the future and an easement held in perpetuity is forever. If you needed access to that land for new growth areas, it's not available. As far as the deed covenant or deed restriction versus easement, there was one case they were following in Pennsylvania where there was an Economic Development Authority that condemned a portion of the land that was held in easement through a TDR Program. It also had some other restrictions on it as part of that easement program, but the Authority condemned the land to build a road to an industrial park. The Court overturned the condemnation because of the conditions in the easement that were associated with the TDR Program. Mr. Gavitt stated that he's very surprised by that because he always thought that eminent domain takes precedence over an easement. Mr. Price said he's not sure what would happen if that challenged to the Supreme Court, but it went to the Pennsylvania State Supreme Court. • Frederick County Conservation Easement Authority - 104- Minutes of March 19. 2009 • Mr. Lawrence stated it might be hierarchy because we create the easement at the local level through a TDR ordinance. If the local body wants to do an infrastructure improvement, it may not be able to overcome the easement but as you go up the hierarchy, they trump everything we do at the local level. A public utility is approved at the State level and it'll trump anything we've done at the local level. Mr. Price continued the other thing that's important to understand in terms of easements being forever is IRS implications. When you're taking the tax gains available through the conservation program or the easement program, the IRS has certain expectations about the life expectancy of that easement. There are estate planning issues but they're not insurmountable. Ms. Kearns asked when TDR rights are sold from a portion of RA property, how is that handled. Mr. Price said the ordinances they were drafting in Pennsylvania were requiring that if you couldn't sell all the rights to the developer, you sell the rest of them to another body, that comparable body being the Conservation Easement Authority here in Frederick County. The transaction would all happen up front so that you sever all rights at once because that's a very complicated issue if you sever some of the development rights and transfer them now and you hold onto some for the future. If you had 100 units by -right and you sold 50 and in the future you developed 50 houses on huge lots and took up the entire parcel, then it wouldn't do the County any good and the density is increased in a place where otherwise density wouldn't have increased. The ordinance has to say that if you keep some of those development rights, you have to agree that any plan that you submit in the future for development on that property has to be • clustered that preserves a certain percentage and keeps a viable piece of ag on that property. Ms. Kearns stated this leads right into the question of banking. Mr. Price stated that jurisdictions almost always want the transaction to happen as quickly as possible, and in fact most jurisdictions want the transaction to happen as the developer is getting ready to submit a subdivision plan on a property; he's purchasing the rights right now and creating a subdivision plan that's using those rights. It's also in the developer's best interests because it could happen that the developer could purchase rights and the County in a few years could decide this program isn't working and we're out of it. There's been no test case to say that someone has the grandfathered development rights because the developer has never assigned them to a property. If a developer has never assigned them to a property, that's when vesting happens, when he gets a subdivision plan approved that has those lots created on record. There's never been a case that says I'm vested, I've purchased these rights and I can use them wherever I want. You can even make the condition of the purchase contingent upon the subdivision plan approval. Legally the developer can own and hold them, but Mr. Price wouldn't recommend it; that's a risky proposition. Mr. Gavitt stated he likes the concept of keeping this very, very simple in the beginning and not getting into a negotiation process with the landowner. Mr. Gavitt is very concerned about the Easement Authority or this County remaining within a sole PDR Program because if we're successful at all it's going to be fragmented success and this is truly an opportunity to be able to move forward and have some money to make things happen. Mr. Gavitt is also totally against • anything being anything but perpetual. If it's not, the pressure will be unbelievable to reverse it and develop it. Frederick County Conservation Easement Authority - 105 - Minutes of March 19, 2009 • Mr. Price stated that if the Easement Authority was to hold the easements, your core responsibilities are very similar to what a Purchase of Development Rights as an easement holder would be. The most important thing is the Authority would want to participate in the language of any easement agreements that were drafted because it's your responsibility after the fact to manage that easement. You're required to maintain any documentation, property records and other things because that easement is held in perpetuity. You have to maintain compliance with the easement, which requires periodic monitoring. Maybe an annual inspection to go out and make sure someone hasn't done something to make the land less viable. As the easement holder, you have the right to review and comment on anything that's happening on that property, even if it's a permitted use, just to make sure that the easement rights aren't compromised. Ensuring that the easement restrictions, if any, are maintained could involve a Court challenge, but you would have to be prepared to legally enforce the easement if it came to that or the easement has no value. Mr. Solenberger asked Mr. Lawrence where the receiving areas would be. Mr. Lawrence stated within the UDA, areas planned for future residential; within the urban center, which is a newly created zoning district which is commercial /residential; and the rural community centers, like Brucetown, Gainesboro and Gore. We're still working on finding the sending areas. The initial thought was we could choose a vast rural area of Frederick County as a sending area because you could tier it based on the multiplier that the farmer could sell three density rights, but since the State has said it has to be a one - for -one transfer, we have to scale back our vision and really identify key areas within the rural areas that we can target as the sending areas. In the western • part of the County you don't notice development because of the mountains and hills and it's harder to get Pere tests done, but when you go out Middle Road and Cedar Creek, properties have converted from orchards to two acre lots. The initial thought is the good soils where the orchards are ought to be the sending areas. If you go to Shawneeland, the side of the mountain has 50 to 100 acre tracts because you can't build on the side of the mountain. We don't want to give them the opportunity to sell development rights which, in reality, don't exist. We have to structure the TDR Program to prohibit the property that can't develop because it doesn't have all the ordinance requirements satisfied. We want to make sure that if a property can only be developed and capture 50 lots instead of 200, then he can only transfer 50 lots. Ultimately, if we get the opportunity to create the flexibility so that the farmer can sell twice or three times as many rights as he could actually develop, then you can identify the farms that have really good ag soils that can prosper. But at the same time, if it's prospering agricultural soil, we want it to stay that way. Mr. Gavin stated that it may well be really important to review and get a tax attorney's view on what would be the minimum requirements in order for a template to be able to qualify for IRS conservation easement criteria. That's an additional incentive, that there's a difference between what they're selling and the current appraised value, that they can even get both federal and state tax credits. Ms. Kearns stated if we all think this is really a good idea, we need to start strategizing on the political level of how we can enhance the possibilities when this comes about. Toward that end, Ms. Kearns stated she talked to Mr. Shickle about the TDR Program. What she heard him say was he had been thinking just deed covenants; he hadn't really thought easement. Mr. Shickle Frederick County Conservation Easement Authority - 106- Minutes of March 19, 2009 ® was also saying the reason he thought the idea was interesting and he supported it is because he was going for a one - for -one. Ms. Kearns asked Mr. Lawrence how this is going to progress. Right now it's an informational thing but is it in Planning's court right now. Mr. Lawrence stated that progression of the rural areas policy is that on April I" it's presented to the Planning Commission and then to the Board at the end of April, which will give us the recommendation to create a TDR ordinance. When the policy gets approved and passed, it's a directive that we create a TDR Program. The Planning Department is fully responsible for that so we're doing research now on TDR programs. Mr. Lawrence continued that whether it be an easement or deed covenant, a lot of the drive behind this is we don't want to add bureaucracy. The belief is if we do a standard easement, that makes it simple for the farmer and the developer to understand and come to an agreement, but also if the standard easement says you can't subdivide or you can't build houses, those are two things the Planning Department already manages. We sign off on building permits and subdivisions so we don't create another layer of bureaucracy because we're enforcing it. Someone has to hold that easement if we go that route and since this Committee is promoting PDRs, it seems this is the logical group to hold it. But the same thing we talked about several years ago with PDRs, we don't want to be responsible for enforcing and taking people to Court because we don't have funds to do that. Conceptually, if this group is a holder of an easement and the easement simply says you can't build houses and you can't subdivide, it's the Planning Department's responsibility to enforce that so the CEA doesn't have any responsibility. The idea of maybe once a year organizing a bus tour of all of the easements we hold to make sure as a group that the properties are still consistent with the agreed to easement. If we see that somebody has done something wrong, that becomes a zoning violation. • Mr. Price stated that the Regional Commission is sponsoring a workshop presenting a TDR overview on April 24 at Valley Farm Credit from 10:00 am to 2:00 pm. They will be announcing an upcoming workshop dealing with green infrastructure on May 15 Mr. Gavitt requested of Mr. Price that the workshop be expanded to include conservation organizations because they are a good source of PR and support. Mr. Jim Lawrence stated that he and Mr. Patrick Felling of Potomac Conservancy feel that the initial format should be geared toward what the local governments are used to. If the Frederick County Planning Commission wants to invite people who have been involved in the rural areas study, that's up to them. Mr. Lawrence pointed out that the Planning Department is going to create an assortment of web pages to talk about TDRs for educational purposes, and ultimately presenting the sample easement language. Mr. Lawrence added that he's always seen the CEA as a PR body for the conservation of the community. You have your annual information gatherings and the TDR Program could assimilate into the same effort. Mr. Gavitt stated that we need information sheets. Mr. Lawrence stated that what we could do through our web exercise is to make sure as we put information on there, we'll bring the CEA • and others into the loop so we're all reading from the same script and it will be consistent. Frederick County Conservation Easement Authority -107- Minutes of March 19, 2009 4. Other Ms. Kearns stated that she has talked to Ms. Marg Copenhaver and the Zartmans and they're eager to host an event in the fall. Mr. Zartman suggested we have something in October that will focus on apples. Ms. Kearns told Mr. Zartman that she won't be able to help at that time of the year. Mr. Zartman said they would handle everything. Ms. Kearns thought that if we do a fundraiser in the fall and it's focused on fruit, we may be able to get some of our CEA members who grow apples and do a fruit sale, but we would need to price it higher than the local farm markets so as not to compete with them. The idea being if you buy, the money will be used by the CEA. Ms. Kearns will talk to Mr. Zartman again before a decision is made. Ms. Kearns said that VCC is holding workshops and it's Jesse Richardson talking at Lord Fairfax. Also, there's an initiative that's gotten started; PEC, DCC and RC &D and Extension are involved in it. Mr. Gavitt stated it's basically a "Buy Fresh, Buy Local" campaign where every producer in Frederick County and other counties will be given the opportunity to fill out a survey and actually get on a really nice mailer that will either be provided to various stores or physically mailed out. Preserve Frederick is in the process of deciding whether they will commit up to $5,000 to get this mailed to all the households. Ms. Kearns stated that Mr. David Garber is going to ease 250 acres on Hunting Ridge. The next meeting is scheduled for April 23` and Ms. Kearns will not be able to attend. It was decided to keep the meeting date on April 23` It was decided that although a quorum is not present, the Committee will contribute $100 to Mr. Jim Lawrence's organization. Everyone present voted to approve. Ms. Powers will contact members who are not in attendance today to get their verbal approval. There being no further business, the meeting adjourned at 9:40 a.m. Respectfully submitted, C �tG4: ��lll. Diane Kearns, Chairman Amber Powers, Secretary Frederick County Conservation Easement .Authority - 108- Minutes of March 19, 2009