The meeting of the Stafford County Purchase of Development Rights Committee for Tuesday, January 22, 2008, was called to order at 7:02 p.m. by Chairman Tom Coen in the ABC Conference Room of the County Administration Center.

Members Present: Coen, Apicella, Clark, McClevey, Kurpiel, Silver, and Hall

Members Absent: None

Staff Present: Neuhard, Baker, Lang, Keys, Perrotte and Knighting

Others Present: Kevin Schmidt – Virginia Department of Agriculture and Consumer Services, Office of Farmland Preservation

Mrs. Kurpiel made a motion to postpone items 2 and 3 on the agenda to be discussed after item 5.

Mr. Apicella seconded. The motion to postpone passed 6-1 (Mrs. Hall absent).

Staff Update

Mr. Neuhard welcomed everyone to the first meeting of the New Year. He stated staff has been busy since the last meeting with counterparts in the state either with visits or teleconference. He stated Mrs. Baker would bring the Committed up to date.

Mrs. Baker stated there was some information in the packages regarding the other localities and the PDR program. She briefly went over the different localities and explained the system they used.

Mrs. Kurpiel asked for further explanation concerning Virginia Beach which stated fair market value less the Agricultural value.

Mr. Neuhard stated they have a set agricultural value. He stated Mike Keys from the Commissioner of Revenues office would talk specifically about this which would better explain in his presentation.

Mrs. Baker stated the brochure would be a one or two page tri-fold which would be sent out. She stated a draft should be available at the next meeting.

Mr. Neuhard stated Mrs. Baker is involved with PDR Administrators and Commonwealth of Virginia. He stated during the conversations, some valuable information had been obtained concerning what they have done or did not do, but in all cases the jurisdictions took the time to make sure every thing in place and money available to respond to the land owners that were interested. He stated in speaking to the other jurisdictions, it seems that one million dollars is the amount of money to have. He stated there are three different ways of valuing and there are some advantages and disadvantages to each one. He stated each one is being used by several jurisdictions in Virginia. He stated the Committee would need to examine the advantages and disadvantages of each in order to make a decision. He stated the time involved is somewhere between 5 to 6 months and 1 to 2 years depending program. He stated in some cases if negotiations are involved, the land owners will back out.

Mrs. Clark asked if June was still the target date to accept applications.

Mr. Neuhard stated if the Committee decided to go forward this year, we would like to be in a position to open this by April.

Mrs. Clark asked if the brochures would be available by March.

Mr. Neuhard stated yes.

Mrs. Clark asked if the brochures would be mailed.

Mr. Neuhard stated a direct mail to all land owners in A-1 and A-2 outside of the Urban Service Area had been discussed.

Mrs. Baker stated information would be obtained from the Commissioner of Revenues records for land greater than twenty acres in the A-1 and A-2 zoning districts.

New Business

Mr. Neuhard stated Kevin would give an overview of the State program and the funding, with Maria Perrotte from the Finance office to discuss basic government financing and with we could use and explain the pros and cons. Then Mike Keys from the Commissioner of Revenues office will walk the Committee through the options of determining value and if we would should negotiate or not.

Kevin Schmidt stated he was the Coordinator from the Office of Farmland Preservation. He gave information explaining his experience and a power point presentation concerning the Office of Farmland Preservation. He stated the Office of Farmland Preservation is responsible for developing model policies, certification criteria and methods and sources of funding for local Purchase of Development (PDR) programs. He explained the PDR programs compensate landowners for permanently protecting property from development and a conservation easement is recorded with the deed. He stated the landowner retains all other ownership rights and PDR programs are voluntary. He stated sometimes there are allowances for future home sights for family, but that is up to the locality as to how to address that issue. He stated generally you are limiting the development of the property. He stated there are 21 local programs in the Commonwealth of Virginia, seventeen localities have a program on the books with some sort of funding, and four others have a program on the books but no funding at this time. He stated every year there is an increase in localities becoming interested in the program. He stated in 2007 the Governor and General Assembly approved $4.25 million for state matching funds to local PDR programs. He stated Stafford is under the four hundred thousand dollar cap, so a match will be given dollar for dollar. He stated the money will be allocated for the county to decide how properties are valued and easements are sent to Virginia Department of Agricultural and Consumer Services (VDACS). Actual awards should be sent out within the next few weeks with the amount of money the locality will receive.

Mr. Neuhard asked about restrictions on the money regarding farmland.

Mr. Schmidt stated there is no definition for working farm land. The money will be allocated to the county and the county will decide how properties are valued. Easements are then sent to the VDACS office for review.

Mr. Apicella asked if the match funds could be used for other projects such as forestry, historical or open space.

Mr. Schmidt stated it would have to be working farm easement in order to receive the state match funds. The county could certainly use their money for other easements, but it would not qualify for the state match fund.

Mr. Silver stated that there is no definition of a working farm.

Mr. Schmidt stated that is correct. He stated the Attorney Generals office would have to review all easement language.

Mrs. Baker stated a draft deed of easement was sent out to the Committee a few months ago, but she would send it out again.

Mr. McClevey asked if there was a minimum acreage.

Mr. Schmidt stated no, that is up to the locality.

Mrs. Hall asked if there was a restriction on the number of dwellings at the State level.

Mr. Schmidt stated no, the State would leave that up to the locality.

Mrs. Baker stated there is other money for Historic Resources and wetlands.

Maria Perrotte, Chief Financial Officer, stated there are three options, first was to pay cash or pay as you go which is straight forward, you go to closing and give the landowner a check It would be part of the operating budget and does not impact debt policies or CIP and could involve a dedicated source. She gave any example if the Board of Supervisors were to dedicate one cent on the real estate tax rate that would provide approximately $1.6 million. She stated the second would be financing, which could leverage the funds to draw down state match funds and accelerate purchases. She stated cost could even out costs over the years and would be required to go through the CIP process. She stated the county would budget the debt service payment which could be a dedicated source. She there was a variety of options that could be used, General obligation bonds, state loan programs through the Department of Environmental Quality (DEQ) and Virginia Resource Authority (VRA), or other programs that would not require a referendum but would have to be within the county’s affordability. She stated some of the latest are Installment Purchase Agreements (IPAs) or Pensions- which is an installment payment to the owner of the land, which may offer tax advantages to the landowner and could be more cost efficient to buyers. She stated IPAs may require a referendum and can be tricky and you would have to look at each deal on its own. She stated there are advantages and disadvantages on each one for both the county and the landowner. She stated the other issue is the source of money, weather you pay cash or debt service which could be a dedicated amount.

Mrs. Hall asked if the Real Estate was the most likely place to get the one cent.

Mrs. Perrotte stated that was the one used most often, but the Board of Supervisors could set aside special assessment districts, implement some other tax, or raise the personal property tax rate. She stated Real Estate was the one seen most often.

Mrs. Kurpiel asked how a special tax district would work.

Mrs. Perrotte stated if there were a special tax district a rate would be set for the district, which would be the same as adding a penny to the real estate tax rate, but the locality has more legal restrictions and the Board of Supervisors would have to set the rate every year.

Mrs. Kurpiel stated that would guarantee the commitment to this program. She asked Mrs. Perrotte is the county could set us a 501C3 to accept donations.

Mrs. Perrotte stated she would have to look at that.

Mrs. Kurpiel asked if proffers could be a potential source.

Mrs. Perrotte stated cash proffers have to be tied to something in the CIP, and if there was a line in the CIP then we could consider looking at cash proffers.

Mr. Schmidt stated there is now a bill that states you can use cash proffers to fund your local Purchase of Development Rights program.

Mr. McClevey asked what would happen to individuals that have property in land use.

Mr. Keys stated the property would still qualify.

Mr. Schmidt stated there is actually language in the section that refers to the donation of land for a conservation easement to use a reduced value automatically. He stated if the use of the property has not changed there should not be any change in the tax rate.

Mrs. Kurpiel asked if grant money was available.

Mrs. Perrotte stated the grants could be written through several departments.

Mr. Apicella asked the borrowing power of one million dollars.

Mrs. Perrotte stated it would depend on how long it was to be financed, but easily it could be ten fold.

Mr. Apicella asked if the IDA or EDA would be another avenue to borrow money.

Mrs. Perrotte stated those are generally used when you are leasing back the assets. She stated she would suggest the VRA instead of IDA or EDA because of the transaction costs.

Mr. Neuhard asked Mrs. Perrotte to talk about affordability and how that fits.

Mrs. Perrotte stated one of the things that guide the CIP process is the county has guidelines for financial management and debt. She stated there are ratios that the county would have to keep in balance, so you would have to look at what debt service the county can afford in the upcoming years. She then explained the formula for the ratios.

Mrs. Kurpiel asked Mrs. Perrotte what she would recommend to the Board of Supervisors.

Mrs. Perrotte stated if the objective is to insure that there is funding, she would consider some sort of dedicated revenue source, which would provide more assurance.

Mr. Schmidt stated the biggest complaint from landowners is there needs to be a consistent level of funding. He stated it keeps the applicants guessing if they should apply now or wait until more funding is available.

Mrs. Kurpiel stated in her opinion the installment purchase agreement is very attractive because it gives control and can be managed. She stated the funds can be used to pay the principal and interest and pay the balloon at the end. She asked it there was any downside other the requirement of referendum.

Mrs. Perrotte stated that was the biggest issue. She stated she has concerns with a balloon payment, but stated if done properly it could work. She stated the details are critical but it was marketable to the landowners and could be tailored to the landowners’ situation.

Mrs. Baker asked it if could cost more in the long run.

Mrs. Perrotte stated anytime you finance you pay more, but it would cost less that other financing alternatives.

Mrs. Kurpiel stated the advantages to the landowner are significant.

Mr. Apicella asked if an IPA or a pension would require a referendum.

Mrs. Perrotte stated is structured more like a bond and with the IPA you get the interest until the balloon payment.

Mr. Apicella asked if a pension would require a referendum.

Mrs. Perrotte stated probable, anything with a financing aspect to it would require a referendum unless you could wrap it around VRA financing.

Mrs. Kurpiel asked Mr. Schmidt his perception of the owners’ acceptability to installment payments instead of cash payment at the time of recordation.

Mr. Schmidt stated the landowners in Virginia Beach think it is great. He stated there is a need to explain to a landowner why you are not giving them all the money today and how that will actually benefit them. He stated if the only option is an installment plan, it works for some landowners and not for others.

Mrs. Perrotte stated if you go to the referendum you could choose your financing source to allow you to offer either to the landowner, depending on their needs.

Mr. Silver asked how the lump sums from the state work it you are paying interest only.

Mr. Schmidt stated it would be an accounting issue and are hoping to offer match funds to localities with IPAs.

Mr. Apicella asked how we can give all the options to the landowners.

Mr. Schmidt stated the options for the landowner for their easements is the state tax credit for donated easements. The landowner have given up something of value, if the appraisal is one million, the county will pay three hundred thousand, the landowner can claim two hundred thousand as a charitable gift, there are federal and state tax credits and deductions.

Mr. Neuhard stated the question is negotiated value, you can offer information regarding tax credit. He stated, in his opinion, each option has advantages.

Mr. Apicella stated when we try to sell this program to the landowner, the documents need to show the advantage to the landowner.

Mrs. Hall stated it would be advantageous to have a tax credit program.

Mr. Coen stated the landowners need to make determinations after the county gives the information.

Mr. Neuhard stated Mike Keys from the Commissioner of Revenue office will show valuation models.

Mr. Keys gave a power point presentation and stated there are three possible options. He stated option one is the two appraisal method which is what James City County is doing, option two is the one appraisal method which is what Virginia Beach is doing and option 3 is purchasing individual development rights which is what Fauquier County is doing. He gave details concerning the pros and cons with each option.

Mr. Neuhard stated James City County negotiates what is allowed on each property.

Mrs. Hall asked how you determine the fair market value verses the development value.

Mr. Neuhard stated some people want to preserve the land and are not as influenced by the developer pressure as others. He stated people do this for different reasons and in some cases people have walked away from the table. Some people want their family to have the land for future generations.

Mr. Apicella stated in his opinion the county would take a risk getting two appraisals. He stated we could spend a lot of money on appraisals and the landowner could walk away at the end of the game. He asked in order to make this the most saleable, is there a way to allow for an appraisal that the landowner would pay for in order to show what they did not get out of this deal.

Mrs. Kurpiel stated an appraisal would be required in order to obtain a tax credit.

Mr. Schmidt stated the IRS has very strict rules that need to be followed. He stated an independent appraisal is required and there are requirements as to how the property is appraised.

Mrs. Baker stated you would have to figure out the set density and in order to do that there is a set formula in the Zoning Ordinance.

Mrs. Kurpiel stated she thought the development rights had to be calculated under any scenario.

Mr. Keys stated you are relying on the appraiser to do the calculation, generally the appraiser will not tell you the calculation. He stated developers are buying property based on an estimate at thirty to forty thousand per home site. He states the day after closing he will flip the parcel for one hundred thousand per lot, but he will know exactly how many lots there are

Mr. Neuhard stated he hopes we have given the committee enough information to further discuss at the next meeting and come up with recommendations as to how you think we should proceed.

Organization

Election of Officers

Tom Coen stated the next item on the agenda would be the election of officers and asked for nominations for the Chair.

Mrs. Hall nominated Mr. Coen as Chair. Mr. Apicella seconded.

Mr. Coen asked for other nomination. He stated seeing none he would ask for a motion to close nominations.

Mr. Silver made a motion to close nominations. Mrs. Clark seconded. The motion to close nomination passed 7-0.

The motion to make Mr. Coen Chair passed 7-0.

Mr. Coen stated he would like to nominate Gail Clark as Vice Chair.

Mrs. Clark stated she would have to decline and would like to nominate Steve Apicella as Vice-chair. Mr. Silver seconded.

Mr. Coen called for additional nominations. He stated seeing none he would ask for a motion to close nominations.

Mr. Silver made a motion to close nominations. Mrs. Clark seconded. The motion to close nomination passed 7-0.

The motion to make Mr. Apicella Vice-chair passed 7-0.

Mrs. Baker stated at the last meeting the Committed had a discussion to designate Mike Neuhard or his designee as secretary.

Mr. Coen asked for a motion to appoint Mr. Neuhard or his designee secretary.

Mr. Apicella made a motion to appoint Mr. Neuhard or his designee secretary. Mrs. Clark seconded. The motion passed 7-0.

Revised By-laws

Mrs. Lang stated on page 2 at the top under E “The Chairman shall serve until his successor has been elected. If the Chairman is not reappointed to the Committee by the Board of Supervisors, the PDR Administrator shall serve as a temporary Chairman until new officers are elected.” She stated this was in case the Chairman and the Vice-chairman are not reappointed, there will be someone to chair the meeting until the new officers are elected.

Mr. Apicella made a motion to adopt the bylaws ad amended. Mr. Silver seconded. The motion to adopt the by-laws as amended passed 7-0.

Minutes of December 3, 2007

Mrs. Kurpiel stated she had a correction on page 5, in the discussion about mortgages should state “Mr. Silver stated, in his opinion, the lender would have to approve of a PDR program on a mortgaged property”. She asked that the words have to be added to the minutes.

Mr. Neuhard stated on page 6, in his comments, the correct word should be oriented to the county programs not anointed.

Mr. Coen stated all those in favor of accepting the minutes as amended. The motion passed 7-0.

Next Meeting

Mr. Neuhard suggested scheduling monthly meeting because of the budget the committee needs to lock down the valuation and give a recommendation during this budget season. He suggested a regular meeting night such as the second or fourth Tuesday of the month.

Mr. Coen stated he would like to recommend the fourth Tuesday night, which would be the 26th of February.

Mrs. Lang stated she will not be at the meeting on the 26th of February, due to the immigration meeting, but someone from her office would be there.
Mr. Coen stated he thought the 26th of February would give more time to staff.

Mr. Neuhard stated the 26th of February would give the Committee time to make a recommendation to the Board concerning financing.

Mr. Coen stated the Commission would schedule the meeting for the fourth Tuesday of each month.

Other Business

None

Adjournment

With no further business to discuss, the meeting was adjourned at 9:29 p.m.