COUNTY OF ALBEMARLE
Funding Options for the ACE Program
Presentation by Rex Linville of Piedmont Environmental Council and Pat O’Connell of Evergreen Capital Advisors on Additional Funding Options for the ACE Program
Messrs. Tucker, Foley, Davis, Kamptner, Cilimberg, Benish, and Goodall
LEGAL REVIEW: Yes
September 3, 2008
ACTION: INFORMATION: X
The promotion and establishment of conservation easements is one of the primary tools used to protect important County resources and to implement the County’s growth management policy. The Board has identified the goal of protecting 30,000 additional acres in conservation easements by 2010 as one of the County’s four most important strategic goals. The Acquisition of Conservation Easements Program (“ACE Program” or “Program”) is an important component of meeting this goal.
The purpose of this presentation is to provide information to the Board about alternative funding options that have been used successfully in other states and Virginia localities, including the Cities of Chesapeake and Virginia Beach and Isle of Wight County. As programs for the purchase of development rights have flourished throughout the country, so have the funding options for, and experience in, implementing them. Rex Linville (Piedmont Environmental Council) and Pat O’Connell (Evergreen Capital Advisors) are here today to present information pertaining to these alternative funding options.
Goal 2. Protect the County’s Natural Resources.
Goal 4. Effectively Manage the County’s Growth and Development.
As the County strives each year to meet the demand to fund properties eligible for acquisition through its ACE Program, the need to consider alternative funding options has become more evident. Though funds from the County’s General Fund and transient lodging taxes were adequate to acquire easements on all of the qualifying lands during the first four years of the Program, they have been insufficient during the last four years as land prices and easement values in the County have escalated and the popularity of the Program has increased. As a result, the number of qualified applications for which the County is able to pursue the purchase of an easement, and the acreage that the County is able to actually place under easement each year has steadily declined. If the Program continues to have more applications than its funding can support, the effectiveness and favorability of the Program as an important land protection tool could be marginalized.
Funding for the ACE Program has come from a combination of the County’s General Fund and the transient lodging tax since its inception. For the first six years of the Program (FY 2000-2006), the funding level was $1,000,000 per year. In the last two years, it has been the “equivalent” of $0.01/$100 value of assessed real estate, with funding totaling $1,387,543 for FY 2006-07 and $1,627,000 for FY 2007-08. ACE funding also has been augmented with over $1.3 million in grants and private donations; however, most grant sources have been negatively affected by the downturn in the economy.
Since the Program’s implementation, easement values have risen by 200-300%, with the majority of the increase occurring since 2004. Despite the FY 07 and 08 increases in funding, the increase in appraised easement values has far surpassed the funding increases. As a result, the County has only been able to acquire easements from less than half (15 out of 32) of the eligible applicants over the last four years (including FY 2007-08). In addition, the number of acres placed under conservation easements has steadily dropped from 1,110 acres to less than 550 acres in each of the last three years. The Round 7 ACE applications (FY 2006-07) provide a dramatic case in point: though the
County had nine eligible applicants in this round (two of whom were among the highest scoring applicants to-date), the County was able to fund only two properties, despite receiving over $950,000 in grant money to supplement Program funds. Five graphs are attached to show the trends in acquisition costs and protection efforts of the ACE program since its inception in 2000.
Given long term property value trends, development trends, and the County’s strategic objectives to protect its resources through conservation easements, it may be prudent to consider additional methods of funding the Program at this time. These other funding methods could include: 1) revenue from the sale of bonds (voter approval required); 2) borrowing from the Virginia Resources Authority (lending for land conservation was authorized in 2007 by the General Assembly); and 3) installment purchase agreements. The authority for and limitations on these funding methods have not yet been subject to full legal review at this time.
This presentation is for the Board’s information and consideration. Staff would welcome any feedback and/or direction from the Board regarding specific funding options it wishes for staff to further research.
Table A - Number of Enrolled, Eligible and Funded Properties
Table B - Amount of Funding Available vs. Cost to Acquire All Easements
Table C - Acquisition Costs Per Acre
Table D - Acquisition Costs Per Development Right Eliminated
Table E - Annual Acreage Protected
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