Greenbelt Commission Reviews Finances

The Ann Arbor Greenbelt Advisory Commission meeting (Sept. 8, 2010): At their September meeting, commissioners got a financial update on the city’s greenbelt program, reviewing unaudited statements from fiscal 2009-10.

Financial manager Kelli Martin reported that revenues from the 30-year open space and parkland preservation millage, which funds the greenbelt as well as land acquisition for parks, were $2.262 million in FY10. Combined with grants and other sources, total revenues for the year reached $3.413 million.

Some commissioners questioned a sharp drop in investment income – from $815,261 last year to $130,011 in FY 2010 – and Martin agreed to ask Matt Horning, the city’s treasurer, for a more detailed report on that issue.

Total expenditures rose 19% to $5.087 million, an increase mostly attributable to greenbelt projects – $3.427 million spent during FY10, compared to $2.641 million in FY 2009. The program bought development rights to three properties during the fiscal year: the Nixon farm in Webster Township, the Girbach farm Lodi Township, and the Webster Church property in Webster Township.

The Sept. 8 meeting began with a presentation by two representatives of Real Time Farms, who asked the commission to help them market their business – an online guide to local foods.

Real Time Farms

Lindsay-Jean Hard and Cara Rosaen made a presentation about a business that launched earlier this year – Real Time Farms. Founded by Rosaen’s husband Karl Rosaen, Real Time Farms is an online guide that provides information about farms and farmers markets within a given area, allowing both farmers and consumers to post photos and commentary. Though it started in Ann Arbor, the site includes locations in other parts of Michigan and in other states, with listings in California, Connecticut, Maryland, North Carolina and Oregon.

The latest addition to the site is a section for restaurants that use locally sourced food. Cara Rosaen, the firm’s marketing director, told commissioners that the business will make revenue from a $120 monthly fee that restaurants pay for their listings. (Farmers don’t pay to be listed.) Locally, five restaurants have signed up so far: Jolly Pumpkin, Grange Kitchen & Bar, Selma Cafe, Logan and Zingerman’s Roadhouse.

Rosaen said they were hoping for some kind of partnership with the city’s greenbelt program, and she hoped that commissioners would use their networks to inform people about the site.

Dan Ezekiel clarified that the venture was a for-profit business, not a nonprofit. Rosaen said they’ll soon be looking for funding to push the site nationally, now that they’ve signed on five customers – the five Ann Arbor restaurants – and proven the business model.

Laura Rubin asked how the business defines “local” and whether the size of the farm is a factor. Rosaen said that anyone can post to the site, regardless of the size of the farm. People can search for farms in their area by zip code, city name or the name of the farm.

Jennifer S. Hall, who’d heard the Real Time Farms presentation at the July 2010 meeting of the Ann Arbor Downtown Development Authority, noted that local food is one strategic focus for the greenbelt program. She wondered whether the site would allow people to search for farms that are part of the greenbelt. Rosaen responded, saying it would be possible to tag the farms to indicate their affiliation with the greenbelt. And since anyone can add a listing, she said, it would be possible to include all greenbelt properties.

Greenbelt Financial Update: 2009-10

Kelli Martin, financial manager for the city’s community services unit, gave an update on the greenbelt program’s unaudited financials for FY 2010, from July 1, 2009 through June 30, 2010. [.pdf file of financial statement]

Revenues coming from the 30-year open space and parkland preservation millage, which funds the greenbelt as well as land acquisition for parks, were slightly higher in FY 2010 – $2.262 million, compared to $2.232 million in FY 2009. [Two-thirds of the millage proceeds fund the greenbelt program, with the remaining third allotted to parks. The parks funding is overseen by the city's park advisory commission.]

In FY 2006, the city took out a $20 million bond that’s being paid back with revenue from the open space and parkland preservation millage. The fund balance from the bond stands at $15.427 million, down from $17.1 million in FY 2009.

Millage revenue exceeds the amount needed to make debt service payments on the bond – the surplus is accruing in a separate account. Of the $15.427 million fund balance, $12.475 million is the accrual of funds from the millage and $2.952 million is the remainder of the bond monies.

The greenbelt program received $1.03 million in federal grants during the year from the U.S. Department of Agriculture’s Farm and Ranchland Protection Program, or FRPP. That was up from $681,800 received in FY 2009.

Interest income dropped from $815,261 in FY 2009 to $130,011 in FY10, and commissioners had several questions about the change.

Martin explained that lower interest rates were one factor contributing to the lower interest income. In addition, open space millage-related funds had previously been kept in a separate investment pool, where longer-term investments had yielded higher returns – in the 4-5% range. But last year, because the greenbelt program had several projects in the works, there was the need for greater liquidity, which necessitated shorter-term – and lower yield – investments, closer to 1%.

Those short-term yields were less than what the city’s general investment pool was earning, Martin said. That – coupled with the fact that the open space fund balance has been decreasing – led to the decision to combine those funds into the city’s general investment pool. In general, that pool yields 2-2.5% in returns.

Jennifer S. Hall, who chairs the commission, asked that they receive more information about the interest income, including what the projection is for the current fiscal year. The commission would be interested in maximizing the return, she said, which would allow the program to fund additional purchases. Martin said that the city’s treasurer, Matt Horning, had indicated that future returns would likely be in the 2% range. She offered to have him prepare something more formal for the commission, to explain the investment’s past performance and future expectations.

Peter Allen wanted to know why the millage proceeds were up in FY 2010, when the city’s tax revenue was generally down roughly 5%, due in part to the “Pfizer factor” – a reference to the drug company’s decision to leave Ann Arbor and sell its research campus to the University of Michigan, a tax-exempt entity. Martin speculated that the “Pfizer factor” was reflected in the line item indicating an $11,087 tax refund, but she said she needed to double-check whether that was the case. [In a follow-up phone call from The Chronicle, Martin said that Horning will be preparing a memo for commissioners on both the investment income issue as well as the "Pfizer factor" question. He'll likely attend the commission's November meeting to discuss those topics, she said.]

On the expense side, total expenditures of $5.087 million represented a 19% increase over FY 2009. Most of that increase was attributable to an increase in expenditures related to greenbelt projects – $3.427 million spent during FY 2010, compared to $2.641 million in FY 2009.

Overall, administrative expenses accounted for 3.5% of total expenditures in FY 2010.

Mike Garfield asked why the line item for personnel and IT (information technology) had nearly doubled between FY 2008 and FY 2009 – from $22,905 to $42,999. (It dropped slightly in FY 2010, to $41,130). Martin said that previously, the greenbelt and park acquisition program hadn’t been properly charged for computers and IT services it used. The increase also reflects a percentage of administrative salaries from staff in the community services unit – such as herself and the director, Sumedh Bahl – to pay for the time they spend on the program.

Administrative expenses for The Conservation Fund – which manages the greenbelt and park acquisition programs, under contract with the city – were $131,374 for FY 2010, down slightly from $139,443 the previous year.

Peter Allen asked for clarification about how The Conservation Fund’s contract is structured. Peg Kohring, one of The Conservation Fund’s staff members who works on the greenbelt and park acquisition programs, explained that every three years, the nonprofit bids on the contract. The greenbelt advisory commission reviews it, and it’s ultimately approved by the city council. The staff’s immediate supervisor is Bahl, with whom they meet periodically, Kohring said. They have a detailed, annual work plan that’s reviewed by Bahl, the commission and council, she said.

Ginny Trocchio, another Conservation Fund staff member, clarified that the council had most recently approved a new one-year contract in January 2010, with the option to renew over the next two years.

Laura Rubin noted that the commission hadn’t actually reviewed the work plan in at least a couple of years. She said that when she served as chair, she had asked Jayne Miller – the previous director of community services for the city – to serve on the committee that reviewed the plan, but that Miller had denied that request. Rubin didn’t think the commission had seen the work plan, and she suggested that it be forwarded to commissioners, if possible.

Dan Ezekiel asked about the line item for bank service fees, under the category of administrative expenses. There was no charge recorded in previous years, he noted, but there was a $1,535 expense in FY 2010. Martin explained that the city had been paying those fees in previous years as well– they are charges for wire transfer fees when an acquisition is made. She said that in the past those fees had been recorded as a line item for project expenses, rather than administrative expenses. Martin said she would move those expenses back to the project category, for consistency.

In reviewing the greenbelt projects, Trocchio reminded commissioners that in FY 2010 they had closed on the Nixon property in Webster Township (a $1.89 million expense), the Girbach farm Lodi Township ($770,706) and the Webster Church property in Webster Township ($553,840). In addition, there were due diligence costs associated with projects that are in the works, she said.

Allen urged Trocchio to make sure the financial statements are posted and easily accessible on the greenbelt program’s website.

Ezekiel noted that the John and Bev Alexander project, which closed in 2007-08, still doesn’t have an endowment, and that the line items for the Merkel, Webster Church and Hilton endowments don’t have any dollar amounts listed. The endowments are important, he said, so they should make sure those amounts are listed. Trocchio clarified that the endowments are set aside to cover future costs associated with the properties, including possible enforcement of the purchase of development rights (PDR) agreements.

Ezekiel also asked whether the program is awaiting any federal FRPP reimbursements on properties that have already been acquired. Trocchio said they were not.

Ezekiel also clarified that over the life of the 30-year millage, which ends in 2033, roughly $22 million hasn’t yet been allocated to projects or debt service. That amount would ultimately vary depending on investment income and millage revenues, which fluctuate annually based on property values.

Open Space & Parkland Preservation Activity Report: 2009-10

Ginny Trocchio of The Conservation Fund gave commissioners highlights of the 2009-10 activity report for the open space and parkland preservation program. [.pdf file of draft report]

During the fiscal year, three greenbelt acquisitions were completed, totaling 460.89 acres of farmland: 1) the purchase of development rights (PDR) in November 2009 for property along Farrell Road in Webster Township, owned by the Webster United Church of Christ; 2) the December 2009 PDR for the William and Cherie Nixon farm in Webster Township, at the corner of Zeeb and Daly roads; and 3) the December 2009 PDR for the Frederick and Christopher Girbach farm (also known as the Frederick farm) in Lodi Township.

Two properties on which the city owns a conservation easement were sold to new owners – this is the first time such a transfer of ownership has occurred on greenbelt properties, Trocchio noted. The Hilton Trust farm in Pittsfield Township was sold to a local farmer, Duane Mason, for $3,200 per acre. And the Girbach/Frederick farm in Lodi Township was bought by Michael and Hope Vetergaard for $4,300 per acre. [See Chronicle coverage: "Frederick Farm in Line to Join Greenbelt"]

Last year was also the first time the greenbelt program received a contribution from Lodi Township, which gave $1,000 toward the purchase of development rights to the Girbach/Frederick farm, and from the Legacy Land Conservancy, which contributed $37,000 toward the PDR.

Trocchio reported that during the year, the city received $679,380 from the U.S. Department of Agriculture’s Farm and Ranchland Protection Program, awarded for the purchase of development rights on the Gilbert and Kathryn Whitney farm in Webster Township and the Honke property in Northfield Township. Those deals haven’t yet closed. When the Whitney PDR is done, it will complete the greenbelt’s first 1,000 block of protected land. The greenbelt program’s strategic plan calls for prioritizing purchases to form large blocks of protected farmland and open space within the greenbelt boundaries.

Not mentioned in Trocchio’s verbal report – but included in the written document – are program goals for 2010-11:

• Apply for grant funds on two properties.
• Close on four properties.
• Complete the 1,000-acre block in Webster Township.
• Complete the first greenbelt bus tour and develop a plan for future tours.
• Obtain at least 20% matching funds on all transactions.

Misc. Staff Updates

Ginny Trocchio reported that on Friday, Sept. 3, the city received word that they’ve been awarded two additional grants from the Farm and Ranchland Protection Program, via the Great Lakes Restoration Initiative: 1) $282,750 for the Maulbetsch property in Northfield Township, and 2) $611,030 for the Geiger property in Salem Township. Combined with two previous grants during the 2010 calendar year, the greenbelt program will have received just over $1.5 million from the FRPP this year. Resolutions will be going to city council on Sept. 20 to accept these grants, she said.

Ezekiel thanked Trochio and Peg Kohring for their work on getting these grants, noting that it helped leverage taxpayer dollars for the greenbelt.

Trocchio also reminded commissioners that there would be a booth for the greenbelt program at Saturday’s HomeGrown Festival. The Sept. 11 event runs from 6-11 p.m. at the Ann Arbor Farmers Market in Kerrytown.

Kohring mentioned the July 17 greenbelt tour, saying they were thrilled with the event. She noted that commissioners Jennifer S. Hall, Gil Omenn and Dan Ezekiel had taken the tour, and she asked Ezekiel to give a report. Ezekiel said they first traveled to Don Botsford’s farm in Scio Township, where Botsford greeted them and talked about his farm. They next went to Tom Bloomer’s farm in Webster Township – Bloomer is a greenbelt commissioner – and heard about the work he does there. The tour included a stop at the Nixon farm, also in Webster Township, as well as a stop at the site of the future farm incubator in Ann Arbor Township. About 20 people went on the tour, he said.

These kind of public outreach efforts will become increasingly important, Ezekiel said. Now that they’ve preserved property in the greenbelt, it’s incumbent on the commission to inform the public about land that’s already protected, how it’s being used and why it’s a benefit to the community. He suggested putting in a section on public outreach in the strategic plan, when it’s updated.

Present: Peter Allen, Tom Bloomer, Dan Ezekiel, Mike Garfield, Jennifer S. Hall, Carsten Hohnke, Catherine Riseng, Laura Rubin

Absent: Gil Omenn

Next meeting: Wednesday, Oct. 13, 2010 at 4:30 p.m. at the Washtenaw County Board of Commissioners boardroom, 220 N. Main, Ann Arbor. [confirm date]