Greenbelt Commission Gets Financial Update
Ann Arbor greenbelt advisory commission meeting (Sept. 5, 2013): This month’s GAC meeting marked the first session for two new commissioners – Jean Cares and John Ramsburgh – and the first meeting led by the group’s new chair, Catherine Riseng.
Christopher Taylor and Jean Cares at the Sept. 5, 2013 meeting of the Ann Arbor greenbelt advisory commission. (Photos by the writer.)
Cares had been confirmed by the city council on July 15 to replace Tom Bloomer, filling the slot designated for a farmer. She co-owns the Dexter Mill, and serves with Bloomer on the Webster Township farmland and open space board. Ramsburgh, who was confirmed on Aug. 8, is a development officer with the University of Michigan’s College of Literature, Science & the Arts. He also is the son of Ellen Ramsburgh, a long-time member of the Ann Arbor historic district commission, and its former chair. He replaces Dan Ezekiel, who was term limited.
The Sept. 5 meeting was in some ways a tutorial on the greenbelt program. It began with introductions of all the members, and included a presentation on conservation easements.
Ginny Trocchio, who provides staff support for the program, also reviewed the draft activity report and financial statements for fiscal 2013, which ended June 30. During the year, the greenbelt program completed 5 deals covering 448 acres of farmland in Webster, Salem, Superior and Lodi townships.
Total revenues for the open space and parkland preservation program – which includes the greenbelt as well as park acquisitions – were $2.626 million. Of that, $2.141 million came from proceeds of the program’s 30-year millage, which voters approved in 2003. Total expenses for the year were $3.357 million. In addition to $1.227 million for debt service, expenses include $1.757 million in greenbelt projects and $242,867 for parkland acquisition.
During her staff report, Trocchio highlighted upcoming on-the-road events, including a Sept. 21 bus tour of greenbelt properties that’s open to the public, and a driving tour of greenbelt land as part of the commission’s Oct. 3 meeting.
Annual Greenbelt Report
Ginny Trocchio is a staff member of The Conservation Fund who provides support to the greenbelt program under contract with the city. She briefed commissioners on the annual activity report for the city’s open space and parkland preservation program for the fiscal year 2013, which ended on June 30. [.pdf of draft fiscal 2013 activity report]
The greenbelt program and park acquisitions are funded through a 30-year 0.5 mill tax that Ann Arbor voters passed in 2003. It’s called the open space and parkland preservation millage, and appears on the summer tax bill as the line item CITY PARK ACQ.
John Ramsburgh attended his first meeting as a greenbelt advisory commissioner on Sept. 5.
The city’s policy has been to allocate one-third of the millage for parks land acquisition and two-thirds for the greenbelt program. The greenbelt advisory commission (GAC) handles the portion for land preservation outside of the city limits, while the city’s park advisory commission (PAC) oversees the funds for parkland acquisition. PAC’s land acquisition committee, of which all PAC commissioners are members, makes recommendations for parkland purchases.
To get money upfront for land acquisition, the city took out a $20 million bond in fiscal year 2006. That bond is being paid back with revenue from the millage. Debt service on that bond in FY 2013 year totaled $1.227 million. [Two debt service payments are made during the fiscal year.]
Since launching, the program has helped preserve 4,226 acres of farmland and open space. That includes 1,484 acres in Webster and Scio townships, 1,415 acres in Northfield and Ann Arbor townships, 819 acres in Salem and Superior townships, 337 acres in Lodi Township, and 89 acres in Pittsfield Township.
Trocchio noted that the average price per acre has decreased since the greenbelt program began – from over $16,000 per acre in fiscal 2006, when the first purchases were made, to just below $4,000 now.
Five transactions were completed in the last fiscal year, covering 448 acres of farmland:
- The VanNatter farm in Webster Township (total greenbelt contribution: $103,657, plus $23,867 for an endowment).
- The Hornback property in Salem Township, in partnership with Salem Township and Washtenaw County parks & recreation commission (total greenbelt contribution: $168,312, plus $23,867 for an endowment).
- The Robbin Alexander farm in Webster Township, which included grant funds from the USDA Farm and Ranchland Protection Program (FRPP) for 49% of the purchase price (total greenbelt contribution: $367,792, plus $23,867 for an endowment).
- The Robert Schultz farm in Superior Township, which also included grant funds from the federal FRPP program for 49% of the purchase price (total greenbelt contribution: $6,450, plus $23,867 for an endowment).
- A portion of the Drake farm, on the south side of Waters Road in Lodi Township, in partnership with the Washtenaw County parks & recreation commission, which contributed 20% of the purchase price (total greenbelt contribution: $476,165, plus $23,867 for an endowment).
The city received two FRPP grants totaling $396,900 – for the Robbin Alexander farm and Robert Schultz farm. Overall, the city secured an average of 60% matching funds for all greenbelt properties in fiscal 2013, Trocchio said. Since the program started, the city has averaged about 50% in matching funds.
The millage also funds parkland acquisitions. Trocchio reported that the city bought two properties in fiscal 2013, and accepted a donation from Ann Arbor Township – the Braun Nature Area, which is adjacent to the city’s Huron Parkway Nature Area. The purchases were:
- 0.91 acres along Hampstead Lane, adding to the Kuebler Langford Nature Area – at a total cost of $118,944.
- 0.35 acres along Orkney, to add to the Bluffs Nature Area – at a total cost of $120,774.
Annual Greenbelt Report: Commission Discussion
Jennifer Fike asked about projections for future funding from the USDA Farm and Ranchland Protection Program (FRPP). Ginny Trocchio replied that the latest update she’d heard was that all of the federal easement programs would be folded into one conservation easement program, but that there would continue to be funding for FRPP grants.
Stephanie Buttrey had two issues with this paragraph in the report:
The Greenbelt scoring criteria awards points to applications that provide scenic views, and visibility from major corridors frequently traveled by Ann Arbor residents. Examples of these major corridors are along the highways that surround the city, which are often an entryway into the City, or routes that are frequented by bikers. The scenic value of each of the applications will continue to be a part of the scoring criteria. Furthermore, the strategic blocks encompass major corridors, so an added benefit of forming large blocks of protected land will be preserving critical viewsheds within the Greenbelt District.
Buttrey suggested changing the word “bikers” to “bicyclists.” She also asked for clarification of the term “viewsheds.” Trocchio described a viewshed as the view of large stretches of rural properties as seen from the road. Examples of viewsheds in the greenbelt include sections along Zeeb Road, Joy Road and Whitmore Lake Road, she said.
Catherine Riseng noted that the report mentions that GAC modified its strategic plan in 2012, but it doesn’t indicate how the plan was modified. She suggested including details about how the plan was changed. [An update of the strategic plan was approved by GAC at its April 4, 2013 meeting. Changes include a new section on education and outreach, and a new goal of establishing a greenbelt registry program, to formalize relationships with landowners who aren’t yet part of the greenbelt program, but who are committed to the program’s principles of land preservation. (.pdf of updated strategic plan)]
Fiscal 2013 Financials
Commissioners were also briefed on a financial report for fiscal 2013, related to the open space and parkland preservation millage. [.pdf of financial statements]
For the year ending June 30, 2013, Trocchio reported that net revenues from the millage were $2.626 million. Most of that – $2.141 million of it – came from millage proceeds. The other main revenue source was investment income of $111,137 in FY 2013. That compared to $176,082 in investment income the previous year.
Expenses for the year were $3.357 million. In addition to $1.227 for debt service, expenses included $1.757 million in greenbelt projects and $242,867 for parkland acquisition.
As of June 30, 2013, the fund balance stood at $8.856 million, with about equal amounts designated for the greenbelt ($4.413 million) and park acquisitions ($4.442 million). The greenbelt program also received $396,900 in reimbursements from the USDA Farm and Ranchland Protection Program (FRPP), and $5,330 in contributions – primarily a $5,000 gift from Cherry Republic.
Administrative costs of $129,966 in fiscal 2013 equate to 3.9% of total revenues. Administrative costs over the life of the millage are limited by ordinance to be no greater than 6% of revenues.
There was minimal discussion about the financial report. Jennifer Fike asked about the significant amount of expenditures in fiscal year 2011 – $8.3 million, by far the highest of any other year. Trocchio said there were about a dozen deals completed that year, which accounted for the higher expenditures.
Conservation Easements
Prior to the Sept. 5 meeting, Ginny Trocchio – who provides staff support to the greenbelt program – had surveyed commissioners about topics related to the greenbelt that they might want to learn more about. Commissioners had indicated an interest in getting an overview about conservation easements, so Trocchio gave a presentation on that topic on Sept. 5.
Ginny Trocchio of The Conservation Fund, who provides staff support for Ann Arbor’s greenbelt program.
Conservation easements are a tool that the city uses to purchase development rights, she explained. It’s a legal agreement that limits the type and amount of development that’s allowed on a property, with the intent of protecting the land as a natural area or as farmland. It’s a perpetual agreement, and remains in place regardless of who owns the land. The easement also allows the entity that holds the easement to monitor it and enforce the terms.
Trocchio noted that conservation easements can only be held by an entity that has conservation as part of its mission.
There are certain things that a conservation easement does not necessarily do, Trocchio explained. It doesn’t require public access to the land, although that can be written into the agreement. For the greenbelt program, most of the protected land is active farmland, she said, and generally it’s not open to the public. An easement doesn’t prohibit or require hunting, or require certain types of farming practices. Nor does an easement prohibit landowners from selling their land, profiting from it, or passing it on to heirs, she said.
To put a value on the conservation easement, two appraisals are done, Trocchio explained. One appraisal is for the fair market value of the property with no easement or other restrictions. The second appraisal assesses what a property is worth with an easement in place. Typically, the cost of purchasing development rights is the difference between these two amounts. There are appraisers who are specifically qualified to do these types of appraisals, she said.
Trocchio talked about the difference between easements that exist on natural areas, compared to easements on agricultural land that’s being worked by the landowner. It’s a static versus dynamic use of the property, she noted.
In some deals, the landowner makes a donation as part of the easement, and gets some tax benefits in return. For example, if the value of an easement is $200,000, the landowner might contribute $80,000 toward that amount, and then sell the development rights for $120,000 to the entity that will hold the easement – like the city of Ann Arbor.
Most of the farmers that participate in the greenbelt program use a “like-kind exchange” under section 1031 of the IRS Code, Trocchio said. The money they receive for a conservation easement would be taxed as capital gains. However, some or all of the funds can be set aside in a 1031 exchange with a third-party agent, and can then be used in the future to buy additional farmland. Funds set aside in a like-kind exchange would be tax-exempt.
Trocchio also described the steps of drafting a conservation easement, explaining that a standard template is used. She’ll meet with the landowner and family members to walk through the property, and talk about any adjustments that need to be made to the standard agreement. The deals are reviewed by the city attorney and the landowner’s attorney, as well as any of the other partners involved. This is one reason why an agreement can take several months to complete, she noted.
It’s important for the language in the agreement to be clear and precise, so that there’s no room for interpretation in the future. It should be consistent with other easements nationally, Trocchio said. The national Land Trust Alliance has standards and practices that have been developed over decades, and that provide consistency in these agreements. The easements also include photographs and maps of the property. Title work must be completed to determine legal ownership.
Jennifer Fike, a greenbelt advisory commissioner, is also finance director for the Huron River Watershed Council.
Elements of the agreement include a statement of conservation values, laying out what the easement is trying to protect. Those might include farmland, certain natural features like wetlands, or specific species of wildlife. The agreement states the conditions under which a landowner must notify the holder of the easement, Trocchio said. For example, if the landowner wants to put up a fence, the city does not need to be notified. However, if a building is proposed, that would trigger notification.
Basic restrictions of an easement typically include prohibitions on: (1) subdividing the property; (2) industrial, commercial or residential use; (3) construction of buildings; paved roads or utilities; (4) dumping; (5) active recreational use; and (6) mining or extracting resources.
Rights that are typically reserved for the landowner include use of the land for agriculture or forestry purposes, passive recreation or education, fences and seasonal structures – like hoop houses, and any existing uses or roads. The owner also has a right to sell or bequeath the property to heirs.
As the holder of the conservation easement, the city of Ann Arbor can transfer the easement to another entity. No mergers are allowed, however – meaning that the city can’t own both the easement and the property. Amendments to the easement are allowed, but they must conform to the conservation values that are stated in the document.
Landowners are allowed to use up to 2% of the easement area for future permanent agriculture-related building, within a specific area that’s designated in the agreement.
After an easement is in place, the city monitors it annually, Trocchio said. Typically that involves walking the property with the landowner to make sure that conditions comply with terms of the agreement. There have been no problems to date with property in the greenbelt program, she reported. Often issues arise after property has changed hands, and the new owners don’t fully understand the easement constraints.
For each easement agreement, the city sets aside funds for an endowment to cover the cost of staff time to monitor enforcement as well as legal costs if the easement is violated. At this point, the total endowment for all greenbelt properties is $647,030.
Conservation Easements: Commission Discussion
Stephanie Buttrey asked about a scenario in which a conservation easement exists on farmland where there are no buildings, but later the farmer decides he or she wants to put a house on the property. Would that be possible?
Catherine Riseng led her first meeting as chair of the greenbelt advisory commission. She was elected to the position at GAC’s July meeting, which she didn’t attend. There was no meeting in August.
No, Trocchio replied – no new residential building is allowed on property that is covered by a conservation easement. Typically before an easement deal is completed, she said, there are discussions about possibly excluding a small portion of the site from being covered by the easement, so that a house could be built there in the future, if desired.
Responding to a query from Jennifer Fike, Trocchio said that a structure is considered permanent if it has a concrete floor, which is an impervious surface that impacts the soil. A hoop house, which simply is placed over the soil, is considered temporary and there are no restrictions on the use of those structures.
Fike also asked about legal challenges, saying she’d heard about a national fund being developed to protect the interests of land conservancies. Trocchio reported that the Land Trust Alliance has been trying to set up a fund for member organizations. It’s important to build relationships with landowners, she added, so that when land is sold, the owner of the easement can be involved and make sure that the new owner of the land understands the conditions of the easement.
Catherine Riseng wondered if any of the landowners in the greenbelt have done like-kind exchanges. Trocchio estimated that over 50% of landowners that have easements in the greenbelt have used like-kind exchanges. The city isn’t typically involved in that, however – it’s a decision of the landowner.
Staff Report
Ginny Trocchio gave a brief staff report during the meeting. She noted that the greenbelt program would be participating in the Sept. 7 HomeGrown Festival from 6-10 p.m. at the Ann Arbor farmers market. Also, a Sept. 21 bus tour of greenbelt-protected land will run from 10 a.m. til 1 p.m. Registration is running slower than in previous years, she said, with about 20 people registered so far. The bus can accommodate about 50 people. The cost is $10. People can register by Friday, Sept. 13, by calling 734.794.6000 ext. 42798.
Trocchio also reported that the Ann Arbor city council approved two greenbelt projects at its Sept. 3, 2013 meeting: (1) the 20-acre Sheldon and Wolf property in Webster Township on Zeeb Road for a total city contribution of $82,067; and (2) a city contribution of up to $32,200 for two pieces of land owned by DF (Domino’s Farms) Land Development LLC in Ann Arbor Township. The Washtenaw County parks & recreation commission is the lead entity on that deal.
The Oct. 3 meeting of the greenbelt advisory commission will include a driving tour of greenbelt properties, Trocchio noted. Details will be worked out, and might include meeting first in council chambers, if there is any official business to conduct.
Topics for other upcoming meetings will include an overview of entities that partner with the greenbelt program, an update on the Huron River Watershed Council’s bioreserve project, long-term planning for the remaining greenbelt funds, and a joint meeting with the city’s park advisory commission.
Land Acquisition
Most meetings of the greenbelt advisory commission include a closed session to discuss possible land acquisitions. The topic of land acquisition is one allowed as an exemption by the Michigan Open Meetings Act for a closed session. On Sept. 5, commissioners met in a brief closed session, then emerged and voted on one resolution that will be forwarded to the city council.
Before appearing on the city council’s agenda, details of proposed greenbelt acquisitions are not made public. Parcels are identified only by their application number, with the first four numbers signifying the year in which the application was made.
On Sept. 5, commissioners recommended that the city council approve partnering with Washtenaw County for the purchase of development rights on a property identified in application #2012-11 and contribute up to 25% of the purchase price, not to exceed $37,995.
Outcome: Commissioners unanimously passed the resolution, which will be forwarded to the city council for consideration.
Next meeting: Thursday, Oct. 3, 2013 at 4:30 p.m. in the second-floor council chambers at city hall, 301 E. Huron. This meeting will also likely include a driving tour of greenbelt properties. [Check Chronicle event listings to confirm date] The meetings are open to the public and include two opportunities for public commentary.
Present: Shannon Brines, Stephanie Buttrey, Jean Cares, Jennifer Fike, John Ramsburgh, Catherine Riseng, Christopher Taylor. Staff: Ginny Trocchio.
Absent: Peter Allen, Archer Christian.
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