Dec 24, 2008 Erin Smith Uncategorized
After spending two years crafting, debating and re-crafting a solution to development pressures in Lysander, two plans were recommended – one a revolving bank fund run by the town and the other a free market system with no government involvement.
With the revolving bank fund, town officials purchase development rights from the landowner, document them and store them until an auction is held, at which point the rights are sold to the highest bidder. The open market system allows a buyer in a receiving zone to purchase development rights from a seller in a sending zone at fair market value (in essence, what both parties are willing to settle upon), but the town is still involved regarding documenting rights, approving the transfer and placing an easement on said property.
“Some of us felt the beauty of the town being involved was the town could purchase the rights [from the farmer] and bank them until the developer came around and wanted to buy the rights,” said Robert Hornaday, the town engineer.
Lysander Councilor Brian May agreed. He said the bank acted as a catalyst for the program by bringing a willing seller and buyer together and providing “a mechanism for just compensation without the need to raise local taxes.” On the other hand, he said he was in favor of the open market system, which “simply relies on free enterprise and the laws of supply and demand,” and keeps government small and out of peoples’ private business.
“The problem with the open market system is that it does fall short in the area of just compensation,” May said.
After lengthy discussions, officials decided to integrate both the revolving fund and the free market system into the adopted language.
Development rights bank
To get the program started, officials will use the Agricultural & Markets $1.07 million grant awarded to the town to purchase the development rights from three Cold Spring Peninsula farms at 75 percent of the assessed value (this is what the Ag & Markets would pay under the Purchase of Development Rights program, which buys the rights and extinguishes them rather than transferring them to another property). The development rights will then be documented and placed in a bank and an easement will be placed on the land prohibiting landowners from ever developing the property. Then, when the demand for development arises, town officials will hold an auction to sell of the development rights in the bank.
Bidding will begin at the full value of each right, allowing farmers to collect 100 percent of what their development rights were worth. If there is no demand, the development rights sit in the bank. Then when the market returns, they are put back on auction and sold. On the other hand, should the rights resell for more than they were originally purchased for, the farmers who sold the rights will not only get the remaining 25 percent of property development rights, they will also get 90 percent of the profits. The aim is to be really fair to farmers and encourage them to participate now, rather than holding out when demand increases.
“Wouldn’t you rather have the money now and know that if the price spirals up, you will receive 90 percent of the entire 100 percent,” said Supervisor Barry Bullis.
The town will use the remaining 10 percent of profits to fund administration of the program (tracking development rights, easements, conducting auctions, appraisal costs, etc.).
Open market system
In the free market system, a seller (landowner) and buyer (developer) negotiate directly and outside of town involvement. The town is still involved, just not in the actual negotiation of price for the established development rights.
According to town engineer Jim Laird, the development rights still need to be determined according to the TDR program. The landowner still needs to walk through the criteria for determining the number of development rights, planning board review and approval, then establishment of conservation easements. In addition, the purchaser needs to present a plan also for consideration under due process for approval by the planning board in order to receive development rights.
The Open Market system can begin after the conservation easements on the three original farms have been attained, which is anticipated to be completed within one year of adoption of the TDR Program.
To participate in the program, an appraiser has to price the property for farming and developing. For example, let’s say a farming acre is valued at $1,500 and that same acre has a development value of $5,000. The difference ($3,500) is the development right value of the parcel at which it would be purchased. However, each acre isn’t the same value. There are additional variables that figure into the appraisal including road frontage, woodlands, type of soil, power line easements, etc.
Overall, the program will take approximately 12 to 18 months before the town can actually start distributing and disbursing funds. According to officials, the following needs to be done to get the program underway:
– Ag & Markets need to finalize conservation easement agreement
– Finalize banking procedures; establish revolving fund
– Start appraisals and closeout procedures of three original farms
– The revolving fund begins until DRs are exhausted
Paying for green
As for now, the TDR program only affects the sending and receiving areas in the specified areas, which are the Cold Springs Peninsula, the West Phoenix area in the northeastern corner of Lysander and the Seneca region west of the village of Baldwinsville.
“This program will conserve the agricultural presence and open space within three zones and will control development and won’t cost a lot of money,” Bullis said. “It offers the opportunity for the best of both worlds. Farmers receive retirement income, plus they still receive the title to their land. It also preserves the green space for all of us.”
Rather than having one farmer win the lottery with a protection easement (from Ag & Markets Purchase of Development Rights), this offers every farmer the option of preserving farmland while harvesting the development potential. Another nice feature is that the new people coming into the town, who want to live in and preserve the rural character of the town they are moving into, are essentially funding the program because the developer will likely pass the cost of purchasing development rights in an area to the homebuyer.
“[New residents] are buying an insurance policy,” Hornaday said, adding that residents know exactly how many properties can be built on the peninsula and they don’t have to worry about any commercial development.
If development pressures threaten other agricultural areas in the town (with large acre zoning and availability of utilities), officials will have to designate sending and receiving areas before they can apply the
TDR program. However, Hornaday said it was premature to speculate the program spreading to other areas of the town.
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