MARYLAND AGRICULTURAL LAND PRESERVATION FOUNDATION

MINUTES

August 24, 2004

TRUSTEES PRESENT:

Daniel Colhoun

Lloyd C. Jones, Jr., Chairman

Jerry Klasmeier, representing Comptroller Schaefer

Lewis Logan, representing Treasurer Kopp

Judith C. Lynch

Vera Mae Schultz

Joseph F. Tassone, representing Secretary Scott, Dept. of Planning

Douglas H. Wilson, representing Secretary Riley, Dept. of Agriculture

TRUSTEES ABSENT:

Allen H. Cohey

Shirley Pilchard

James Pelura, D.V.M.

Robert F. Stahl, Jr.

OTHERS PRESENT:

Bill Amoss, Harford County Program Administrator

Bill Beach, Department of General Services

Michael Birch, Island Branch Farm, LLC

David Black, Cecil County Program Administrator

Tammy Buckle, Caroline County Program Administrator

James A. Conrad, MALPF Executive Director

Tom Croghan, Dodon Farm, Anne Arundel County

Nancy Forrester, Assistant Attorney General, Dept. of General Services

Tom Heisler, NRCS, MD State Office

Carla Martin, Kent County Program Administrator

Craig Nielsen, Assistant Attorney General, Dept. of Agriculture

Polly Pittman, Dodon Farm, Anne Arundel County

Stewart Pittman, Dodon Farm, Anne Arundel County

Barbara Polito, Anne Arundel Program Administrator

Charles Rice, Charles County Program Administrator

Radhika Sakhamuri, Queen Anne's County Program Administrator

Martin Sokolich, Talbot County Program Administrator

Elizabeth Weaver, MALPF Administrative Officer

Greg Williams, NRCS, Somerset County

Susan Wilson, Frederick County Landowner

Lloyd C. Jones, Jr., Chairman, called the meeting to order at 9:30 a.m. at the Maryland Department of Agriculture building, Annapolis, Maryland. Mr. Jones asked guests to introduce themselves.

I. APPROVAL OF MINUTES/ADDITION OR DELETION OF AGENDA ITEMS:

A. APPROVAL OF MINUTES, July 27, 2004

Motion #1: To approve the minutes of the July 27, 2004, Board meeting.

Motion: Lewis Logan Second: Joseph Tassone

Status: Approved

B. ADDITIONS OR DELETIONS OF AGENDA ITEMS:

James Conrad, Executive Director, stated that there would be a change in the order of the items on the agenda. The Pittman request from Anne Arundel County would be heard first, followed by the Wetland Reserve Program presentation.

Mr. Conrad stated that there were a few announcements. Bob Stahl will be replacing Mildred Darcey on the Board of Trustees. Mr. Stahl could not attend the meeting because of prior commitments. He owns a farm property in Charles County and serves on the Rural Legacy Advisory Committee. Mr. Stahl served as a farm manager with Chaney Enterprises. He is currently the Associate Vice-President of Operations for the University of Maryland, University College. Mr. Stahl will be starting next month. Mr. Conrad stated that he will find a way to say goodbye to Mildred at the appropriate time and place. He stated that the Foundation does not want Ms. Darcey to leave without recognizing everything she has done for MALPF.

Mr. Conrad stated that Elizabeth Weaver, MALPF administrative officer, spoke with Allen Cohey, Board member, yesterday by telephone. Mr. Conrad asked Ms. Weaver to provide an update on Mr. Cohey. Ms. Weaver stated that Mr. Cohey wanted to let the Board members know that he wanted to attend the meeting but felt that it was going to be too long of a day for him. He is still recovering from his illness but is feeling much better. He is able to get around better but is still a little stiff. Mr. Cohey stated that, after many blood tests, his doctors feel that he may have been infected with a type of virus, but they are not sure what type of virus it may have been. Mr. Cohey wanted to thank everyone for their cards and good wishes.

Douglas Wilson, representing Secretary Riley, Dept. of Agriculture, stated that he would provide an update on the financial situation for the current fiscal year. The State appropriations are for $5 million in bonds. He is estimating, and put in a budget amendment for, about $5 million in agricultural transfer tax. He is estimating about $5 million for the federal grant. The GreenPrint allocation is $750,000.00. The estimate for local government is about $13 million, which includes both matching funds and 100% county funds. The estimate is based on the last two years actual county funds. Mr. Wilson stated that it appears that MALPF will be able to match the federal money. He stated that he appreciates the willingness of NRCS to work with the Foundation to ensure that all the money stays in the State.

Mr. Wilson stated that for Fiscal Year 2006, the legislation that took the transfer taxes and diverted then to the General Fund, is no longer in effect. Assuming that the administration will not introduce legislation as they have in the past two years, MALPF’s share of the transfer tax should be just over $22 million. If we use estimates similar to this fiscal year for federal funds, agricultural transfer tax and county funds, MALPF’s budget would be just under $47 million.

Mr. Wilson stated that the Foundation is in the process of trying to fill the vacancy resulting from Iva Frantz’s resignation, which was effective July 1. The Foundation is also trying to hire a contractual secretary. The Foundation staff is looking into ways to change the method for which duties are assigned. In the past, Ms. Frantz processed the easements and Ms. Weaver did the work associated with districts. The staff is looking into having those positions cross-trained, with the administrative officers sharing the duties of easement and districts. The intent is to avoid problems created when staff members leave and the Foundation loses the knowledge or specialty that only that one person had from doing a specific job.

Mr. Conrad stated that he was ready to begin with item II.C.1 from Anne Arundel County as Mr. Pittman and members of his family were present.

II. DISTRICT /EASEMENT AMENDMENTS

C. ANNE ARUNDEL COUNTY

1 02-91-02 PITTMAN, Steuart, et al (Dodon Land Trust) 211.00 acres

Request for the exclusion of up to 2 acres for a child’s lot on easement property.

Mr. Conrad introduced the request of Steuart Pittman, et al. Mr. Pittman, et al, is the original grantor of the easement property. The current request is for the release of up to 2-acres for a child’s lot for the personal use of his daughter, Patricia.

There have been no other lot requests on this property. Mr. Pittman et al own additional easement properties, totaling 475 acres, but no lots have been requested on those properties. According to Anne Arundel County, the proposed lot is to be located at the edge of woods and will be accessed through existing farm lanes. The lot is adjacent to a family cemetery.

Staff recommends approval. Mr. Conrad stated that Mr. Pittman and his daughter and son-in-law and Barbara Polito, Program Administrator for Anne Arundel County, are present and available to answer any questions.

Daniel Colhoun asked Mr. Pittman or Ms. Pittman to point out on the map, which was provided in the agenda material, the location of the proposed lot in relation to existing buildings on the property. Ms. Pittman demonstrated the location of the proposed lot in relation to the main house, the tenant house and the additional pre-existing dwellings on the property. Mr. Colhoun asked if all three parcels shown on the map were under easement. Ms. Pittman stated that all three parcels were under easement. Mr. Colhoun asked about access to the proposed lot. He asked if the lot would be accessed by Dodon Road and if the road dead-ended at their farm. Ms. Pittman stated that Dodon Road dead-ends at the main house and there is a dirt road, which the proposed lot will use for access, which continues along by the cemetery and leads down to the pond.

Mr. Colhoun stated that he was concerned because a child’s lot can be sold separately from the farm at some point in the future. There is access through the farm to the lot at this point. He asked how this is going to be worked out if the lot is sold in the future. Ms. Pittman stated that she and her siblings have an agreement never to separate any of the dwellings from the farm and they intended to keep the farm and all the dwellings in the family.

Mr. Conrad stated that he met with Joe Rutter, Director of Anne Arundel County Department of Planning and Zoning, about this issue. Mr. Conrad stated that they have made arrangements at the request of the owner, that this lot would be excluded from the easement but would not be sub-divided from the farm. Mr. Conrad stated that he hoped this would address Mr. Colhoun’s concerns. Mr. Colhoun answered that he is glad to hear that the family has decided to do that. Mr. Colhoun stated that he wanted to compliment the family because he thinks that what they have done is admirable.

Vera Mae Schultz, Board member, asked about the eighty acres that were not part of the easement. Ms. Pittman stated that it is located adjacent to a strip that is developed. Tom Croghan, Ms. Pittman’s husband, stated that it is located in the south-west corner, which is parcel ninety-seven. Ms. Schultz asked if the parcel is being farmed. Ms. Pittman stated that it is being farmed.

Motion #2: To approve the request of Steuart Pittman, et al, for the exclusion of up to 2 acres for a child’s lot on easement property

Motion: Douglas Wilson Second: Judith Lynch

Status: Approved

Wetland Reserve Program Presentation

Mr. Conrad stated that the Board would next hear a presentation from Tom Heisler, who is with the Maryland State Office of the Natural Resource Conservation Service (NRCS). Mr. Heisler would talk about the Wetland Reserve Program. Mr. Conrad introduced Mr. Heisler. Mr. Conrad stated that Gregg Williams, NRCS, would also be a participant in the presentation.

Mr. Heisler stated that he wanted to discuss the Wetland Reserve Program (WRP) in the sense that it would be complimentary to the MALPF program. He stated that there would be a special application of the WRP program on the Eastern Shore due to its geology. That is where the bulk of the WRP activity has taken place as there are a lot of areas there that qualify for the program. The program has several 10-year contracts and 30-year easements as well as perpetual easements there.

Mr. Heisler stated that he wanted to familiarize the Foundation with the concept of WRP and to point out that there is an opportunity for the MALPF program and WRP to work together in a complimentary way. He stated that he wanted to make it clear the he is not contemplating any kind of overlay easement. He sees it as more of a situation where the more productive section of a farm would go under a MALPF easement or use FRPP funds and the portion that is less productive, for instance where it may currently be planted in loblolly pine or some other forest use, would go into the WRP program. He sees this as an opportunity to work in partnership to help preserve some of these types of properties.

Mr. Heisler stated that he brought with him some fact sheets about the WRP program for the use of the Board members and anyone else who is interested. He also provided a handout showing the allocation of the 2004 FRPP funds in Maryland. Mr. Heisler asked Mr. Williams to add some specific details about the WRP program.

Mr. Williams introduced himself as the District Conservationist for Somerset County. Mr. Williams stated that the main criteria for eligibility for the program is that the land is cropland, woodland or pasture that was wetland at one time and where the hydrology has been altered, usually by ditches. On the Lower Eastern Shore, the large majority of land that has entered the program is marginally productive woodland. He believes that MALPF and WRP could work well together in situations, for instance, where there are not enough MALPF funds to cover a large parcel, but a combination of MALPF and WRP funds could make it possible to purchase an easement on the entire property.

Mr. Williams stated that there are three options for the WRP program. A landowner can choose a 10-year contract, a 30-year easement or a permanent easement. The processes for the 30-year and permanent easements are very similar to the MALPF easement process. An appraisal is ordered for the property. The appraiser provides the market value and the wetland value of the property. The landowner is paid for the difference, which is the easement value. The WRP program pays for a survey of the property. Once the survey is completed, settlement is arranged. On a permanent easement, the landowner will get the full easement value. In the case of a 30-year easement, the landowner is paid 75% of the easement value. When the landowner opts for the permanent easement option, in addition to the easement value, NRCS will pay the full cost of the restoration of the wetland. NRCS will pay 75% of the easement value and 75% of the restoration cost on a 30-year easement. In the case of a 10-year contract, NRCS will pay for 75% of the restoration cost but there is no additional payment to the landowner.

Mr. Heisler stated that some of the funding for the WRP program is earmarked specifically for the Conservation Corridor on the Eastern Shore. He estimates that amount for 2004 to be approximately $750,000.00. He expects to continue to receive the extra consideration for the Conservation Corridor in 2005 and beyond.

Lewis Logan, representing Treasurer Kopp, asked Mr. Heisler for an estimate of the total number of acres in Maryland protected by the WRP program. Mr. Heisler stated that he estimates that approximately 3,000 acres are protected by the program. Mr. Wilson asked for an estimate of the average easement price paid per acre by the program. Mr. Heisler stated that they had been capping the easement price paid for woodland at $600.00 per acre. With the recent steep increase in land values, they have moved away from the concept of capping and were paying the full agricultural value.

Mr. Wilson asked about the involvement of the counties in the WRP program. Mr. Williams stated that, other than informing them about the easement, there is no role for the county to play. Mr. Conrad stated that it would make sense that the Program Administrators, who go out on the properties, are in the position to provide the best advice about available programs to a landowner who may be interested in preserving his property. Mr. Williams stated that he believes that the local Program Administrators would be the best people to provide information about the programs.

Charles Rice, Charles County Program Administrator, stated that his experience is that the WRP program cannot compete with the MALPF program because of the low amount that the WRP program pays for its easements. He cannot get a landowner to sell an easement for $1,000.00 per acre when he knows that MALPF is paying $2,800.00 or $3,000.00 per acre.

Mr. Rice asked if MALPF would pay for an easement on land which has a 10-year contract or a 30-year easement. Mr. Wilson stated that he believes MALPF would pay for the land with the 10-year contract but he is not sure about the 30-year easement. That would have to go to the legal people for their opinion.

Mr. Conrad asked about the appraisal process used by WRP and how many appraisals are done. Mr. Heisler stated that only one limited appraisal is done where they use sales comparisons to determine value.

Mr. Colhoun stated that he sees an advantage to landowners on the Western Shore who have properties that have a good portion of prime soils but the wetland portion of the property brings the average down to where it doesn’t rank well. The WRP program would allow a farmer to exclude the wetland portion of his property and this would help improve his ranking.

Mr. Heisler asked if there were any further questions. Mr. Jones thanked Mr. Heisler and Mr. Williams for their presentation.

Mr. Conrad stated that the Board would now hear the remainder of the items in the order presented in the agenda. The next item was from Harford County.

II. DISTRICT /EASEMENT AMENDMENTS

A. HARFORD COUNTY

1. 12-87-04 LINKOUS, Marvin M. 174.58 acres

Request for a 2-acre owner’s lot on easement property.

Mr. Conrad presented the request of Marvin M. Linkous. He is the original owner of the easement property. The current request is for a 2-acre owner’s lot for his personal use.

There have been no other lot requests on this property. There is one pre-existing dwelling on the property. Mr. Linkous does not own any other district or easement properties.

According to Harford County, the proposed lot is located along a public road and will be accessed directly from the road. The request was approved by the local advisory board. The request conforms to local zoning regulations. Harford County subdivision regulations require two acres in the agricultural zone.

Staff recommends approval.

Motion #3: To approve the request of Marvin M. Linkous to exclude two acres for an owner’s lot.

Motion: Lewis Logan Second: Dan Colhoun

Status: Approved

2. 12-80-01 ISLAND BRANCH FARM, LLC. 239.16 acres

Request for an agricultural subdivision on easement property.

Mr. Conrad presented the request of Island Branch Farm, LLC. Island Branch Farm LLC is the original owner of the easement property. The current request is for an agricultural subdivision of the farm.

According to Harford County, the proposed subdivision will create a 101.01-acre parcel and a 143.432-acre portion. The portion proposed to be subdivided contains 77.7% qualifying soils. The remaining portion contains 56.43% qualifying soils.

Jeffrey and Leslie Lynn, the contract purchasers of the area to be subdivided, wish to expand their existing horse operation. The portion they would acquire consists of 50 tillable acres, located at the southern end of the property, which they would continue to lease for crops; the remaining area, which is primarily pasture and farm buildings, would be used for their proposed horse operation.

Having recently decided to end their existing dairy operation, the members of Island Branch Farm LLC intend to make available for lease the cropland area that is being retained. They intend to use the remainder of the property for a replacement heifer and beef cattle operation. The request was approved by the local advisory board and conforms to local zoning regulations.

Foundation staff has concerns about the proposed new configuration of the farm as it appears to create areas that may be more difficult to farm than under the current configuration. However, Bill Amoss, Harford County Program Administrator, stated that the proposed division would not have a negative impact on the operation of the farm because the property line follows existing fences which separate cropland from pastureland.

Mr. Conrad stated that Bill Amoss, Harford County Program Administrator, and the landowner, Michael Birch, are present to address any questions.

Mr. Birch introduced himself. He stated that he is representing his family and is a managing member of the Island Branch Farm, LLC.

Mr. Colhoun asked Mr. Birch to explain the reasoning behind the partitioning of the farm as per the request. Mr. Birch stated that his parents purchased a portion of the farm in 1948 and purchased the remainder of the farm over a period of time. His father operated the farm as a dairy farm until 1980, when he retired from farming. His father sold the dairy business but retained ownership of the property. The farm was rented to various tenants until recently. The family had a financial interest in the most recent dairy operation on the farm. The business did not survive the unfavorable conditions of the dairy industry in recent years. He stated that his family is selling the land because they have no choice.

Mr. Tassone asked where Jeffrey and Leslie Lynn’s current operation is located. Mr. Birch responded that their horse operation is located about five miles from the farm. Mr. Tassone asked if the Lynns intended to live on the farm. Mr. Birch stated that once the house on the farm has been renovated, they would move to this farm. Mr. Tassone asked about the plans for the remainder of the farm that the family will continue to own. Mr. Birch stated that he and his son will continue a replacement heifer operation and will rent the cropland to a local farmer.

Mr. Tassone asked if the staff still has concerns about the proposed division of the farm. Ms. Weaver stated that from the map, it appears that it would be awkward to farm the sharp U-shaped portion created by the new parcel configuration. The prior parcel configuration cut the property along a straight line. Mr. Birch stated that it makes more sense to separate it along the proposed line because of the contour of the land and the proposed configuration would eliminate the need to cross a stream that runs through the property.

Mr. Colhoun asked if an aerial map of the property was available. Mr. Amoss stated that he does not have one available. Mr. Logan asked if Mr. Amoss thought that the subdivision makes sense to him. Mr. Amoss stated that it did.

Motion #4: To approve the request of Island Branch Farm, LLC to subdivide the easement property.

Motion: Lewis Logan Second: Joseph Tassone

Status: Approved

B. KENT COUNTY

1. 14-87-06a CHANCE, John A., Sr. 80.18 acres

Request for the exclusion of a 1-acre child’s lot from easement property.

Mr. Conrad presented the request of John A. Chance, Sr. for a 1-acre exclusion for a child’s lot. He is the original owner of the easement property. The current request is for the exclusion of a 1-acre lot from the easement for the purpose of constructing a dwelling for the personal use of his son, Jake. Two lots have been excluded from the easement for the personal use of Mr. Chance’s daughters, Kimberley and Angela. Mr. Chance does not own any other district or easement property.

According to Kent County, the proposed child’s lot is to be located along a public road, adjacent to the lot excluded for Jake’s sister, Angela. Access will be directly from the road.

Foundation staff recommends approval.

Mr. Tassone asked Carla Martin, Kent County Program Administrator, to point out on the map, the locations of the other child’s lots. Ms. Martin did so and pointed out that this is the last child’s lot that will be taken off this farm.

Motion #5: To approve the request of John A. Chance, Sr. for a child’s lot.

Motion: Joseph Tassone Second: Judith Lynch

Status: Approved

B. CARROLL COUNTY

1. 06-89-36e ROACH, Harry W. 122.55 acres

Request to increase the size of a previously approved child’s lot.

Mr. Conrad presented the request of Harry W. Roach to increase the size of a previously approved child’s lot. Mr. Roach is the original owner of the easement property. The current request is for an increase in the size of a previously approved child’s lot to meet Health Department requirements.

On April 27, the Foundation approved a 1-acre child’s lot for the personal use of Mr. Roach’s son, Ryan. According to Carroll County, because the lot will be located within 2,000 feet of the New Windsor Watershed Area, the Health Department requires a lot size of two (2) acres. The request was approved by the local agricultural advisory board and conforms to local zoning regulations.

Foundation staff recommends approval.

Motion #6: To approve the request of Harry W. Roach to increase the size of a child’s lot.

Motion: Vera Mae Schultz Second: Lewis Logan

Status: Approved

B. FREDERICK COUNTY

1. 10-92-06 KRANTZ, William & Geraldine 125.00 acres

Request for the exclusion of up to 2 acres for an owner’s lot on easement property

Mr. Conrad presented the request of Mr. and Mrs. Krantz for an owner’s lot. They are the original owners of the easement property. The current request is for the release of up to 2-acres for an owner’s lot for their personal use. Mr. and Mrs. Krantz do not own any other district or easement properties. A child’s lot has been approved on this property for the use of their son, Mark Krantz. Additionally, there is one pre-existing dwelling on the property.

According to Frederick County, the Krantzs wish to obtain approval for two locations, of which one location will be chosen. The choice will depend on the most suitable perk location. Both proposed locations are along a public road. The lot will be accessed directly from the road.

If more than one acre is required to meet Health Department regulations, a letter from the Health Department must be presented to the Foundation at the time of Preliminary Release of the lot. The request was approved by the local advisory board. The request conforms to local zoning regulations.

Staff recommends approval.

Mr. Colhoun asked if it is the policy of the Board to approve two locations and allow the landowner to choose one. Mr. Jones stated that it is not the landowner who makes the choice; it is the Health Department who has to approve the location. Mr. Conrad stated that it is not perk season right now and the landowners are trying to get a head start so that when the area is perked they can go ahead with construction.

Ms. Schultz pointed out that the lot location in the corner appears to be in an area that would interfere with the operation of the farm. Ms. Weaver stated that, according to Tim Blaser, Frederick County Program Administrator, these areas were chosen because they are the two driest areas along the road.

Mr. Tassone stated that if the Board is comfortable with both sites, then it could approve them both. Ms. Schultz stated that she has concerns that Lot 1 is not contiguous with the parcel that has been removed from the easement. Ms. Weaver stated that Mr. Blaser said the area contiguous with the excluded parcel would not be likely to produce a successful perk due to the soils.

Mr. Colhoun suggested that the Board ask the landowner to do the perks first and establish some data and then come back to the Foundation for an approval on an exact site. He stated that the Board members have raised some questions and there isn’t anyone from the county to address them. If the owner was present or someone from the county, then the answers could be provided to the Board at this meeting.

Ms. Weaver stated that she advised the county staff to send a representative to the meeting to answer questions from the Board members.

Mr. Colhoun stated that he would prefer to table the request until either the owner or someone from the county comes to answer questions.

Tammy Buckle, Caroline County Program Administrator, stated that she thought that the Health Department approval was necessary prior to bringing a request to the Board. Mr. Conrad stated that the Board has recently approved a process that allows approval of the Board without the final approval of the Health Department. The Board instituted this process to avoid the need for landowners to have to bring their requests back to the Board when they needed a larger lot to meet Health Department requirements. Ms. Weaver stated that when landowners request a lot size greater than one acre, they must provide a letter from the Health Department prior to the Preliminary Release of the lot.

Mr. Tassone asked what is was about the two sites that the Board members needed to know before approving the two locations. Mr. Colhoun stated that he had concerns about the ability to farm around the lot located close to the corner of the property.

Ms. Schultz asked about the current farm use of the property. Mr. Conrad stated that Mr. Blaser’s letter to the Foundation states that for Lot 1, half of the lot is in woodland and the other half is in crops. Mr. Logan asked about the impact on the landowner of tabling the request until the Program Administrator or the landowner could provide further information. Mr. Wilson stated that the land can’t be perked until January so the impact is not likely to be significant.

Motion #7: To table the request of William and Geraldine Krantz until the next meeting to allow the county to provide more information regarding the issue of location.

Motion: Lewis Logan Second: Dan Colhoun

Status: Tabled

C. WORCESTER COUNTY

1. 23-04-01, 23-04-02 DAVIS, William E., Sr. 271.66 acres

Request to consolidate two districts into one district.

Mr. Conrad presented the request of William E. Davis to consolidate two districts into one district. Mr. Davis is the original owner of the district property. The current request is to consolidate two existing districts into one district.

On May 25, 2004, the Foundation approved the establishment of two districts on Mr. Davis’ property, 120.9 acres and 150.76 acres. Mr. Davis wishes to sell an easement to the Foundation during the 2005 easement cycle. He would like to consolidate both districts, which are contiguous, into one district and apply for one easement on his entire 271.66-acre property.

According to Worcester County, the proposed amended, consolidated district would contain 81.7% qualifying soils.

Foundation staff recommends approval.

Mr. Tassone asked why this landowner is requesting to consolidate the districts when there is a concern that the Foundation will not have adequate funds to purchase an easement on large farms. Mr. Conrad stated that perhaps because of the FRPP funds, the landowner may believe there will be adequate funding to purchase an easement on the entire parcel. Mr. Tassone stated that he thinks that this is good for the program because larger farms tend to be more viable operations. He asked if the Program Administrator has spoken with the landowner to make sure he understands the implication of combining the districts. Ms. Weaver stated that Katherine Munson, Worcester County Program Administrator, has verified that she has spoken with the landowner about this concern but the landowner wants to proceed to combine the districts.

Motion #8: To approve the request of William E. Davis, Sr. to consolidate two districts into one district.

Motion: Joseph Tassone Second: Dan Colhoun

Status: Approved

III. AGRICULTURAL PRESERVATION DISTRICT PETITIONS

Mr. Conrad presented the petitions to establish agricultural preservation districts.

A. CARROLL COUNTY

1. 06-05-01 PETERS, John R. & Barbara A. 40.49 acres

This property has 58.77% qualifying soils; two dwellings on the property; and is a hay and grain operation. No acreage is being withheld. Staff recommends approval based on meeting minimum qualifying soils and contiguity with proposed district 06-05-02.

2. 06-05-02 HARPER, Roy H. & Gladys M. 77.60 acres

This property has 69.83% qualifying soils; one dwelling on the property; and is a hay and grain operation. No acreage is being withheld. Staff recommends approval based on meeting minimum qualifying soils and size criteria.

3. 06-05-03 MAHANNA, Charles S. & Francis E. 88.63 acres

This property has 67.2% qualifying soils; one dwelling on the property; and is a grain and forage production operation. No acreage is being withheld. Staff recommends approval based on meeting minimum qualifying soils and size criteria.

Mr. Logan asked about the soils classification for this property. Mr. Conrad stated that this specific soil type (MtC2) has been approved in the past by the Foundation as acceptable for meeting soils criteria based on its productivity.

4. 06-05-04 NAECKER, William T. & Darlene A. 82.97 acres

This property has 61.01% qualifying soils; one dwelling on the property; and is a hay and pasture operation. 2.2 acres is being withheld for a dwelling for his daughter. Staff recommends approval based on meeting minimum qualifying soils and size criteria.

Mr. Tassone asked that in future, when acreage is being withheld from the district, the staff state in the report whether or not the acreage being withheld falls within the Foundation’s guidelines for withheld acreage.

Motion #9: To approve the request of all four Carroll County district petitions to establish land preservation districts on their properties.

Motion: Joseph Tassone Second: Vera Mae Schultz

Status: Approved

IV. PROGRAM POLICY

A. Treatment of Pre-existing Dwellings as Tenant Houses

Mr. Conrad stated that the Foundation staff and Program Administrators and Bill Beach, Office of Real Estate, Department of General Services, have been trying to deal with this issue for some time. It has come up in several contexts over the last year or so. Mr. Beach has come to the point where he must tell his appraisers how to appraise the properties and he would like to have some instruction on how to do that.

Mr. Conrad stated that this issue came up as a result of Task Force legislation which was passed during the 2003 Legislative Session. The Foundation adopted a new lot policy as a result of the legislation. This memo was the result of a meeting between MALPF staff, DGS staff and counsel on Thursday of the prior week. The purpose of the meeting was to resolve the issue of instructions to be used for the appraisals.

Mr. Conrad stated that the two counties that are most affected by the new policy are Carroll and Baltimore County. Unfortunately, the Program Administrators from both counties, Bill Powel and Wally Lippincott, are on vacation. They have not had a chance to review this memo so they have not had a chance to comment on it. The memo was written with the intention to put the issues on the table and show the dilemmas that the Foundation was facing.

One of the changes in the lot policy treats pre-existing houses different than they had been treated in the past. The intent was to make it more difficult to subdivide pre-existing houses from the property. Until October 1, 2003, all pre-existing houses could be subdivided from the easement property with a one-acre lot. They could be sold to anyone without restrictions in the open market place. As a result, at the time the property is appraised, all pre-existing houses are treated as having used rights to dwelling units on the property, with an occasional exception primarily in Baltimore County.

After October 1, 2003, in large part as a response to the concern that the MALPF system had created incentives for some owners to subdivide and sell separately from the main protected parcel all pre-existing dwellings, leaving no dwelling on a farm, new legislation required that any lots created around pre-existing dwellings after the easement is in place can only be done at the expense of family lots or the unrestricted lot rights that remain to the original grantor. Thus, while it is possible to subdivide a lot off a MALPF property around a pre-existing dwelling, it is much more costly and restrictive than before.

This new policy has created an incentive for landowners either to withhold or exclude pre-existing dwellings from the district agreement or, as has become evident, to deem them to be “non-sub-dividable tenant houses” when applying to sell the easement so they do not count against the dwelling unit rights used when the appraiser determines the fair market value (FMV) of the property. There is at least one contradictory problem that has been created with this approach when a property is appraised. The Office of Real Estate at the Department of General Services has asked for guidance in this matter in developing the instructions to appraisers this year. MALPF staff also notes some additional problems that extend beyond the question of the instructions given to appraisers in how these changes in the treatment of pre-existing dwellings in the program are implemented.

The appraisal dilemma is as follows. The appraisal for the fair market value under statute must be done for the conditions on the property at the time of the appraisal. Thus, the appraiser cannot take into consideration what will be given up under the easement (for example, a commitment not to subdivide certain pre-existing dwellings once the easement goes into effect), but can only take into consideration actual conditions or restrictions agreed to and in effect at the time the FMV is determined. This would require that a landowner not just commit to additional restrictions on pre-existing houses when the easement goes into effect, but that the landowner has actually restricted the subdivision of those pre-existing houses at the time the FMV is determined. Thus, the statute seems to require that a landowner put restrictions on the property without any guarantee that an offer, much less an acceptable offer, is forthcoming from the Foundation. A landowner seems to be required to give up value in the hopes of regaining that value in the appraisal.

The contradiction arises in that, if a landowner is required to have a restriction in place at the time of appraisal in a way that the county recognizes that (one or more of) the pre-existing dwellings do not count against the number of dwelling units used on the property for appraisal purposes, they are in effect also creating the possibility of additional rights to construct dwelling units on the property if an easement is not placed over the property because an acceptable offer is not forthcoming. This contradicts the intent of the new legislation on pre-existing dwellings because it has the unintended consequence of creating the potential for additional development on productive farmland.

Additionally, it should be noted that, given that once the easement goes into effect, almost all such pre-existing dwellings will either no longer be sub-dividable or be sub-dividable with severe restrictions (that is, only for eligible family members), it is not clear what is being given up if such dwellings are deemed to be non-sub-dividable tenant houses for purposes of the appraisal. Thus, the primary if not only impact that deeming these dwellings to be non-sub-dividable tenant houses will have is on the way that dwelling units are calculated on the property for appraisal purposes. Such designation will have little or no impact on the actual restrictions to which the property will be subject under the program.

The additional complications for MALPF staff arise from the existing tenant house policy. First, the original 1995 agreement allowing pre-existing houses to be deemed “non-sub-dividable tenant houses” required that these dwellings be restricted to tenants fully engaged in the farming operation. This requirement has not been seriously enforced. Further, changes in tenant house policy since the 1995 agreement place acreage requirements on tenant houses, require the landowner to show a compelling need for a tenant based on the nature and requirements of the farming operation, and require that existing tenant houses be used for legitimate tenants before any additional tenant houses are approved on a property. The Foundation has never made clear if these changes apply to pre-existing houses deemed to be non-sub-dividable tenant houses or if these should be considered a separate and distinct category of dwelling for which there is no statutory or regulatory guidance.

Mr. Conrad asked Mr. Beach if he would provide a synopsis of the issue from the perspective of the Office of Real Estate. Mr. Beach stated that the MALPF program has created an artificial situation so it is difficult to give an analogy to the real world. When a property owner builds a house on a farm and they are able to subdivide it and sell it off, obviously it has a value. On the other hand if they can’t sell it off separately and they have multiple dwellings on a property and the landowner cannot sell off the second, third, fourth, etc., they do not have the same contributory value to that whole property as they would otherwise. Mr. Beach stated that this is Bill Powel’s argument. Mr. Powel believes that the landowners are not adequately compensated. At the same time, to go to the opposite end of the spectrum, and to ignore them totally and say they don’t use up development rights is, in essence, compensating them too much. The reality is somewhere in between. Nancy Forrester, Assistant Attorney General, Department of General Services, stated that it is also contrary to the definition of development rights under the law.

Mr. Wilson stated that he understood Ms. Forrester’s point but he feels that the Foundation needs to be able to understand what’s happening to the farmer. If it is an unintended result and bad, it’s going to hurt the program. Mr. Wilson stated that we have an intermediate issue that we have to ask ourselves do we need a solution or do we not. If we decide we don’t need a solution, we should tell Mr. Beach to go out and do it the way we’ve always done it. However, we will need to be prepared to answer to our two largest jurisdictions as far as easements go. If they are going to greatly object, we have a huge problem.

Mr. Tassone stated that perhaps the Foundation could come up with a way to fix this problem for the interim. Given the fact that easement value is equal to unrestricted fair market value minus agricultural value, it seems that the only way to fix this would be to do something in the appraisal process that would make the appraised value higher.

Mr. Beach stated that when a property is appraised, the law says that the appraiser will appraise the property as it is; the appraiser will not take into account what happens after the easement is put in place. Mr. Beach stated that from his perspective, it is a voluntary program and there are certain benefits to the program and there are drawbacks. Mr. Beach stated that he does not think there is a problem at this time. His suggestion is for the Foundation to go through this cycle and see what happens. If there are major objections, then they can be reexamined at that time.

Mr. Colhoun stated that he believes there is a problem and Mr. Powel is correct in illustrating that the new policy created a problem that penalizes the landowner, whether it was intended or not. If there is some way administratively that the Foundation can address that, then it should, until such time as legislation can be passed.

Mr. Tassone stated that the only way to address this issue right now is to talk with the landowners and explain to them that they will be penalized for any pre-existing dwellings and if they want to get value for them, they should exclude lots around them when they bring the properties into the program. Ms. Weaver stated that that solution was proposed to Mr. Powel but he did not find it acceptable because he felt that it encourages the landowner to subdivide the lots off. Ms. Weaver stated that the Foundation staff acknowledged that it was not a perfect solution but, in the meantime, until a better solution is found, it would address the issue of the compensation for the landowner. Mr. Tassone stated that he agrees with Mr. Powel that it is not a good solution. Mr. Tassone stated that the current appraisal system would seem to suggest, because it counts the dwellings as development rights, that it expects the landowner would be able to take them off later. If the landowner is unable to take them off, then they should not be counted as using development rights. Mr. Wilson stated that that may be compensating them too much.

Mr. Nielsen stated that the program started off as being very generous to the farmer. As time went by, the trend has been to tighten up on development. He stated that it appears to him that if we go ahead with this, then it looks like the Foundation is trying to undo what the General Assembly intended to do. It appears that the Foundation is doing end runs around the statute. The intent was for the appraisal was to look at the property as it is before the easement is put into effect, without any consideration of what will happen after the easement is in place.

Mr. Wilson stated that he expects that legislation will be introduced from either of the two jurisdictions that will try to address the problem. It is possible that the Foundation could work with the counties to craft a proposed legislative solution.

Ms. Schultz asked if a motion was needed. Mr. Wilson stated that he was prepared to make a motion to instruct Mr. Beach‘s office to continue to do appraisals in the same way as they have done them in the past.

Ms. Weaver asked if MALPF would continue to allow Baltimore County to treat certain existing dwellings as tenant houses when they come into the program and therefore not count against their development rights. Mr. Wilson stated that MALPF counsel’s opinion is that if they can show that their ordinance allows them to do that, then MALPF will accept that. Ms. Weaver asked if the same applies to Carroll County. Mr. Tassone asked Mr. Nielsen if a Carroll County property is brought into the program and it has a tenant house on it, will it be allowed to be called a tenant house or farm structure and not count against the develop