Agenda - 06-28-1994-IX-B - Laserfiche WebLink

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15 Pay-As-You-Go Program: In Forsyth County, the Board of Commissioners elected a pay-as-you-go program. In the first year, the Board appropriated$1.0 million to fund the program but,in subsequent years,appropriations have not exceeded$500,000. Since the first purchases in 1987, Forsyth County has acquired development rights to 22 farms with a total of 1,303 acres.The County acquired these rights through purchases and leases for a total of$1.97 million. If Orange County were to employ a pay-as-you-go program, it might start "modestly" as Forsyth County has done.Given that the level of participation is unknown,approximately one-half cent ($0.0046) of the County tax rate might be earmarked for the PDR program. As shown on Table 3.5, this tag rate would provide sufficient funds to purchase approximately the same amount of development rights as either bond program option.Based on the current assessed property value and assuming a 98 percent collection rate, the program would be funded during the first year (FY 1994-95) at a level of$203,713. If the value of development rights averaged $2,837 per acre, this would mean that development rights could be purchased on 72 acres.This would be roughly equivalent to purchasing the development rights on one farm every two years, based on the average farm size (155 acres) in Orange County in 1987. With property values appreciating approximately two-and-one-half percent annually, one might expect revenues from a one-half cent tax increase to rise as well, enabling more development rights to be acquired.This situation would not occur,however,since the value of development rights would appreciate at the same rate as property values. Shown on Table 3.5 are the revenues to be received over a 24-year period assuming an annual two-and-one-half percent appreciation rate. Slightly more than $6.5 million would be received and expended to acquire 1,723 acres worth of development rights.Over the same period, the total cost to a family with a home valued at$170,000 would be$259 or an average of$10.80 per year. Although a pay-as-you-go program may cost less and provide program continuity,its principal disadvantage is the lack of immediate impact. Over the course of two decades, some of the most productive farm land may be lost if sufficient funds are not available and property is converted to non-farm use. Combined Program: By way of comparison, and to give some idea of what a combined pay-as-you-go/bond financing program would cost,'Table 3.6 combines the tax rate required for debt service payments on a$5.0 million bond issue (Table 3.5) with that required for a pay-as-you-go program (Table 3.5). In this manner, funds remaining after debt service payments are made could be used to purchase more development rights. If such a combined program were implemented, the total cost of the program would be almost$20.0 million,result in the acquisition of development rights on 3,402 acres of farmland, and cost the owner of a$170,000 home approximately$590 (average of$25 per year). The advantage of this approach is that it provides the means for immediate impact at the beginning of the program while assuring long-term continuity. Table 3.7 summarizes the amount of acquisition funding available for each of the options as well as the amount of development rights acquired through each.Regardless of which funding method is chosen, the acquisition of development rights is expensive. The advantage of the program over purchase in fee simple is the land remains in the hands of the owner and is taxable.In contrast, even with expenditures on the order of$20.0 million,development rights could only be acquired on four percent of the 92,267 acres under agricultural use (Table 3.1). If, however, the program focused on the acquisition of development rights in portions of the county with costs of$1,500 per acre, development rights could be acquired on twice that amount (Table 3.8). 6. Who pays for a Purchase of Development Rights Program? Shown on Table 3.9 is the assessed value of property in Orange County by location. If the peak tax rate ($0.01110 per $100 valuation) required to pay the debt service payment on a$5.0 million bond issue(Table 3.4)were assessed today,approximately 55 percent of all revenues would come from property