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Agenda - 06-28-1994-IX-B
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Agenda - 06-28-1994-IX-B
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BOCC
Date
6/26/1994
Meeting Type
Regular Meeting
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Agenda
Agenda Item
IX-B
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Agenda - 08-10-1994
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\Board of County Commissioners\BOCC Agendas\1990's\1994\Agenda - 08-10-94 Special Mtg.
Minutes - 19940628
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\Board of County Commissioners\Minutes - Approved\1990's\1994
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15 <br /> Pay-As-You-Go Program: In Forsyth County, the Board of Commissioners elected a <br /> pay-as-you-go program. In the first year, the Board appropriated$1.0 million to fund the program but,in <br /> subsequent years,appropriations have not exceeded$500,000. Since the first purchases in 1987, Forsyth <br /> County has acquired development rights to 22 farms with a total of 1,303 acres.The County acquired these <br /> rights through purchases and leases for a total of$1.97 million. <br /> If Orange County were to employ a pay-as-you-go program, it might start "modestly" as Forsyth <br /> County has done.Given that the level of participation is unknown,approximately one-half cent ($0.0046) <br /> of the County tax rate might be earmarked for the PDR program. As shown on Table 3.5, this tag rate <br /> would provide sufficient funds to purchase approximately the same amount of development rights as either <br /> bond program option.Based on the current assessed property value and assuming a 98 percent collection <br /> rate, the program would be funded during the first year (FY 1994-95) at a level of$203,713. If the value <br /> of development rights averaged $2,837 per acre, this would mean that development rights could be <br /> purchased on 72 acres.This would be roughly equivalent to purchasing the development rights on one farm <br /> every two years, based on the average farm size (155 acres) in Orange County in 1987. <br /> With property values appreciating approximately two-and-one-half percent annually, one might <br /> expect revenues from a one-half cent tax increase to rise as well, enabling more development rights to be <br /> acquired.This situation would not occur,however,since the value of development rights would appreciate <br /> at the same rate as property values. Shown on Table 3.5 are the revenues to be received over a 24-year <br /> period assuming an annual two-and-one-half percent appreciation rate. Slightly more than $6.5 million <br /> would be received and expended to acquire 1,723 acres worth of development rights.Over the same period, <br /> the total cost to a family with a home valued at$170,000 would be$259 or an average of$10.80 per year. <br /> Although a pay-as-you-go program may cost less and provide program continuity,its principal disadvantage <br /> is the lack of immediate impact. Over the course of two decades, some of the most productive farm land <br /> may be lost if sufficient funds are not available and property is converted to non-farm use. <br /> Combined Program: By way of comparison, and to give some idea of what a combined <br /> pay-as-you-go/bond financing program would cost,'Table 3.6 combines the tax rate required for debt service <br /> payments on a$5.0 million bond issue (Table 3.5) with that required for a pay-as-you-go program (Table <br /> 3.5). In this manner, funds remaining after debt service payments are made could be used to purchase <br /> more development rights. If such a combined program were implemented, the total cost of the program <br /> would be almost$20.0 million,result in the acquisition of development rights on 3,402 acres of farmland, <br /> and cost the owner of a$170,000 home approximately$590 (average of$25 per year). The advantage of <br /> this approach is that it provides the means for immediate impact at the beginning of the program while <br /> assuring long-term continuity. <br /> Table 3.7 summarizes the amount of acquisition funding available for each of the options as well <br /> as the amount of development rights acquired through each.Regardless of which funding method is chosen, <br /> the acquisition of development rights is expensive. The advantage of the program over purchase in fee <br /> simple is the land remains in the hands of the owner and is taxable.In contrast, even with expenditures <br /> on the order of$20.0 million,development rights could only be acquired on four percent of the 92,267 acres <br /> under agricultural use (Table 3.1). If, however, the program focused on the acquisition of development <br /> rights in portions of the county with costs of$1,500 per acre, development rights could be acquired on <br /> twice that amount (Table 3.8). <br /> 6. Who pays for a Purchase of Development Rights Program? <br /> Shown on Table 3.9 is the assessed value of property in Orange County by location. If the peak <br /> tax rate ($0.01110 per $100 valuation) required to pay the debt service payment on a$5.0 million bond <br /> issue(Table 3.4)were assessed today,approximately 55 percent of all revenues would come from property <br />
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