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1998-09-03 Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26 WORK SESSION, SEPTEMBER 3, 1998PAGE 667 ASSEMBLY The New Hanover County Board of Commissioners held a Work Session on Thursday, September 3, 1998, at 8:45 A.M. in the New Hanover County Administration Building, Room 501, 320 Chestnut Street, Wilmington, North Carolina. Members present were Commissioner Buzz Birzenieks; Commissioner Ted Davis, Jr.; Commissioner Charles R. Howell; Vice-Chairman Robert G. Greer; Chairman William A. Caster; County Manager, Allen O’Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Caster called the meeting to order and stated the purpose of the Work Session was to discuss the North Carolina Coastal Land Trust. ANNOUNCEMENT OF CHAIRMAN CASTER BEING ELECTED TO SERVE AS CHAIRMAN OF THE N. C. SHORE AND BEACH PRESERVATION ASSOCIATION County Manager O’Neal announced that Mr. Caster was elected Chairman of the N.C. Shore and Beach Preservation Association formed to educate North Carolina Legislators on the issues of beach preservation. Chairman Caster was congratulated by the other members of the Board for being elected to serve in this position. PRESENTATION BY ATTORNEY CAMILLA HERLEVICH ON NORTH CAROLINA COASTAL LAND TRUST Ms. Camilla Herlevich, Attorney with the North Carolina Coastal Land Trust, addressed the Commissioners about the North Carolina Coastal Land Trust and how local land trusts throughout the country are working with local governments to help leverage monies for land protection as well as work with private citizens to protect land outside of the government context. Land trusts grew from the idea of the Boston Commons where people owned land in common and used it for the good of the public. New England still has a tradition of community land being held for common use. These groups are non-profit organizations that do not become involved in political advocacy. The Nature Conservancy is probably the largest international land trust, and its focus is on rare and endangered species. Land trusts are more local and regional, and they focus on smaller tracts of land that do not necessarily hold rare and endangered species. However, these tracts are important to the community. There are 19 land trusts in North Carolina. The land trust based in Wilmington covers the entire coastal plain, which is the largest geographical area of any one North Carolina land trust. Others in the piedmont and mountain areas sometimes conflict over which land trust includes what population center. Land trusts need a strong membership and money from foundations. The coastal area is not as heavily endowed with philanthropy and foundations as the piedmont and mountain areas. The North Carolina Coastal Land Trust now has 1,000 acres under protection, about half of which is owned through title, and about half of which is protected through conservation easement. Conservation easements are a powerful technique to work with private landowners who keep the land. A land trust is a written agreement between a landowner and a tax exempt conservation organization whereby the landowner places a set of restrictive covenants on the property which decreases the use of the property for development and sets the property aside for conservation. There are three tax incentives with this type of agreement: a federal income tax deduction, a state income tax credit, and a reduction in local property taxes. The land is not removed from the local tax roll, but the value of it for tax purposes is reduced. For instance, if a landowner gives a conservation easement on his property to a land trust, he can take a charitable contribution deduction for the loss in value of that easement. This method works well with very wealthy landowners who have large incomes. One method that works well in North Carolina is estate planning tax reductions. Weyerhauser is the biggest corporation in North Carolina granting conservation easements to the N.C. Coastal Land Trust. This company has written off a seven figure amount for a conservation NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26 WORK SESSION, SEPTEMBER 3, 1998PAGE 668 easement given in the Newport area. Because Weyerhauser is a big corporation, it can use the 10% deduction feature. Commissioner Birzenieks asked if there was any flexibility in allowing local government to build in a conservation easement. Ms. Herlevich answered no, but said the agreement could be amended as long as the fundamental conservation purposes in the initial agreement are not changed. Also, the easement remains perpetual under federal tax law. Agreements can be tailored to the needs of the specific landowners, and restrict only certain portions of the land to allow for family dwellings. The conservation value of the property and what the land will take as usage are some of the issues governing how the trust would be set up. The estate tax for individuals is important for landowners to consider. If the property is reduced significantly, it reduces the value of an estate for tax purposes. These agreements do not have to be approved by local governments in North Carolina. It is a private agreement that must be recorded. The agreement is essentially a contract that turns into a real estate interest between the landowner and the conservation organization. In North Carolina there is a state income tax credit. The State of North Carolina may be the only state in the country that provides this incentive. The income tax credit is allowed for up to 25% of the value of the property, and there is a dollar cap on the amount. There is a pending bill in the General Assembly to increase the amount of the cap. County Manager O’Neal asked if there is a conservation easement on your property, can the property be sold. Attorney Herlevich replied that State law grants permission for the property to be sold, left to your children, or used as collateral for a loan. Land trusts also work well with state and local agencies by helping to explain the tax benefits. For example, if property is purchased for less than fair market value, the landowner can take, as a charitable contribution, the difference between the purchase price and the appraised value. Chairman Caster asked if the N. C. Land Trust had been able to raise enough money to actually acquire properties. Attorney Herlevich replied that the N. C. Coastal Land Trust was not able to acquire properties until last year when funds were available from the National Land Trust Fund. Land purchased in this fashion is removed from the tax roll because it qualifies under the state ad-valorem exemptions for scientific and educational purposes. There is no restriction to prohibit building on the property, but it must be set aside for conservation purposes. Parcels in New Hanover County have been given to the N. C. Coastal Land Trust in mitigation for development permits; however, it would be beneficial for the developer to construct boardwalks in these conservation areas for public access. Looking at land trusts in the context of real estate development, some problems arise, especially with tax limitations. If the developer wants to buy the land, there are two ways land trusts can become involved: (1) If a wetland is destroyed, the Corps of Engineers will sometimes order mitigation either off-site or on-site. It is important for the land trust to become involved from the beginning so any land set aside for conservation becomes truly a charitable contribution and not a quid-pro-quo situation. (2)When there are developable areas that have significant conservation potential, it is important for developer to talk with the N. C. Land Trust before beginning the NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26 WORK SESSION, SEPTEMBER 3, 1998PAGE 669 development. For example, giving land to a County Parks Foundation would be a possibility, and the N.C. Coastal Land Trust could become involved to assist with the project. Discussion followed on Greenview Ranches where lots were sold in the 1960's without a plan to provide roads to inland parcels. There are approximately 350 lots that cannot be sold or developed because of these complications. Chairman Greer advised that New Hanover County was considering acquiring this land to be used as a park site or school site, and he asked if any of this property could be donated to the N. C. Land Trust. Attorney Herlevich responded that while it sounds like an administrative nightmare, the property owners could receive tax benefits if they agree to give their land to the county. She advised the N. C. Coastal Land Trust could get a package of materials together for the Commissioners to review. She commented on a project in Florida that involved complicated ownership situations and stated that this process could be used in trying to acquire lots in Greenview Ranches. County Manager O’Neal requested Attorney Herlevich to attend a meeting with representatives from the Planning Department, Parks, Department, School Administration, and Department of Transportation to review the land in Greenview Ranches. Commissioner Birzenieks asked if any land with potential conservation solutions had been identified in New Hanover County. Attorney Herlevich responded the Conservancy has been working for a period of time on land holdings from the old rice plantations on the other side of the lower Cape Fear River in Brunswick County. It is felt this project will eventually become a reality. Also, a unique piece of land to be preserved would be the old trail that ran from Fort Fisher to Wilmington. New Hanover County might want to consider preserving tracts that contain salt marshes, wetlands and environmentally sensitive areas, especially along River Road. Unfortunately, the County does not have an in-depth biological inventory. Most coastal counties have performed this type of survey. There is a State Heritage Program that sends personnel to perform ecological surveys. Brunswick and Columbus Counties have performed surveys, and Pender County is in the process of performing the survey. It would be beneficial for New Hanover County to perform a survey; however, because of the County being urbanized and the value of land, it has been difficult to encourage people to donate land when alternative economic uses are so high. A new tool being used by the N. C. Clean Water Management Trust Fund is the availability of grants to non-profit organizations as well as local governments. Attorney Herlevich offered to sit down with county planners and identify some lands that contribute to water quality in a comprehensive in-depth manner. This would place the County in a position to offer cash to landowners instead of tax incentives, which is a more attractive package. Discussion followed securing enough money to acquire conservation land. Attorney Herlevich spoke on holding a bond referendum to set aside large sum of money, approximately $40 million to $50 million, for land acquisition. In Florida many counties have held individual bond referenda. New Hanover County citizens have been supportive of the County purchasing Airlie Gardens, which means there should be a similar bi-partisan support for protecting what land is left, not just Airlie Gardens. Attorney Herlevich offered to provide information on revenue sources in terms of state money. There is also the possibility of establishing a National Wildlife Refuge which will require influential help from a Congressman, such as Senator Lauch Faircloth. A National Wildlife Refuge established in New Hanover County would greatly benefit the land acquisition efforts. County Manager O’Neal commented on the innovative land use policies used in Portland, Oregon, and he asked if there was a relationship between the city and state for protecting these lands. NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26 WORK SESSION, SEPTEMBER 3, 1998PAGE 670 Attorney Herlevich responded that she was not familiar with that particular program; however, New Hanover County does have zoning in place, such as the Conservation Overlay District. The County has the choice of sitting on the sidelines and being helpless or going to the public and making a case for preserving the identified natural areas. Commissioner Birzenieks asked if New Hanover County could hold a General Obligation Bond to acquire conservation lands. Attorney Herlevich responded the bond referendum must be for public purpose, such as a school site, park, or museum. Commissioner Birzenieks asked if a bond referendum could be held without specifically identifying the parcels in advance. Attorney Copley responded the bond proposal could be artfully worded to be specific enough to inform the public about how the money would be spent. Ms. Herlevich suggested not placing dollar amounts on land or identifying specific parcels beforehand because this could upset landowners. She recommended identifying types of land to be purchased such as river corridors, long leaf pine forests, bird sanctuaries, or beach access points. Chairman Caster expressed concern for holding a bond referendum for the purpose of New Hanover County acquiring land without informing the public about a specific use of the property. He asked if the wording of the bond proposal could refer to a park or school site. Attorney Herlevich replied this type of wording would be fine. She reminded the Board that when the “public” owns a piece of property, there is a high expectation from the public for the land to be properly managed, which necessitates an operational expense. Commissioner Birzenieks spoke in favor of moving forward with a bond issue and allowing the public to decide on acquiring natural areas and open spaces that are locally important. He stressed the importance of preserving the natural resources left in New Hanover County. Chairman Caster questioned whether the citizens would be willing to adopt a $40 million bond issue with school bond issues that were just adopted. A lengthy discussion followed on the need to properly research the issue and educate the public if a bond referendum is held. County Manager O’Neal recommended the appointment of a Task Force comprised of one or two County Commissioners, Attorney Herlevich, one or two members of the County Administrative Staff, and two or three interested citizens to study the issue and make a recommendation to the Board of County Commissioners. After further discussion, the Board requested the County Manager to prepare a structure for appointing a Task Force and present this recommendation to the Board on October 5, 1998. ADJOURNMENT Chairman Caster, on behalf of the Board, expressed appreciation to Attorney Herlevich for the informative report on the North Carolina Coastal Land Trust. Chairman Caster adjourned the meeting at 9:55 a.m. Respectfully submitted, Lucie F. Harrell. Clerk to the Board