Calvert County commissioners are examining ways to speed up the pace and lower the cost of agricultural preservation--a top priority in Maryland's fastest growing county.
In a presentation at last week's meeting, county officials recommended "leveraging" as an alternative to issuing bonds as the most cost-effective method of locking up development rights on open space in the county at today's prices. Finance officials project that leveraging will cost less over the long term than issuing bonds, but so far they haven't specified a price tag because the plan is still emerging.
Under the tentative 32-year plan being discussed, the county would buy development rights from landowners with a lump sum payment due in 15 years. In the meantime, the landowner would receive an annual tax-free interest payment on the unpaid purchase price. A capital gains tax generated from the sale also would be deferred for 15 years, according to information presented to the commissioners.
By comparison, if the county issues bonds, it could buy development rights to several tracts now but also would have to pay the purchase price right away, said Terry Shannon, county director of administration and finance. Farmers also would have to pay a capital gains tax--roughly one-third of their profit on the sale--immediately, but would have the net amount to invest or spend.
Shannon said leveraging has been implemented in Harford and Howard counties, where farmers were at first skeptical of the plan's complexities. Now, however, 40 farms are on the waiting list for Harford's program, she said. "Once they see they can trust it, demand will grow," Shannon predicted.
John Prouty, a Calvert farmer who is chairman of the Agricultural Advisory Board, said he supports the leveraged financing, but wants to ensure that farmers understand the deal before committing to a plan.
"What everybody in the preservation community needs to do is make this as clear and easy to understand as possible," Prouty said. "Anything involving land and public money is a sensitive issue."
Overall, Prouty said he favors leveraging because "every dollar outlaid is going to come back in money we don't have to spend later on schools, public safety and recreation" that would emerge from unchecked growth.
Commissioners also praised the concept, but are worried that 32 years is too long and would result in the county losing the race with developers for open spaces. The board requested a revised presentation with a 20-year deadline, expected later this month.
"I'm encouraged by what I see," said Board of Commissioners President Linda L. Kelley (R-Owings). "The crystal ball starts to fade at 32 years, and even though 20 years out is a lot, [that plan] would be better."
The county's goal is to preserve 40,000 acres of farmland. Kelley said 20,000 acres are now enrolled in the preservation program, and development rights to 16,000 of those acres already have been purchased. That leaves 24,000 acres to go for the county to reach its mark.
Commissioners indicated they would set a public hearing on the financing options.