THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, January 3, 1996 TAG: 9512300143
SECTION: VIRGINIA BEACH BEACON PAGE: 08 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 203 lines
THE FUTURE OF THE city's farmland is in the hands of people like H. Ernest Brown.
Brown, a retired car repair shop owner, doesn't want development to come to the 115 acres of woodland he now uses for hunting and fishing.
But he knows he will not live forever, and says his ``grandboys'' would rather chase girls than rabbits.
So Brown, 72, was the first landowner to submit an application for the Agricultural Reserve Program, a city-funded plan to protect an estimated 30,000 acres of undeveloped land in the southern half of the city.
Brown is still ambivalent about the program, which pays landowners to forgo development of their property, but he wants to see what the city has to offer.
``If they give me enough to justify tying it up, I don't see where I could be hurt by it,'' Brown said.
The City Council set up the program last spring because it was faced with a looming problem: If it allowed more intensive development of Pungo and Blackwater, it would be forced to spend hundreds of millions on new roads, schools, police, fire and trash collection services.
But, if it could give landowners a financial incentive not to develop, then it could end up spending less money in the long run, preserve its agricultural industry and gain badly needed time to address pressing problems in the city's northern half.
To fund the Agricultural Reserve Program, the council raised real estate taxes by 2.5 cents. That would provide nearly $90 million over the next quarter century to pay landowners the difference between what their land is worth as farmland and what it would be worth to a developer.
Brown's and other landowners' interest is crucial if the program is to be successful. Without their willingness to sell development rights, the program will not work.
Early indications suggest that property owners are open-minded about the Agricultural Reserve Program. About 80 rural-area landowners turned out at a meeting at the Agricultural Department in late December to hear the city's pitch. A half-dozen submitted applications before the year was out and many more had called the Agriculture Department for information.
William E. Chaplain was among the early applicants. A horse farmer with three children, Chaplain said he wants to sell the development rights to his 100 acres to help preserve his family's and his community's rural heritage. Chaplain's father, who owns 650 acres, is also considering the program.
``I don't really want a whole lot of growth down this way, so I hope some other farmers down here do it too,'' said Chaplain, whose family has owned land just south of Pungo for more than 100 years.
``I don't mind if the land stays like this for the next 50 years,'' he continued. ``One thing I don't want down here is another Kempsville.''
The primary incentive for landowners like Chaplain and Brown is that they will draw tax-free interest for 25 years before receiving the full amount they are due.
The city won't release detailed figures because prices will vary according to land quality. But if owners like Chaplain and Brown can get $3,000 per acre for each of their 100 acres, they will earn roughly $15,000 a year tax free for a quarter century. At the end of the 25 years, they will receive the $300,000 principle on the development rights while still owning the land.
Landowners who sell development rights will still be able to sell their property, albeit at a lower price. The city will hold onto the rights indefinitely, but at the end of 25 years, the property owner can ask the City Council for permission to buy back the development rights.
``We think in general, it's a great idea,'' Deputy City Attorney William M. Macali told the landowners at last month's meeting. ``If you want to continue farming you can do that and get paid at the same time.''
Don Horsley, a grain and hog farmer who is chairman of the Agricultural Advisory Commission, which oversees the program, said, ``Anybody who's a landowner and would like things to pretty much stay as they are and reap more from their property would be foolish not to look into this program.''
For its part, the city will be able to get a lot of leverage out of its investment.
Once the city decides to purchase a landowner's development rights, it will buy zero coupon bonds - like savings bonds - for 10 percent of the purchase price, or $30,000 for development rights worth $300,000.
By the time the bonds have matured in 25 years, they will be worth the full amount of the sales price. In the meantime, the city will use tax revenue to pay the landowner interest twice a year.
That way, city officials figure they can slow the pace of development at a cost of about $3.5 million per year.
But rural developer Herbert A. Culpepper doesn't think the program will work out that way.
Culpepper, owner of Pungo Realty, sees the agricultural reserve program as a way for the city to manipulate rural property values to benefit a handful of farmers and large landowners.
Two years ago, the city depressed rural land values by changing the way it calculated how many lots a landowner could develop. Now, the city can buy the development rights for much less money, Culpepper said.
The city will end up wasting a lot of money, he predicted, because the only land that will be offered up for sale will be land that wouldn't be good for development anyway.
The program will help the city tie up huge tracts of land for a few years, he said. Then, when the City Council is pressured to allow more development, those tracts will be ready for a major growth spurt.
``My theory is, if you leave it empty, you're going to leave a lot of land empty. Then when the politics get right, you're going to see a lot of development,'' Culpepper said. ``We're going to get a vinyl city down here and that's what we don't want.''
Instead, Culpepper said, landowners should be allowed to subdivide their land into ``farmettes,'' where houses - like the ones he develops - could be built on extremely large lots. That would preserve the rural quality of the land, the landowner's value and the farmer's way of life, he said.
Linda Fentress, another rural area landowner, said she has no intention of participating in the program.
``I (would) like my money now and not locked in on an interest rate for 25 years,'' Fentress concluded, after hearing the city's pitch at last month's meeting.
But for the most part, those landowners who turned out to hear the city's explanation of the program, seemed intrigued. Deputy City Attorney Macali said he expects the city to buy its first development rights by the end of this month.
Brown, the retired car shop owner who was first to apply for the program, said if the price is right, he may be the first seller.
``I didn't (buy my land) for the investment and I didn't do it to build on,'' said Brown. ``I just enjoy coming over here and spending time.
``I don't think this land would ever be good for development anyhow, but you never know,'' he said. ``You've seen what's happened out here in the last 25 years, so you don't ever know what's going to happen in the next 25 years.'' MEMO: Applications for the Agricultural Reserve Program are available at the
city's Department of Agriculture in the Municipal Complex. The
department can be reached at 426-5775.
WHAT IT'S ALL ABOUT
What's the point?
The program is intended to preserve the city's rural heritage and
agricultural industry by discouraging landowners from developing their
property. If it works as planned, the program will save the city
millions of dollars by reducing the need for costly city services such
as schools and roads.
Who will be able to participate?
Landowners in the rural southern half of the city, roughly south of
North Landing, Princess Anne and Sandbridge roads. Fewer than 20 of
those landowners are active farmers; most are people who inherited rural
land or bought as an investment and now lease to farmers.
What's a ``development right''?
The city plans to buy landowners' development rights, or the difference
between what the land is worth as farmland and what it would be worth
to a developer. The city will not release exact figures, but officials
said landowners might receive about $3,000 per acre on average. City
officials hope to tie up development rights to 30,000 acres.
How much will it cost taxpayers?
The program will cost $3.5 million a year for 25 years, or nearly $90
million total. Last spring, the council increased the real estate tax by
2.5 cents to help pay for the program, meaning the owner of a $100,000
house will pay at least $25 a year for it.
How much will the landowners make?
The city will hire appraisers to decide how much the development rights
to a particular piece of land are worth. The landowners will be paid
for their development rights over a 25-year period. The city will buy
zero-coupon bonds now, for 10 percent of the purchase-price. Like
savings bonds, the bonds will mature over the 25 years to equal the full
value of the purchase. In the intervening time, twice a year, the city
will pay the landowners tax-free interest on the sales price.
At the end of 25 years, landowners will be able to petition the City
Council to buy back their development rights, but there is no guarantee
that the council will be willing to sell.
How will the city decide which land to buy?
The Agricultural Advisory Commission has developed a ranking system to
help decide which land to buy if there is not enough money to purchase
all that is offered. Land that is ripe for development will be favored
over property that is not likely to see growth anytime soon; larger
tracts will be favored over smaller ones; and the city will try to
obtain contiguous land when possible. The city will not buy development
rights to undevelopable land, such as swampland.
ILLUSTRATION: [Cover, photo]
PRESERVING THE LAND
Map
Staff photos, including color cover, by CHARLIE MEADS
Ernest Brown, a retired car repair shop owner, doesn't want
development to come to the 115 acres of woodland he now uses for
hunting and fishing - a little firewood.
Herbert A. Culpepper, owner of Pungo Realty, would like to see the
land subdivided into ``farmettes'' with homes on large lots - like
the ones he develops.
by CNB