Harford County, Maryland FY 24 Proposed Operating Budget

AGRICULTURAL PRESERVATION - COUNTY

ORIGIN/PURPOSE: The Maryland General Assembly enacted House Bill No. 1481, effective July 1, 1992, authorizing the Harford County Council to impose a Transfer Tax. Subsequently the County Council enacted Bill No. 93-3 to add new Article IV, Transfer Tax, to Chapter 123, Finance and Taxation, of the Harford County Code which imposes a 1% Transfer Tax on any instruments of writing that convey title to, or a leasehold interest in, real property, effective July 1,1993. The proceeds are to be distributed:

50% to the County's Agricultural Land Preservation Program 50% to fund school site acquisition, school construction, or school debt service

With the approval of a majority of voters, an amendment to Section 524, Indebtedness, of Article V, Budget and Finance, of the Harford County Charter, effective December 3, 1992, was enacted, allowing the County to enter into installment contracts to purchase easements for agricultural land preservation purposes. These purchases are to be primarily funded with a Transfer Tax. In addition, the County Council, via Bill No. 93-2, enacted that new Article II, Agricultural Land Preservation Program, be added to Chapter 60, Agriculture, of the Harford County Code, effective April 6, 1993, establishing the Harford County Agricultural Land Preservation Program (HALPP) to preserve productive agricultural land and woodland which provides for the continued production of food and fiber for the citizens of the County. The program is administered by the Department of Planning and Zoning and the Harford County Agricultural Advisory Board. The Harford County Agricultural Land Preservation Program allows land owners to preserve productive farmland for future generations through the use of conservation easements; in addition the land owner receives payment for selling their development rights and/or a tax credit. Easement purchases may be settled in a lump sum payment, or may be handled through an Installment Purchase Agreement (IPA) between the County and the seller. The agreement sets payment terms, including the fixed interest rate on which the landowner will receive annual payments. An IPA may be up to 30 years in length with interest and a small portion of the principal being paid annually. At the end of the term, the landowner will receive a lump sum payment constituting the remainder of the principal. This final payment is made with the proceeds of a stripped-coupon U.S. Treasury obligation purchased at settlement and held by the County until maturity. The funding included in the annual budget appropriation represents anticipated expenses for new easement purchases, required annual payments of IPAs, scheduled balloon payments on IPAs, and other associated expenses and obligations. The county's dedicated Agricultural Preservation fund maintains funding levels sufficient to meet the full obligations under the program at the time of settlement through to the completion of agreed payments. Due to the timing of Council approvals of easements, the completion of required surveys and documents, and final settlement dates, the preservation process for one property may span more than one fiscal year. Transfer Tax revenue not expended during the fiscal year in which it was budgeted reverts to the dedicated Agricultural Preservation fund and is made available for expenditure on eligible land preservation in future fiscal years in the form of appropriated fund balance.

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