To: From: Re: Date: Virginia Outdoors Foundation Board of Trustees Brett Glymph Audit and Finance Committee Recommended Amendment to Fee Schedule June 10, 2015 Recommendation: To sustain current operations, the Audit and Finance committee voted May 27, 2015 to recommend approval of a fee schedule that would include several new fees, adjustments to existing fees and stewardship endowments for certain purchase easements. Background: VOF is operating with a budget gap, and additional public funding to deal with this gap in the near term is uncertain. VOF s budget gap is expected to increase significantly in the next five years due to stagnant and shrinking revenue from existing sources and increasing acquisitions and stewardship obligations. The Governor s administration and several legislators have suggested that fees may be a way for VOF to address its budget gap. VOF was established by the General Assembly as an independent agency with the authority to develop its own budget and programs in furtherance of its mission. Many public agencies have shifted costs from the general taxpayer to the priority responders of their programs and services. The vast majority of the conservation community has recognized that sustainable funding for stewardship is critical for long-term protection of conservation easements, and they address this by collecting stewardship endowments and other fees. This is a standard practice in the land trust community and there are very few exceptions. Easements are not ordinary charitable gifts; they impose fiscal and legal obligations on the recipient in order for the gift to have value. In the case of easements, the general public receives the benefit of the gift if, and only if, the holder stewards the gift. Discussion: Three categories of fees typically charged by land trusts are: o processing fees to cover administrative processes associated with reviewing and approving a new easement application. o stewardship fees or endowments to cover post-recordation, long-term stewardship costs for services that VOF is legally obligated to perform; i.e., monitoring and enforcement of restrictions, diversion/conversion cases. o service fees to cover costs for services that: 1) the land trust is not legally obligated to perform, 2) benefit landowner, and 3) provided by the land trust after an easement has VOF BOT 6 25 15 Fee Resolution 1 of 2 1 of 7
been accepted/acquired; e.g. Baseline Documentation Report (BDR) preparation, boundary line adjustment review, interpretation letters for buyers and sellers. VOF s public funding and access to certain protections by virtue of its state agency status (duty to defend by the Attorney General s Office and indemnification by the Commonwealth) provide resources to account for the first two categories. As noted above, current resources are insufficient at present; however, there is a funding mechanism in place to support our administrative and stewardship costs (i.e., general fund appropriation, VLCF Stewardship Fund and recordation fees). Work to expand and augment these revenue streams is on-going with the Administration and key legislators. The other category is tied to services that are the result of VOF policy, accepted best practices and everyday management of a real estate portfolio; they are not tied to legal mandates for easements. VOF s current fee schedule captures a portion of this category (boundary line adjustment review and development-related reserved rights such as oil and gas and mitigation projects); the recommendation herein is an expansion of that category to include certain easement amendments, certain access and utility easements and Baseline Documentation Reports (which report is required of the landowner by the IRS and Virginia Department of Taxation for eligibility in the tax incentive programs). Historically, these services have been performed by VOF at no cost to the landowner. Absent unforeseen changes to existing revenue sources or expenditures, adoption of the proposed fee schedule would enable VOF to maintain current operations without a significant deficit, maintain timeliness in customer service to landowners and allow for additional time to expand and augment funding. For income-qualified donors, it may be possible to issue grants from the Preservation Trust Fund (PTF) to cover the BDR costs. At present, a request for a formal opinion by the Attorney General has been submitted to ensure that no legal impediment exists to using PTF grants for BDR costs. Other Considerations There are concerns among some staff that requiring a BDR fee will create a disincentive for donations of easements. Concerns have been raised that easements are considered to be a gift and that landowners should not have to pay to donate. The projected revenue from the combined fees is approximately $250,000 to $300,000 on an annual basis. VOF BOT 6 25 15 Fee Resolution 2 of 2 2 of 7
Virginia Outdoor Foundation Services and Fee Schedule Effective July 1, 2015* *with one exception as noted Stewardship Charges VOF provides a vast array of services to landowners free of charge, such as, interpreting existing easements, reviewing and approving plans for activities on easement properties and responding to all questions and inquiries from easement landowners and prospective buyers. The following are services for which a fee is charged in order to defray the costs incurred by VOF. If you have questions about these services or fees, contact your local VOF office and speak to a Stewardship Specialist. Easement Amendments: $1,000 flat fee with application. An additional fee for staff hours may be charged if work exceeds 30 hours. This fee applies to amendments that are initiated as a result of an easement violation or compliance issue or that are initiated by a landowner to clarify ambiguities or improve conditions for the landowner without imparting impermissible private benefit or inurement. For Short Form Amendments that exclusively add acreage or reduce division rights, the fee is a $500 flat fee. Access or Utility Easements: $1,000 flat fee with application. An additional fee for staff hours may be charged if work exceeds 30 hours. This fee shall apply to requests for administrative or legal work related to ROWs, access or utility easement through the open space easement. This does not include utility or access rights of ways that serve permitted buildings or activities on the property. Ecosystem Service Request for review: $1,000 flat fee with application. An additional fee for staff hours if work exceeds 30 hours for ecosystem projects related to wetland mitigation banks. These fees applies to requests for review and evaluation of ecosystem function projects for commercial purposes on easement properties including, but not limited to, stream bank restoration, wetland and stream mitigation, biological carbon sequestration, and biodiversity mitigation. Other situations subject to charge include but are not limited to: Oil and Gas drilling plan review: $10,000 flat fee with application. {An additional fee for staff time may be charged if work exceeds 40 hours.} Request for conversion or diversion of Open Space (Virginia Code Section 10.1-1704): $5,000 flat fee with application for applicants other than state or local government or other public agency. An additional fee for staff time may be charged if work exceeds 30 hours. VOF BOT 6 25 15 Fee Resolution 3 of 7
Present Condition Report in conjunction with property sale: $1500 flat fee with application. An additional fee for staff hours may be charged if work exceeds 40 hours. Boundary Line Adjustments: $2,000 flat fee with application. An additional fee for staff hours may be charged if work exceeds 30 hours. This fee applies to boundary adjustments between two VOF easements, a boundary adjustment between a VOF easement and an adjacent property subject to an easement held by another governmental entity, and any other type of BLA that VOF is requested to review. The fee covers the review of documents and plats, as well as the deed of conveyance. Easement Acquisition Charges Easement Purchase Projects Stewardship Endowment: Grant funded purchase projects require a stewardship endowment. The amount is determined by VOF s fee calculation formula, which considers property-specific variables such as permitted divisions, other retained rights, property size, and whether the easement includes a management plan requirement. This calculation is not to exceed the maximum amount permitted by the grant program. This endowment applies to all easement acquisition projects (full or partial purchase) that utilize any source of funding other than VOF or another state entity. Examples include Army Compatible Use Buffer Program (ACUB), Agricultural Conservation Easements Program-Agricultural Land Easements (ACEP-ALE)). Other examples of easements that may require an endowment are US Army Corp of Engineers approved mitigation banks, or easements which require a co-holder or third-party right of enforcement. Baseline Documentation Report Preparation/Review fee: *Effective January 1, 2016 a fee of $3,000 $3,500 (determined by built environment conditions of the property) for all new donated easements, to be charged at the time of BDR preparation. For projects using a thirdparty for BDR preparation, a $1,500 flat fee for VOF review will be charged. A comprehensive review is necessary to insure that the BDR meets VOF standards. Reconsideration of Proposal by the Board after one-year lapse: $1,000 flat fee. This fee applies when an easement project is approved by the Board of Trustees and not recorded within one year of approval. An approved but unrecorded project must be resubmitted to the Board for reconsideration and is subject to a $1,000 fee. VOF BOT 6 25 15 Fee Resolution 4 of 7
R-15-xx RESOLUTION A RESOLUTION OF THE VIRGINIA OUTDOORS FOUNDATION S BOARD OF TRUSTEES TO ADOPT AN AMENDED FEE SCHEDULE WHEREAS, the Board of Trustees of the Virginia Outdoors Foundation (VOF) approved a fee schedule in 2012; and WHEREAS, a Services and Fee Schedule shall be applicable from adoption by the VOF Board of Trustees until formally changed by same; and WHEREAS, both costs and services change over time and therefore, updates are normal and expected; and WHEREAS, the Executive Director, in consultation with other members of the VOF Management Team and the Audit and Finance Committee, has prepared and submitted an Amended VOF Services and Fee Schedule; now, therefore, be it RESOLVED by the Virginia Outdoors Foundation Board of Trustees this 25th day of June 2015, That the Amended VOF Services and Fee Schedule, and is hereby, adopted as follows: Stewardship Charges VOF provides a vast array of services to landowners free of charge, such as, interpreting existing easements, reviewing and approving plans for activities on easement properties and responding to all questions and inquiries from easement landowners and prospective buyers. The following are services for which a fee is charged in order to defray the costs incurred by VOF. If you have questions about these services or fees, contact your local VOF office and speak to a Stewardship Specialist. Easement Amendments: $1,000 flat fee with application. An additional fee for staff hours may be charged if work exceeds 30 hours. This fee applies to amendments that are initiated as a result of an easement violation or compliance issue or that are initiated by a landowner to clarify ambiguities or improve conditions for the landowner without imparting impermissible private benefit or inurement. For Short Form Amendments that exclusively add acreage or reduce division rights, the fee is a $500 flat fee. Access or Utility Easements: $1,000 flat fee with application. An additional fee for staff hours may be charged if work exceeds 30 hours. This fee shall apply to requests for administrative or legal work related to ROWs, access or utility easement through the open space easement. This does not include utility or access rights of ways that serve permitted buildings or activities on the property. 1 of 3 VOF BOT 6 25 15 Fee Resolution 5 of 7
R-15-xx Ecosystem Service Request for review: $1,000 flat fee with application. An additional fee for staff hours if work exceeds 30 hours for ecosystem projects related to wetland mitigation banks. These fees applies to requests for review and evaluation of ecosystem function projects for commercial purposes on easement properties including, but not limited to, stream bank restoration, wetland and stream mitigation, biological carbon sequestration, and biodiversity mitigation. Other situations subject to charge include but are not limited to: Oil and Gas drilling plan review: $10,000 flat fee with application. {An additional fee for staff time may be charged if work exceeds 40 hours.} Request for conversion or diversion of Open Space (Virginia Code Section 10.1-1704): $5,000 flat fee with application for applicants other than state or local government or other public agency. An additional fee for staff time may be charged if work exceeds 30 hours. Present Condition Report in conjunction with property sale: $1500 flat fee with application. An additional fee for staff hours may be charged if work exceeds 40 hours. Boundary Line Adjustments: $2,000 flat fee with application. An additional fee for staff hours may be charged if work exceeds 30 hours. This fee applies to boundary adjustments between two VOF easements, a boundary adjustment between a VOF easement and an adjacent property subject to an easement held by another governmental entity, and any other type of BLA that VOF is requested to review. The fee covers the review of documents and plats, as well as the deed of conveyance. Easement Acquisition Charges Easement Purchase Projects Stewardship Endowment: Grant funded purchase projects require a stewardship endowment. The amount is determined by VOF s fee calculation formula, which considers property-specific variables such as permitted divisions, other retained rights, property size, and whether the easement includes a management plan requirement. This calculation is not to exceed the maximum amount permitted by the grant program. This endowment applies to all easement acquisition projects (full or partial purchase) that utilize any source of funding other than VOF or another state entity. Examples include Army Compatible Use Buffer Program (ACUB), Agricultural Conservation Easements Program-Agricultural Land Easements (ACEP-ALE)). Other examples of easements that may require an endowment are US Army Corp of Engineers approved mitigation banks, or easements which require a co-holder or third-party right of enforcement. Baseline Documentation Report Preparation/Review fee: *Effective January 1, 2016 a fee of $3,000 $3,500 (determined by built environment conditions of the property) for all new donated easements, to be charged at the time of BDR preparation. For projects using a third-party for BDR preparation, a $1,500 flat fee for VOF review will be 2 of 3 VOF BOT 6 25 15 Fee Resolution 6 of 7
charged. A comprehensive review is necessary to insure that the BDR meets VOF standards. R-15-xx Reconsideration of Proposal by the Board after one-year lapse: $1,000 flat fee. This fee applies when an easement project is approved by the Board of Trustees and not recorded within one year of approval. An approved but unrecorded project must be resubmitted to the Board for reconsideration and is subject to a $1,000 fee. ADOPTED by a vote of ATTEST: Brett Glymph, Executive Director 3 of 3 VOF BOT 6 25 15 Fee Resolution 7 of 7