Management of the Conservation Fund

As authorized by RSA 36-A:5.1

At the 1999 Town Meeting, Hanover voters created the Conservation Fund. Money in the Conservation Fund may be expended by the Conservation Commission for any purpose authorized by the state of New Hampshire in by RSA 36-A (see Appendix I). Limitations are imposed by the Memorandum of Understanding between the Conservation Commission and Board of Selectmen (see Appendix II). Typically, these funds are used by conservation commissions for land acquisition and the costs associated with donation, purchase and management of land. This section of the Open Space Priorities Plan sets forth guidelines for management of Hanover's Conservation Fund, including implementation of this open space plan.

Composition of the Fund

The Conservation Fund was created in 1999 by combining a number of existing funds: Land Acquisition Fund, Land Maintenance Fund and 50% of the Land Acquisition and Capital Improvement Fund, and Capital Improvement Fund (Elm Street). In addition to this "nest egg", voters approved 50% of the land use change tax to be added to the Conservation Fund each year. Pursuant to the Memorandum of Understanding, 100% of the revenue from timber sales on town-owned lands and 100% of fines collected from conservation and environmental violations are accounted as revenue for the Conservation Commission General Fund budget. Any balance reserved at the end of the year from fines or timber sales will join the revenue stream that replenishes the Conservation Fund. The initial balance of the Conservation Fund was $176,998. Approximately $50,000 will be added to the Fund in 2000 from the use change tax.

Estimating the Revenue Stream for the Next Five Years

The use change tax is imposed when land that has been in current use no longer qualifies for current use tax treatment. State law authorizes a municipality to vote to deposit all or a portion of this tax in the conservation fund when it is collected. Towns in New Hampshire have chosen to allocate the use change tax receipts to their conservation funds in a variety of amounts, from 5% of the tax receipts to 100% of the tax receipts. Some towns place a ceiling on the amount that can be added to the Conservation Fund in any year, with ceiling amounts ranging from $1000 to $100,000. Others authorize deposits to their funds only after a certain amount has been raised. Hanover voters have approved an annual transfer of 50% of the use change tax receipts into the Conservation Fund. A vote in Town Meeting could change this proportion.

Over the past ten years, the average annual amount of use change tax generated by land being taken out of current use, has been $50,000. Assuming that the rate of land taken out of current use continues at the same rate for the next five years, it is anticipated that $25,000 per year, or $125,000 over the next five years, will be added to the Conservation Fund.

In the best case, a management plan will be developed for each of the forested tracts owned by the town. Such a plan would recommend a timetable for timber harvest for each tract. Using estimated timber yields from these plans, harvest values could be estimated. Currently, some but not all of the town-owned properties have management plans, so it is not possible to predict a revenue stream coming from each tract where timber harvest is planned might occur. Based on the town's consulting forester's estimate of revenue from timber sales, in the next five years, approximately $7,500 will be added to the Conservation Fund.

A system of conservation and environmental violation fines has not been instituted to date. To keep the estimates for spending from the Conservation Fund at a conservative level, the revenue stream from this source was estimated at $0.

The Conservation Fund is deposited in the New Hampshire Public Deposit Investment Pool. This is an interest-bearing account. Assuming that a balance for ongoing stewardship is kept in the Conservation Fund of approximately $30,000, that conservation projects will reduce the Fund in a gradual way, and a 5% interest rate, there would be interest earned each year of around $3,500.

Based on this analysis, approximately $150,000 will be added to the Conservation Fund over the next five years. Added to the beginning balance, this amounts to approximately $330,000 to work with over the next five years.

Conservation Fund Initiatives - A Five-Year Plan

Given the pace of development, the need to protect and conserve more open space in Hanover now is great. The town is committed to becoming a model land steward, proving its ability to care for the town's portion of the open space network, and setting a good example for other landowners and towns. Careful planning for Conservation Fund assets is needed, as both protection and stewardship will have to be funded from the fund.

Stewardship Fund

With conservation easements, of which the town now holds 35, comes the responsibility to monitor them and to enforce their terms. When an easement violation occurs, consultants may be needed to assist in litigating and remediating damages. Most land trusts have stewardship funds that support the costs incurred in the event of an easement violation. The Upper Valley Land Trust sets its one-time stewardship fee based on a calculation of the complexity of the easement and estimated future costs starting with a minimum of $1,800. Many land trusts use their stewardship accounts to support easement-monitoring activities.

A stewardship fund of $30,000 should be established as a restricted fund within the Conservation Fund with the recognition that the town's General Fund will also continue to be used for these expenses. Interest from the stewardship fund should flow back into the Conservation Fund for land protection and other projects. Easement monitoring should be done by town staff, paid for out of operations, and volunteers.

Every time an easement is accepted, a stewardship fee of at least $1800 should be added to the stewardship fund. This fee could be covered by the Conservation Fund, by donations, or by the easement donor. The amount of the fee should be reassessed periodically.

Land Protection Assistance Fund

One excellent way for open space to be protected is for a landowner to voluntarily donate a conservation easement to a land trust or governmental entity. Landowners who have decided to generously give up development rights on their property are often surprised and dismayed by the costs associated with donation of a conservation easement. These include a property survey (if one does not already exist), a title search, legal counsel for preparation and/or review of the easement deed, stewardship fund fee, appraisal (if the easement is to count as a charitable contribution) and often land planning and/or financial planning assistance. Although the tax savings to the landowner resulting from the donation of a conservation easement typically exceed the associated costs, even the most willing and generous landowner can experience "sticker shock".

In order to encourage voluntary donations, the Conservation Commission should make $20,000 available annually to assist property owners with defraying the costs of easement donation (except for the landowner's appraisal and professional counsel fees solely for the landowner's tax deduction purposes), whether to the town, a land trust or to another governmental entity. The terms of the conservation easement must meet clear professional writing and legal standards and be agreeable to the Conservation Commission in order for the project to qualify for these funds.

Notice of the availability of these funds should be made by the end of May each year. Applications from landowners should be received by the Conservation Commission by August 1. Decisions should be made by the Commission on projects to be funded by September 1, or sooner, in order that projects could be completed by December 31 of that year. Land Protection Assistance money not awarded by September 1 should be available for other projects through the end of the town's fiscal year and should be carried forward to be made available in subsequent years when there may be more interest in easement donation. Specific guidelines for award of these funds should be established by the Conservation Commission. There may be extraordinary cases where exceptions can be made to this general funding schedule.

Permanent Protection of Town-Owned Land

There are approximately 20 town-owned parcels that are managed by the Conservation Commission as open space land. In order to assure that these lands will remain as permanent open space, the town should work with a land trust to devise a conservation easement to protect each parcel. Each year, $3,000 should be allocated from the Conservation Fund to work towards permanent protection of town-owned conservation lands.

Land Maintenance Budget

Five hundred dollars should be allocated per year from the Conservation Fund for development of a volunteer stewardship program, trail signs, maps, and other items for managing and publicizing use of town-owned land. (Management planning and hazard tree removal and trail work, including establishment of new trails, should continue to be funded through the consultant line item in the Conservation Commission's general fund budget.) Volunteer training in easement monitoring and trail and open space maintenance should be offered on a regular basis.

Land Protection

The balance of the Conservation Fund (an estimated $232,000 in the five-year period) should be available for supporting land protection initiatives. The Commission needs to be sure that purchased open space lands have high resource value. In every case where the Conservation Fund will be used, the Commission should seek conservation partners. The Upper Valley Land Trust, the Hanover Conservation Council, the Appalachian Trail Conference Land Trust, and Society for the Protection of New Hampshire Forests are all active land trusts which may have an interest in participating in a given land protection project in Hanover. There are also non-land trust conservation partners that could be utilized such as the Audubon Society of New Hampshire, the Connecticut River Joint Commissions, The Nature Conservancy, New England Wildflower Society, NH Extension Service and NH Coverts Project. Alternatively, this money could also be used to support a project initiated by one of these conservation partners.

In the case of conservation easement purchase, because of the long-term monitoring and enforcement responsibilities, it is advised that the town work in cooperation with a land trust and seek a land trust recipient for the conservation easement. In this way, the town and land trust work together to achieve open space protection but the town is not encumbered with the monitoring and enforcement time and financial commitments, particularly those that come with an enforcement action.

In order to make the limited Conservation Fund dollars stretch further in every possible case, there should be an attempt to leverage support from neighbors, conservation partners, other government agencies, foundations and/or the general public. This match could take the form of a bargain sale from the landowner.

Depending on the projects that are developed or come to the attention of the Conservation Commission, the Commission should decide in any given year whether to spend the entire amount on a single project or to divide this money for land protection among many projects.

Evaluating Potential Expenditures From the Conservation Fund

In its approach to spending limited conservation dollars, the Conservation Commission must be at once opportunistic and flexible, but also guided by the lands, objectives and criteria identified in this plan as it is consistent with the town Master Plan. Having established a structure for the open space network, it is a goal of the Commission to have that network completed. Thus, the lands described in this plan are considered to be priorities for protection.

However, should specific properties outside those mentioned in this plan that exhibit outstanding open space benefits come to the attention of the Commission, they should be considered for inclusion as a rational part of the open space system. For example, the availability of an undeveloped lot that could become an addition to the Town Forest whose location is not specifically cited in the Plan may be an excellent addition to the town's open space holdings. Likewise, a neighboring community might run a trail to the Hanover town line. A specific piece of property in Hanover may be necessary to link the trail to Hanover trails. This type of opportunistic purchase would provide an open space benefit to Hanover residents, even though the particular piece of property is not shown as part of the open space system at this time.

For every property whose protection might be funded by the Conservation Fund, natural and historic resources should be identified, and an assessment of the open space benefits must be completed, and the willingness of the land owner, the threat of development or disturbance of the natural systems, the costs and price all need to be considered. These measures should be used to evaluate the benefit of conserving one piece versus another piece of property. The Land Conservation Committee may wish to review the criteria used by other conservation organizations to evaluate high priority areas.

This management plan, which covers only the land protection assistance fund, permanent protection of town-owned properties, and land maintenance at the proposed levels, will leave the Conservation Fund depleted at the end of the five-year period. Nevertheless, good land stewardship and assistance to voluntary conservation easement donors need to continue. Hopefully, anticipated revenues from the use change tax, timber sales, and interest should cover those continuing responsibilities.

It is clear that one or more additional revenue sources must be identified. Public fund raising to capitalize a long-term land protection fund, or a bond issue, are two potential sources. Establishment of new sources will be a measure of the town's commitment to the open spaces that residents have identified, in several public surveys during the last 25 years, as very important elements of their town.

Conservation Fund - Summary of Proposed Cash Flow

$498