October 13, 1999
NEW JERSEY OPEN SPACE INITIATIVE
By: Kevin E. McCarthy, Principal Analyst
You asked for a description of New Jersey governor Christie Whitman's open space initiative, particularly with regard to farmland preservation.
In 1998 New Jersey voters authorized the dedication of $98 million annually from the sales tax over the next 10 years for open space, farmland, and historic preservation. The money will be used to back revenue bonds to pay for the preservation programs. From 2010 through 2029, enough sales tax revenue must be earmarked to pay off the bonds, up to a cap of $98 million per year. In 1999 the legislature adopted implementing legislation, at the governor's request. Under this legislation, $6 million of the annual funding goes to historic preservation, while the remainder is allocated between open space and farmland preservation programs on a 60/40 basis. These programs are the successors to those authorized under ten bond acts passed between 1961 and 1995. So far, the program has preserved 56,420 acres of farmland under the current and earlier programs and applications have been received for another 20,000 acres.
On November 3, 1998, New Jersey's voters passed Public Question No. 1, subsequently codified as Art. 8, Sec. 2, paragraph 7 of the state constitution. The paragraph requires that $98 million of sales tax revenue be dedicated each fiscal year from FY 1999-2000 through FY 2008-09 for open space, farmland, and historic preservation. The money must be used to provide financial assistance for (1) the acquisition and development of open space, (2) preservation of farmland for agricultural or horticultural use, and (3) historic preservation. The paragraph authorizes the issuance of up to $1 billion in revenue bonds backed by the earmarked funds.
In 1999, the legislature adopted the Garden State Preservation Trust Act to implement the referendum item. In adopting the act, the legislature found that:
1. the acquisition and preservation of open space, farmland, and historic properties protects and enhances the character and beauty of the state and that open space and farmland that is available now will gradually disappear as the costs of preserving them simultaneously increases;
2. agriculture plays an integral role in the state's prosperity and well-being and that much of the state's farmland is imminent risk of permanent conversion to non-farm use;
3. the retention and development of an economically viable agricultural industry is a high priority; and
4. the state should preserve an additional one million acres of open space and farmland in the next decade to protect the state's quality of life.
The act establishes the Garden State Preservation Trust (GSPT) to issue bonds for open space, farmland, and historic preservation and prescribes funding allocations and procedures. The GSPT has nine members, including the Secretary of Agriculture serving ex officio. In its annual allocations, the GSPT must first set aside any funds needed for debt service on the bonds and then transfer $6 million to the state Historic Trust for historic preservation projects. The remaining funds must then be allocated 60% for the Green Acres (open space) program and 40% for the farmland preservation program. The GSPT can change these allocation amounts after providing notice and holding at least one public hearing. The administrative costs of these programs must come from the General Fund rather than the earmarked revenues.
At least twice each year, the State Agricultural Development Committee (SADC) must propose projects to be funded under the farmland preservation program to the GSPT. (The committee is within the Agriculture Department for administrative purposes only.) The Department of Environmental Protection must do the same for the Green Acres program. The GSPT can delete items from these lists but cannot add items. The act establishes a procedure for reconsideration of the deleted items. The legislature is ultimately responsible for funding projects through the appropriations process. The appropriations for the farmland preservation program generally must identify the locations of the projects to be funded, but this requirement does not apply when a farm is bought outright (in fee simple). The act limits the total amount that can be funded annually under the two programs to $200 million.
SADC can pay up to 80% of the cost of a local government (county or municipality) acquiring a conservation easement on farmland, or acquiring it in fee simple. SADC can also do these things itself. Acquisitions in fee simple can only be made from a willing seller. If the local government or SADC acquires a farm in fee simple, it must resell it with an agricultural deed restriction, with the proceeds returned to the program. Funding under this program must, to the maximum extent feasible, reflect the state's geographic diversity.
In determining the value of land acquired under either program, any appraisal by or for SADC or the Department of Environmental Protection, a local government, or a nonprofit organization must be based on the property's zoning as of November 3, 1998. Special rules apply to appraisals of land in the Pinelands Preservation Area under the farmland preservation program.
The act establishes a sliding scale payment in lieu of taxes (PILOT) for property acquired in fee simple under either program by the state or nonprofit organizations. For acquisitions made under the act, the PILOT declines over a 13-year period, starting at 92% and declining to 4% of the taxes that would normally apply. Thereafter, the PILOT is based on the proportion of land in the municipality that is owned by the state or non-profit organizations as open space or farmland. The PILOT ranges from $2 per acre per year where less than 20% of the municipality's total land area is so owned to $10 per acre where 60% or more of the land is so owned. Funding for the PILOTs must come from the General Fund.