Some members of the Lexington council said Tuesday they want to explore increasing the local hotel tax to pay for Fayette County’s farmland preservation program.
A 0.5 percentage point increase in the hotel and motel tax would generate as much as $800,000 to $900,000 a year for the program, which has spent more than $79 million in federal, state and local money since 2000 to protect nearly 30,000 acres of farmland from future development.
Raising the tax, though, would require approval from voters at the ballot box. The tourism tax was increased by 2.5 percentage points last year to help pay for an expansion of the Lexington Convention Center. It is now 9.5 percent, of which 8.5 percent goes to the city and 1 percent goes to the state.
Lexington has spent $38 million in borrowed money on the Purchase of Development Rights program so far, but ballooning pension payments and flat tax collections mean the city may have to explore other ways to fund the program, some council members said Tuesday during a council committee meeting held to review the farmland preservation program.
“I think it’s something we need to consider next year,” said Councilman Kevin Stinnett, the chairman of the council’s budget committee. “We are going to have a tough time. This is one of the programs that’s going to be on the chopping block if we don’t do something differently.”
Councilman Fred Brown said the program has actually cost the city much more than the $38 million it borrowed, since interest payments on those bonds have cost an additional $11 million.
“Our budget is really strapped,” Brown said.
Lawyers for the city said they would have to get back to the council on how raising the hotel and motel tax would work.
Stinnett said state law allows Lexington to raise the tax to help pay for PDR and for park improvements, although it’s not clear if there is a cap on how many times Lexington can raise the tax.
Funding of the PDR program was one of many topics discussed during the review by the Lexington-Fayette Urban County Planning and Public Safety Committee. The panel voted Tuesday to put the issue of who sits on the Rural Land Management Board, which oversees PDR funds, onto the agenda of a council subcommittee looking at the Urban County Planning Commission and Board of Adjustment, the city’s two major planning bodies.
The 11 member board is appointed by the mayor but its members are nominated by various interest groups.
Council members also decided to hold off on making any changes to city ordinances governing the PDR program until a subcommittee of the land management board makes its final recommendations on possible tweaks to the ordinance, which has not had a major update since it was passed 17 years ago.
A schedule for when the Rural Land Management Board will return to the council with final recommendations has not been set, said Derek Paulsen, the city’s planning commissioner. Paulsen said he would stress to the board that the council expects recommendations soon.
The city has received federal funds to match local money it spends on conservation easements to protect farms from future development. The federal government, though, has more stringent guidelines than the local program, creating problems in recent years
The federal government, for example, does not grant money to non-U.S. citizens and those making $900,000 or more in a year. It also no longer allows landowners to pay for a second appraisal, which often raises the amount landowners receive.
The local ordinance has no upper income limit, citizenship requirement and allows second appraisals for landowners who do not qualify for federal funding. Over the past 11 years, conservation easements for 16 farms have been purchased using only local money or a combination of state and local money. The last time a second appraisal was used was likely four years ago, Paulsen said Tuesday.
There also were questions about board members who have participated in the program. Six current or former Rural Land Management Board members have received $6.2 million to protect their own farms, the Herald-Leader reported Monday.
None of the individuals were on the board at the time conservation easements for their farms were purchased, but several have rotated on and off the board for years, receiving payments between their stints on the board.
There is no prohibition against former board members participating in the program, unlike Lexington’s Affordable Housing Board, which makes members wait six years before getting city money to build housing for the poor.
Some council members said board member participation in the program is not a concern.
“They are only 3 percent of the total farms,” said Councilwoman Kathy Plomin of board members’ conservation easements.
Board member participation helps recruit more landowners into the program, she said. “They would of course be the best ambassadors to recruit farms.”
Those six board members have had nine conservation easements that protected a total of 2,035 acres. In addition, at least four family members of board members have received payments from the program, according to information provided to the council Tuesday.