Lexington won’t have to repay $350,000 it allegedly overcharged conservation agency

The city of Lexington will not have to repay a federal conservation agency $350,000 that the city allegedly overcharged the agency, Lexington officials learned Tuesday.

At issue was how much Lexington charged the Natural Resources Conservation Service to help purchase conservation easements that protected two farms from future development. The federal conservation service typically pays half of the cost of conservation easements in Lexington’s Purchase of Development Rights program.

A 2015 federal audit of the Natural Resources Conservation Service’s programs raised questions about two land transactions in which Fayette County allowed land owners to hire appraisers to conduct counter-appraisals after the landowners disagreed with the appraisal paid for by the PDR program. The audit covered transactions that closed in 2012 and 2013. In each case, the counter-appraisals were higher, and in each case, the board and the landowners agreed on compromise figures.

However, in both cases, the audit found that the PDR program asked the federal agency to pay half of the higher counter-appraisal while the local PDR program was charged a lower amount.

In June, the federal agency sent the city a letter saying they had determined the city had overcharged it by $350,560 in those two land transactions. The farm owners did not benefit or receive a higher price.

The city appealed the decision.

Amanda Moore, the acting state conservationist for the federal agency, said in a letter dated Tuesday that although the city overcharged the federal agency, it had made a “good faith effort” to comply with the agreement between the city and the conservation agency.

“Though you failed to fully comply with the terms of the (Farm and Ranch Protection Program) cooperative agreement, you made a good faith effort to comply and rendered substantial performance, making you eligible for equitable relief,” Moore wrote.

The federal agency can wave the repayment if Lexington made efforts to comply with the program guidelines, Moore wrote.

The ruling allows Lexington’s PDR program to “move forward with a clean slate, and focus on its mission of protecting our farmland from development,” said Susan Straub, a spokeswoman for the city. “We appreciate our long-time partners at the Natural Resources Conservation Service in helping us resolve this issue.”

Fayette County’s PDR program was created in 2000 with the goal of preserving 50,000 acres of farmland. So far, the program had allocated $77 million — $37 million in local money, $24 million in federal money and $16 million in state funding — to buy conservation easements on nearly 29,000 acres of Fayette County farmland.

Some city officials had recommended an independent audit of the PDR program after the federal audit raised questions about its oversight. Nearly three years later, no audit has been conducted.

The city hired a new PDR director in 2014. The former director has said there was no attempt to circumvent the program’s guidelines in order to charge the federal government a higher price for the farmland.

This story was originally published November 15, 2017 at 5:09 PM with the headline "Lexington won’t have to repay $350,000 it allegedly overcharged conservation agency."