Fayette County

Lexington council approves $8 million in bonds, including $2 million for PDR

Sign on the Francis Farm on Old Richmond Road, now preserved under Lexington's Purchase of Development Rights program.
Sign on the Francis Farm on Old Richmond Road, now preserved under Lexington's Purchase of Development Rights program.

Lexington's Urban County Council authorized borrowing $2 million to protect more Fayette County farmland from development.

The decade-old preservation program, called Purchase of Development Rights, is one of nine bond projects that won council's approval Thursday night. Council passed an $8 million bond package for the projects by a 14-1 vote.

Council member Doug Martin cast the dissenting vote.

Martin said he was "not comfortable with" the overall package. "If PDR had been separated out, I would have voted for it," he said later.

Approval came after a sometimes contentious debate earlier in the week about the program's future in tight fiscal times.

Faced with the choice of buying a fire engine or a farm's development rights, most taxpayers would opt for public safety, councilman Kevin Stinnett said Tuesday as PDR officials updated the council on its progress.

Councilman Tom Blues countered that PDR helps protect the equine and agricultural industries, which are major economic engines for Lexington. He also noted that PDR generates more than half its budget from matching grants.

"We all understand that this is bringing in matching funds," Blues said. "That strikes me as a serious obligation to follow through with the bonding."

The program has purchased the development rights to more than 25,000 acres of Lexington farmland since it started in 2000, reaching more than half its goal of 50,000 acres by 2020. More than $61 million has been spent on the program, with $28 million coming from the city and $33.5 million from local, state and federal matching grants.

Since July 1, the PDR program has acquired permanent conservation easements on approximately 1,200 acres.

"We're only halfway through the fiscal year, so we're not done yet," PDR program manager Billy Van Pelt told the council Tuesday.

Phil Meyer's 233-acre cattle farm on Military Pike, which features an 1894 historic house, was accepted into the PDR program in March 2009.

"There's such a low profit margin in farming. ... This money helps us continue to operate as a cattle farm," said Meyer, 59, an owner of Bohannon-Meyer Insurance firm in Versailles.

The program pays farmers the difference between what they would get if they sold their farm whole, and what they would get if they sold it in 40-acre tracts, Meyer said. In Fayette County, the minimum lot size outside the Urban Service Boundary is 40 acres.

As a working farm, Meyer's property is valued at $10,000 an acre, he said. If sold in 40-acre tracts, it would be expected to fetch $13,000 an acre.

After paying 25 percent in capital gains taxes, Meyer said he had about $2,200 an acre to re-invest.

He used half that to pay off debt and to invest in a new barn, sheds, feeding systems, a scale and other equipment needed for farming, he said.

Councilwoman Diane Lawless said Tuesday she often hears criticism that PDR "is about giving a lot of wealthy horse farms money not to develop.

"When in fact it's really more about the family farm, many of them struggling, with farmers who need that money to buy equipment and keep their heads above water," she said.

The debate on Tuesday about PDR also focused on how the program has been managing its flow of cash.

Some council members were critical of Van Pelt for using city money to "pre-fund" the purchase of conservation easements before the council gave final approval to sell bonds.

What happens, Stinnett asked, if the city finds itself in tough economic times like now, and the bonds aren't sold?

Van Pelt said the Rural Land Management Board operates off the assumption that the PDR program has an approved budget as of July 1, because it is included in the city's general fund budget.

"That's not how it is," Stinnett said. "The bonds, until they are sold, you can't spend that money."

However, it was standard for many divisions of city government to "pre-fund" items like PDR in the past, when the city maintained a large reserve of cash, Finance Commissioner Linda Rumpke told the council.

"Then we would bond, and there would be reimbursement" to the city, she said. "That was how business went on."

But with an extremely tight budget, "life as we know it changed," she said. "We have had discussions with these directors to say, 'We can't cash flow your expenses'" in the future.