Analyzing the state ballot question

Breakdown of money to be bonded

“Green Acres, Water Supply and Floodplain Protection, and Farmland and Historic Preservation Bond Act of 2009”

$218 million Green Acres-Acquire & develop lands for public recreation & conservation purposes.
$90 million State purchases & development of lands.
$110 million grants & loans to local governments for purchases & development of lands.
$18 million grants & loans to nonprofit organizations for purchases & development of lands.

$ 24 million Blue Acres-State purchases of flood-prone or storm-damaged properties.

$146 million Farmland Preservation-For permanent preservation of agricultural & horticultural production land generally by acquisition of development easements, land restrictions, or fee simple titles.

$ 12 million Historic Preservation-Conservation, improvement, interpretation, preservation, protection, rehabilitation, renovation, repair, restoration, & stabilization of historic properties.

Stats & facts

Here are some state stats, provided by New Jersey.

New Jersey is 4.8 million acres in size of which approximately 1.3 million acres are permanently preserved, 1.4 million acres are developed and 2.1 million acres are undeveloped. While some of these undeveloped lands are protected by existing environmental regulation [Pinelands & Highlands], a significant portion remains unprotected and subject to development.

The above quote leads one to believe there is unprotected land.  The fact is that every parcel of land in New Jersey is under regulation.

The purpose of the State Plan is to:
Coordinate planning activities and establish Statewide planning objectives in the following areas: land use, housing, economic development, transportation, natural resource conservation, agriculture and farmland retention, recreation, urban and suburban redevelopment, historic preservation, public facilities and services, and intergovernmental coordination (N.J.S.A. 52:18A-200(f)).

All municipal and county master plans must gain approval by the state .

Through Cross-acceptance, negotiating entities work with local governments and residents to compare their local master plans with the State Plan and to identify potential changes that could be made to achieve a greater level of consistency with statewide planning policy.

Here is a state planning map (large file) under the Department of Community Affairs.

The Pinelands comprises 1.1 million acres.  The Highlands is 860,000 acres, half of which is under severe environmental restrictions.  These restricted lands are a combination of privately owned, nonprofit owned, and government preserved or owned land.

Since 1961 NJ voters have approved a dozen state open space questions totaling $2.1 billion.  A portion of this is passed down to supplement county, municipal, and nonprofit purchases in the form of grants and/or loans to local governments and nonprofit organizations.

According to the Green Acres site, “…every county and 238 of New Jersey’s municipalities have approved local tax referenda to preserve land and improve parks in their jurisdictions”.

Nonprofit groups also totally or partially purchase land.

Water supply authorities have open space watershed acquisition programs, money coming from water user rates.

Green Acres & Blue Acres

Green Acres & Blue Acres properties acquired by a qualified nonprofit or the state will be exempt from property taxes, if accepted by the Green Acres Tax Exemption Program.

The municipalities these properties fall in may also qualify for annual payments in-lieu-of taxes from the State of NJ. “Payments totaling $9,718,893.06 are being made to 290 municipalities in December 2008”.  These payments are an attempt to provide some compensation to municipalities for the loss of property tax collections from open space tax exemptions.

Personally, I do agree with the purchase of the Blue Acres where the state purchases flood prone and storm-damaged properties.

Green Acres issues

Spending for Green Acres too often not green.

A municipality may turn real open space into parking lots, artificial turf fields, and other sports related projects and structures.  Visit StopHigherTaxes.com for more information.  As long as the project meets a certain criteria, Green Acres money may be available.

There is disparity in assistance.

Urban, and more populated areas can receive more aid compared and rest of the state.  Here is one example from the link.

Green Acres provides low interest loans and grants to assist local governments in the acquisition and development of open space for recreation and conservation purposes. Green Acres nonurban acquisition loans are repayable at 2% interest over 30 years. In this funding round, funds are provided for projects in several categories: Urban Aid Acquisition, Planning Incentive Acquisition, Site-Specific Incentive Acquisition, and Standard Acquisition.

To support the purchase of open space in New Jersey’s cities, where opportunities are extremely limited and generally expensive, the funding ratio for the Urban Aid acquisition projects is 75% grant, 25% loan, up to the cap. Loans for Urban Aid acquisition projects are at zero percent, payable over 30 years.

Farmland Preservation Program

Here is a summary by county of the 179,303 acres of farmland preserved as of June 30, 2009.

There are different state farmland acquisition programs.  With a farmland preservation development rights purchase the land is deed restricted from being sold as anything except agricultural use.  The land stays in the owner’s hands, but prevents development of the property.

Sometimes the state buys the land outright and offers a few for sale at public auction.  While the state has ownership, it will be exempt from property taxes.  Here is a history of the farms on the above linked list the state has purchased and will attempt to sell.  As you see when the state purchases farmland for preservation it is very costly.  There is not only a loss at the auction, but also property taxes, and the costs to maintain and administer the lands while under state ownership.

Sturgis Farm South Harrison, Gloucester County-127.88 acres purchased 4/15/09 $2,557,600.
Not yet offered for auction.
Sassi Farm Carney’s Point, Salem County-81.68 acres purchased 12/20/05 $571,767.
5/6/09 minimum state auction bid $393,600-not sold.
Schroeder Farm Pittsgrove Township, Salem County-82.59 acres purchased 7/19/07 $1,036,295.
5/6/09 minimum auction bid $344,000-not sold.
Case Farm West Amwell Township, Hunterdon County-87.18 acres purchased 6/21/07 $1,656,439.
5/20/09 minimum auction bid $700,350-not sold.
Seagreaves Farm Alexandria Township, Hunterdon County-137.63 acres purchased 6/1/07 $2,384,970.
5/20/09 minimum auction bid $1,020,000-not sold.
Holcombe Farm W. Amwell Township, Hunterdon County-72.48 acres purchased 10/16/07 $1,739,592.
5/20/09 minimum auction bid $657,000-not sold.
Eagle Valley Farm Mansfield Township, Hunterdon County-78.12 acres purchased 3/28/07 $958,950.  Located in the Highlands Preservation Area.
5/20/09 minimum auction bid $500,550-not sold.
Erb Farm N. Hanover Township, Burlington County-138 acres purchased 3/15/07 $3,347,750.
6/8/07 minimum auction bid $1.14 million-not sold.
6/17/09 minimum auction bid $1,073,876-not sold.

Historic Preservation

Historic Preservation is not being ignored.  In August 2009 Governor Corzine signed S2770, “Appropriates $15,557,201 from various historic preservation funds to provide grants for certain historic preservation projects, and appropriates $574,805 from certain historic preservation bond funds for associated administrative expenses.”

New Jersey debt and taxes

Interest on $400 million debt service is unknown as it is based on prevailing interest rate, risk, and amount bonded at a given time.  One thing for sure, when money is scarce and our state debt payments already off the charts, either cuts will needed in other areas, or another tax will be conjured.  Bonds will be sold in increments over time. There are also costs associated with these programs such as salaries & benefits, professional fees, and other expenses.

Where the money is going to come from to repay the bonds is also concerning.

28.    Should the State Treasurer, by December 31 of any year, deem it necessary, because of the insufficiency of funds collected from the sources of revenues as provided in this act [Sales & Use Tax], to meet the interest and principal payments for the year after the ensuing year, then the State Treasurer shall certify to the Director of the Division of Budget and Accounting in the Department of the Treasury the amount necessary to be raised by taxation for those purposes, the same to be assessed, levied and collected for and in the ensuing calendar year.  The director shall, on or before March 1 following, calculate the amount in dollars to be assessed, levied and collected in each county as herein set forth.  This calculation shall be based upon the corrected assessed valuation of each county for the year preceding the year in which the tax is to be assessed, but the tax shall be assessed, levied and collected upon the assessed valuation of the year in which the tax is assessed and levied.  The director shall certify the amount to the county board of taxation and the treasurer of each county.  The county board of taxation shall include the proper amount in the current tax levy of the several taxing districts of the county in proportion to the ratables as ascertained for the current year.

The final analysis

While almost everyone is in favor of open space and reduced development, the big problem is how to pay for it. Obviously open space properties owned by the state, municipalities, and non-profit organizations do not generate property taxes. We the taxpayers must pay for the shortfall in taxes, professional and administrative fees, and also for the upkeep of the land and buildings while owned by the state.

There are 1.3 million acres already permanently preserved and another 1.9 million acres (40% of NJ) under Highlands and Pinelands environmental regulation.  According to the Trust for Public Land in 1998 the NJ Department of Environmental Protection managed more than two-third of the preserved land.

The amount of permanently preserved land recorded is a moving target, as I have read as much as 1.5 million acres.  I cannot find any specific information if this includes federally owned land.  There is also a lot of open space in private and corporate ownership, and schools, churches, large and other tax-exempt organizations own large parcels.

Senator Bob Smith, Chairman of the Senate Environment Committee and one of the sponsors of the bill, “…echoed the high returns of investing in our natural resources. Preserving open space, farmland, and our historic assets generates $10 for every $1 invested.”  As I have not seen any report of how his ‘economic analysis’ was calculated, so my thoughts are that it mostly involves the impact on students added to the school system and an population based increase in  services.  This type of analysis leaves out a tremendous amount of secondary and indirect analysis information.  It also points me to the need to reduce what the education system is costing taxpayers.

Costs associated with the state management and maintenance of the purchased properties and buildings often can’t be accurately estimated and many times are at the mercy of the current market, interest rates, and legal and professional fees, to name a few.  The state will cover direct, indirect, and unforeseen costs by adding more budget expenditures.

Our bonded open space money along with general state funds is actually often used to alter or destroy natural ecosystems.  I have seen government level projects, if a private individual or business had implemented, would have brought heavy fines.

A voter defeated state ballot question will not eliminate open space purchases.  There will still be municipal, county, nonprofit, and water authority expenditures for open space, conservation and development.  Also, proceeds from any state owned land that is sold could be reinvested in another purchase.

Shortfalls in sales tax revenue may put us in jeopardy of added property taxes, through additional taxes levied on the counties, and likely passed down to our local taxes.

A $400 million bond seems like the tip of the iceberg when it comes to the costs.

My analysis of the information, including the amount of open space already preserved, condition of the state finances and debt, observance of numerous parks, Highlands landowners waiting for compensation, and misuse or inappropriate unnecessary spending in some cases leads me to this conclusion.

New Jersey will be bankrupted from spending, faster than major land development will occur.

Voting NO November 3rd on this ballot question is the logical vote.