New year to bring new fund to board
January usually doesn’t stand out around here as a month for planting anything.
But the Kent County Agricultural Preservation Board will begin cultivating something new in January: an endowment fund.
A $100,000 grant from the M.E. Davenport Foundation provides the start-up money for the fund that will be incorporated into a much larger investment fund to be managed by the Grand Rapids Community Foundation.
Board members plan to deposit half the grant’s total into the fund and use those dollars to pay for land appraisals and closing costs not covered by federal or state monies in a purchase of development rights transaction. The remaining $50,000 has been set aside to help buy those rights from a qualified landowner.
“The fund agreement is based on IRS regulations,” said Kendra Wills, a land use educator with the MSU/Kent Extension and a consultant to the county, of the board’s contract with GRCF.
“We didn’t want to be tied to appraisals. We might need to use some of the funds to buy development rights,” she added.
The $50,000 the board has to buy development rights should go quite a bit further in the coming year than it would have three years ago. The average price to purchase the rights to an acre was about $3,500 in 2005 throughout most of the county — higher in the Lowell area where an acre went for $4,000. But property prices have fallen since then and fairly steeply, too. Wills thought an acre would sell for at least 40 percent less next year, if an owner is willing to part with those rights for that price.
“We just had some appraisals done in the Lowell area and it’s dropped quite significantly, like to around $2,000 to $2,200 an acre now. So that is what we’re probably looking at,” she said.
The idea behind the endowment fund came from foundations that have provided money to allow the board to buy development rights. Those officials told the preservation board that it needed to establish a reliable source of revenue to help purchase rights and pay for appraisals, as the county doesn’t budget for the program.
Wills said the board included the idea for the fund in its grant application last year to the M.E. Davenport Foundation because foundation officials approached the board and offered to invest in the Property Development Rights program.
“We can’t get to the first step without paying for an appraisal, and we need to have a little bit of money on hand. I think the idea was generated by (County Commissioner) Sandi Parrish when she was on the ag board, and the board had been mulling over that idea for quite some time,” she said.
Those who contribute to the board’s endowment fund become eligible for a 50 percent state tax credit, as long as those donations don’t exceed $100 per person or $200 per couple. Wills said the fund is expected to get a better rate of return by having GRCF manage it than if the board had joined the county’s investment pool.
“Even with a down stock market,” she said. “All contributions should be made directly to the Community Foundation. We’re instructing people to add ‘preservation fund’ or something like that to the memo line.”
The preservation board will name someone to administer the endowment fund at the next meeting and Wills is a leading contender for the post. She said she is willing to accept the position.
“It’s not very time intensive. It has to do with requesting funds from the endowment fund through an annual letter to the Community Foundation. Every year we can spend 5 percent of the endowment. It’s very similar to writing a brief for a grant proposal,” she said.
“I’m willing to do that but it could be somebody else, maybe somebody in the county administrator’s office. It’s not a big job. It’s not like managing the money. That’s the responsibility of the Community Foundation.”
The board will also welcome up to three new members next month as the two-year terms of Dennis Heffron, Mari Stone and County Commissioner Gary Rolls expire at the end of this month. County commissioners appoint the seven members who make up the board.
Rolls is a strong preservation advocate who sees the program as an economic issue. Farm and orchard products make up the county’s second-largest industry that is worth nearly $150 million annually.
The M.E. Davenport Foundation is named after Michael Edward Davenport, the founder of the Davenport Institute, now Davenport University. Robert W. and Margaret Davenport Sneden started the foundation in 1986. It is not affiliated with the university or the school’s foundation.
County commissioners approved the PDR ordinance in late 2002, without attaching any public funding to it but with a goal of preserving 25,000 acres of farmland and orchards in the first 10 years. The program has bought the development rights of 758 acres so far.