1 Land Acquisition and the CWSRF Presented By Thomas J. Kelly, President NYS Environmental Facilities Corporation November 2003

2 Governor George E. Pataki Announces Goal “Over the past seven years New York State has led the nation in protecting crucial land and water resources for future generations. By expanding opportunities to complete these important projects, we will build on that progress and meet our goal of preserving one million acres of open space over the next decade.” January 18, 2002 The CWSRF will be an important part of meeting the Governor’s goal.

3 NY’s CWSRF Breaking Ground with Land Acquisition Few other states have financed land acquisition through CWSRF. EPA fact sheets promote using land acquisition to protect water quality. We are setting precedents about how to put that into action.

4 Land Acquisition and the CWSRF Part 1: Land Acquisition Overview Part 2: Application Process

5 Part 1: Land Acquisition Overview

6 Land Acquisition Overview What is Land Acquisition? How can we finance it under the CWSRF? Where in NY is land acquisition important and why? Who can acquire land under the CWSRF?

7 What is Land Acquisition? You can buy land and all the rights to it. Outright or fee simple purchase. You can buy some of the rights to the land. Purchase of Conservation Easements Must be in accordance with Article 49 of the ECL. Sometimes the term Purchase of Development Rights (PDR’s) is used by communities, but it has various meanings and some PDR’s cannot be financed.

8 Article 49 Conservation Easements Engineering and legal staff will review conservation easement to verify water quality protection goals. Subject to EFC approval for CWSRF financing but EFC will not negotiate the conservation easement.

9 Authority to Finance Land Acquisition Clean Water Act Section 212 – land acquisition allowed only where the land is an integral part of the treatment process – rare, will follow 212. Section 319 – land acquisition to prevent water quality impacts from nonpoint sources. Section 320 – land acquisition for projects implementing an approved estuary plan.

Land Acquisition Projects Must protect water quality and/or prevent water pollution. Parcels must be included in a “land acquisition plan” that conforms with the NYS NPS (319) Plan and describes the water quality purpose for each parcel.

11 First Non-Profit Land Acquisition Loan Open Space Institute receives CWSRF short- term loan for $6 million Preserves 10,000 acres in the High Peaks region of the Adirondack Mountains, including the headwaters of the Hudson River Protects the upper Hudson River watershed

12 10,000 Acres In the Adirondack Park

Land Acquisition Projects Must implement a recommended activity in an approved national estuary plan: Long Island Sound Study Peconic Estuary Plan New York-New Jersey Harbor Estuary Program Parcels must be included in a “land acquisition plan” that links each parcel to the recommended activity.

14 Long Island Sound Estuary

15 Peconic Estuary

16 New York New Jersey Harbor Estuary

17 City of Rye Land Acquisition $3.1 million short-term, zero interest CWSRF loan To acquire land for the conservation and management of the Long Island Sound Estuary Finances the purchase of three properties in the Long Island Sound watershed

18 Where and Why Land Acquisition Is Important Where Everywhere in the state for 319 Projects NYC Watershed. Nassau and Suffolk Counties, Westchester and Rockland Counties for 320 Estuary Projects. Why To protect groundwater and surface water from nonpoint sources of pollution.

19 Who Can Apply? Municipalities For any CWSRF project. Not-for-Profits qualified under Article 49 of the ECL. For 319 and 320 land acquisition projects only.

20 Part 2: Application Process

21 Project Listing Applicant submits Land Acquisition Project Listing Form, Land Acquisition Plan, and Parcel List. Engineer determines eligibility. Engineer scores project and submits project information for listing on IUP.

22 Determining Eligibility Eligibility Determination performed by Engineer in consultation with Technical Support Services Based on “Land Acquisition Plan” Parcel Listing Information Land Uses to be Restricted

23 Eligible Land Acquisition Projects Types of Projects

24 For each parcel, the Land Acquisition Plan identifies: the water quality benefit (for 319 projects). the recommended activity of the national estuary plan which is supported (for 320 projects). The land acquisition plan describes the water quality issues, water protection needs, parcels or areas to be acquired and why, restrictions on use, and other information.

25 What “Land Acquisition Plans” Can Be Used? Important Note: Any appropriate land acquisition plan may be used but only parcels that protect water quality or prevent water pollution may be financed. County or other Local Community Preservation Plan Local Groundwater Management Plan Local Water Resources Management Plan Source Water Protection Plan The Long Island Comprehensive Special Groundwater Protection Area Plan New York City Watershed MOU

26 Are All Projects or Property in Land Acquisition Plan Eligible? No. Only those with documented water quality related needs are eligible. Open space for parks not eligible. Cultural or historical resources typically are not eligible.

27 Environmental Review Municipalities – same as for other CWSRF projects. Not-for-profits – EFC is lead agency. SERP Certifications performed by DEC Regional staff

28 Land Use Restrictions for Protection of Water Quality Land Acquisition includes outright (fee simple) purchase and conservation easements in accordance with Article 49 of ECL. For all land acquired with CWSRF financing, restrictions of future land use must be imposed to provide for the protection, preservation and enjoyment of water resources in perpetuity. Restriction are site specific and will be determined on a case-by-case basis.

29 Restrictions Determined by Type of Recipient Municipal Recipient Fee simple land purchase is undertaken pursuant to a New York State law or regulation. No additional restrictions other than that provided under relevant legislation. Fee simple land purchase is not undertaken pursuant to a New York State law or regulation. Restrictions imposed by CWSRF loan documents and water quality protection restrictions.

30 Restrictions Determined by Type of Recipient Not for Profit Recipient All not-for-profit recipients will be subject to restrictions incorporated into CWSRF loan documents as well as site specific water quality protection restrictions.

31 Fee Simple Land Purchase Intended For Conveyance to NYS Recipient may have up to 5 years to secure conveyance to municipality or state agency. During this 5 year period – EFC will agree not to file CWSRF loan documents or water quality protection restrictions. In event Recipient is unable to secure conveyance – EFC will file CWSRF loan documents or water quality protection restrictions.

32 Activities Allowed and Restricted Allowable Use Passive Recreation – Scope and extent of such recreational uses shall be limited as necessary to ensure no significant damage to the property. Hiking, bird watching, fishing, canoeing or kayaking.

33 Activities Allowed and Restricted Active Use Recipient must demonstrate active use has been generally permitted and will be appropriately managed to improve, protect or maintain water quality. Restricted Activities Constructed facilities Motorized vehicles Any activity not provided for in nationally approved estuary or land management plan. Any activity negatively impacting water quality or contrary to purpose for which property is protected.

34 Disbursement Procedures Recipient must provide the following with each disbursement request Certified copy of real estate contract Real estate appraisal Necessary water quality protection restrictions Certification for Section 319 or 320 Project Disbursement Request with proper check request Escrow Letter

35 Disbursement Procedures EFC Approval Process Legal review of real estate contract, appraisal and supporting documentation, including necessary restrictions. Program management to review certification (319 or 320), real estate contract, appraisal and supporting documentation. Eligibility determination

36 Disbursement Procedures EFC Approval Process Appraisal staff review of real estate appraisal Confirming opinion of independent appraisal, if necessary. Finance to approve sufficiency of disbursement documentation Disbursement Request with proper check request Escrow Letter Final Step – Loan Committee Approval of Disbursement

37 Penalties For Recipient Non -Compliance In the event land use restrictions are violated; Recipient will be required to return all CWSRF financing received, plus a predetermined penalty amount. May forfeit ability to participate in future CWSRF financings.

38 Credit Considerations Who is the Borrower? General Purpose Local Governments (Counties, Cities, Towns and Villages) Local Authorities New York State Not-for-Profit

39 Security Requirements Evidence of Indebtedness Investment Grade Rating Letter of Credit Local Debt Service Reserve Third Party Guarantee

40 Loan Structuring Issues Term: Short Term Loans (GRID notes) up to 3 years, with annual conversion to Long Term for prior-year disbursements. Long Term Financing for up to 30 years (30 year PPU). Project Start and Completion: EPA requires SRF loan repayments to begin within one year of project completion. Project Start is the first disbursement within the annual period. Project Completion is the final disbursement within the annual period.