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|2/5/2014 ||Email this article Print this article |
|Clinton County Supervisors again consider sale of county farm|
By Jeremy Huss
Increased land values are prompting the Clinton County Board of Supervisors to consider selling 160.3 acres of county-owned farmland near Charlotte five years after a similar proposal was shot down due to public opposition.
County officials believe selling the land could generate more than $2 million, which could be used to reduce the property tax levy, fund major road projects or defray the cost of building a new jail.
A three-year lease on the cropland expires at the end of this crop year, and the board must give notice of its intent to lease-holder Clinton County Farms by Sept. 1.
Discussing the issue at a Feb. 3 meeting, the supervisors reached consensus to hold a public hearing in June on the possible property sale in order to make a decision and notify the farm tenant of the county's plans before the September deadline.
The county farmland is located on the east and west sides of 330th Avenue just south of the Charlotte city limits, with approximately 90 acres to the east of the road and 70 acres to the west.
The property has an average corn suitability rating (CSR) of 81, making it some of the most productive crop land in the area.
"It's some pretty good ground - some of the best ground in the county," supervisor Jill Davisson commented.
The current lease is $411 per acre, resulting in annual revenue of $65,883.30 for the 160.3 acres of tillable farm ground. Board members noted the rental price may be too high relative to current corn prices.
Davisson laid out what she said have been the two basic arguments in past discussions of selling the land. Opponents of a sale point to the farm as one of the only avenues of guaranteed revenue for Clinton County, with rent exceeding the tax value of the land. Meanwhile, sale advocates argue the county should not be in the landlord business and should put the land back on the property tax rolls.
Davisson made it clear she falls in the second camp, while supervisor John Staszewski noted Charlotte-area residents strongly opposed a sale when the supervisors floated the idea in 2009.
"If we continue to own it, it doesn't bother me, but I just truly am a believer that I don't think it's our place to be landlords," Davisson said.
Davisson said her principles mean she'd rather see the land on property tax rolls, even if it means less revenue for county coffers, though she added her feelings "aren't super strong either way."
Supervisor Brian Schmidt noted a survey of Clinton County Farm Bureau members conducted on behalf of the supervisors found an even split on the issue, with half of the 300 respondents favoring a sale and the other half in opposition.
Supervisor Staszewski said he supports a sale in order to get the county board out of the landlord business since the property will remain in crop production either way.
"If we had a future use for it, that'd be different . . . We shouldn't be landlords," Staszewski said.
"To take that land out of production would be a crying shame," Davisson commented.
Right time to act?
If the county is going to sell the property, now is the time to act because land prices appear to have peaked, Schmidt said.
That was the conclusion of Iowa State University economist Michael Duffy in the university's annual land value survey released in December.
The survey showed historic farmland values in 2013, with an average per-acre value of $8,716 for fair quality farmland. The average value of an acre in Clinton County was $8,153, up 9.8 percent from 2012.
However, Duffy predicted a decline in land values in 2014 due to falling commodity prices and lower farm income.
"Just looking at it from a purely financial investment standpoint . . . I came up with a 2.7 percent return on investment, which isn't great," Schmidt said.
The bigger question, Schmidt said, is what the county would do with the proceeds from selling the farm.
Sheriff Rick Lincoln quickly chimed to say the money could be put toward the cost of a new jail.
Auditor Eric Van Lancker noted the county will be receiving $6 million in reimbursements from the city of Clinton for the Lincolnway Railport project. Those funds, along with the farm sale proceeds, could give the county $8 million to hold in a capital improvement fund for jail construction.
Van Lancker attempted to put an estimate on the cost of the jail project, but Lincoln said it's still too early to say what a new facility could cost. Consultant Shive Hattery is conducting a study to determine the county's jail needs and establish a cost estimate.
Van Lancker noted the county will be able to use the railport reimbursement funds for whatever projects the board of supervisors desires as long as the $6 million is distributed after the county has finished paying its debt from the bond issue.
"We can basically use it for whatever. That's $6 million you don't have to bond for," Van Lancker said.
The ongoing repayment of the bonds adds 32-35 cents per $1,000 of taxable value to the overall tax levy, he noted.
Staszewski said he wouldn't want to see the money put in the county's reserve fund "because we'd be tempted to spend it," and supervisor Schmidt agreed.
Davisson said the money could be used to fund road projects that have been delayed due to the cost, noting she doesn't expect legislators to act on a gas tax increase long-advocated by the board of supervisors.
Davisson said local legislators have heeded the message from county officials but other representatives are afraid to address the gas tax in an election year.
"Get a backbone. Do what's got to be done," she said.
Schmidt said Farm Bureau members surveyed on the sale proposal ranked retiring the county's debt as the top priority for sale proceeds, with 30 percent supporting that option. Road funding was third on the list, he said.
When the current fiscal year ends June 30, Clinton County will have $7.3 million in principal remaining to pay on three separate bond issues, according to budget director Jeannine Clark.
The debt is from a $4.2 million bond issue for roads in 2009, an additional $2 million for roads in 2010 and $6.2 million for the railport, also in 2010. There is a 10-year repayment period on all of the bonds, and payments in fiscal year 2014 were approximately $1.4 million.
The supervisors estimate sale of the county farm property could generate $2.1 million to $2.4 million in revenue based on land values of $13,000-$15,000 per acre.
"Ground like that has been bringing $15,000 an acre," Schmidt said.