Xerxes Wilson

The News Journal

Two Port Penn farmers hope to get $6 million in exchange for signing away their development rights.

New Castle County is seeking to buy rights to preserve open space.

The arrangement is being questioned regarding the use of federal funding and other issues.

A controversial chapter in New Castle County farmland preservation will soon come to an end.

In one scenario, taxpayers will pay Gary Warren and Jaymes Lester $6 million to bar development on their farms near Port Penn in what would be among the most expensive per-acre price paid in state farmland preservation history.

If the County Council rejects the plan some claim is a sweetheart deal for the farmers, County Executive Thomas P. Gordon says he will be forced to build a sewer line reaching Port Penn Road, one of the last arterials below the canal between U.S. 13 and the Delaware River not to see large-scale developments that have fueled a building boom in the southern part of the county.

Gordon has pushed the plan to buy development rights of the farmers and allow them to continue living on and working their properties. Building sewer, he argues, will seed townhouses and Mc-mansions on some of the county's best farmland.

But Gordon's proposal is now the subject of an independent review by U.S. Department of Agriculture Inspector General Phyllis K. Fong, who has been asked by opponents of the deal to determine if the appraisals used to determine the farms' value skewed the price far beyond market value.

Once Fong completes her work, County Council will vote to either cut a check or kill the deal.

Delaware Audubon Society and some County Council members claim the two farmers have worked a favorable, backroom deal, arguing that Gordon could find options for limiting growth other than making the men millionaires.

"I don't want to pay someone this amount of money for them to keep their land," said Councilwoman Janet Kilpatrick. "Preservation was not meant to make people rich.”

Counters Gordon: "I will predict that one day this country will have to grow its own food in its own states. These are rated as high tillable land. This is not meant to be the growth area."

Gordon has said he doesn't need the county council's endorsement of the proposal, but wants council members to have a say since it is such a divisive issue.

The deals have been through multiple rungs of scrutiny from the federal government, but minutes before the county council was set to vote on the endorsement in February, County Councilman Bill Bell, who represents the Port Penn area, withdrew the legislation for legal review.

Bell last week sent a letter to the county law department requesting an outside attorney be commissioned for a final analysis of the proposal. Bell's request was rejected because Gordon's office had been notified that Fong's office was already conducting a review, said New Castle County Chief of Staff James McDonald.

“We want to be clear that we appreciate and share Councilman Bell’s desire for an unbiased and independent legal review, but one already is underway by the U.S. Department of Agriculture’s inspector general,” McDonald said in a statement. “We’re told that review is wrapping up (and) believe its findings should address any remaining issues ..."

The purchases are part of a county effort to keep open space and limit over-development. Gordon seeks to combine $3 million in federal farmland preservation funds, $3 million in county money and $300,000 from the state to purchase development rights of 123 acres owned by Warren, the former president of the influential state Farm Bureau, and 110 acres tied to Lester, a previous public service commissioner.

The land included in the arrangement will be limited to agricultural purposes, although a small portion of the farmers' properties were carved out for any use –– including new construction. Because the county is only paying about half the cost, Gordon argues, this deal is a bargain for local taxpayers.

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Fong's investigation was prompted by a previous request by David Carter, Delaware Audubon's conservation chairman and retired Delaware Department of Natural Resources and Environmental Protection official. In a letter to Fong, Carter questioned appraisals used to set the properties' value. The scope or timeframe for the federal review is unclear.

Warren and Lester, who have been largely quiet about the county's push, say criticism is motivated by politics and jealousy.

“Politics trumps everything," Warren said during a recent visit to his property. "All they have going is political grandstanding. They have no sensible reason to deny this."

Disjointed land planning

New Castle County has 60,000 acres of farmland, a number that continues to shrink as development encroaches. In some cases, builders have sought to buy golf courses, and five properties north of the canal are either being targeted for development or have changed hands.

Much of the remaining opposition to the New Castle County purchases centers on the perceived secrecy in the process forming the deals. A legal settlement among Warren, Lester and the county — which was reached under former County Executive Chris Coons — guaranteeing their properties public sewer service spurred that process.

Lester has farmed his oblong, mostly flat property that runs parallel with Route 13 on Port Penn Road since the 1970s. The second-generation farmer said the topography and drainage that makes the land capable of growing a "phenomenal" 300 bushels of corn per-acre is the same reason it is attractive for new construction.

"The developers say, 'If it will grow corn it will grow houses. It is flat and productive," Lester said. "It is basically what realtors say — location, location, location ... This the Brandywine (Hundred) of the south down here. This is where people are moving to. Because of that, it makes it a higher value farm."

On a recent visit to Lester's farm, geese decoys dotted the bare rows as whitetail deer streaked across the landscape. The area also is part of a significant migratory bird flyway. The state has spent more than $1 million preserving land in the neighboring Thousand Acre Marsh, including purchasing parts of Warren's property that is not part of the county's current pact.

Warren has owned his 123-acre plot near Port Penn Road's intersection with Pole Bridge Road since the 1970s. Knowing the area would one day be hot for development, he expected the land would make him a "millionaire" one day, he said. Lester and Warren around 2003 signed separate, multi-million dollar contracts with builders to develop their properties with planned public sewer service.

Shortly after, the county's plans for public sewer changed, leaving the two properties outside the county's sewer system designs. Public sewer access allows a developer to build more homes per-acre, making a property with public sewer service more valuable. In 2006, the farmers sued the county, claiming government officials gave them assurances throughout the land development process that government sewer would be built in close proximity to the Port Penn properties.

"What the county did was let me go too far if they were not going to sewer this area," Lester said during a recent interview, as he pointed out his window toward houses being built within eyesight just west of U.S. 13. "Over there, you can sell your property for $60,000 an acre and over here, guess what? You are on the wrong side of the line. Is that not discrimination?"

The two reached a settlement with the county after years of fighting in 2010. The settlement requires the county pay an estimated $1.5 million to run a sewer main from the existing infrastructure to the head of Port Penn Road for the two properties to tie into at their own expense. The settlement also leaves to the door open for preservation.

Kilpatrick said the the county shouldn't reward litigious landowners holding the threat of development over taxpayers' heads. Others have alleged Lester and Warren potential to rally votes from the tightly-knit farm community led to them having the sewer settlement as leverage over the county.

High-priced preservation deal divides some farmers

Warren "has been playing this game for three decades," Carter said. "I don't know two other landowners that could get this kind of deal negotiated for them."

For 14 years, Lester served as the state public service commissioner, charged with regulating utilities. Warren has been a consistent defender of his property's value, appearing at government hearings on zoning and sewer decisions through the years. As former president of the Delaware Farm Bureau, which has about 8,000 members, Warren has been a prominent figure advocating for farmer's interests in Dover.

Warren said his position of leverage hasn't been aided by promises for votes or cronyism, but a persistent defense of his land rights and property value.

"I don't think anyone could fault me for that," Warren said. "I don't promise anyone votes. I am one vote ... They have tried to taint me as something bad. They have tried to taint Gordon as something bad because they have nothing else."

'Sweetheart deal'

Gordon also has pitched purchasing the pricey development rights as a fair way to avoid paying the $1.5 million to run the sewer main to Port Penn Road. He said that if a sewer main is built, the farms lining Port Penn Road will be ripe for mansions and townhouses.

The county, through vote of the council, allocated about half the money needed for the purchases in 2013, but has struggled since the settlement to find the balance needed to pay the two farmers for the development rights.

Warren said he identified the other half needed after the state decided not to apply for federal farmland preservation money through the National Resources Conservation Service in 2014. This led the Gordon administration to quickly apply for the federal matching funding, which pays up to half the market value for farmland preservation.

Warren and Lester's farms were the only ones considered when the county applied for the first round federal funding. Carter and critics on the county council have slammed Gordon's administration for concocting a "sweetheart deal" in selecting the two farms to receive county and federal preservation money without a competitive process. The state's program solicits bids from farmers each year before selecting which properties will be preserved.

"Farmland preservation should be vetted by the county council and it needs to be fair to all the farmers. That is, it needs a uniform program. What we have now is we are satisfying a legal settlement and we haven't had any meaningful discussion of that," said Councilman Penrose Hollins.

Other farmers along Port Penn road complained they didn't have a chance to apply for the county program matched with federal funds.

Gordon Chief of Staff James McDonald said the Warren and Lester farms were selected because pooling county and federal preservation money is an attractive way around the sewer settlement problem.

"There was no backroom deal. Look at how long this has been in the open. The letter that lays out the settlement, our farms were selected by that letter," Warren said.

Others on the council question the legality of using federal preservation money to circumvent the sewer issue.

"We need unequivocal clarification to use federal money on this," Councilman George Smiley said. "To me it was not a clear answer whether it was farmland preservation or it was a settlement ... I'm not going to be put in a position where I am in a court deposition to justify my vote."

Paul M. Petrichenko, assistant state conservationist for the Delaware office of the National Resources Conservation Service, which is awarding the federal match for the county's money, said his office does not see the preservation funding as part of the settlement but as "another avenue."

"The bottom line is, the council needs to decide if they want to spend that much money on these farms. They are two good farms. They meet program eligibility, but it is completely up to them whether they want to set that precedent," Petrichenko said.

Bell said the legal review could look at these issues.

Sewer issues are factor

Though he is part of an conservation organization, Carter said it might be best to let Warren and Lester develop their properties with sewer infrastructure only large enough for their two properties. This would avoid a larger building boom on the road and the high price being paid to Warren and Lester then could be used to preserve more acreage elsewhere, he said. He said money to pay for the sewer would be recovered through fees paid by developers tying into it.

“What is the most responsible way to do it? It may be that a small sewer line to let those properties go and we can protect at a much lower cost, more farms," Carter said. "Or we can use that money to buy that land outright. Keep in mind, we don't even really have a park down here for people."

Carter pointed to examples in Kent County where local government has built small, public sewer infrastructure intended for single developments in order to get subdivisions off of septic systems. He said the same could be done to satisfy the settlements on Port Penn Road.

McDonald said the county would have to forgo the federal preservation funding and come up with several million dollars more to buy the properties outright. Gordon and some on the County Council said putting in a sewer main to service only those two properties would open the county up to further litigation.

"If you put something undersized, you are creating a perception that others would have the legal right to get into it," Smiley said, who added that he is not sold on the purchase of the development rights.

Other developments east of U.S. 13 and south of Port Penn Road have been developed in the past two decades with sewer. Warren said there was some discussion about potentially tying into those systems, but he is staying out of how the county plans to provide sewer if the preservation effort fails.

"A lot of stuff that has happened here makes no sense, and you wonder why I get irritated and don’t trust nobody," Warren said.

Kilpatrick questioned if development is really imminent if the sewer is allowed. She said it is time for council to "call their bluff." She along with others on the council have also questioned the appraisals used to set the development value of the properties.

"The issue for me is the value of the two farms that are being considered at $30,000 an acre and the owners remain owners. Just how much value is that to county residents?" Hollins said.

Others have targeted the high price as detrimental to the state's preservation efforts. The state has preserved farmland through the Delaware Agricultural Lands Preservation Foundation for 20 years at per-acre prices much lower than the deals being considered. It has been the state's primary tool for preserving farmland, protecting about 22 percent of about 500,000 acres of farmland in Delaware.

Opponents say the deal would be the first time locally preservation money has been used to buy land at a value comparable to what a developer would shell out, setting a dangerous precedent that threatens how much the state can preserve through annual farmland preservation funding that has been sharply cut by state government in recent years.

The state's program is supposed to receive $10 million annually from transfer taxes, but has been raided to help balance the state's budget in recent years. There is currently $3 million in the state's proposed budget for next year, though Republican lawmakers in Dover are floating a constitutional amendment to ensure the program receives its $10 million each year.

"The truth is, we can't protect every acre. We have to be strategic in how we do it so we have to do it maximize public benefit and reduce taxpayer expense," Carter said.

For now, the path forward on the deals rests with Bell, who said he will await the results of the federal review.

Warren said the issue comes down to how much citizens value disappearing farmland.

"Me and the Lord had a talk," Warren said. "I asked him when he was going to ship some more tillable land. He couldn’t answer me."

Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com. Follow @Ber_Xerxes on Twitter.

How the Port Penn arrangement would be funded

New Castle County Executive Thomas P. Gordon wants to use about $6 million to buy development rights for 233 acres along Port Penn Road.

$3 million: Federal farmland preservation funds through the National Resource Conservation Service

$3 million: County funding from local taxes

$300,000: State money included in last year's budget epilogue