An inquiry has been received concerning whether a member of the Board of Trustees of the Agricultural Land Preservation Foundation (the Foundation) may also serve on the local agricultural preservation advisory board.
The agricultural land preservation program was established in 1977, with the general purpose of preserving agricultural land and woodland in the State.(Agricultural Article, §2-501 et seq., Annotated Code of Maryland.) The Board of Trustees of the Foundation consists of 11 members, two serving ex officio (the State Treasurer and the DAGR Secretary) and the remainder from the State at large appointed by the Governor. Five of the at-large members must be farmer representatives actively engaged in or retired from farming. Of the remaining four, one must be a representative of the Department of State Planning. The Board's Executive Director is appointed by the Secretary based on a recommendation from the Board. The statute also provides for establishment by county governing boards of local agricultural preservation advisory boards. These boards consist of 5 members each, appointed by the local governing body. Three of the five members must be active commercial farmers.
Preservation of agricultural land in this program is a two-step process, with the first step the establishment of an agricultural district. The process is started by the petition of one or more landowners to establish a district. Each area must be at least 100 contiguous acres, though individual landowners may have smaller units. The petition is referred to the local planning agency and the local preservation advisory group, each of which evaluates the petition and makes a report to the local governing body. They apply criteria which must be at least as restrictive as the State criteria defined in COMAR 15.15.01.03C. These include size, productivity and location. The local jurisdiction may have additional criteria, and very often local governing bodies have requirements designed to conform agricultural land preservation to local planning and growth expectations.
The two local reviewing groups must by statute be consulted, but their recommendations need not be followed, except in the negative sense that a district cannot be established unless it is recommended by at least one of these groups. The local governing body is the official decision-maker at the local level. It may hold a hearing on the issue, and if it votes to establish a district, refers this recommendation to the Foundation. A report is prepared by the agency's staff regarding whether the district meets the Foundation's criteria, and final determination is by the Board of Trustees of the Foundation. If the determination is to approve, then a district agreement is executed and recorded in the land records of the County. Foundation representatives may actually inspect some properties and the State agency has occasionally disapproved some county recommendations. This happens very rarely, however.
Once a district is established the landowner may not use the land for any purpose other than farming for at least five years. Under the agreement, the land may not be subdivided or developed for residential, commercial or industrial purposes. Notice of intent to terminate must be provided one year in advance of termination. Landowners may retain the right to develop one-acre residential lots for themselves and their children with a maximum of 10 and no more than one for each 20 acres. The primary benefit of the establishment of the district, however, is that this is a pre-condition to the sale to the Foundation of a perpetual development rights easement.
This second step of the Foundation's program is one in which landowners may apply to sell development rights to the Foundation. Easement applicants in this process bid on the difference in value between the land's fair market value (what a developer would pay) and the agricultural value (what a farmer would pay). Basically, the landowner is being compensated for the equity lost to him by his agreement not to sell the property for development. The process here is similar to the district process, except that there is a more defined time frame. Applications must be received by June 1 of any particular year. The list of applicants for a particular county is sent to that county and reviewed there by the same bodies as the district petitions. Within 60 days county lists are returned to the Foundation.
Staff of the Foundation then order appraisals of all parcels included on each county list and prepare a ranking which is based on a ratio comparing the asking price to the appraised value. Where the asking price is above the appraised value the ranking is based on a 100-point easement priority formula that takes into account other characteristics such as size, productivity, development pressure, and local recommendations. The Foundation's Executive Director describes these as fundamentally objective criteria as set forth in the point system in the agency's regulations at COMAR 15.15.01.04.1B. The criteria are applied by the staff. Once the ranking is established, an offer to purchase an easement will be made offering either the appraisal value or the asking price, whichever is lower.
The ranking process is first done county by county and is the basis of what are called Round One Offers. The easement purchase program is funded by the agricultural transfer tax and program open space funds, as well as some county matching funds. During FY1986 there was $7.6 million available. This sum is divided equally, with one-half allocated for county-by-county distribution, and the remainder available for distribution to counties having matching funds. The first portion is then equally divided by 23, and the offers are made beginning in each county with the top ranked applicant and proceeding down the ranking until all the money for that county is gone. The county matching allocation is also spent in Round One. Those approved within each county who do not get offers in Round One are then re-ranked on a State-wide basis and any State funds remaining in either allocation are applied to offers made according to this ranking in Round Two Offers. Regardless of ranking, the offering price is always the appraised value or the asking price, whichever is lower.
This offering process includes allocations and determinations according to established formulas, for example, where offers are rejected or where participation within a particular county does not require all the funds allocated to that jurisdiction. These determinations are staff decisions, however, and according to the Executive Director application of the formula involves very little discretion. Also, he indicates that counties do not compete with each other, given the nature of the allocation process. A county determination can affect the process if the county uses less than its direct allocation, in which case what is left goes back into the State-wide matching portion of the fund. Also, the county does establish priorities that are relevant in the point system. Nevertheless, the Executive Director says that the county approvals and the county determination of its matching amounts both precede the appraisals and therefore the rankings, and that it is thus not possible for local determinations to impact on the ultimate allocation of funds, either in Round One or Round Two. The Executive Director also indicates that the Board has considerable discretion in defining criteria, but very little in the actual offer process. If an applicant meets the criteria and funds are available at his ranking, there is no discretion for the Board to disapprove.
After an offer is made and accepted, the transaction is treated as a real estate transaction and after settlement the existence of a permanent negative easement is recorded in the county land records. The landowner continues to be the owner of the property in fee simple. The land can be transferred, but would be subject to a restriction in perpetuity against use for any purpose other than agriculture. The landowner and his successors are barred from any development, commercial, industrial or residential, except for certain limited family residential lot exclusions. The landowner continues to have an obligation to the Foundation, which may periodically inspect the property to ensure compliance with the conditions of the easement. The law provides for a "buy-back" of the easement rights 25 years or later from the time of purchase, if it is determined that profitable farming on the land is no longer feasible, and the buy-back is approved by the Foundation and the county. The landowner could buy the easement back for the difference between the fair market value and the agricultural value, as appraised at the time of the buy-back. Though Foundation staff recognize that buy-back is a legal possibility, they express the general program view that the restriction will apply to the land in perpetuity.
The Requestor here is a member of a local advisory board. He has served on the Board since its inception and was a member of it at the time of his appointment in the Spring of 1986 to the Foundation's Board of Trustees. This membership was included on the resume he provided to the appointing authority. The Requestor indicates, and the enabling statute also reveals, that the local committee is essentially advisory. It does not hold hearings, and makes specific district and easement purchase recommendations in accordance with policies and criteria established by the County Commissioners. According to the Requestor the local group does not actually see the petitioners or applicants, but relies on materials submitted by the County government.
Foundation staff also indicate that the local groups are essentially advisory, though the regulations provide that a negative report from both the planning agency and the advisory group would bar any positive recommendation by the local governing body. The local advisory group does not have authority to establish local criteria for inclusion of specific land in a district or for purchase of an easement. Nor, according to the Executive Director, do county board members have access to information that could be used to anyone's special advantage in the distribution of funds. The Executive Director says that this distribution is based on neutral application of allocation and ranking criteria. Also, he says that given the timing of easement applications, county review, Foundation staff work-up of rankings, and the presentation of proposed offerings to the Board, a member would be unlikely to have advance information that could be an advantage in local reviews.
The primary question here is application of the outside employment and prestige of office provisions of §3-103(a) and 3-104 of the Public Ethics Law (Article 40A, §§3-103(a) and 3-104, Annotated Code of Maryland, the Ethics Law). Section 3-103(a) prohibits an official or employee from being employed by or having an interest in an entity that is under the authority of or has contractual dealings with his agency (subsection (a)(1)(i)). It also bars any other employment relationship that would impair his impartiality or independence of judgment (subsection (a)(1)(ii)). We have on several occasions considered proposed affiliation with local governments, generally treating them as entities for the purposes of the strict employment provisions in §3-103(a) of the Ethics Law. (Opinions No. 82-22, No. 83-36 and No. 85-13.) We have also generally taken a broad view of the concept of employment, concluding that non-compensated service on a private board or commission could be viewed as employment where the service necessarily called for some loyalty, commitment or fiduciary duty.
Though we believe under these principles that the Requestor's service with the local board would be employment, this service does not, in our view, come within the prohibitions of §3-103(a). The Requestor's board is described as an advisory entity that works solely within the parameters defined by the local governing body. According to the Requestor, his group does not exercise discretionary authority in policy areas, or deal directly with landowner applicants. Any hearings are conducted by the county commissioners, who make all final decisions. The local advisory board deals with application of specific criteria to specific district petitions or easement applications, and does not appear before the Foundation Board on behalf of any issue or applicant.
Foundation staff indicate, on the other hand, that the Foundation Board itself is concerned primarily with legislative or regulatory changes, consideration of general policy and program matters, review of exclusions and agricultural subdivisions, and monitoring of restrictions. It apparently does not get involved in or exercise significant discretionary authority as to the particular district and easement decisions that are the subject of the local advisory board's review. The Executive Director and the DAGR Assistant Attorney General assigned to the Foundation both indicate that the easement offers reflect application of objective criteria and independent appraisal determinations by the State Department of General Services. Though the Foundation Board of Trustees has final approval authority under the Law, as a practical matter it has no discretion to alter a ranking or change an offer once the criteria are applied. Agency officials thus do not believe that membership on the local advisory board results in a conflict of interest.
Under all of these circumstances, we do not think that the employment prohibitions of §3-103(a) are appropriately applied here. In our view, this advisory group to a local agency is not, strictly speaking, under the authority of the Foundation, nor do there appear to be any of the kinds of State/local grant or contract relationships that would bring this situation within the strict prohibition of subsection (a)(1)(i). Moreover, we do not believe that the Requestor's duties as a Foundation member would be impacted by the type of specific determinations on which he provides advice at the local level to create the type of clear conflict of interest concerns intended to be addressed by the impairment provision of subsection (a)(1)(ii). This is especially so given the fact that the Requestor disqualifies himself from any specific matter involving his county, and also since the timing and relationship of the local decisions and the State decisions make it unlikely that a decision at the local level could significantly impact on the rankings or the offers by the Foundation.
Also, given the way the system and process are described, it does not appear that there is county-to-county competition that Requestor could influence in favor of his own county at the State level. This factor, taken with others set forth above, also leads us to conclude that the Requestor's service on both the local board and the Foundation's Board of Trustees would not, on its face, present a use of prestige of office forbidden by §3-104 of the Ethics Law. The system does not seem to offer the opportunity for a Foundation Trustee to influence particular decisions to benefit individual easement applicants in particular or those in his county in general. Nor do we find any basis in the facts as they are described here for concluding that his status or position as a State official raises any prestige of office issues in connection with the local board's recommendations to the local commissioners.
Based on our review of all of the information provided regarding the agricultural land preservation easement purchase program, we do not believe that the Requestor's dual service on the local advisory board and the Foundation Trustees presents an employment relationship or use of prestige intended to be covered by the Ethics Law. We therefore advise him and the agency that this service does not violate §§3-103(a) or 3-104 of the Ethics Law. This assumes, of course, that he continues to refrain from any Foundation action relating to particular matters involving properties in his county, and also that he takes no local actions that could be construed as use of his State position to benefit particular individuals.1
Thomas D. Washburne, Chairman
Reverend John Wesley Holland
Betty B. Nelson
Barbara M. Steckel
Date: December 10, 1986
1 We note also that this Opinion reflects our determination regarding application of the State Ethics Law. We specifically do not express any views regarding whether and how the county ethics provisions would apply here, as he is an appointee to a local agency. Questions regarding this should be directed to the appropriate local authority.