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GIBSON CITY — Following a second Economic Development Committee meeting on the subject, committee members are in favor of a conservation easement agreement with the new owners of Railside Golf Club.
Three of the four committee members were present at Monday night’s committee meeting — Chairman Barb Yergler, Nelda Jordan, and Dennis Pardick. Committee member Bette Lain was not present.
Also present were council members John Carlson, Scott Davis, Dean Kidd, and Laura Miller and Mayor Daniel Dickey.
According to information presented to council members, “A conservation easement is created by a voluntary legal agreement between a landowner and another party – usually the government — which restricts the development of a piece of land.”
The property must have a valid conservation purpose, which includes outdoor recreation by the general public and preservation of an open space. The landowners must agree not to change the land’s use.
Under provisions in the new federal tax law, as reported by the Wall Street Journal on Feb. 25, landowners generally can deduct the value of a conservation easement up to 50 percent per year against their adjusted gross income. The deductions can be taken over a 15-year period if needed.
The value of the donation for income tax purposes is considered to be the difference between the land’s unrestricted value and its new value with development and use restrictions.
To gain the maximum tax advantage, the easement and its associated restrictions against development is a permanent agreement. The property can change owners, but the easement — like a utility easement — transfers to the new owner.
The city’s minimum role would be to monitor the use of the golf course and report any attempts to develop it in violation of the conservation easement. The city would receive a one-time payment of $5,000 for its role.
The land to be placed in the conservation easement is the golf course portion of Railside Golf Club on the city’s northwest side.
A major detail to be clarified, however, is the actual acreage of the golf course parcel.
Initial documents presented at the last committee meeting on Feb. 25 indicated the golf course consisted of 126 acres, but the Ford County assessor’s online records put the golf course at 186 acres.
A separate parcel of 11.25 acres contains the clubhouse and parking lot at 120 W. 19th Street. That parcel will not be part of the conservation easement.
The entire property has been offered for sale to Railside Golf Course LLC of Enterprise, Ala., by Gibson Golf Inc., owned by Fred McCullough of Gibson City since 2007.
McCullough was the original developer for the course which was established in 1993, and he initially partnered with several other local investors.
While there has been no official announcement of the sale, visitors report that major interior changes are already being made to the clubhouse.
The conservation easement agreement is being prepared by Joe Brady, managing partner for Conservation Easement Consultants of Birmingham, Ala.
According its website, www.conservationeasements.us, the firm has produced “dozens of successful easements, thousands of acres conserved, and hundreds of millions of dollars award in tax deductions.”
As part of the deal, council members are asking the new owners to place the entire golf course within city limits.
The clubhouse parcel is already within city limits, but the golf course itself is not.
Along with that request, the council plans to forgo associated new tax revenues.
“Without the abatement, annexation won’t happen,” Dickey said.
Council members will offer a full abatement for five years of the city portion of new taxes, estimated to be approximately $1,500 per year. City taxes then would be abated at an unspecified “stair-stepped” rate for an additional five years.
The annexation agreement will specify that any change in use of the property would negate the abatement.
The clubhouse parcel generates about $650 annually in city property taxes. That amount would not be abated or reduced.
City Attorney Marc Miller said he will make contact Friday with representatives for the new owners. He believes the offer will be acceptable, but should have an answer to that question by the March 11 meeting.
Miller said an official council vote on the easement and annexation issues could be as early as March 11 but may be delayed until the March 25 meeting if documentation is not ready.
Before he can present a valid document for the official council vote, Miller said he would have to be certain of details such as actual ownership, property title, and legal description of the land.