by Elaine Lutz, Maryland office staff attorney with the Chesapeake Bay Foundation
SUPPORT – Senate Bill 234 – Forest Conservation Fee-in-Lieu Programs
Education, Health, and Environmental Affairs Committee – February 12, 2019
The above-listed organizations respectfully request a favorable report on Senate Bill 234 from the Education, Health, and Environmental Affairs Committee. This bill would bring transparency and accountability to Forest Conservation Act fee-in-lieu programs, and ensure that the replanting requirements of the Act are satisfied when a developer pays a local government a fee in lieu of reforestation.
Forest Conservation Fee-In-Lieu Programs
Under the Forest Conservation Act (FCA), a developer who clears forests or trees sometimes occurs an obligation to replace some of the forest or trees, known as a mitigation. The FCA allows a developer to pay the local government a fee in lieu of replanting, which goes into a local Forest Conservation Fund. A local government can choose whether or not to have a fee-in-lieu program. A local government that opts to run a fee-in-lieu program is authorized to use those funds on reforestation and afforestation activities, including site identification, acquisition, and preparation, maintenance of existing forests, and achieving urban tree canopy goals. The state FCA sets a minimum fee amount per square foot, but local governments are authorized to set the fee amount at any rate.
Problems with Fee-in-Lieu Programs
Once a developer pays fees to a local government in lieu of replanting trees, the local government may or may not actually turn those fees into the required mitigation. Oftentimes fees collect in local funds for years, going unspent. Sometimes fees are spent entirely on maintenance or other uses that do not actually create or conserve forest. The outcome is that paying fee in lieu of mitigation results in fewer forest acres being planted than is required by the FCA. For example, in fiscal year 2016 alone, local governments collected $2.9 million in fees, but only spent $990,000. The surplus of fees collected but not spent represents hundreds of acres of forest that were required to be planted under the FCA, but that were not. Local forest conservation funds currently hold thousands or even millions of dollars that represent hundreds of acres of forest that should have been replanted.
There have also been long-standing issues around transparency and accountability in local fee-in-lieu programs. Local governments are not required to track the number of acres for which fees are collected, or to track how many acres a local government replanted with those fees. Therefore, we have no idea how many acres of forest that should have been replanted have been lost. The Ecosystem Services Working Group raised this issue in a 2011 report, noting “[i]t is also unknown how the fee-in-lieu option is being implemented by each county and whether the forest cover that is planted replaces the forests that are lost.” That group went on to recommend that fee-in-lieu is only used as a last resort, and that the FCA should require purchase of forest mitigation bank credits where available before allowing fee-in-lieu payments.
Senate Bill 234 Solutions
Senate Bill 234 would correct several issues with transparency, accountability, and effectiveness of fee-in-lieu programs.
First, the bill would require that local governments bear the responsibility of replanting the same acreage of forests for which fees were paid. In other words, if a developer pays a fee for one acre of forest mitigation, the local government would have the obligation to create an acre of forest. This puts the same onus on local governments collecting the fee as would have been on the developer, and ensures that we are receiving the full amount of mitigation that is required under the FCA. If a local government cannot identify a location or opportunity to satisfy the mitigation, this bill would not allow the local government to accept the fee-in-lieu.
Second, the bill provides transparency and accountability to fee-in-lieu programs by requiring a local government to produce a reforestation plan and accounting procedures, and also report on acres for which fees were collected and spent. The reforestation plan will help local governments determine whether appropriate locations and opportunities are available for replanting, and help the public participate in identifying reforestation opportunities. The reporting requirement will allow reviewers to tell how many acres of forests in fees were collected and whether the equivalent number of acres were replanted. Although it is not expected that a local government will fully replant all the acres for which fees were collected in that same year, this will demonstrate over time whether fee-in-lieu programs are generating approximately the same amount of forest for which fees were paid.
Third, the bill would require a developer to purchase credits from a mitigation bank, where available, before being able to turn to a fee-in-lieu program. This reflects the recommendation of the Ecosystem Services Working Group, and also provides enhanced ecological value. Forest mitigation banks create contiguous tracts of forest that provide habitat, recreation, and increased ecological benefits. Forest mitigation banks are also easier to maintain and verify than smaller, discrete patches of forest or individual tree plantings. Finally, forest mitigation banks can represent an opportunity for private landowners to convert land to forest while receiving economic return on that investment.
Forests and trees provide a plethora of ecosystem services that are critical for clean air, clean water, and the health and well-being of Maryland citizens and communities. The Forest Conservation Act already does not require the full replacement of forests that are lost to development, and the problems with the existing fee-in-lieu programs mean even fewer forests are replanted than the Act intended. For these reasons, the above listed organizations respectfully request a favorable report on Senate Bill 234.
 Ecosystem Services Working Group Final Report, October 2011.