National Forum

The Revolving Fund Concept - keys to a successful operation
Michael Looker - Trust for Nature
michaell@tfn.org.au
www.tfn.org.au

Introduction
The concept for a revolving fund for land purchase is simple. Conservation land is purchased, a covenant is placed on the property to provide permanent protection after which the property is on-sold (slide 1). The proceeds of the sale are then used to revolve the fund. While the mechanism involves land purchase the outcome of the process is a conservation covenant. Its use therefore provides an additional tool for obtaining new covenants and for capturing conservation land as it comes on the market. Often land placed on the market allows very little time for conservation bureaucracies to respond. The revolving fund provides a convenient mechanism for agencies to react quickly to land sales.

Brief History of Trust for Nature Revolving Fund
Trust for Nature originally considered the use of this mechanism in the late 1970s at the same time the covenanting process was being put into place (see TfN Conservation Bulletin, Winter 2000). However, it was not until some time after this in the late 1980s, when covenanting was well underway, that the first revolving fund property was bought. It was used to purchase a block of land which was under threat from clearing. A covenant was then placed on the block before being on-sold.

The fund was further developed through a land exchange process with the Department of Natural Resources and Environment (DNRE). This process exchanged high conservation value land held by the Trust which could go into the public reserve with lower conservation land which could be placed into the revolving fund and thus covenanted and on-sold (slide 2). This mechanism allows the placing of high conservation land currently under private ownership to be placed into the public reserve and for lower priority land to be protected with a caring private owner.

Over the past two years the fund has been considerably boosted with a Natural Heritage Trust (NHT) grant. It is now an important tool for Trust for Nature in its extension work throughout Victoria to protect its most significant habitat on private land.

Whilst the fund is conceptually simple it is much more complex to administer. The Trust has found the following key points important for its success (Slide 3):

Land Purchase (slide 4)
Two principle considerations require attention:
1. Conservation Value - an acquisition report is developed to highlight the important conservation values of the site i.e. habitat type, species present, state conservation priorities etc. This is undertaken by experienced extension officers in the field. Trust for Nature has a network of 10 Regional Coordinators, one placed in each Catchment Management Authority (CMA) area across the state.

2. Suitability for the fund - an important component to the success of the fund is the marketability of properties. Trust for Nature employs (part -time) a professional real estate agent (with 30 years experience) as its Revolving Fund Manager. Not only does this bring important skills in land purchase and land sale negotiations but also in the assessment and development of marketing conservation land. For the Trust this has perhaps been the single most important factor in the success of this fund to date. General factors which are important to assess for marketability are as follows:

Location: how far is the property from a regional centre? - remote properties are more difficult to sell
Access: property is more saleable with good access
Flexible uses: areas primarily for conservation are balanced with zones for other activities e.g. dwelling, productive uses etc
Condition: property in good condition e.g. fencing, weeds etc.
Services: availability of services such as power, water etc.

Professional Valuation - a valuation from a valuer familiar with the area is sought for each proposed purchase. This is used as a guide in negotiations over the purchase of the property. The Trust has a policy of not exceeding a price greater than 5% over the valuation.

Costs in land purchase (general):
Staff time - especially the Revolving Fund Manager and Conservation staff
Legal costs
Administration costs

Board Approval - each purchase proposal requires board approval before proceeding to purchase. This is a final filter on the process and allows for the justifications for purchase i.e. conservation values, marketability to be tested. This can occur quickly by sending a purchase proposal to board members for a response rather than waiting for regular board meetings.

Covenants
There are a number of costs such as administration , legal and staff costs associated with the placing of a covenant. However, as there is not a land owner to negotiate the conditions of the covenant, as is the usual case with the covenanting program, these costs can be kept to a minimum.

Stewardship
An important part of the covenanting program is stewardship. For the Trust this involves monitoring and management advice for owners of covenanted properties in perpetuity. While the Trust already has a structured program (slide 5) it is currently being stepping up this part of its work. A full time Stewardship Manager has recently been employed and in February this year Bush Practice was launched (see TfN Conservation Bulletin April 2001). This program aims to form an alliance with other environmental organisations to bring together a whole range of programs and expertise to undertake best practice conservation management on private land and will include areas such as education for landowners, technical advice, on ground assistance and monitoring. Our aim in this program is to build positive relations with landowners.

Land Sale
There are a number of costs associated with land sales such as general administration, legal costs, advertising and staff time. However, it is at this point that revenue comes back into the fund to revolve. If the assessments and marketing aims have been achieved then ideally all costs for the purchase are covered in the sale price. The Trust experience thus far has been to recover and exceed recovery of the costs on some properties but not on others. The balance therefore requires careful monitoring to ensure the overall ledger for the fund has a positive direction.

In addition to income from property sales, the fund is able to be promoted and therefore attracts donations; gifts of land can assist further building of the fund. This is potentially a strong area of growth with the new tax deductions for gifting of land to environmental organisations; grants to the fund such as NHT and the investment of uncommitted funds can all provide income and further build the capital base of the fund.

Financial monitoring
The complexity of the fund requires separate financial monitoring to ensure the financial as well as the conservation aims of the fund are met. The Trust separately reports on the fund to its finance committee and regular board meetings.

Summary
The revolving fund is a useful tool for obtaining new covenants over private land. However, the complexities in running this fund require a well worked out business plan which provides direction and important monitoring mechanisms and performance criteria. Trust for Nature is still learning with this fund, especially its accountability and the marketability of conservation land. It has, though, already become a useful tool which the Trust believes warrants further substantial building.