Under the terms of the Agreement, the City must solicit owners of 355,050 acres of eligible land in the Catskill/ Delaware Watershed (approximately 30% of the watershed area) and must commit from $250 to $300 million for acquisition. This does not mean that the City will actually acquire this much land, it simply means they must contact property owners within the Watershed to meet certain solicitation milestones stipulated in the Watershed Agreement and FAD. In addition to direct fee acquisition, the City will also seek to obtain conservation easements on certain lands within the Watershed.

The Land Acquisition Program is a purely voluntary program -- acquisitions will be made on a "willing seller/willing buyer basis," and no lands will be acquired through eminent domain. The City will be following an acquisition schedule and will be targeting specific areas of the Watershed. However, a property owner willing to sell their property to the City may approach the NYCDEP at any time.

The purchase price for the land will be based on fair market value, and the City will continue to pay property taxes to the local jurisdiction. In addition, the City will consult with communities within the watershed to ensure that the City is aware of and considers the localities' interests and that the terms of the land acquisition program are complied with.

Certain towns and villages within the watershed were also given the option of exempting certain areas of their communities from purchase by the City (discussed in more detail later). These exemptions were designed to provide reasonable opportunities for development in and around existing population centers while at the same time protecting water quality.

Priority Area 1A Properties located in sub-basins near intakes to the NYC distribution system.

Priority Area 1B Balance of lands located in sub-basins that are within the 60-day travel time to the NYC distribution system.

Priority Area 2 Lands located within sub-basins of "terminal reservoir basins" that are not included in Priority Areas 1A or 1B. Terminal reservoirs are those reservoirs that are linked directly to NYC distribution system (Ashokan and Rondout Reservoirs).

Priority Area 3 Lands located within sub-basins that have been identified with water quality problems.

Priority Area 4 Balance of land in the Neversink, Cannonsville, Pepacton and Schoharie basins.

1. Parcels in Priority Area 1A must be at least 1 acre in size
2. Parcels in Priority Area 1B must be at least 5 acres in size
3. Parcels in Priority Areas 2, 3 or 4 must be at least 10 acres in size and must satisfy one of the following conditions:

• The parcel(s) must be at least partially located within 1,000 feet of a reservoir.
• The parcel(s) must be at least partially located within the 100-year flood plain.
• The parcel(s) must be at least partially located within 300 feet of a watercourse as defined in the Watershed Regulations.
• The parcel(s) must contain, in whole or part, a federal jurisdiction wetland greater than 5 acres or a NYSDEC mapped wetland.
• The parcel(s) must contain ground slopes of greater than 15 percent.

In addition, the City may only acquire vacant parcels outright -- that is, properties with no structures other than uninhabitable dwellings or accessory structures. If a parcel to be bought outright has a habitable dwelling on it, the parcel must be subdivided so the City takes title only to the portion of property without the habitable dwelling. If the City acquires a parcel that contains structures other than a habitable dwelling, the local government may, during the local consultation process, direct the City to demolish the structure(s) within one year of taking title.

It should be noted that land that has been exempted from the City's acquisition program cannot be acquired in fee by the City, even if a prospective seller is willing, although the City may purchase conservation easements on such property. Properties that meet the following conditions and limitations may be exempted from the City's Land Acquisition Program:

• Hamlets and Villages
  A listing of defined Hamlets and Villages in the Catskill/Delaware Watershed that may be excluded from acquisition in fee (but not conservation easements), along with the maximum acreage that may be excluded, can be found in Appendix A. Towns were responsible for delineating the boundaries of existing hamlets in the Watershed by contiguous tax map parcel, while incorporated Villages were permitted to exclude all of the land within their boundaries from acquisition.
  
  This designation can serve the additional purpose of enabling a landowner within the exempted area to also be exempt from the regulatory prohibition on the creation of new impervious surfaces within 100 feet of a watercourse. Instead, a landowner may apply for a permit from the NYCDEP to create a new impervious surface.

• Commercial/Industrial Areas
  Each Town was permitted to designate up to 50 acres in Priority Areas 1B, 2, 3, or 4 as a commercial or industrial area to be exempt from acquisition.

• Road Corridors
  Towns could designate parcels which are located within 1/4 mile of a Village abutting defined road corridors (see Appendix B) to be excluded from acquisition.

• Waiver of Acreage Requirements
  A Town or Village could also choose to waive the minimum acreage requirement for priority areas 1B, 2, 3, and 4 or only for those parcels located, at least partially, in a 100-year flood plain.

Upon agreement by the owner, eligible properties, as determined by the City, may be acquired based on the market value as determined by an independent appraisal. After the City enters into an option or contract to purchase, but before a closing can occur, the City must first submit the parcels under consideration for acquisition to the appropriate Town or Village for its review. The Town or Village will then have 120 days in which to review and assess the information concerning the properties, conduct public hearings (if desired), and submit comments to the City.

Typically, the comments will concern such matters as proposed recreational uses on the property, the "natural features criteria" that were identified as being present, the use of signage, fencing, etc. The City will then respond to any comments received within 30 days. After responding to the local government's comments, the City may then proceed with acquisition.

If, during this process, disputes arise over whether a particular parcel meets the natural features criteria, or whether a structure is an uninhabitable dwelling or an accessory structure, the dispute will be submitted to and resolved by the NYSDEC within thirty days.

Certain historical recreational uses, such as fishing, hiking, and hunting, may be allowed to continue on newly acquired property only in such cases where NYCDEP determines that it will not conflict with water quality and public safety. Activities such as boating, snowmobiling, camping, motorcycling, mountain bicycling and horseback riding are not likely to be permitted, even if the property was historically utilized for these purposes. In addition, the City will also undertake a comprehensive review of existing and potential recreational uses on City property. A preliminary report is expected to be issued within two years.

Any property acquired in fee by the City will have a conservation easement placed on it to ensure that the land will be held in perpetuity in an undeveloped state. The conservation easement will be held by the NYSDEC and will be enforced by the USEPA (until 2007) or the NYSDOH (after 2007).

In addition, for those lands located in incorporated villages, hamlets or defined road corridors that have been exempted from the City's land acquisition program, the City is permitted to purchase conservation easements in lieu of direct acquisition of property. For any conservation easements directly acquired by the City, the New York State Attorney General will have enforcement rights, subject to certain conditions.

It should be noted that only farms that have implemented Whole Farm Plans that have been approved by the Watershed Agricultural Council (WAC) will be eligible to sell agricultural easements. Any agricultural easements sold to WAC will be administered, monitored and enforced by WAC, with enforcement oversight by the New York State Attorney General.

The amount of taxes to be paid on land purchased directly by the City in fee will be based on an assessment made by the applicable County, Town or Village at the time of acquisition.

The City has agreed not to challenge assessments for a period of at least 20 years, provided that the assessed value does not exceed the market value of the property multiplied by the equalization rate (either state or local). The City has also agreed not to consolidate any lands acquired for the purpose of reducing taxes. Finally, the City has agreed not to transfer title to any land it acquires to a tax exempt entity unless that tax-exempt entity agrees to make a payment in lieu of taxes (PILOT).

With regard to property taxes paid on conservation easements, the parties to the Agreement have agreed to support state legislation that would require City-held conservation easements to be taxable. If the City acquires any easements before this new legislation passes, then the City has agreed to enter into an agreement to make payments in lieu of taxes.

The amount of taxes to be paid on conservation easements held by the City will be based on the proportional value of the easement, compared to the value of the property as a whole, as determined by an independent appraisal. The City will pay the proportional value of the property taxes, exclusive of any improvements. For example:

Agricultural easements will also be subject to payment of property taxes by the City, unless the property qualifies for and receives an agricultural assessment pursuant to provisions of Article 25AA of the Agriculture and Markets Law.

In 1989, the United States Environmental Protection Agency (USEPA) promulgated the Surface Water Treatment Rule (SWTR) to protect drinking water sources nationwide pursuant to the 1986 Safe Drinking Water Act Amendments. These new rules mandated that all surface drinking water sources -- including the New York City water supply -- would have to meet certain water quality standards by June 1993 or be filtered. The City estimated that it would cost from $4 to $6 billion to filter the Catskill/Delaware supplies, which would more than double current water rates.

In September 1990, the New York City Department of Environmental Protection released a draft Watershed Protection Plan which included, among other things, revised watershed rules and regulations (which had not been updated since 1953) and a land acquisition plan. This draft document spurred opposition on the part of communities located within the watershed, and out of this opposition came the formation of the Coalition of Watershed Towns in 1991.

In January 1993, the USEPA issued the City a one-year "Filtration Avoidance Determination" or "FAD." As a condition of the FAD, the City was required to, among other things, issue final proposed Watershed Regulations, to begin to acquire land and conservation easements by June 30, 1994, and to upgrade sewage treatment plants in the Watershed.

Based on its determination that the preliminary conditions were met, the USEPA granted a second FAD in December 1993, effective until December 15, 1996. This second FAD stipulated, among other things, that the City must have satisfactory watershed protection programs in place, including revised Watershed Regulations that were to be in effect by September 30, 1994 (later changed to April 15, 1995). In addition, the City was required to commit to a land acquisition program that would result in the acquisition of at least 80,000 acres of land by December 31, 1999.¹

After years of controversy and litigation, which prevented the City from promulgating new regulations or from buying any land, Governor Pataki convened the interested parties in April 1995 to resolve the multitude of issues involving the Watershed. After seven months of intense negotiations, on November 2, 1995, the parties involved announced that they had reached an Agreement in Principle outlining the measures that would be taken to maintain and enhance the quality of the City's drinking water supply, while protecting the economic vitality and social character of watershed communities. Over one year later, that Agreement in Principle was translated into a Memorandum of Agreement which serves as the legal mechanism through which the "Watershed Protection Plan" will be implemented.

¹   It should be noted that under the terms of the final Watershed Agreement, this 80,000 acre goal is no longer applicable.