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The Sonoma County Agricultural Preservation and Open Space District, the landmark taxpayer-financed effort that's protected more than 85,000 acres of undeveloped land, has hit financial hard times and is looking at a major strategic overhaul, including a likely slowdown in new land deals.

The changes are driven by two forces: A steep drop in sales tax revenue, the district's main source of cash, and the debt now coming due for a recent three-year bond-supported spending spree on land and conservation easements with private landowners.

In a special meeting Monday of the board of directors, district staff described those fiscal challenges alternately as a "perfect storm" and a "day of reckoning" for the district, which voters first authorized in 1990.

The district is still far from a deficit. But at no time in its 21-year history has it been so financially stressed, staff told the five county supervisors, who serve as the agency's board of directors.

"Our reality is very different," Conservation Program Manager Misti Arias said bluntly.

The stark news is another sign of the recession's blow to county government, which faces a 25 percent drop in spending next fiscal year, due largely to a historic decline in property tax revenue.

But the district's woes are slightly different and several supervisors suggested they were due to a lack of fiscal foresight.

"Bad financial planning," said Efren Carrillo, who serves as president of the open space board.

Director Valerie Brown defended the board, saying a separate entity — the district's Open Space Authority — had primary oversight of financial decisions, up until this year. The authority's recent disbanding — a move granted by voters in their 2006 renewal of the district — gave supervisors tighter control over district finances, Brown said.

"It's time for this board to really get down in the weeds," she said.

The problems revolve around two related pots of money: the voter-approved quarter-percent sales tax that supports ongoing expenses and leftover money that goes into reserves.

The first pot is projected to remain at $16 million next fiscal year, down nearly 17 percent from its peak at $19.2 million in 2007.

But an even more costly hit to both pots is expected in July, when the district begins paying $7.5 million annually in debt for the next 20 years on $98 million in bonds. The 2007 financing was used through 2009 to fund many recent land purchases, including high-profile deals for the Jenner Headlands, Taylor Mountain and additions to both Tolay Lake Regional Park and Sonoma Coast State Park.

Combined with operational expenses, including staff and program costs of $7.2 million and other expenses, the debt payments are expected to consume most of the district's annual revenue.

That would leave no source of money to replenish the cash reserves — the largest pot for project funding, now that the bond proceeds have been spent. In the last two years, those reserves have dropped from $77 million to $57 million. Planned projects could leave the balance with about $35 million in the years ahead.

At current levels, assuming no growth in sales tax, that figure would support about five years of land purchases and easement projects on private land, a massive shortfall considering the district is supposed to live through 2031.

Supervisors discussed a "pause" on land deals to avoid that scenario, but District Manager Bill Keene headed off that proposal with assurances that such an immediate crisis is unlikely.

By holding operational costs down, Keene expects to deposit about $1.5 million annually into the district's reserves, even as it pays off its bonds. In the past, those annual contributions have been $8 to $9 million.

The result: the district will have less money to spend on land deals. Its budget this year is $18.9 million — about half of it coming from previous contributions to reserves. In past years, the district has rarely spent its full allocation. But in any case, future budgets will likely be considerably smaller.

"We still have $35 million in uncommitted money to go land conservation projects," said Keene. "Now the challenge is where do those dollars go?"

Comments from Monday's packed audience, including representatives from farming, land conservation and recreation groups and cities, showed competition will only get tougher for the district's dwindling money.

Already up to 80 projects compete for funding each year, with about eight making it to a list of finalists. Most speakers pressed for more support of their causes.

"Ag needs its fair share of acquisition dollars," said California Farm Link executive director Steve Schwartz, echoing others who said ranchers and farmers were underserved by the district.

Supervisors approved work on a plan to guide district priorities in the next three years.

To trim rising management costs, they also agreed to look at transferring more of the district's own 6,700 acres to private or other public hands, with protections.

The cash-strapped state parks likely won't be a partner in that effort, several speakers said, but nonprofit groups might.

LandPaths' leader Craig Anderson said his group, which manages 6,000 acres of public open space countywide, has saved state and local governments $4.3 million. The nonprofit will continue to "fill in the cracks where possible," he said.