WHAT IS A CONSERVATION EASEMENT?
A conservation easement is a way for a landowner to permanently protect the conservation values of his or her land while continuing to own it. It is a legal agreement between a landowner (“grantor”) and a land trust (“grantee”) that permanently limits development. Conservation easements are tailor made to meet the needs of an individual landowner and can cover an entire parcel or portions of a property. Tax benefits and/or financial compensation are often available for grantors of conservation easements.
WHAT ARE THE RESTRICTIONS?
Conservation easements typically restrict development and subdivision to the degree that is necessary to protect the significant conservation values of that particular property. Some conservation easements include “home sites,” or areas known as “exclusions” where development is allowed. Generally, home sites or exclusions are small in size (1-2 acres) and located on areas low in conservation value. Landowners and land trusts work together to draft conservation easements that reflect both the landowner’s desires and the need to protect conservation values.
HOW LONG DOES A CONSERVATION EASEMENT LAST?
Most easements “run with the land,” binding the original owner and all subsequent owners to the easement’s restrictions. Only gifts of perpetual easements can qualify for income and estate tax benefits. The easement is recorded at the county or town records office so that all future owners and lenders will learn about the restrictions when they obtain title reports.
DO I RETAIN ANY PROPERTY RIGHTS?
By granting a conservation easement on your property you are only giving up the right to subdivide and develop those areas covered by the easement. The landowner retains title to his or her property and therefore can still sell or use the property as collateral on a loan, restrict public assess, farm the land, and remain eligible for state and federal programs including the Williamson Act. Property subject to a conservation easement remains on the local tax roles.
HOW IS A CONSERVATION EASEMENT VALUED?
The value of a conservation easement is the “fee” or fair market value of the property minus the value of the property with a conservation easement on it as determined by a qualified appraiser. Typically, more restrictive easement terms and higher, local development pressure increase the value of a conservation easement. For example, Ed Johnson owns land worth $1,000,000. With a conservation easement on the property it is worth $600,000. The value of the conservation easement is $400,000, which Ed can sell or donate to a qualified conservation organization like The Land Trust or government agency.
ARE THERE ANY TAX BENEFITS?
The Pension Reform bill passed in August 2006 helps family farmers, ranchers, and other moderate-income landowners get a significant tax benefit for making the charitable donation of a conservation easement, restricting future development of their land to protect an important public resource. The conservation tax incentive, in place for 26 years, has been adjusted to raise the maximum deduction a donor can take for donating a conservation easement from 30% of adjusted gross income in any year to 50%. 1. Allow farmers and ranchers who qualify under the IRS definition to deduct up to 100% of AGI and; 2. Extend the carry-forward period for a donor to take tax deductions for a voluntary conservation agreement from 5 to 15 years; 3. Although slated for expiration on December 31, 2007, the U.S. Senate Finance Committee recently approved the permanent extension of these benefits, which will go before Congress soon. Similar to the federal income tax incentives, most state income tax laws provide for charitable deductions of conservation easements. In addition, when a landowner donates or sells a conservation easement on their property, it usually reduces the value of land for estate tax purposes. To the extent that the restricted value is lower than fair market value, the estate will be subject to a lower tax. The Economic Growth and Tax Relief Reconciliation Act of 2001 expanded an estate tax incentive for landowners to grant conservation easements by removing the geographic eligibility requirements. Under Section 2031(c) of the tax code, executors can exclude 40% of the value of land subject to a donated, qualified conservation easement, regardless of location. This exclusion is limited to $500,000 but is in addition to any reduction in the value of the estate as a result of protecting the land with a conservation easement. The full benefit is available for easements that reduce the fair market value of the property by at least 30%. A smaller exclusion is available for easements that reduce property value by less than 30% (AFT 2006).
WHAT IS A LAND TRUST?
A land trust is a nonprofit organization that actively works to conserve land by undertaking or assisting in land or conservation easement acquisition, or by its stewardship of such land or easements.
ARE LAND TRUSTS GOVERNMENT AGENCIES?
No, they are independent organizations that work with landowners who are interested in protecting open land. However, land trusts often work cooperatively with government agencies in protecting or managing land, researching open space needs and priorities, or assisting in the development of open space plans.
WHAT DOES A LAND TRUST DO?
Local and regional land trusts, organized as charitable organizations under federal tax laws, are directly involved in conserving land for its natural, recreational, scenic, historical and productive values. Land trusts can purchase land for permanent protection, or they may use one of several other methods: accept donations of land or the funds to purchase land, accept a bequest, or accept the donation of a conservation easement, which permanently limits the type and scope of development that can take place on the land. In some instances, land trusts also purchase conservation easements.
IS CONSERVATION EASEMENT FUNDING CURRENTLY AVAILABLE?
Yes there is! Conservation funding is becoming more available from bond measures, private funders, wildlife agencies and conservation organizations state and nation-wide. Some of the programs/organizations The Land Trust works with numerous partners including The Sierra Nevada Conservancy, USFS Forest Legacy Program, NRCS Farm and Ranchland Protection Program, California Dept. of Conservation (DOC) California Farmland Conservancy Program (CFCP), and the Wildlife Conservation Board (WCB)
WHAT ARE THE LAND TRUST’S CREDENTIALS?
20 years of experience executing regional conservation projects
Holder of 15 conservation easements covering over 6,400 acres of farmland, rangeland, wildland (non-working land), and mitigation land in Butte and Tehama counties.
Holder of 4,235-acre Llano Seco Rancho agricultural conservation easement
7 member Board of Directors
6 Working Committees
4 staff including Executive Director, Office Manager, Land Projects Coordinator and BFBL-NV Program Coordinator.
HOW CAN I APPLY FOR FUNDING?
Contact the Northern California Regional Land Trust (The Land Trust) at (530) 894-7738 or email@example.com and request a Project Application.