Congress Renews Tax Incentive to Increase the Pace of Conservation
On May 23, 2008, Congress enacted a Farm Bill that renews a powerful tax incentive which has helped to conserve a million or more acres of farms, ranches and natural areas across the US. The incentive had expired January 1st, but is now retroactive to the beginning of the year and will last through 2009.
The incentive, which applies to a landowner’s federal income tax, will:
*Raise the deduction a donor can take for donating a voluntary conservation agreement from 30% of their income in any year to 50%; *Allow farmers and ranchers to deduct up to 100% of their income; and *Increase the number of years over which a donor can take deductions from 6 to 16 years.
Landowner donations to conservation organizations known as land trusts have resulted in millions of acres of working lands and natural areas being conserved for the future. According to the Land Trust Alliance, many conservation groups reported an annual doubling of the number of conservation agreements completed in 2007, in response to the same incentive that had expired in January. Land trusts in America have together saved more than 36 million acres from development, an area the size of New England.
The Watershed Land Trust (WLT) Is a nonprofit charitable organization which was formed to hold land in fee simple and/or conservation easements in perpetuity. Most Land Trust's mission is to hold vast areas of land typically in large sections. With the ability and expertise to work with any Mitigation Bank or In Lieu Fee arrangement, the WLT is unique in that its mission and focus is to preserve watersheds, waterways, streams, rivers, lakes, wetlands, and adjacent (riparian) corridors and green space primarily for the benefit of water quality, ecosystems, and Open Space. The Arkansas Darter, Topeka Shiner, Pallid Sturgeon, Red Spotted Toad, Lesser Prairie Chicken and other species of concern are of interest to the WLT.
Given this ability to fill a Unique Stewardship Niche, the WLT is a good choice to be a co-holder of a conservation easement with another Land Trust or Governmental Entity to protect a legitimate Conservation Purpose (Click on the links above for more information or examples). Such a Conservation Purpose could be for preservation of fish, wildlife, or plant habitats or ecosystems. Often times, these will be mitigation sites or in other words, sites that were created or improved as a result of an adverse impact elsewhere which will also include the Conservation Purpose of preservation of open space. If the easement preserves open space to advance a federal, state, or local governmental conservation policy – for example, it protects farmland under a state flood control program or to advance the no net loss of wetlands provision under the Clean Water Act– it may limit public access to the land as long as the limitation does not undermine the purpose of the easement. Here are a couple of examples of projects that could benefit from a conservation easement by or in cooperation with the WLT.
The WLT may also be an excellent partner for cost share opportunities with Federal funding such as using State Wildlife Action Plans to Protect Wildlife from Road Impacts or other opportunities. We may be able to bring project funding to the table in addition to in-kind match. For more information click on your state of interest.
The WLT is exempt from Federal income tax under section 501(c)(3) of the Internal Revenue Code and is considered a Public Charity. Contributions are deductible under section 170 of the Code. The WLT is also qualified to receive tax deductible bequests, devises, transfers or gifts under section 2055, 2106 or 2522 of the Code.
In a cooperative effort, the Land Trusts doing business in the State of Missouri in cooperation with the Missouri Department of Conservation has formed a Steering Committee to pursue the formation of the Missouri Land Trust Coalition. The Steering Committee is Chaired by the Watershed Land Trust Executive Director, Frank Austenfeld.
Mr. Austenfeld is a member of the Land Trust Alliance national conservation defense network. The Network is an exclusive group of experienced, knowledgeable, committed conservation attorneys and practitioners who regularly share information throughout the country about emerging trends and current cases, state legislation and policy, serious easement violations and other legal challenges, help populate legal clearinghouse, write articles, help build good case law, and be ambassadors in their state for good land trust practices.
A land trust is a nonprofit organization that, as all or part of its mission, actively works to conserve land by undertaking or assisting in land or conservation easement acquisition, or by its stewardship of such land or easements. The Nature Conservancy is one of the most widely known Land Trusts.
Are land trusts government agencies?
No, they are independent, entrepreneurial organizations that work with landowners who are interested in protecting open space. But land trusts often work cooperatively with government agencies by acquiring or managing land, researching open space needs and priorities, or assisting in the development of open space plans.
So, what are the advantages of working with a land trust?
Land trusts are very closely tied to the communities in which they operate. Moreover, land trusts' nonprofit tax status brings them a variety of tax benefits. Donations of land, conservation easements or money may qualify you for income or gift tax savings. Moreover, because they are private organizations, land trusts can be more flexible and creative than public agencies - and can act more quickly - in saving land.
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.
I first heard about land trusts just a few years ago. Are they new?
Not at all! A very few land trusts have already celebrated their centennials, but most are much younger. In 1950, for example, just 53 land trusts operated in 26 states. Today, more than 1,600 land trusts operate across the country, serving every state in the nation. The Northeast, home of the first land trust, still has the most land trusts - 581, according to the Land Trust Alliance's most recent National Land Trust Census.
What has contributed to the huge growth in the number of land trusts?
People are tremendously concerned about the unmitigated loss of open space in their own communities. They see subdivisions supplanting the open spaces where they once walked and hiked, and they want to know how they can gain the power to save the green spaces that make their communities unique. So they turn to land trusts as the local entities that have been set up to conserve land.
What is a Conservation Easement?
A conservation easement (or conservation restriction) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs.
When you donate a conservation easement to a land trust, you give up some of the rights associated with the land. For example, you might give up the right to build additional structures, while retaining the right to grow crops. Future owners also will be bound by the easement's terms. The land trust is responsible for making sure the easement's terms are followed.
Conservation easements offer great flexibility. An easement on property containing rare wildlife habitat might prohibit any development, for example, while one on a farm might allow continued farming and the building of additional agricultural structures. An easement may apply to just a portion of the property, and need not require public access.
A landowner sometimes sells a conservation easement, but usually easements are donated. If the donation benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements it can qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land's value with the easement and its value without the easement. Placing an easement on your property may or may not result in property tax savings.
Perhaps most important, a conservation easement can be essential for passing land on to the next generation. By removing the land's development potential, the easement lowers its market value, which in turn lowers estate tax. Whether the easement is donated during life or by will, it can make a critical difference in the heirs' ability to keep the land intact.
Why should I grant a conservation easement to a land trust?
People execute a conservation easement because they love their open space land, and want to protect their land from inappropriate development while keeping their private ownership of the property. Granting an easement to a conservation organization that qualifies under the Internal Revenue Code as a "public charity" - which nearly all land trusts do - can yield income tax savings. Moreover, land trusts, some of which are more than 100 years old, have the expertise and experience to work with landowners and ensure that the land will remain as permanent open space.
Are conservation easements popular?
They are very popular. In the 5 years between 2000 and 2005, the amount of land protected by local and state land trusts using easements doubled to 6.2 million acres. Landowners have found that conservation easements can be flexible tools, and yet provide a permanent guarantee that the land won't ever be developed. Conservation easements are used to protect all types of land, including coastlines; farm and ranch land; historical or cultural landscapes; scenic views; streams and rivers; trails; wetlands; wildlife areas; and working forests.
How can a conservation easement be tailored to my needs and desires?
An easement restricts development to the degree that is necessary to protect the significant conservation values of that particular property. Sometimes this totally prohibits construction, and sometimes it doesn't. Landowners and land trusts, working together, can write conservation easements that reflect both the landowner's desires and the need to protect conservation values. Even the most restrictive easements typically permit landowners to continue such traditional uses of the land as farming and ranching.
What steps do I take to write a conservation easement?
The WLT can explore the conservation values you want to protect on the land. Discuss with its Executive Director what you want to accomplish, and what development rights you may want to retain. For example, you may already have one home on your property and want to preserve the right to build another home. That is one provision that must be specifically written into an easement agreement. Always consult with other family members regarding an easement, and remember that you should consult with your own attorney or financial advisor regarding such a substantial decision.
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.
What are a land trust's responsibilities regarding conservation easements?
The WLT is responsible for enforcing the restrictions that the easement document spells out. Therefore, the WLT monitors the property on a regular basis -- typically once a year - to determine that the property remains in the condition prescribed by the easement document. The WLT maintains written records of these monitoring visits, which also provide the landowner a chance to keep in touch with the land trust. Many land trusts including the WLT establish endowments to provide for long-term stewardship of the easements they hold.
For a testimonial about the benefits of a conservation easement click on the following link: