Tools for Land Conservation

Tools for Land Tools for Land ConservationConservation

Tools for Land Tools for Land ConservationConservation

Sarah Richardson, Land Sarah Richardson, Land Conservation CoordinatorConservation Coordinator

Potomac Watershed ForumPotomac Watershed Forum

August 10, 2007August 10, 2007

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Improves/preserves the quality of life

Safeguards drinking water supplies

Reduces runoff that overloads streams and lakes in developed areas

Protects wildlife habitat and biodiversity

Provides recreation in and near urban areas

Improves air quality

Can be used to help curb urban sprawl

Protects scenic resources

Protecting Open SpacesProtecting Open Spaces

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In Virginia, 60,000 acres are converted to development each year.

Every day, more than 100 acres are converted to impervious surfaces.

USDA estimates 20,000 acres of prime farmland are lost each year.

DOF estimates 31% of forests with high value for water quality are threatened by development in the next 5 to 15 years.

Development in VirginiaDevelopment in Virginia

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Forest lands provide the best land cover for water quality protection.

Private landowners hold nearly 80% of forest land in the Bay watershed.

64% of Bay watershed forest land is held by family (not corporate) owners.

Therefore: protection of forestland is largely up to family landowners.

Development in VirginiaDevelopment in Virginia

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1. Virginia Land Conservation Foundation Competitive matching grant program for individual

projects Eligible: state agencies, local governments,

nonprofits Grant applications ranked by an interagency team Future funding unknown

State Programs for Land Conservation: State Programs for Land Conservation: A Three-Legged StoolA Three-Legged Stool

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2. Purchase of Development Rights Office of Farmland Preservation

(VDACS) Matching funds to localities – not

competitive Currently about $5 million available

3. Private Land Trusts and VOF Depend to a great extent on generous federal

and state tax incentives for donations or bargain sales

Most land conservation in Virginia happens this way

State Programs for Land Conservation: State Programs for Land Conservation: A Three-Legged StoolA Three-Legged Stool

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How do we protect land?How do we protect land?Land conservation = acquisition

Acquire what?Fee simple interestConservation easements (most land

protection is through easements)

Who acquires the land? State & federal agencies Local governmentsPrivate land trusts

How is it acquired? Purchase Donation

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What are What are conservation conservation easements?easements?

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Owning LandOwning Land

These include the right to:– occupy the land;– use the land;– sell the land, give it away, or

bequeath it in a will;– keep others off the land; and– subdivide the land.

Owning all the sticks is called “fee simple” ownership.

Landowners possess a collection of rights that are like a bundle of sticks.

Each stick in the bundle represents a right the landowner possesses.

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Conservation EasementsConservation Easements A conservation easement is

a voluntary, legally binding, and perpetual agreement created when a landowner gives or sells a few of their property rights (some of the “sticks in the bundle”) to another party, who holds those rights in public trust forever.

The landowner does this with the express intention of conserving some characteristics of the land.

Enforcement of the easement is transferred to a public body or a “holder.”

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Conservation EasementsConservation Easements

By giving up some rights from the “bundle of sticks”, a landowner ensures that the property will be protected from unrestricted development forever.

The landowner retains possession and use of his land, while conserving the property for future generations and potentially realizing some of the financial gain from that asset.

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Conservation EasementsConservation Easements

Rights commonly given up in a conservation easement are:The right to subdivide, The right to build new structures,The right to engage in activities that may

endanger the resource being protected.

These rights are given up forever.

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Conservation EasementsConservation Easements

Rights that are not given up in a conservation easement:The right to sell or give the land away,The right to occupy the land,The right to use the land in any way that

does not endanger the resource being protected,

The right to exclude others from the property (except the easement monitor),

Any right not specifically mentioned in the conservation easement.

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Who Holds Conservation Easements?Who Holds Conservation Easements?The Code of Virginia authorizes public bodies and “holders” to receive conservation easements.

Public bodies are state agencies, counties or municipalities, park authorities, Soil & Water Conservation Districts, or community development authorities.

Holders are defined by Va. Code as charitable organizations whose primary purposes include: protecting natural resources and natural or open-space values

of real property;assuring availability of property for agricultural, forestal,

recreational, or open-space use; maintaining or enhancing air or water quality; or preserving historic, architectural, or archaeological lands.

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What Are the Best Candidates What Are the Best Candidates for a Conservation Easement?for a Conservation Easement? A landowner who is motivated by love of the

land and desire to preserve it. Tax incentives are great, but they won’t make the

landowner wealthy!

Land that has good conservation value.

Land that doesn’t require intensive management.

Current and future uses of the land are compatible with preservation.

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Tax IncentivesTax IncentivesTo qualify as a charitable contribution, a donation must be: In perpetuity (permanent)

Made to a qualified grantee (land trust or public agency)

Must meet at least one of the following conservation purposes:Preservation of land for public outdoor recreation or educationProtection of relatively natural habitats of fish, wildlife, or plantsPreservation of open space including farm and forest landPreservation of historically important land or buildings

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Federal Tax DeductionsFederal Tax Deductions

2006 and 2007 – these rules expire 12/31/07 unless Congress decides to extend them.

Generous deduction: Landowners who donate a conservation easement on their land can apply the value of the donation as a deduction on up to 50 percent of their adjusted gross income (AGI).

Farmers: Qualified farmers and ranchers (50 percent of income from agriculture) can deduct the value of the donation on 100 percent of their AGI per year.

Carry forward: The donor can carry the deduction forward for 15 years.

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Other Tax IncentivesOther Tax Incentives Capital gains tax exclusion

If the land is dedicated to open-space use, any profit on the sale of land or an easement on land is not taxed.

Estate and gift taxesDonation of a conservation easement reduces the

assessed value of the land, which can reduce the tax liability of an estate or taxes due on gifts of land.

Property taxes Land restricted by a conservation easement is eligible

for reduced property taxes.

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What is the VirginiaWhat is the VirginiaLand Preservation Tax Credit?Land Preservation Tax Credit?

LPTC is a credit against Virginia state income tax available to landowners who donate any interest in land for a conservation purpose in perpetuity.– The credit is worth 40% of the appraised

value of the easement.– The recipient can use the credit for their

state taxes or sell it to another taxpayer for cash.

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Virginia Tax CreditsVirginia Tax Credits

Cap: each year, tax credits granted will be capped statewide at $100 million. First come, first served – donations that come in after

the cap is reached are rolled over to the next year.

Carry forward: Tax credits can be claimed in the year of the gift and the subsequent 10 years or until used up.

Transfer: Tax credits may be transferred (given or sold).

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Example of Example of Land Preservation Tax CreditLand Preservation Tax Credit

Ms. Jones owns 100 acres of land with an appraised value of $300,000.– She donates a conservation easement,

which reduces the value of her property by giving up subdivision rights and restricting development.

– After the donation her property has an appraised value of $200,000.

– Therefore, the appraised value of the easement is $100,000.

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Appraised Value of Ms. Jones’ Appraised Value of Ms. Jones’ Conservation EasementConservation Easement

Property Value Before Easement = $300,000

Property Value After Easement =$200,000

Value of Conservation Easement = $100,000

Land Preservation Tax Credit = 40% of $100,000

Land Preservation Tax Credit = $ 40,000

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What is DCR’s role in the Land What is DCR’s role in the Land Preservation Tax Credit?Preservation Tax Credit?

The Code of Virginia requires DCR to:

Report annually on all donations of less-than-fee-simple interests in land (i.e., conservation easements) where a donor claims a Land Preservation Tax Credit of any value.

Verify to the Virginia Department of Taxation the Conservation Value of all donations of interest in land where a credit of $1 million or more is claimed by the donor.

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What does this mean to those applying What does this mean to those applying for a Land Preservation Tax Credit?for a Land Preservation Tax Credit?

A copy of all applications for credits from donations made on or after January 1, 2007, must be sent to DCR.

All applications claiming a credit of $1 million or more will be subject to a verification of “Conservation Value.”

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What is What is Verification of Conservation Value? Verification of Conservation Value?

DCR’s verification of Conservation Value will consider three factors:Conservation Purpose,Public Benefit, and Water Quality and

Forest Management.

Together these are the Conservation Value of the donated land.

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For more information on DCR’s For more information on DCR’s Conservation Value Review:Conservation Value Review:

www.dcr.virginia.gov/www.dcr.virginia.gov/virginia_land_conservation_foundativirginia_land_conservation_foundati

on/on/

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So What Can YOU Do?So What Can YOU Do?

Landowner outreach

Hand out brochures or other publications

Hold landowner information meetings

What to do in the absence of funding

Encourage donations

Track inquiries to demonstrate need

Refer landowners to appropriate easement holders

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www.dcr.virginia.gov/land_conservation/whereto4.shtml

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Progress towards land Progress towards land conservation goalsconservation goals

Governor’s goal to protect 400,000 new acres by 2010

155,561 new acres have been protected as of June 30, 2007

242,439 acres left, with 2.5 years to go

Chesapeake 2000 Agreement goal to protect 20% of Virginia’s lands in the Bay watershed by 2010

18% have been protected

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What is the Commonwealth doing to What is the Commonwealth doing to advance these land conservation goals?advance these land conservation goals?

Outreach and capacity building – educational workshops and conferences for land trusts and other conservation organizations

Tracking – monthly reports and conserved lands database

Targeting tools – Virginia Conservation Lands Needs Assessment

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What is DCR doing to advance What is DCR doing to advance these land conservation goals? these land conservation goals?

Grants – Virginia Land Conservation Foundation, Land and Water Conservation Fund, Water Quality Improvement Fund

State Parks and Natural Area Preserves – both acquisitions and conservation easements

CREP – permanent easements on riparian buffers in farmlands

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DCR’s Office of Land ConservationDCR’s Office of Land ConservationSarah RichardsonSarah Richardson Jeremy StoneJeremy Stone(804) 225-2048(804) 225-2048 (804) 371-5218(804) 371-5218

www.dcr.virginia.gov/land_conservation/www.dcr.virginia.gov/land_conservation/