Land Protection and Conservation Easements

What is a Conservation Easement?

A conservation easement is legal agreement between a landowner and a land trust (or government agency) that permanently protects open space by limiting the amount and type of development that can take place, but continues to leave the land in private ownership. The ownership of land includes a "bundle of rights," such as the right to sell it, to grow plants and raise animals, to hunt and fish on it, to recreate on it, to mine or cut timber, to exclude trespassers, and to develop it, among others. These rights, which have waxed and waned over the centuries with changes to law, are collectively referred to as “property rights”. A landowner has the right to segregate and transfer (by donation or sale) and extinguish some of these rights. When the goal of a landowner is to conserve their land, they can reduce or remove their development rights and restrict specific uses of the land voluntarily with a conservation easement. The property remains in private ownership with the landowner who can continue to live on it, sell it, or pass it on to heirs. Landowners can also continue practicing agriculture or harvesting timber. Easements do not require public access, but must meet a public benefit test as defined by the Internal Revenue Service.

Non-profit land trusts, such as the Conservation Trust for Florida (CTF), accept donated easements from willing landowners who have land with significant natural or agricultural resources and the desire to protect them. In return, these landowners can realize tax savings on federal income taxes and in some cases, property, and estate taxes. In some instances if funding is available, a landowner may choose to sell a conservation easement.

Our whole community wins when thoughtful landowners conserve their land this way, protecting wildlife habitat, clean drinking water, scenic landscapes, recreational spaces, and productive agricultural lands.

How can I protect my beautiful open space land from future development?

By working with a nonprofit land trust, such as the Conservation Trust for Florida, you can decide the best conservation tool to protect your land. You can select from a number of tools, including outright donation of your property, donation or sale of a conservation easement that permanently restricts development, bargain sale of your property, and several other variations. You should always have legal advice before embarking on such a decision.

What are the tax benefits associated with land protection?

Based on many variables, there may be income, estate and property tax benefits for donating your land, donating a conservation easement, or selling the property as a "bargain sale" at below market value. The amount and type of tax benefits depends on a variety of factors, including the legal tool you've used to protect your land, the value of the donation, your income level and the total amount of your estate. Again, you should consult with a financial advisor and/or an attorney to fully understand the tax implications.

Congress recently renewed a tax incentive for private landowners—especially working family farmers and ranchers—who protect their land with a voluntary conservation agreement.  The incentive, which had expired at the end of 2009, helped land trusts like ours work with willing landowners in our community to conserve thousands of acres of productive agricultural lands and natural areas between 2006 and 2009.

Conservation-minded landowners now have until December 31, 2011 to take advantage of a significant tax deduction for donating a voluntary conservation agreement to permanently protect important natural or historic resources on their land.  When landowners donate a conservation easement to a qualified land trust they maintain ownership and management of their land and can sell or pass the land on to their heirs, while foregoing future development rights.

The enhanced incentive applies to a landowner’s federal income tax.  It:

• Raises the deduction a donor can take for donating a voluntary conservation agreement from 30% of their income in any year to 50%;
• Allows farmers and ranchers to deduct up to 100% of their income; and
• Increases the number of years over which a donor can take deductions from 6 to 16 years.

Conservation agreements have become an important tool nationally for protecting our watersheds, farms and forests, increasing the pace of private land conservation by a third – to over a million acres a year.  CTF joins America’s 1,700 land trusts and their two million supporters in thanking our Legislature for making this important conservation tool available.

Aside from this renewed Federal tax incentive, in Florida, we have a potentially even more powerful tax planning tool.  In 2008, Florida voters approved a Constitutional Amendment to provide property tax relief for land owners who protect their lands with conservation easements. Now State law, sections 196.26(2)&(3), F.S., created two classes of property tax exemptions:

• 100% exemption, for those lands protected with an irrevocable easement, (dedicated in perpetuity), provided that any income generated from the land be returned to the land in land management activities, (e.g. no net profit made from the land).
• 50%, exemption, the same rules apply, but there is no restriction on the profits made from the land.

 

It is important to note that in either case, agriculture is generally an allowed commercial use on conservation easements, and that the exemption does not apply to non-conservation uses on the land (such as a home, which will be assessed separately and taxed per usual).  Also, for parcels less than 40 contiguous acres, it order to qualify for either of these exemptions, the conservation easement must be approved  by the Florida Acquisition and Restoration Council  (ARC), who will evaluate such lands utilizing a set of conservation-based criteria established by the Legislature.    If over 40 acres, or approved by ARC, these exemptions become effective once the land owner has submitted form DR-418 (and renewed annually with DR-418CR) to their County Property Appraiser’s office.

Why should I grant a conservation easement to a land trust?

People execute conservation easements because they love their open space land, and want to protect it from inappropriate development while retaining their private ownership. Granting an easement to a conservation organization that qualifies under the Internal Revenue Code as a "public charity"--such as the Conservation Trust for Florida--can yield income and estate tax savings while ensuring that the land will remain as permanent open space.

Are conservation easements popular?

Very popular. In the decade between 1988 and 1998, the amount of land protected by local and regional land trusts by using easements increased nearly four-fold to 1.4 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.

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 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 both 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 step do I take to write a conservation easement?

First, explore with CTF the conservation values you want to protect on the land. Discuss 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; this would 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 quality 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. Thus, protection lasts forever.

What are a land trust's responsibilities regarding conservation easements?

The land trust is responsible for enforcing the restrictions that the easement document spells out. Therefore, the land trust 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 land trust 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 establish endowments to provide for long-term stewardship of the easements they hold.

Aren’t Land Trusts just a bunch of “tree huggers” who want to tell me what I can and cannot do with my land?

Well, most of us do hug a tree every now and again, but controlling you is not what we’re about.  In fact, if we came to you or if you’re reading this, you’re probably somewhat (or very) like-minded, and already understand quite well that the land is our most cherished asset, as it sustains us all.   We will not likely be interested in protecting land that is being heavily impacted by any particular use, as maintaining its “conservation values” would require a change in land management that the land owner may be unprepared for or disinterested in.   Entering into such a relationship would be foolish and counterproductive.

But, both your engaging in sustainable uses of your land, and our partnering with you to ensure that those uses are continued so that the land is not degraded surely is a form of control over our surroundings; there is no denying that simple fact.   But, what we’re interested in is rewarding good land stewards and making sure those forward-looking and responsible land uses become customary and a permanent management philosophy.   After all, these conservation easements are voluntary, openly negotiated, and are custom tailored to the needs of the land and the land owner, with input and expertise provided by us or your own counsel.   We strive to never cause any “donor’s remorse”, and create lasting, amicable relationships with our neighbors.   If we are unresponsive to the need and wishes of land owners or have ulterior motives, we will fail to protect our landscapes, and ultimately will only hurt ourselves.   We, like you, want to have a lasting, positive impact on our society, and be held in high esteem by our communities.

 

Land Trusts

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 1,200 land trusts operate across the country, serving every state in the nation.

What has contributed to the huge growth in the number of land trusts?

People are tremendously concerned about the irreversible loss of open space in their own communities. They see subdivisions supplanting the open spaces where they once walked and hiked and saw local produce growing, 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.

Just 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 including accepting donations of land or funds to purchase land, or they may accept a 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 and land outright.  Land trusts also educate landowners about their conservation options and how protecting their land can be a very powerful way to preserve their legacy, their family’s beloved farm, or to be a community conservation leader while saving themselves considerable tax dollars.

Are land trusts government agencies?

No, they are independent, nonprofit organizations that work with landowners who are interested in protecting open space. But land trusts can 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, estate, or gift tax savings. Moreover, because they are private organizations, land trusts can be more flexible and creative than public agencies, and can often act more quickly in their efforts to save land.

How can I help in achieving CTF's goal of land conservation?

Joining the Conservation Trust for Florida is the first step. Of course, cash donations keep us doing this vital work.  Much of our work is accomplished by volunteers, so if you have the time and interest there are many ways that you can help; no experience (but a good heart!) is necessary.  Finally, if you have land that you would like to protect, please consider one of several options to leave a permanent legacy reflecting your good stewardship and love of your land.