Triangle Land Conservancy
• Triangle Land Conservancy (TLC) is a local non-profit land trust serving Wake, Johnston, Chatham, Lee, Orange and Durham counties
• One of 25 land trusts in North Carolina working to protect farm and forest land, stream corridors, wildlife habitat and natural areas
• Non-profit – funded primarily by our 3,100+ members – individuals, families and area business and organizations.
What is TLC?
• Triangle Land Conservancy's mission is to protect important open space—stream corridors, forests, wildlife habitat, farmland and natural areas—in Chatham, Durham, Johnston, Lee, Orange and Wake counties to help keep our region a healthy and vibrant place to live and work
• Work with landowners to identify best tool for protecting their land
• All of TLC’s work is voluntary
• Conservation methods/tools used by TLC
• Own land – nature preserves, farm preserves, and open lands
• Assist – facilitate acquisition on behalf of another entity. Example: State Parks, County, or City Government
• Conservation Easements – landowner retains ownership, but relinquishes certain rights
What does TLC do?
Public Benefits of TLC’s Conservation
TLC’s conservation work fulfills these four public benefits and helps answer the question to the public “ How does TLC’s conservation work impact me?” Each conservation action TLC performs can be explained as it satisfies benefits to the community.
SupportingLocal Farms and Food
Connecting People with Nature
Safeguarding Clean Water
Protecting Wildlife Habitat
White Pines Nature Preserve
Steep North Facing Bluffs
Unique VegetationWhite Pine
Catawba Rhododendron
Four Miles of Hiking Trails
Confluence of Rocky and Deed Rivers
Spring Peeper Frog on the trail
White Pines Restoration Map
Summer 2012 thinning begins
Group Opening
Loblolly Pine Thinning
TLC Conservation Corps at work
Conservation Easements
A voluntary option for protecting your farm and
forest landTriangle Land Conservancy
January 23, 2014
• As a landowner you have certain property rights– Development– Timber/forest management– Agriculture - grow crops, raise livestock– Extract minerals
• This collection of rights is often compared to a “bundle of sticks” because individual rights can be removed from the collection just as a stick can be removed from the bundle
Property Ownership
• A voluntary legal agreement between a landowner and a qualified conservation organization or public agency that permanently limits certain uses of the land to protect its conservation values
• In effect, conservation easements remove the right to develop the property and to extract minerals from the property from the landowner’s “bundle of sticks”
What is a Conservation Easement?
• Conservation values or purposes – defined in Section 170(h) of the IRS code as:– Wildlife habitat (plants and animals)– Farm and forest land (open space)– Land for public outdoor recreation or education– Historic land or buildings
• Conservation easements “run with the land” - they bind both current and future landowners
What is a Conservation Easement?
• Conservation organization or public agency (Grantee) that holds the conservation easement has right to enforce easement and monitor the property
• Conservation easements are flexible – not “one size fits all”
How does it affect my land?
• Allows landowner to continue to own and use their land– Farming– Forestry– Passive recreation – hunting, fishing, etc.– Often allow for a certain number of structures
• Can still use land as collateral for loan; lease, sell or pass property to heirs
How does it affect my land?
• Does not grant public access– Landowner may allow public access so long as the
conservation values of the property are not diminished
• Remain eligible for present use property tax program
• Remain eligible for federal and state farm programs
How does it affect my land?
• Easement holder visits property regularly (usually once a year) to ensure landowner is in compliance with easement terms
• Ensures conservation values are protected and maintain the deductibility of the easement
• Easement holder may request a contribution to their stewardship endowment – tax deductible
Stewardship
• Federal income tax deduction
• No State of NC income tax credit
• Estate taxes
• Limited state and federal funding
Financial Benefits
• Independent appraisal– Qualified appraiser – qualifications defined through a 2006
law - PL109-280– Essentially two appraisals in one report– First appraisal – highest and best use – fair market value– Second appraisal – value of property subject to
conservation easement – Conservation value = difference between first appraisal
and second appraisal
How is the Value Determined?
• Example:– Appraised fair market value of farm “as is” equal to
$500,000– Appraised value of farm subject to terms of conservation
easement equal to $250,000– Value of conservation easement equals $250,000
How is the Value Determined?
• Federal Tax Law– Internal Revenue Code
• 26 USC 170(h) – qualified conservation contribution
– Internal Revenue Regulations• 26 CFR 1.170A-14 – qualified conservation contributions
• Individual landowner may use the conservation easement value to:– Deduct up to 30% of their adjusted gross income (AGI) for
the year of the gift– Any unused conservation easement value may be carried
forward an additional 5 years
Federal income tax deduction
• Example: Landowner donates a conservation easement valued at $150,000– Landowner’s adjusted gross income is $100,000– Landowner can deduct up to 30% or $30,000– Instead of paying federal income tax on $100,000, they are
now paying tax on only $70,000– The remaining $120,000 in value may be used over the
next 5 years
Federal income tax deduction
• Qualified farmers and ranchers may use the conservation easement value to:– Deduct up to 100% of their adjusted gross income (AGI) for
the year of the gift– Any unused value may be carried forward an additional 5
years– Qualified farmers and ranchers defined as someone who
receives more than 50% of his or her gross income from “the trade or business of farming”. Complete definition in IRS Code 2032A(e)(5)
Federal income tax deduction
• If a conservation easement is granted during a Donor’s lifetime, only the restricted value of the property under the conservation easement will be included in the owner’s estate.
• If a conservation easement is granted by will, the Donor’s estate may claim an unlimited charitable deduction for the value of the easement.
Estate Taxes
• A limited number of local, state and federal government funding sources exist that may pay a portion or all of the value of the conservation easement.
• Project must meet funding source criteria.
• Funding agency will have input into the terms and conditions of the conservation easement.
Public Funding
• Contact your local land trust or other conservation entity that holds conservation easements – Must be a “qualified organization” as outlined in Section
170(h) of the IRS code for income and estate tax purposes
• Outline your conservation and land management goals and identify conservation values of property
Steps Involved in Completing a Conservation Easement
• Review property features using GIS mapping and conduct a site visit
• Negotiate terms of conservation easement– Should take into account current uses of land and potential
future uses– Balance landowner goals with mission of easement holder
Steps Involved in Completing a Conservation Easement
• Due diligence– Title examination– Environmental assessment– Boundary survey
• Draft conservation easement deed– Must comply with tax codes, state law and requirements
set by public funding sources if applicable
Steps Involved in Completing a Conservation Easement
• Baseline documentation report– Establishes a reference point for determining compliance
with the terms of the conservation easement – photos, maps, detailed summary of conservation values of the property
• Execute and record conservation easement– All current property owners must sign– Conservation easements are recorded in Office of Register
of Deeds
Steps Involved in Completing a Conservation Easement
• Future borrowing needs– Conservation easement may reduce value of property as
collateral
• Conservation easements are difficult to amend– Impact to conservation values?– Tax implications– Assume the conservation easement will not be amended
in the future
Landowner Considerations
• In order to qualify for tax deduction, title must be clear of encumbrances that could extinguish the easement– The holders of any mortgage or deed of trust must consent
in writing to the easement and the consent must be recorded (subordination agreement)
• Every landowner should consult with a qualified attorney and financial advisor
Landowner Considerations
• Conservation easements are a multi-step process that may take several months and in some cases years to complete
Landowner Considerations
• Costs typically incurred to complete a conservation easement may include:– Survey– Appraisal– Environmental assessment– Stewardship endowment
• Potential costs should be discussed at beginning of project and parties should determine how the costs will be paid
Transaction Costs
• Bo Howes, Conservation Project Manager• [email protected] (919) 908-0052• Walt Tysinger, Land Manager• [email protected] (919) 908-0053 www.triangleland.org
• Conservation Trust for NC www.ctnc.org
• Land Trust Alliance – national land trust group www.lta.org
Contacts and Resources
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