5 Benefits to the Recipients of Florida Conservation Easements

A conservation easement is a voluntary legal agreement between a landowner and a government agency or qualified conservation organization that restricts specific uses or development on the land. This is a landowner’s way to protect the land for now and in the future. One of the significant benefits of a conservation easement is the protection of wildlife habitats, natural lands, and resources for generations to come.

The seller of a conservation easement is a landowner who desired to restrict development or land use through this option, but still holds on to ownership of the land.

The buyer or recipient of a conservation easement is typically a government conservation program or a private conservation organization. While the landowner seller has specific benefits that make a conservation easement desirable, the buyer or recipient too reaps benefits from this type of transaction. Read more »

8 Benefits and Tax Advantages for Landowners Who Sell a Conservation Easement

A conservation easement is a viable solution for landowners who want to protect their land from development. Simply put, a conservation easement is a restriction on the use of property owned by an individual, similar to a deed restriction. Read more »

Conservation Easements: the Essence of Landowner’s Property Rights

The pathway to conservation easements is not always a straight line but, more often than not, is worth the trip. [Dean Saunders, ALC]

Conservation easements are powerful, effective tools available to landowners for the permanent conservation of private lands in the United States. The use of conservation easement options has successfully protected millions of acres of wildlife habitat and open space, keeping land in private hands and generating significant public benefits.

The primary purpose of a conservation easement is to give a landowner the right to protect his land from certain types of development or land use. This opportunity appeals to property owners who hold undeveloped land that is agricultural and/or has timberland, wildlife habitats, natural open space, and those with natural resources. Simply, a conservation easement is a restriction on the use of property similar to a deed restriction. It is recorded in public records and generally is in perpetuity. The government receives assurance that this valuable land will be protected from future development. Read more »

Asking-price discount for conservation easements

Conservation easements vary a lot, although all are supposed to serve some public interest.

Some are sold, but most are donated. They are usually sold or donated in perpetuity, though some have limited terms. Most easements are set up to preserve open space, restrict/eliminate development or keep farmland in agricultural use.

At the time of the donation, its value is calculated. The donor uses the value to receive, federal, state, local (property tax) and estate tax benefits. These are substantial.

The question I have is how should a buyer calculate the discounted value of a for-sale property burdened with a conservation easement?

Many sellers seem to think that a CE is a selling point and don’t like to discount their asking prices.

It’s often hard to find comps to use in a conventional appraisal.

I’ve been involved in several situations of this sort. It’s hard to agree on a valuation methodology.

What are your thoughts?

The implications of a conservation easement

I talked with an old friend last week about selling a large New England farm that’s been in his family since the 1930s. The farm is in a pretty setting, at the foot of publicly owned mountains. Land prices have risen dramatically during the last 15 years, driven by second-home buyers and retirees from southern New England and, primarily, the Boston area.

Of the 300 or so acres, about one-third has been used for cattle grazing and haying. This area is bounded on two sides by state-maintained highway. It is flat. It’s not particularly productive dirt, but it has dramatic views, easy access and many potential lots. The rest of the ground is a mix of woods and wetlands, which is not suitable for much of anything except recreation.

My friend placed the agricultural field in a conservation easement that prohibits any use other than agricultural. Not a single house is permitted to be built in perpetuity. He did this with the best of intentions some years ago. His health has changed for the worse as he’s gotten older. His income is limited. The farm is his major asset, and most of its value was in the 100 acres of field.

Without this easement, a developer might pay $10,000/acre for the right to divide it into five to ten second-home lots. With the easement in place that keeps this marginal farmland as marginal farmland, the price might be $1,000/acre on a really good day for the seller. My friend’s life would be a lot more comfortable going forward with $900,000 more in gross sale revenue. Of course, sale to a developer means five to ten newly built second homes where hay once grew.

At the time he placed this easement on his land, he wanted to preserve the 100 acres as open space and keep it in agricultural uses. He got tax benefits for the easement. Now he needs the money. Now he’s stuck with the personal consequences of what I would consider a questionable choice.

Many good reasons exist to place conservation easements on property. Owners, however, must consider the long-term consequences for themselves and their heirs of prohibiting all development forever.

Had my friend allowed one residence to be built on the 100 acres, the value of the easement would have been marginally reduced. But he would have been able to sell the property in his time of need for maybe $7,500/acre or more. The land would have still been kept primarily agricultural and open.

I have seen other cases where economic fortunes have turned against a landowner whose last asset was land–burdened with a conservation easement. The surviving spouse and the heirs received substantially less inheritance than the calculation at the time when the easement was donated.

I’m interested to hear from advocates on both sides of this question.

Conservation easements on land need to be thought through

About 10.6 million privately owned acres — an area about twice the size of Connecticut — now carry conservation easements.  This land base is growing by more than one million acres annually.

Almost 30 million more acres have been conserved through sale, acquisition by government agencies and other means, according to Russell Shay, Director of Public Policy at the Land Trust Alliance in Washington, D.C.

Conservation easements enable landowners — individuals and corporations –  to donate one or more rights in environmentally important land to a government agency or tax-exempt, charitable organization like a land trust. In return, landowners preserve the look or current uses of their properties and enjoy substantial local, state and federal tax benefits. Read more »