Conservation Easements
With development rapidly encroaching upon rural parts of Florida, the need to maintain green space has resulted in unprecedented purchases of land by governmental agencies and environmental advocacy groups. The resulting costs to tax payers for acquisitions and management are often onerous on taxpayers. During the past several years there has been increasing pressure to find creative, innovative and cost effective ways to protect and preserve Florida’s natural habitats. The most popular and widely accepted method is the use of conservation easements. Given the many questions regarding conservation easements, Heartland Real Estate Corporation (HREC) offers answers to the most common areas of interest.
What is the Purpose of a Conservation Easement?
The primary purpose of a conservation easement is to protect land from future development. There are also numerous secondary and ancillary environmental benefits, including protection and restoration of natural vegetative communities and hydrological features (water bodies, wetlands, etc). The landowner continues to privately own and manage the land and can use it for compatible economic, aesthetic or educational purposes.
What Does the Sale of a Conservation Easement Entail?
Conservation easements require a willing landowner (seller) to give up or “extinguish” specific land use rights for financial compensation and/or tax credits. The purchaser is usually a governmental entity, an environmental advocacy group or private donor. Under certain circumstances, the purchaser is not the easement holder. The easement holder is usually an entity that provides oversight regarding the ongoing management and conditions of the easement property and ensures land use prohibitions are followed. Return to Top of Page
What Benefits Does the Buyer Gain?
First we must assume the buyer’s goal is to protect the natural resources. Since the conservation easements costs less than buying the land, it is apparent that far more resources can be protected using conservation easements versus fee title acquisition. In addition, some landowners opposed to selling their land may be willing to sell an easement. Benefits result from the fact that the expense of management stays with the easement seller who continues management with greater knowledge and efficiency than the easement holder or purchaser. The resource protection often results in improved water quality, flood retention, aquifer recharge, wildlife habitat and open space management, retention of aesthetic values and educational opportunities.
What Benefits Does the Seller Gain?
The seller benefits by receiving financial compensation or tax credit but still maintains possession and control of the land. Estate tax liabilities are reduced significantly through lower land value, and the seller is assured the land is preserved for use and enjoyment by future generations (or could be sold to others). Regardless of future ownerships, the property cannot be subdivided into multiple ownerships.
How Do Conservation Easements Benefit Everyone?
The sale of conservation easements for agriculture property is truly a win-win-win scenario. First, the landowner retains ownership of the property and is allowed continued use pursuant to the easement. The landowner receives financial benefits via cash payments, tax credit and estate planning advantages. Second, the land is protected from development and preserved for future generations, which accomplishes the buyer’s goal. Third, the public is not burdened with costs associated with managing government-owned property. Nevertheless, the public benefit derived from protecting and managing resources continues.
What Type of Land is Best Suited for Conservation Easement?
There are numerous characteristics that influence desirability of land for a conservation easement. Most important is the quality of the habitat. The degrees of “pristineness” versus degradation are evaluated. Pristine land with an eminent threat of development would rank high on the list for acquisition. In addition, proximity to other conservation property is important. If a target site is adjacent to other conservation lands, the potential to develop larger wildlife corridors is favored. Also important when evaluating land suitability for conservation easements are the preservation of unique or sensitive hydrological features, threatened or endangered species, as well as species of special concern. Return to Top of Page
How is the “Value” Assigned to a Conservation Easement?
The first step in this process is to determine the fair market value of the land using the appraisal process. Once that is agreed upon, the amount of money paid for the easement will be some fractional portion of that value. Determining the fractional value requires a determination of the land use rights that remain with the land as opposed to those rights being extinguished. For example, if the only rights extinguished are for development but all rights for agricultural use remains, then the value of the easement may be 40%-60% of the appraised value. However, if most of the agricultural use rights are extinguished and the only remaining use is recreation and cattle grazing under a range management scenario, then the conservation easement value may be 70%-90% of appraised value.
What Restrictions are Assigned to the Land?
There are numerous scenarios which are usually determined by the purchasing entity depending on their goals. It is always the case that future development or subdividing is prohibited. If the property owner determines a future need for a structure (barn, shop, residence, cow pens, etc), then that site should be excluded from the land included in the easement. Some easements may prohibit intensive agriculture, such as row crops. All easements permit recreational uses such as hunting, fishing and/or ecotourism and encourage or require management to benefit wildlife and hydrological systems.
What Should I Do to Pursue a Conservation Easement For My Property?
As a first step, it is imperative that any landowner contemplating an easement has a responsibility to conduct thorough due diligence or engage the services of a reliable realtor or other consultant to perform such services. That person can provide feedback and connect you with governmental agencies and/or environmental advocacy groups interested in purchasing conservation easements. For more information regarding conservation easements, contact Jimmy Wohl at (863) 382-3887 or at JimmyW@HeartlandRE.net.