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PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCILPhoto by Ken Garrett
Michael Kane
Land Conservation Officer
Lo...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Why Conserve Our Land and Resources?
Our land provides us wit...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
What is a Conservation Easement?
• A voluntary agreement betw...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
• Comprehensive Planning
• Rural / Agricultural Zoning
• Cons...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Conservation easements typically include terms that:
 Limit ...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
What are some of the myths about conservation easements?
 Yo...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Who accepts / holds easements?
• Local governments, for insta...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Protected Land in the 9 County PEC Service Area
1994
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
2004
Protected Land in the 9 County PEC Service Area
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
PEC and partner organizations
have helped preserve over
375,0...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Why do people give easements?
Three primary reasons….
1. They...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
 And…because they love their land and want to protect
it for...
PIEDMONT ENVIRONMENTAL COUNCIL
$3,000,000
Value of property prior to protecting
land with a conservation easement
- $2,100...
PIEDMONT ENVIRONMENTAL COUNCIL
Size of federal deduction = easement value. But, use of
the deduction is subject to certain...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Virginia Land Preservation Tax Credit (LPTC)
 CREDIT is diff...
PIEDMONT ENVIRONMENTAL COUNCIL
“Run the Numbers on the Incentives” – An Example
Assumptions:
Before Easement Value $3,000,...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Virginia Land Preservation Tax Credit (LPTC)
Virginia is one ...
PIEDMONT ENVIRONMENTAL COUNCIL
Purchase of Development Rights (PDR) Programs
• Fauquier, Clarke, Rappahannock,
Loudoun, an...
PIEDMONT ENVIRONMENTAL COUNCIL
“Run the Numbers on the Incentives” – An Example
Assumptions:
Before Easement Value $3,000,...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Getting Started—How do people give easements?
• Land Trust (o...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Professionals will help you…
Getting Started—How do people gi...
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Benefits to the Landowner
• Permanently protect the land you ...
PIEDMONT ENVIRONMENTAL COUNCIL
Upcoming PEC Workshop on Estate Planning
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCIL
PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL
Gilberts Corner
Loudoun County, VA
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Introduction to Conservation Easements and Potential Financial Incentives, by The Piedmont Environmental Council

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Introduction to conservation easements and potential financial incentives by Michael Kane, Land Conservation staff with PEC

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Introduction to Conservation Easements and Potential Financial Incentives, by The Piedmont Environmental Council

  1. 1. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCILPhoto by Ken Garrett Michael Kane Land Conservation Officer Loudoun & Northern Fauquier Counties Financial incentives available for preserving land with Conservation Easements
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  10. 10. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Why Conserve Our Land and Resources? Our land provides us with….  A renewable source of nourishment & fiber  A sustainable natural environment  Jobs and Rural economies  Recreation & Tourism  Historic and scenic places to experience and learn. Our land connects us to our past and sets the course for a prosperous future.
  11. 11. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL What is a Conservation Easement? • A voluntary agreement between a landowner and a land trust or government agency to limit future development of property. • Easement must advance a conservation purpose and result in public benefit. • Landowner is giving up a “stick” from their property rights bundle. • Easement must be consistent with local Comprehensive Plan. • Easement is forever.
  12. 12. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL • Comprehensive Planning • Rural / Agricultural Zoning • Conservation Overlay Districts • Land Use Assessment / Taxation • Agricultural / Forestry Districts • Historic Districts / Scenic Corridors • Parks & Natural Areas acquisitions • Family land transition and estate planning • Conservation Easements The Land Conservation Toolbox—A Sampling
  13. 13. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Conservation easements typically include terms that:  Limit subdivision of property  Limit intensive industrial & commercial activities (other than agriculture)  Call for management of forests  Protect water with riparian buffers  Limit blasting & mining  Trash & Dumping  Limit signs & billboards But…easements are flexible tools that recognize that no two properties are the same.
  14. 14. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL What are some of the myths about conservation easements?  You have to grant public access to your land.  You can’t sell your land.  You can’t continue to farm, hunt, fish.  You can’t harvest timber on your land.  You can’t pass your land on to your kids.  Easement holder will tell you what to plant.  One size fits all.
  15. 15. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Who accepts / holds easements? • Local governments, for instance those with Purchase of Development Rights (PDR) Programs • State agencies (VOF, DOF, DHR) • Certain non-profit organizations that meet state and federal requirements (PEC, Land Trust of Virginia, Northern VA Conservation Trust, The Nature Conservancy).
  16. 16. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Protected Land in the 9 County PEC Service Area 1994
  17. 17. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL 2004 Protected Land in the 9 County PEC Service Area
  18. 18. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL PEC and partner organizations have helped preserve over 375,000 acres in the PEC nine county service area. Protected Land in the 9 County PEC Service Area 2014 • 1,558 miles of streams and rivers • 9,089 acres of wetlands • 176,660 acres of prime farming soils • 175,786 acres of forests • 102,188 acres along scenic byways • 120,749 acres in historic districts • 27,708 acres of Civil War battlefields
  19. 19. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Why do people give easements? Three primary reasons…. 1. They love their land 2. They love their land 3. They love their land
  20. 20. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL  And…because they love their land and want to protect it for the next generation.  And…because they may be eligible for: o Federal Tax Deduction – full or partial easement donation o State Tax Credits – full or partial easement donation o Property Tax Benefits o Local Purchase of Development Rights programs Why do people give easements? (Part II)
  21. 21. PIEDMONT ENVIRONMENTAL COUNCIL $3,000,000 Value of property prior to protecting land with a conservation easement - $2,100,000 Value of property after protecting land with a conservation easement = $900,000 Value of conservation easement (i.e. loss of property value due to easement) (potential value of tax deductible charitable gift) THIS IS A HYPOTHETICAL EXAMPLE ONLY AND IT IS NOT INTENDED TO BE TAX OR LEGAL ADVICE. CONSULT YOUR OWN LEGAL OR FINANCIAL ADVISOR ABOUT YOUR PARTICULAR SITUATION. Calculating the value of an easement
  22. 22. PIEDMONT ENVIRONMENTAL COUNCIL Size of federal deduction = easement value. But, use of the deduction is subject to certain rules:  Donation can be used to deduct up to 30% of Adjusted Gross Income (AGI)  Unused donation can be carried forward and used on future taxes for 5 years (year 1+5 = 6 years).  Cash value of deduction is going to be determined by your own financial situation / marginal tax rate  See example if AGI = $200,000 Federal Income Tax Deduction THIS IS A HYPOTHETICAL EXAMPLE ONLY AND IT IS NOT INTENDED TO BE TAX OR LEGAL ADVICE. CONSULT YOUR OWN LEGAL OR FINANCIAL ADVISOR ABOUT YOUR PARTICULAR SITUATION.
  23. 23. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Virginia Land Preservation Tax Credit (LPTC)  CREDIT is different than deduction  $1 of credit can be used to pay $1 of VA Income Taxes owed.  Easement donor can claim credit = 40% of the land or easement donated.  Can use the credits in the year of the donation plus 13 additional yrs.  Individual taxpayer limited to using $20,000 per year in 2015-16, $50,000 per year thereafter. (new for 2015)  Can sell unused credits to other taxpayers. Virginia is one of the few states that offer a state income tax CREDIT for conservation easement donations
  24. 24. PIEDMONT ENVIRONMENTAL COUNCIL “Run the Numbers on the Incentives” – An Example Assumptions: Before Easement Value $3,000,000 After Easement Value $2,100,000 Easement Value $ 900,000 (30%) Adjusted Gross Income--Married $ 200,000/year State Tax Credit (40% of $900,000 donation) $ 360,000 Potential Value of Incentives Fed Income Tax Savings (over 6 yrs): $ 98,784 VA Income Tax Savings from Fed Deduction: $ 20,700 Income Tax Savings using LPTC $ 140,300 Sale of remaining $219,700 in credits @ .80 $ 175,760 --less VA Transfer Fee $ 10,985 Total $ 424,559 THIS IS A HYPOTHETICAL EXAMPLE ONLY AND IT IS NOT INTENDED TO BE TAX OR LEGAL ADVICE. CONSULT YOUR OWN LEGAL OR FINANCIAL ADVISOR ABOUT YOUR PARTICULAR SITUATION.
  25. 25. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Virginia Land Preservation Tax Credit (LPTC) Virginia is one of the few states that offer a state income tax CREDIT for voluntary land conservation donations Since 2000…. • Over 2,500 donations of land or conservation easements • Over 540,000 acres conserved using the LPTC • Over $1.2 Billion in LPTC credits issued In 2015….. $75 million is available for land and conservation easement donations through LPTC
  26. 26. PIEDMONT ENVIRONMENTAL COUNCIL Purchase of Development Rights (PDR) Programs • Fauquier, Clarke, Rappahannock, Loudoun, and Albemarle in PEC area • PDR programs typically rank applications, with focus on farmland preservation • Due to limited funding, “bargain sales” are common • 22 programs statewide Under PDR programs, landowners voluntarily sell—rather than donate—a conservation easement to local jurisdiction
  27. 27. PIEDMONT ENVIRONMENTAL COUNCIL “Run the Numbers on the Incentives” – An Example Assumptions: Before Easement Value $3,000,000 After Easement Value $2,100,000 Easement Value $ 900,000 (30%) Adjusted Gross Income--Married $ 200,000/year PDR Program funding (8 Division Rights @ $25K) $ 200,000 State Tax Credit (40% of $700,000 donation) $ 280,000 Potential Value of Incentives PDR Program funding (8 Division Rights @ $25K) $ 200,000 Fed Income Tax Savings (over 6 yrs): $ 98,784 VA Income Tax Savings from Fed Deduction: $ 20,700 Income Tax Savings using LPTC $ 140,300 Sale of remaining $139,700 in credits @ .80 $ 111,760 --less VA Transfer Fee $ 6,985 Total $ 564,559 THIS IS A HYPOTHETICAL EXAMPLE ONLY AND IT IS NOT INTENDED TO BE TAX OR LEGAL ADVICE. CONSULT YOUR OWN LEGAL OR FINANCIAL ADVISOR ABOUT YOUR PARTICULAR SITUATION.
  28. 28. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Getting Started—How do people give easements? • Land Trust (or public agency) • Legal Advisor • Financial Advisor • Qualified Real Estate Appraiser • Tax Credit Broker • Lender Donating a conservation easement call for a team effort! CONTACT PEC! We are here to assist you.
  29. 29. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Professionals will help you… Getting Started—How do people give easements? • Determine if a conservation easement is right for your situation • Connect you with the organization with a mission that matches your conservation goals • Run those numbers….on the financial incentives • Understand the legal, technical, and financial implications of giving an easement • And, finally, provide advice—after the easement is complete—on the managing your property’s unique resources
  30. 30. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Benefits to the Landowner • Permanently protect the land you love • Extract some of the land’s cash value now without having to sell any land fee simple • Retain the right to own & farm the property • Maintain the ability to sell the property (subject to easement restrictions) • Assist in estate planning • Ability to take direct action that can benefit the entire community
  31. 31. PIEDMONT ENVIRONMENTAL COUNCIL Upcoming PEC Workshop on Estate Planning
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  34. 34. PIEDMONT ENVIRONMENTAL COUNCILPIEDMONT ENVIRONMENTAL COUNCIL Gilberts Corner Loudoun County, VA

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