Private Land Conservation: Conservation Easements. Matt Singer Land Stewardship Manager

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1 Private Land Conservation: Conservation Easements Matt Singer Land Stewardship Manager

2 Galveston Bay Foundation Mission: To preserve, protect, and enhance the natural resources of the Galveston Bay estuarine system and its tributaries for present users and for posterity

3 Our Programs Advocacy - Encourage and actively seek solutions to conflicts among the diverse users of the Bay Conservation Implement projects aimed at preserving/enhancing the natural resources of the Bay system Education - Provide resources and guidance for education projects aimed at developing a constituency for the Bay, from schoolchildren to public officials Research - Support the allocation of public and private resources for research into the multiple resources of the Bay system

4 Land Trust Accreditation Independent Accreditation Commission (Land Trust Alliance) 9 Accredited Land Trusts in Texas Land Trusts must abide by 26 Standards and Practices Promotes consistent conservation efforts for Land Trusts Builds confidence in the land conservation community

5 About Galveston Bay Largest bay in Texas, 7 th largest in the nation, and 2 nd most productive bay in the U.S. Fed by freshwater from the San Jacinto (28%) and Trinity (54%) rivers, and local bayous and creeks (18%). Approximately half of Texans live within the Galveston Bay watershed.

6 Where we Conserve Land Between 1991 and 2015, acquired 5,945 acres of properties for conservation, including 3,335 acres to which we hold title and 2,610 acres on which we hold conservation easements Conservation Easements vs. Fee Simple Purchase Donation, Mitigation, Purchase, Bargain sale

7 Need for private land conservation Estimated that more than 83% of land in Texas is privately owned ranches, farms, and forests Over 1 million acres of private farms, ranches, and forests have been lost in Texas between 1997 and 2012 Land fragmentation impacts wildlife habitats, water quantity and quality, and sustainability of agriculture. Managing land is incredibly expensive for government agencies and conservation organizations Keeping property on tax roles maintains local revenue Population growth and urban sprawl will continue to consume natural areas

8 What is a Conservation Easement? A voluntary legal agreement between a property owner and a qualified entity Agreement will restrict the future land uses of the property to protect natural and ecological qualities (conservation values) Qualified easement holders may be public agency or private conservation organization (non-profit)

9 Conservation Easement Basics Real Property = Bundle of Rights Possession, Mineral rights, development rights, etc. Can be owned at anytime by one or more people Easements can be donated or sold Conservation Easements should be perpetual Some entities allow term easements Language and terms are flexible and can be negotiated Conservation easements are good negative covenants Land Trust is responsible for enforcing the terms of the easement Baseline inventory Annual monitoring

10 Conservation Easement Provisions/Restrictions: Subdivision Development of structures Outdoor recreation Roads, fences, other infrastructure Mineral exploration and production Management of environmentally sensitive areas Care of historical features Public access Timber management Hunting and fishing Agriculture uses

11 Why would a landowner consider a Conservation Easement? Desire to protect the land Family owned property Maintain current condition of the land Perpetuate cultural heritage Income tax benefits Landowners can deduct the value of a donated conservation easement as a charitable gift Estate planning Conservation easements can help avoid federal estate taxes Access value of land without selling part or all of property

12 Conservation Easement Tax Benefits Qualifies for a federal tax deduction if (IRC Section 170(h)): Perpetual Held by a qualified conservation organization Serves a valid conservation purpose (must meet at least 1) Outdoor recreation or education accessible to the general public Protection of a relatively natural habitat of fish, wildlife, plants or similar ecosystem Preservation of open space (includes farmland or forest land) Historically important land area or certified historic structure Value of a conservation easement must be documented by a qualified appraisal

13 Conservation Easement Valuation: Before and after appraisal method Uncle Joe s Ranch: 1000 acres in Matagorda county Value of land prior to easement is $3,000/acre FMV = $3,000,000 Value of land after easement is $1,800,000 Conservation easement is worth $1.2 million 40% of the original fair market value Aunt Mary s Farm: 1000 acres in Harris County Appraised value of land prior to easement is $10,000/acre FMV = $10,000,000 Value of the land after easement is $4,000,000 Conservation Easement is worth $6 million 60% of the original fair market value

14 Conservation Easement Tax Benefit Example Standard non-cash contribution: 30% of AGI with a carryover of 5 years Easement Donor AGI is $450,000 Tax Bracket = 35% Value of CE =$3 million Annual deduction(30% AGI)= $135,000 Annual tax savings = $47,250 Number of years = 6 Total Tax Savings resulting from Easement donation = $283,500

15 Conservation Easement Tax Benefit Example Enhanced Conservation Tax Deduction: 50% of AGI with a carryover of 15 years (farmers and Ranchers may be able to deduct 100% of AGI) Easement Donor AGI is $450,000 Tax Bracket = 35% Value of CE =$3 million Annual deduction(50% AGI) = $225,000 Annual tax savings = $78,750 Number of years = 14 Total Tax Savings resulting from Easement donation = $1,050,000

16 Lone Pine Farm: A purchased Conservation Easement Funded through Texas Farm and Ranchlands Conservation Program 1100 acres Adjacent/nearby other conservation efforts Active farm and ranch Significant wildlife and water quality values

17 Conservation Easement Summary Texas needs to increase private land conservation efforts Conservation easements provide perpetual protection for privately owned lands Restrictions may be tailored to meet the needs of each individual property Conservation easements can provide significant economic benefits for landowners

18 2015 GBF Events Abandoned Crab Trap Removal - February 21 at Fort Anahuac Park Trash Bash March 28 at Armand Bayou Marsh Mania April 11 (and likely another event in September) Bay Day Saturday, May 23 at the Kemah Boardwalk Ladies Casting for Conservation Fishing Tournament July 25 in Port Bolivar Guardian of the Bay Award Luncheon - September 30 at the Hilton Americas Houston Bike Around the Bay - October 17 & 18

19 Thanks for your support of the Galveston Bay Foundation! Questions?