Private Land Conservation: Conservation Easements

Matt Singer Land Stewardship Manager

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

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

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

About Galveston Bay

Largest bay in Texas, 7th largest in the nation, and 2nd 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.

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

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

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)

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

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

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

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”

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

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

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

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

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

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

Questions?

Thanks for your support of the Galveston Bay Foundation!