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Questions and Answers on Conservation Easements
Sample conservation easements are available from the Rensselaer Land Trust upon request.
- What is a conservation easement?
A conservation easement is a voluntary agreement to preserve land in perpetuity. Although filed with the deed, it does not transfer land ownership, but rather spells out a landowner's commitments to protect the existing character of his property. It is a flexible document and may be written to protect land in accordance with the landowner's wishes.
- If I give a conservation easement, do I still own and control my own property?
Yes. Only the specific use rights that you choose to donate are removed from your property. You can still own, build upon, sell, lease, mortgage, farm, or otherwise use your property consistent with the terms of the conservation easement.
- Does a conservation easement require me to allow public access to my land?
No. The conservation easement does not give the public any rights to your land unless you decide to include such rights in your easement.
- To whom is a conservation easement given?
A conservation easement is enforced by the organization or public body to which it is donated, by court action if necessary. Some easements name another entity as a back-up enforcer in case the original donee organization is unable or unwilling to ensure compliance with the easement. If the original donee organization ceases to exist, the easement is transferred to a similar entity which has the power to enforce it. The organization which holds the easement is responsible monitoring it on a regular basis to assure that the current landowner is complying with the terms of the easement.
- How is a Conservation Easement enforced?
RLT is required by the LTA Standards and Practices and IRS requirements to legally defend the conservation easements that it holds. Some easements name another entity as a back-up enforcer in case the original donee organization is unable or unwilling to ensure compliance with the easement. If the original donee organization ceases to exist, the easement is transferred to a similar entity which has powers to enforce it. The organization which holds the easement is responsible for monitoring it on a regular basis to assure that the current landowner is complying with the terms of the easement.
- What is the difference between a conservation easement and a "deed restriction"?
A deed restriction (also called a "restrictive covenant running with the land") is similar to a conservation easement, but there are some significant differences. Conservation easements, established under Article 49, Title 3 of the Environmental Conservation Law and Section 247 of the General Municipal Law, enjoy a special legal status. While deed restrictions may in some circumstances be easily eliminated by the mutual consent of landowners or court action, it is much more difficult to remove a conservation easement.
Under Section 345 of the Real Property Law, deed restrictions expire after 30 years unless that are recorded, whereas conservation easements are valid in perpetuity. Also, deed restrictions may only be enforced by adjoining landowners who directly benefit from them, while conservation easements can be enforced by entities which do not own adjoining land and do not necessarily derive an economic benefit from them. To assure maximum effectiveness, a deed restriction and a conservation easement may be used jointly, since enforcement by neighboring landowners may be advantageous but is only possible through deed restrictions.
- Can I donate a conservation easement and still develop my land?
Yes. A conservation easement can be used to control the number, location, and designs of buildings, thus assuring a that a quality development plan is maintained in perpetuity. Used in this manner, an easement may be able to enhance the value of each lot created.
- Can a conservation easement assure the protection of open space set aside in a "cluster development"?
Yes. One of the biggest concerns that towns have in approving cluster developments is that the land set aside as "open space" today may be developed in the future. Requiring a cluster developer to place a highly restrictive conservation easement on land set aside as open space is the most secure way to protect it from development permanently. It is also a tool that can be used to place the protected open space in the private hands of one or more large estates or farms, rather than in a possibly unwieldy homeowner's association.
Conservation easements can also be used in connection with private roads. Many towns are unwilling to approve private or town roads built to minimum specifications because of the concern that as an area develops, the road system will require upgrading at the town's expense. If towns require perpetual conservation easements limiting the total number of units that can be served by such roads, they can approve these roads without needing to worry about future over-development. The alternative is that eventually the developer will build full-scale suburban roads, resulting in a "cookie cutter" development that will totally destroy the existing open space.
- Will conservation easements reduce my property taxes?
Maybe. Tax assessments are made by local assessors based on the fair market value of property. In fact, much rural land is actually underassessed relative to developed land, in recognition of the fact that undeveloped land does not demand municipal services and that raising the assessments of undeveloped land will tend to place development pressure upon ready being assessed at less than fair market value. Logically, a highly restrictive easement that reduces a property's market value should be reflected in a lower assessment, but this decision falls within the discretion of the local assessor.
Much land under easement already receives special tax treatment through either the Agricultural Districts Law (Section 25AA of the Agriculture and Markets Law) or the Forest Tax Law (Section 480-a of the Real Property Tax Law). A conservation easement would have little impact on land enrolled in these programs, since assessors are free to use their discretion regarding easements, while the agriculture and forestry exemptions are mandatory.
- For additional information, see our easement tax credit discussion (see menu Landowner Information on our homepage).
- Are there other tax advantages in donating conservation easements?
Yes. The principal advantage is the charitable deduction from state and federal income taxes. A taxpayer may deduct as a charitable donation the difference in value between the land before an easement is donated (unrestricted value) and after it is donated (restricted value). If the easement is highly restrictive, this could amount to a large tax deduction. In order to qualify for the deduction, the land involved must meet certain IRS criteria to establish public benefit, such as scenic enjoyment by the general public , preservation of natural ecosystems or historic sites, or public education or recreation. Under the Alternative Minimum Tax provisions of the Tax Reform Act of 1986, there is a strong possibility that a deduction could be limited to an owner's "basis" (acquisition cost) in the land rather than the full fair market value of the easement. Only a careful review with personal tax advisors will reveal whether or not this will be a problem for individual landowners. Easements can also result in significant estate tax savings as well.
- Won't conservation easements limit the availability of needed housing?
No. Good planning dictates that new housing should be concentrated in those areas best able to service it with roads, water, and sewer facilities (infrastructure), and employment and shopping opportunities. Conservation organizations do not accept easements on land that should more appropriately be developed for housing. In those areas of the County where large-scale development is appropriate, conservation easements will only be accepted in connection with open space set aside as part of planned cluster developments or to preserve scenic or ecologically sensitive areas such as wetlands, stream corridors, and riverbanks, steep hillsides, etc. Most conservation easements are placed on land in sparsely populated rural areas where good planning requires the preservation of open space and the retention of land in large tracts to keep agriculture a viable industry. A conservation easement strategy goes hand-in-hand with capital improvements to infrastructure to concentrate development in those areas best able to service it. In this way, an adequate supply of housing, at high enough densities to be affordable, can be created.
- Don't conservation easements erode the tax base?
Generally, conservation easements have little or no impact on the real property tax base, particularly in the Hudson Valley. Easements may, in some instances,, actually help stabilize and lower tax rates. One advantage of using conservation easements is that land under easement remains in private ownership and on the tax rolls, unlike publicly owned land.
In developed communities, open land represents a negligible proportion of the tax base. Even if a conservation easement were to result in a slight tax break for the landowner, the impact on a tax base comprised mostly of residential and commercial would be imperceptible. In rural communities, most land coming under conservation easement already enjoys property tax benefits under either the Agricultural Districts Law or the Forest Tax Law (see question #9), and the conservation easement adds no further tax reduction. In any area, a small reduction in the taxable valuation of eased property would be more than offset by enhanced taxable value of the surrounding properties. It is common knowledge that property surrounding parks and preserves commands premium prices.
Finally, Conservation easements provide important public benefits, not only in the open space amenity they provide, but also fiscally. Keeping haphazard development out of rural areas slows the growth in the property tax rate. It has been documented that increased residential growth always brings higher taxes, since demand for municipal services increases faster than the tax base. Limiting the growth and channeling it toward existing population centers, which can be accomplished using conservation easements, is the best way to stabilize the tax rate. Providing local property tax relief would therefore create an incentive for landowners to place conservation easements on their land and would, far from eroding the tax base, help to keep local property taxes down.
Questions and Answers on Conservation Easements comes from a handout produced by the Dutchess Land Conservancy and is reproduced with their permission.