1. Triangle Land Conservancy

2. Triangle Land Conservancy (TLC) is a local non-profit land trust serving Wake, Johnston, Chatham, Lee, Orange and Durham counties One of 25 land trusts in North Carolina working to protect farm and forest land, stream corridors, wildlife habitat and natural areas Non-profit – funded primarily by our 3,100+ members – individuals, families and area business and organizations. What is TLC?

4. Triangle Land Conservancy's mission is to protect important open space—stream corridors, forests, wildlife habitat, farmland and natural areas—in Chatham, Durham, Johnston, Lee, Orange and Wake counties to help keep our region a healthy and vibrant place to live and work Work with landowners to identify best tool for protecting their land All of TLC’s work is voluntary Conservation methods/tools used by TLC Own land – nature preserves, farm preserves, and open lands Assist – facilitate acquisition on behalf of another entity. Example: State Parks, County, or City Government Conservation Easements – landowner retains ownership, but relinquishes certain rights What does TLC do?

5. Public Benefits of TLC’s Conservation TLC’s conservation work fulfills these four public benefits and helps answer the question to the public “ How does TLC’s conservation work impact me?” Each conservation action TLC performs can be explained as it satisfies benefits to the community. Supporting Local Farms and Food Connecting People with Nature Safeguarding Clean Water Protecting Wildlife Habitat

6. White Pines Nature Preserve

7. Steep North Facing Bluffs

8. Unique Vegetation White Pine

9. Catawba Rhododendron

10. Four Miles of Hiking Trails

11. Confluence of Rocky and Deed Rivers

12. Spring Peeper Frog on the trail

13. White Pines Restoration Map

14. Summer 2012 thinning begins

16. Group Opening

17. Loblolly Pine Thinning

18. TLC Conservation Corps at work

19. Conservation Easements A voluntary option for protecting your farm and forest land Triangle Land Conservancy January 23, 2014

20. As a landowner you have certain property rights – Development – Timber/forest management – Agriculture - grow crops, raise livestock – Extract minerals This collection of rights is often compared to a “bundle of sticks” because individual rights can be removed from the collection just as a stick can be removed from the bundle Property Ownership

21. A voluntary legal agreement between a landowner and a qualified conservation organization or public agency that permanently limits certain uses of the land to protect its conservation values In effect, conservation easements remove the right to develop the property and to extract minerals from the property from the landowner’s “bundle of sticks” What is a Conservation Easement?

22. Conservation values or purposes – defined in Section 170(h) of the IRS code as: – Wildlife habitat (plants and animals) – Farm and forest land (open space) – Land for public outdoor recreation or education – Historic land or buildings Conservation easements “run with the land” - they bind both current and future landowners What is a Conservation Easement?

23. Conservation organization or public agency (Grantee) that holds the conservation easement has right to enforce easement and monitor the property Conservation easements are flexible – not “one size fits all” How does it affect my land?

24. Allows landowner to continue to own and use their land – Farming – Forestry – Passive recreation – hunting, fishing, etc. – Often allow for a certain number of structures Can still use land as collateral for loan; lease, sell or pass property to heirs How does it affect my land?

25. Does not grant public access – Landowner may allow public access so long as the conservation values of the property are not diminished Remain eligible for present use property tax program Remain eligible for federal and state farm programs How does it affect my land?

26. Easement holder visits property regularly (usually once a year) to ensure landowner is in compliance with easement terms Ensures conservation values are protected and maintain the deductibility of the easement Easement holder may request a contribution to their stewardship endowment – tax deductible Stewardship

27. Federal income tax deduction No State of NC income tax credit Estate taxes Limited state and federal funding Financial Benefits

28. Independent appraisal – Qualified appraiser – qualifications defined through a 2006 law - PL109-280 – Essentially two appraisals in one report – First appraisal – highest and best use – fair market value – Second appraisal – value of property subject to conservation easement – Conservation value = difference between first appraisal and second appraisal How is the Value Determined?

29. Example: – Appraised fair market value of farm “as is” equal to $500,000 – Appraised value of farm subject to terms of conservation easement equal to $250,000 – Value of conservation easement equals $250,000 How is the Value Determined?

30. Federal Tax Law – Internal Revenue Code 26 USC 170(h) – qualified conservation contribution – Internal Revenue Regulations 26 CFR 1.170A-14 – qualified conservation contributions Individual landowner may use the conservation easement value to: – Deduct up to 30% of their adjusted gross income (AGI) for the year of the gift – Any unused conservation easement value may be carried forward an additional 5 years Federal income tax deduction

31. Example: Landowner donates a conservation easement valued at $150,000 – Landowner’s adjusted gross income is $100,000 – Landowner can deduct up to 30% or $30,000 – Instead of paying federal income tax on $100,000, they are now paying tax on only $70,000 – The remaining $120,000 in value may be used over the next 5 years Federal income tax deduction

32. Qualified farmers and ranchers may use the conservation easement value to: – Deduct up to 100% of their adjusted gross income (AGI) for the year of the gift – Any unused value may be carried forward an additional 5 years – Qualified farmers and ranchers defined as someone who receives more than 50% of his or her gross income from “the trade or business of farming”. Complete definition in IRS Code 2032A(e)(5) Federal income tax deduction

33. If a conservation easement is granted during a Donor’s lifetime, only the restricted value of the property under the conservation easement will be included in the owner’s estate. If a conservation easement is granted by will, the Donor’s estate may claim an unlimited charitable deduction for the value of the easement. Estate Taxes

34. A limited number of local, state and federal government funding sources exist that may pay a portion or all of the value of the conservation easement. Project must meet funding source criteria. Funding agency will have input into the terms and conditions of the conservation easement. Public Funding

35. Contact your local land trust or other conservation entity that holds conservation easements – Must be a “qualified organization” as outlined in Section 170(h) of the IRS code for income and estate tax purposes Outline your conservation and land management goals and identify conservation values of property Steps Involved in Completing a Conservation Easement

36. Review property features using GIS mapping and conduct a site visit Negotiate terms of conservation easement – Should take into account current uses of land and potential future uses – Balance landowner goals with mission of easement holder Steps Involved in Completing a Conservation Easement

37. Due diligence – Title examination – Environmental assessment – Boundary survey Draft conservation easement deed – Must comply with tax codes, state law and requirements set by public funding sources if applicable Steps Involved in Completing a Conservation Easement

38. Baseline documentation report – Establishes a reference point for determining compliance with the terms of the conservation easement – photos, maps, detailed summary of conservation values of the property Execute and record conservation easement – All current property owners must sign – Conservation easements are recorded in Office of Register of Deeds Steps Involved in Completing a Conservation Easement

39. Future borrowing needs – Conservation easement may reduce value of property as collateral Conservation easements are difficult to amend – Impact to conservation values? – Tax implications – Assume the conservation easement will not be amended in the future Landowner Considerations

40. In order to qualify for tax deduction, title must be clear of encumbrances that could extinguish the easement – The holders of any mortgage or deed of trust must consent in writing to the easement and the consent must be recorded (subordination agreement) Every landowner should consult with a qualified attorney and financial advisor Landowner Considerations

41. Conservation easements are a multi-step process that may take several months and in some cases years to complete Landowner Considerations

42. Costs typically incurred to complete a conservation easement may include: – Survey – Appraisal – Environmental assessment – Stewardship endowment Potential costs should be discussed at beginning of project and parties should determine how the costs will be paid Transaction Costs

43. Bo Howes, Conservation Project Manager rhowes@triangleland.org (919) 908-0052 Walt Tysinger, Land Manager wtysinger@triangleland.org (919) 908-0053 www.triangleland.org Conservation Trust for NC www.ctnc.org Land Trust Alliance – national land trust group www.lta.org Contacts and Resources