Emerging Opportunities

…in Conservation-Oriented Land Investments

Continuing advancements in legislation, rulings and regulations regarding land conservation are generating new opportunities for both landowners and real estate investors. These advancements are making it possible for landowners to now realize more economically equitable benefits from private land conservation efforts.

Previous private conservation efforts have for the most part required a substantial economic sacrifice on the part of the contributor. Recognizing that this economic sacrifice was limiting the amount of land the private sector could be encouraged to set aside for conservation purposes, Congress has for several years followed a consistent course of ongoing enhancements to the tax regulations providing for increasing benefits associated with private land conservation efforts. Additional benefits are being expanded by state governments. These enhancements have now resulted in a set of potential benefits which can, under certain circumstances, enable conservation-oriented land investment programs to be viable economic alternatives to higher-density development oriented programs.

Planning

In order to properly structure a project to take maximum advantage of available conservation benefits, many considerations must be taken into account early in the planning process. It is best, and sometimes essential, that a conservation strategy be implemented prior to the start of any construction. In some cases, identification of a conservation strategy prior to the purchase of a property can optimize the value of that acquisition.

One of the most successful strategies to achieve an economically attractive conservation-oriented plan is termed the “limited development” approach. This strategy includes provisions allowing for the development of a small portion of the subject property while the remainder of the property is placed under a conservation easement, permanently restricting further development on that portion of the property.

Under the limited development approach, economic values are generated from several sources. Placement of property under a conservation easement generates economic benefits to the owner(s) in the form of income tax deductions. Depending on a number of factors, these deductions can be in excess of the property’s basis. In addition, the value of the land reserved for development is typically enhanced by that land’s proximity to the preserved land.

Further benefits may be realized in the form of estate tax reductions and savings in property taxes, depending on the owner’s circumstances and the property’s jurisdiction. Additional economic benefits can be realized from a timing standpoint, in that the returns from a conservation-oriented approach may occur in a project sooner than those generated from a full development approach.

Other techniques, such as wetlands mitigation, discounted land sales, and land donations can also be effectively incorporated into an overall plan. View sample easement plans here.

To learn more about emerging opportunities in conservation easements, or for a complimentary evaluation of the suitability of your property for a conservation-oriented strategy, just contact Forever Forests.