Conservation Easements Pros and Cons: Keep Ohio Cool and Green Wednesday, September 04, 2019
Summer in the Buckeye State can be a sultry affair. And, surprisingly, one way to beat the heat may involve a unique land protection vehicle known as a conservation easement. From a climate perspective, a green oasis can help cities lessen their urban heat island effect.
If the above statement doesn’t make much sense, let us make the case. In cities such as Columbus, the heat is often exacerbated by what’s known as the urban heat island effect. Dark-colored buildings and pavement absorb the sun’s midday energy and release it slowly at night, keeping temperatures up. So far this summer, Columbus has cracked 90°F on 17 occasions. And, with temps running over about 3°F above normal for July 2019, many more can be expected.
While these 4 sustainability trends drive the commercial real estate industry, the importance of a conservation easement cannot be underscored. So, how do conservation easements fit into the equation for a cooler and greener Ohio? As with every topic, there are pros and cons to help us weigh the decision. Here, we explore conservation easements pros and cons, and provide a resource so you can speak with conservation easement advisors.
Beyond Climate Change, the Case for Conservation Easements
Conservation easements are voluntary land use agreements where the landowner agrees to protect a portion of the land they own from future development, often in perpetuity. A conservation easement allows for a property to remain in its natural state and can include forest and nature preserves.
Conservation easements do not require public access on privately owned property. These land agreements can stay private, although the owner can charge a land trust, governmental agency, or non-profit organization with managing the easement.
Pros of Productive Conservation Easements
Beyond immediate climate-cooling in urban areas, conservation easements have numerous benefits. Conservation easements offer the following benefits:
- An opportunity to preserve agricultural land. Conservation easements can also protect undisturbed wildlife habitats or wetlands; they can even be used to safeguard a scenic view from overdevelopment.
- Compelling human interest. Selling or donating property that includes a conservation easement can prevent future development; thus, becoming an essential generational legacy.
- A federal income tax deduction. Landowners who establish a conservation easement and donate to a land protection organization may be eligible for a federal income tax deduction equal to the value of their donation. (To uncover the value of the easement donation, you should inquire about the services of a qualified property appraiser like those at The Robert Weiler Company.) Essentially, the donation equals the difference between the fair market value of the property, before and after the easement takes effect.
- Other income tax benefits. Conservation easements also qualify for income tax benefits, provided the easement meets specific criteria. The natural land use must be perpetual, held by a qualified governmental or non-profit organization for a legitimate conservation purpose. The property in question should have a genuine appreciable natural, scenic, historical, scientific, agricultural, recreational, or open space importance. As such, not every property can qualify for a conservation easement.
One of the most significant advantages of conservation easements is its flexibility. Since this is a voluntary agreement, landowners can decide precisely how the land will be used now and in the decades ahead. It’s also a highly non-intrusive experience. The land trust – the organization overseeing the conservation easement once it’s either donated or sold – usually inspects the property no more than once a year.
Moreover, conservation easements aren’t just land protection vehicles for city dwellers. Farmers, too, can benefit – sometimes substantially. In Ohio, this is especially important, as agriculture is the State’s top industry, contributing more than $93 billion to the local economy. It’s also a state where almost 50 percent of the land is considered “prime farmland,” according to the US Department of Agriculture.
Cons of Conservation Easements
To be sure, entering into a conservation easement is an important decision and one that should not be made lightly. While the benefits are plenty, there are few cons to consider:
- Failure to accurately state the value of the easement. If the tax deduction you are seeking is more substantial than $500,000, a property appraisal must be performed. With the growing popularity of conservation easements, the IRS is looking more closely at these transactions.
- Land trust operators can be finicky. Again, due to their increasing popularity, conservation easements are overseen by a rapidly expanding roster of land trust operators. Not all are created equally. And some can be bureaucratic and inflexible. Ensure that this doesn’t happen by working with a non-profit certified by the Land Trust Accreditation Commission.
- Pay attention to the fine print. Agreements should cover as many variables as possible. Otherwise, conservation land use can change over time, possibly restricting your ability to use ATVs, snowmobiles, or other recreational vehicles. You may also be limited in your ability to install green technologies like wind turbines.
- Potentially reduced buyer pool. Sometimes selling land that has a third-party involved, such as a land trust, can reduce the remaining land’s marketability. Do your homework beforehand to guarantee that, when you want to sell, there will be interested land buyers who share your views on the protected land.
Keeping Ohio “Forever Wild” – How The Robert Weiler Company Can Help
Surprisingly, “forever wild” is an expression borrowed from our near-state neighbors some 500 miles to our northeast – New York.
“Forever wild” was language inserted into New York’s constitution at the turn of the 20th century. The addition to the constitution protected Adirondack Park (in the State’s north) and Catskill Park in the State’s interior southeast from future development. For a state known for its extensive downstate urban landscape, New York legislators deserve credit for their foresight.
According to a research article published on the matter, some 70 percent of protected land in a given year and half of the financial investment in raw or vacant land are devoted to conservation easements in the US. As such, amendments to state constitutions are far from the only way to protect wildlands. Conservation easements can be a much simpler approach compared to the state legislative process.
At The Robert Weiler Company, a full-service commercial real estate and appraisal firm, we are committed to helping you navigate the conservation easement landscape. As temperatures continue to soar across Central Ohio, protected green spaces become more valuable than gold! Think about how today’s land use preservation decisions could have a powerful impact on the Ohio of tomorrow.
The Robert Weiler Company has been a trusted industry expert for 80 years, particularly for those seeking tax-saving options like conservation easements. Call us today at 614-221-4286 and let’s discuss the land-use power – and financial potential – of conservation easements.
Future generations of Ohioans will thank you that you did!