Land trusts have several tools with which to work with landowners to achieve a mutually beneficial way of protecting land. In dealing with a landowner, the land trust first determines the objectives of the landowner and then attempts to choose which land protection strategy will achieve those objectives, protect the land most effectively, and be within the means of the land trust.

 

Owner Objectives - The landowner objective might be:
     •  Cash out, that is, maximize the sale price;
     •  Conservation;
     •  Continue to use the land;
     •  Reserve future residential lots for immediate family;
     •  Tax break;
     •  Estate planning;
     •  Some combination of the above.
   
Land Protection Tools, the Conservation Easement - One of the most powerful tools of a land trust is the Conservation Easement.  When a perpetual Conservation Easement is put on land, certain rights of ownership are given up, typically the development rights to subdivide and to build structures beyond limits stipulated in the Easement. The deed of Conservation Easement is a legally binding document recorded in the land records of the County, applying to present and all future owners. The landowner, as grantor, conveys the development rights to the land trust, as grantee. State law then requires that the land trust “extinguish” those rights. The owner continues to own and use the land.

The rights given up have a market value. This value is determined by two appraisal values, one with the Conservation Easement and one without. The difference is the value of the Easement.

The Conservation Easement may be purchased or donated. If it is donated, its value can be taken as a tax deduction (up to 30% of the adjusted gross income per year for up to five years). Some states, including Maryland, have passed legislation enabling the Easement value to be taken as a tax reduction. If the Easement is co-held with the Maryland Environmental Trust (www.dnr.state.md.us/met/), the undeveloped portion of the land is subject to both a County and State property tax abatement for 15 years, which can be extended. The Easement also reduces estate taxes by reducing the value of the asset.

The Maryland Department of Natural Resources has established three programs focused primarily on the purchase of Conservation Easements as a way of slowing development on environmentally sensitive land, namely, Program Open Space (www.dnr.state.md.us/pos.html), Rural Legacy (www.dnr.state.md.us/rurallegacy/) and Greenprint (www.dnr.state.md.us/greenways/greenprint/). All are under
budget pressure in the year 2003 with the State legislature diverting funds that were originally earmarked for these programs. 

Easement Criteria - A seminal decision early on is whether the land meets the criteria established by the land trust for receiving the land as a gift or holding a Conservation Easement. Some of the issues to be considered are:

• Does the property have significant conservation values?

• Can the Trust meet its stewardship responsibility on this property?

• Is the property large enough to be significant?

• Do any of the Trust Board members have a financial interest in the land?

• Is the financial risk/benefit ratio acceptable.

Other Land Protection Tools 

The land trust may also act as a third party in brokering a deal between a limited liability company (LLC), formed for the purpose, and the landowner. In an LLC, all tax advantages flow to the individual investor. The LLC buys the land, may subdivide and sell a small portion of the land for development, and puts a Conservation Easement on the undeveloped portion, with each investor realizing the tax advantages. The objective is to conserve most of the land and come close to breaking even financially.