As housing costs increase and open space dwindles here in Northeast Florida, are we facing a choice between building new homes or preserving our environment? Some recent projects suggest that these two goals are far from incompatible. In fact, efforts to protect the environment can actually help achieve housing goals (and vice versa).
Most Floridians want a better balance between growth and preservation. In the building boom over the past fifteen years, North Florida has lost one-third of its privately-owned open space. A few more spurts like this and the look and feel of this area will have changed forever.
At the same time, years of rising home prices have created steep barriers for seniors and young adults who want to remain in the communities they have called home for years. Many towns lack affordable places to live for teachers, police officers, firefighters and others whose work is an essential component of quality of life.
In the last ten years, North Florida Land Trust has helped to protect land in our region. We've been able to help with over 12 such projects, which has conserved over 600 acres of protected open space.
The landowners in North Florida play a vital role in the conservation of the diverse natural landscapes that define our region. Did you know that North Florida is one of the most biologically diverse communities in the United States? With a diverse riparian habitat to the floodplains with freshwater streams and sloughs, from the forests to the ocean, the Atlantic coast and the tidal wetlands of the St. Johns River, the North Florida Land Trust has been helping people protect their property since 1999.
Your Goals for the Property
Our Land Protection and Stewardship Committee, along with staff are available to help you make long-term conservation plans for your property. There are several techniques available, all of which can be tailored to fit your unique circumstances. Your choice of which technique to pursue depends upon your goals for the property, the natural characteristics of the land, and your financial objectives, including income and estate tax planning.
An outright gift of land for conservation is one of the most generous legacies a landowner can make to future generations. A donation will release the landowner from the responsibility of managing the land and may provide substantial income tax deductions and estate tax benefits. The donation can even be set up in a way that allows you to continue to live on the land or to receive a life income.
Gifts of land may be the best conservation strategy for you if you do not wish to pass the land on to heirs, own property you no longer use, own highly appreciated property, have substantial real estate holdings and wish to reduce estate tax burdens, wish to see it protected forever, or would like to be relieved of the responsibility of managing and caring for land.
The donation of any interest in land to a qualified charitable organization, such as the North Florida Land Trust, may provide substantial income, property, or estate tax benefits, as well as avoidance of taxation on capital gains. Because federal regulations may limit a taxpayer's ability to fully utilize a deduction, a landowner should seek professional legal and tax advice when considering conservation options.
Fee Simple.
An owner may donate the entire fee simple interest in a property to North Florida Land Trust.
Bargain Sale of Land
If you need to realize some immediate income from selling your land, yet would like the property to go to a land trust, a bargain sale might be the answer. In a bargain sale, you sell the land to a land trust for less than its fair market value. This not only makes it more affordable for the land trust, but offers several benefits to you: it provides cash, avoids some capital gains tax, and entitles you to a charitable income tax deduction based on the difference between the land's fair market value and its sale price.
A "bargain sale" (or "charitable sale") is the term used by the Internal Revenue Service to describe a sale of land, or interest in land such as a conservation restriction, for less than fair market value to a land trust when the land is to be used for a public purpose, including conservation or recreation. Technically, in a bargain sale, a portion of the value of the land is sold and a portion is donated. The relative proportions of the sale and the donation are determined through negotiation between the land trust and landowner. The landowner is able to take a charitable deduction determined by the difference between the sales price and the appraised fair market value on his or her income tax return under Section 170 of the Internal Revenue Code, resulting in tax savings.
Reserved Life Estate/Remainder Interest.
An outright donation is not the only way to give land. You can continue to live on the land by donating a remainder interest and retaining a reserved life estate. In this arrangement, you donate the property during your lifetime, but continue to live on and use the property. When you die (or sooner if you choose), the land trust gains full title and control over the property.
By donating a remainder interest, you can continue to enjoy your land and may be eligible for an income tax deduction when the gift is made. The deduction is based on the fair market value of the donated property less the expected value of the reserved life estate.
Last Will and Testament.
A donation via your Last Will and Testament lets you enjoy full lifetime use of the property while assuring that its conservation values will be protected for future generations. Careful estate planning can also reduce or eliminate the potentially devastating estate tax burdens faced by heirs. You should make sure the chosen recipient is willing and able to receive the gift.
Charitable Gift Annuities.
There are also several land donation mechanisms through which a landowner may establish a regular income stream via annuity payments during the donor's life.
If you have land you would like to protect by donating it to a land trust, but need to receive income during your lifetime, you might use a Charitable Gift Annuity. In a charitable gift annuity, you agree to transfer certain property to a charity, and the charity agrees to make regular annuity payments to one or two beneficiaries you specify for life.
Your gift of land usually qualifies for a charitable income tax deduction at the time of the gift, based on the value of the land less the expected value of the annuity payments.
Another option for donating property and receiving regular income is a Charitable Remainder Unitrust. You place the land in a trust, first putting a conservation easement on it if it is to be protected. Then the trustee sells the land and invests the net proceeds from the sale. One or more beneficiaries you specify receive payments each year for a fixed term or for life, then the trustee turns the remaining funds in the trust over to the land trust.
The gift qualifies for a charitable income tax deduction when the land is put in the trust, based on the value of the land less the expected value of the payments.
Charitable gift annuities and charitable remainder unitrusts are most useful for highly appreciated land, the sale of which would incur high capital gains tax.
Tradable Lands.
North Florida Land Trust may accept properties which are not considered of high conservation value, yet would provide significant financial support to our work. The purpose of accepting these lands would be with the intent to resell them. The proceeds from these sales benefit additional land protection projects and other NFLT programs.
Donate a Conservation Easement over your Land.
One of the most powerful, effective tools available for the permanent protection of private lands in North Florida is a conservation easement. A conservation easement is a voluntary legal agreement between a landowner and North Florida Land Trust which restricts the use of a particular property in order to protect its conservation values.
Conservation Easements are used to achieve a variety of conservation purposes, including open space preservation, agricultural preservation, and natural resource protection. The conservation easement is recorded in the form of a Grant Deed and is binding on successive owners of the property in perpetuity. In other words, it is forever.
Flexible tool. A conservation easement is a flexible tool, and is tailored for each specific property based on the common preservation goals of the landowner and the holder of the easement. For example, conservation easements may prohibit development over scenic landscapes; prohibit non-agricultural uses over agricultural land; restrict timber harvests to sustainable levels over forest land; or require that land be kept "forever wild" over natural areas.
Land remains in private ownership. Landowners retain title to the land and continue to occupy and use the lands under the terms of the Conservation Easement. A subsequent owner would also be obligated to use the lands under the terms of the Conservation Easement. A conservation easement is an excellent tool for families who wish to keep their land intact to pass on to the next generation.
In order to purchase land, North Florida Land Trust must identify and secure funds from a variety of resources - local and state agencies and private organizations and foundations. A landowner offering a bargain sale (that is, selling the property for a price which is less than fair market value) increases the possibility that funding can be obtained for the transaction. A bargain sale also offers potential income tax benefits to the seller, as the difference between the appraised fair market value and the sale price is considered a tax-deductible charitable contribution.
Next Steps For More Information
Call us! The NORTH FLORIDA LAND TRUST has a Land Protection and Stewardship Committee that meets monthly to review potential properties and to assist families in their desire to preserve and protect open space.
Please call Executive Director Bonnie Barnes at 904-827-9870 or email nfltoffice@bellsouth.net.
Steps to Donating A Conservation Easement
Frequently Asked Questions About Protecting Your Land
Follow the links below for more information on the economic benefits of open space protection.
- The Trust for Public Land’s 1999 report entitled the "Economic Benefits of Open Space."
- The American Farmland Trust has compiled a list of costs of community services. "Cost of Community Services Studies (Acrobat PDF)" details the cost in tax dollars for industrial and commercial, open space, and residential areas versus every $1 of tax revenue.
- The National Park Service and RTCA published "The Economic Impact of Protecting Rivers, Trails and Greenway Corridors." There is a good chapter on "Real Property Values."
- "Saving Land Saves Money" by Montgomery County Lands Trust of Pennsylvania.
- The "Open Lands Initiative" web site, a project of the Western Governors' Association, assists western states struggling with growth issues. The site boasts a comprehensive bibliography of literature of economic benefits of open space and contains over 100 citations addressing many different dimensions of the issue.
- The May 2003 "Editorial Viewpoint": "Smart Investment Tip: Buy Land" by Rand Wentworth, President, Land Trust Alliance.
- Economic Benefits of Natural Land Conservation: Case Study of Northeast Florida, by Clyde F. Kiker. Ph.D. and Alan W. Hodges, Ph.D., Co-Principal Investigators, University of Florida, Institute of Food & Agricultural Sciences, Revised, Dec. 30, 2002
"The purpose of conservation: The greatest good to the greatest number of people for the longest time."
- Gifford Pinchot,
first Director of the U.S. Forest Service
Much of the undeveloped land in North Florida is used for agriculture. Most of the owners of that land have it as their primary asset and are not in a position to donate land or interests in land. That's why the North Florida Land Trust has been involved with campaigns to establish programs for the "Purchase of Development Rights" (or PDR).
PDR works in a similar way to Conservation Easements, with the key difference being the landowner is compensated for the fair market value of the development potential of the land instead of donating it. A qualified appraiser makes the determination of the value of the development rights, and a cash payment is made in exchange for the landowner signing a deed restriction that is recorded in the county clerks office.
PDR programs have been run successfully in more than 20 states for over 25 years and are a proven cost-effective method for preserving high-quality agricultural lands.
The Crisis in Agriculture
Every year, some 4,000 acres of North Florida farmland is converted to residential uses. That works out to be 10 acres every day. Think of the many places that were farms just a few years ago and are now shopping centers, subdivisions and office parks.
Practically every farmer in the seven county area has received numerous phone calls from someone wanting to buy their land for speculation or development. The average size farm of 180 acres is worth several hundred thousand dollars. Although most farmers don't want to sell out, as one property after another gets developed it becomes more and more difficult to continue farming.
There are also adequate support businesses for the agricultural industry; farmers can still buy what they need and sell their products in or around the region. If too much more land is converted, however, the agricultural community's fabric will start to unwind, and the $300 million industry, along with its natural and aesthetic benefits, will be lost forever.
Why Land Preservation of Agricultural Lands Makes Good Economic Sense.
As land becomes developed, there are a number of costs associated with servicing that property.
Proponents of PDR argue that we can spend a little money now to preserve farms forever, or we can spend a lot more money building new roads, schools, township halls and water and sewer lines and buying new fire trucks and police cars. We have that choice, right now. Keeping farms around will have numerous nutritional, environmental and economic benefits for our children and grandchildren.
The Push for PDR. Citizens groups and others continue to advocate for PDR as a necessary and important tool to be utilized in protecting our agricultural lands.
Further Reading
Further information and suggested reading is available on the websites of the Land Trust Alliance and the Trust for Public Land.
Additional Resources
Steve Small, Esq., Author of Conservation Easement Books
Family Lands Remembered, Rural Lands Stewardship Program
International Carbon Bank & Exchange
Lincoln Institute of Land Policy