The costs associated with placing a conservation easement on a parcel of land can vary dramatically depending on characteristics of the parcel, preferences and needs of the landowner, and the goals and requirements of the qualified organization. Even the “donation” of a conservation easement has several associated costs. However, it is possible to identify potential costs, and to prepare for the process.
Personnel
Although some land trusts use volunteer staff, many land trusts and all municipalities rely on paid staff to identify, negotiate, fundraise for, monitor and coordinate conservation easement acquisitions. It is important to have a sense of the time investment anticipated, and thus the associated cost. Even in the case of volunteer staff, knowing the “in-kind” value is critical in grant applications.
Baseline Reports
All future monitoring of a conservation easement is based on an initial report, cataloguing the character and features of the parcel (the Baseline Report, Baseline Documentation Report or BDR). Developing the report will require the involvement of reliable professionals who can provide a credible assessment of the ecological, agricultural, scenic or other values of the land. The qualified organization usually covers the cost of this document, though that cost may be offset by the information the landowner may already have collected.
Management Plans
Often conservation easements include a management plan, which is separate from restrictions on use of the parcel, and describes the approach that will be taken in managing the land to maintain identified conservation values. Like a Baseline Report, the management plan usually requires the involvement of professionals with skill in creating a plan that meets the needs of both the landowner and the qualified organization.
Appraisals
The value of the conservation easement – established to inform compensation calculations – requires a professional appraisal conducted by a certified appraiser, with experience assessing conservation easements. This is also required as part of the EcoGifts application process. The appraisal may be paid for by the landowner or the qualified organization, or the costs may be shared.
Advisor Fees
Both the landowner and the qualified organization will want to consult with their professional advisors before and during the process of negotiating a conservation easement, and will likely incur costs doing so. Those advisors could include legal, financial and/or conservation experts.
Stewardship Funds
Generally speaking, qualified organizations establish a Stewardship Fund (for its own purposes, not for the purposes of the landowner) to ensure that the organization is able to implement and monitor the easement and to be sure the landowner is living by the baseline report, usually as an endowed fund intended to support anticipated costs of stewarding the organization’s conservation easement. These costs generally include ongoing personnel costs (monitoring, etc.). The legal defense fund is usually a pooled fund that the qualified organization can use for any of its properties, invested to grow over time, and applied as needed to counter infractions or challenges to the easement.
Qualified organizations may fundraise for this fund, or may ask the grantor to provide part or all of this fund as an up-front endowment.
Taxes
There are two main taxation costs to be aware of. Properties subject to conservation easements are still owned by the landowner and are still subject to assessment for property taxation purposes. As well, even a donation of a conservation easement represents the disposition of property, and is subject to capital gains taxes.
Both of these costs can be mitigated or even eliminated through the certification of a conservation easement as an EcoGift or preferential tax treatment by the municipality. It is important to understand these opportunities at the outset of the conservation easement acquisition/negotiation process (see Ecological Gifts and Property Taxes for more information).
