This common technique is used when a landowner is interested in conserving his or her property but is unwilling or unable to part with its entire economic value. Typically, the land trust works with the landowner to prepare a site plan that meets the landowner's revenue or estate planning goals while protecting important conservation values. The land trust then receives a donation of (or easement over) the portion of the site designated for conservation, while the landowner retains the development lots for sale or personal use.
This structure allows landowners to "cash in" on the value of their property without sacrificing the entire site to development and without relying on traditional middlemen such as developers. In fact, this type of limited development can sometimes be more profitable for landowners than selling their entire tract to a developer, once tax consequences and the timing of revenue streams are considered. In addition to lower taxes, more flexibility for the landowner, the landowner may gain access to funds from government open space or farmland protection programs. After going through the site planning process, many landowners choose a more conservation-oriented plan.
When conservation of an entire tract of land is not financially possible, striking a careful balance between conservation and revenue generation can be a win-win situation for everyone.
Harford County Agricultural Preservation Program
The County easement program established in 1993, is recognized throughout the United States. This is due to the use of innovative funding sources, payment options, and a timely manner of settlement.
To participate in the county easement program, the landowner does not have to form a district as required by the State program. There is also no minimum acreage requirement for participation as long as the farm has operated for the past ten years and/or is located in a predominantly farming area and has at least one additional development potential.
Payment is a 20 year Installment Purchase Agreements (IPA). (tax free income interest payments), which are used in most settlements.
Applications are submitted and ranked according to a 300 point ranking system which assigns more favorable points to size, soil quality, percent of crop land, development potential, conservation practices and connection to preserved properties. After the farm is ranked landowners are notified of their score, and they are placed on an open waiting list along with their easement price offering.
Easement price is determined by a one page easement valuation sheet which multiplies the ranking items previously used on the ranking system and develops them into an easement value. There is a cap of $6,000 per acre set on the easement payment, and $60,000 per development right or price per acre, whichever is less. The county is able to leverage these payments through the ½ percent real estate transfer tax funding source. Also, for participation in the easement program, the landowner receives a 100% County property tax credit with a $50 per acre cap. There is a County District program 5 year commitment to be eligible for the tax credit.
Maryland Agricultural (MDA) Land Preservation Districts
The district program established in 1979 is a minimum commitment of five years on the applicant's part not to develop the land and keep in agricultural use. The property must be greater than one-hundred acres in size and contain at least 50% Class I, II, or III soils. Two or more properties may be combined to form a one-hundred acre tract, or a property may adjoin a property with an existing district and/or an existing easement. Participants in the District Program receive a 50% tax credit from the County portion of the real estate property tax while remaining a district.
Maryland Agricultural (MDA) Land Preservation Easements
The conservation easement is a permanent easement attached to the land restricting further subdivision and leaving it in agriculture production. The State program does contain a very limited one time twenty-five (25) year buyout clause for unusual circumstances. The easement allows the owner at the time of settlement the creation of two (2) acre lots for the owner, the owner's children, and existing dwellings.
The easement value is determined through a formula using real estate appraisals, agricultural land value, the owner(s) asking price, and a tabulated discounting ratio. The farms are than ranked against each other, competing for funding allocated that granting cycle.
Maryland Rural Legacy Program
The Rural Legacy Program is a unique approach to land conservation created to protect Maryland's best remaining landscapes and natural areas. Through this program, greenbelts and greenways dominated by farms and forests are conserved though the voluntary purchase of conservation easements or fee estate interests in land preservation.