Frequently Asked Questions

Q. What is a conservation tax credit?

A. A conservation tax credit is a credit against a landowner’s income tax awarded to the landowner if he/she donates land or water rights to the state or to a qualified nonprofit organization for certain conservation purposes. Conservation tax credits should not be confused with credits awarded for energy or water conservation.

Q. What property qualifies for the credit?

A.

• Property, including water rights, that meets the goals of a conservation plan or a similar plan;
• Property, including water rights, that harbors or aids the survival endangered species or habitat;
• Agricultural land threatened by development; and
• Property that will increase public access to the state’s natural heritage.

See Section 5 of the bill text. Fee interest donations, conservation easements, and water rights are all acceptable protection mechanisms under the program.

Q. Who is “the board” and what is their role in the program?

A. In California, the Wildlife Conservation Board (WCB) is in charge of the program. The WCB consists of one official each from the state Fish and Game Commission, Department of Finance, and Department of Fish and Game, and has a six-member legislative advisory committee. Many states with conservation tax credit programs also have certifying boards or agencies. In Delaware, the Department of Natural Resources and Environmental Control, in conjunction with the Department of State and Division of Historical and Cultural Resources, certifies donations. The job is relegated to the Board of Public Works for the program in Maryland and, in North Carolina, the Department of Environment and Natural Resources accepts applications for donations. The Natural Heritage Preservation Tax Credit Act authorizes “the board” to implement the conservation tax credit program. The board is required to adopt guidelines for the program according to rules spelled out in the act. Once the program is established, the board considers and certifies applications for donations from designated donees.

Q. How can the state be a donee?

A. In California, the Resources Agency contains departments and conservancies created by statute that may act as donees. The mission of the Resources Agency is to restore, protect, and manage the state’s natural, historical, and cultural resources for current and future generations using creative approaches and solutions based on science, collaboration, and respect for all the communities and interests involved. If your state government has no equivalent to the Resources Agency, other existing state agencies can still fulfill this role. The agency or agencies must contain departments and/or conservancies created by statute that are capable of acting as land or water donees, and can hold the donations in perpetuity as preserves or easements. These departments and/or conservancies may create their own priority lists and procedures, based on criteria specified in the act, to determine which properties should be give priority. They submit their applications for donations to the board.

Q. If a landowner wants to donate property, what should they do?

A. Interested land donors need to contact qualified land donees, including land trusts and specified state departments and conservancies. The qualified donee will file a tax credit application with the board.

Q. Do required donations (e.g., for environmental mitigation) qualify for the tax break?

A. No. Not under the provisions of this bill. Most states who have these programs don’t allow credits for required donations. See Section 6(B)(4)(b) of the bill text.

Q. Can property owners donate a fraction of piece of property?

A. Yes. But the donor will receive a break based only on the fair market value of the fraction of the property qualifying for donation. See Section 7(G)(1) of the bill text.

Q. What is a conservation easement?

A. A conservation easement is a voluntary agreement between a landowner and a qualified conservation organization that permanently restricts the use of land to preserve wildlife habitat, scenic, historic, recreational, or agricultural conservation values. Generally, an easement limits development and future use of a property (without necessarily preventing all development or continued uses such as agriculture). Once a landowner and land trust agree upon the terms of an easement, the trust accepts responsibility for enforcing them, while the land stays under the ownership and control of the landowner. Conserved land may still be mortgaged, sold, or passed on to one’s heirs. In addition, donating an easement may provide the landowner significant estate and income tax benefits.

Q. What is a “carry-forward period”?

A. A carry-forward period is the number of years a land donor may claim tax credits they are not able to claim following the year they are originally awarded the credit due to restrictions on total income tax deductions. According to the bill included in this package, donors may not claim additional tax credits for donations in years they carry forward credits from previous donations. The carry forward period in the California program is eight years. Most states allow five or ten years.

Q. How should public hearings be conducted?

A. All public hearings must comply with the provisions of your state’s open meeting law. To assure the public hearing provides meaningful information to the public and the board, all public hearings should provide, at a minimum, the following information:

(1) A description of how the donation meets the requirements and criteria of the act;

(2) Property description and location, including maps that show the property boundaries and adjacent properties;

(3) Identification of donor and donee;

(4) A discussion on what, if any, impact the donation may have on adjacent landowners;

(5) A discussion on how setbacks or buffers will be used to minimize impacts on adjacent landowners. The donee should be prepared to address this issue and how the size of any setback or buffer was established;

(6) A discussion on whether or not public access will be provided. If access is provided, the hearing should provide information on how the access will be managed and the status of the required plan to minimize any impact on adjacent landowners;

(7) A discussion regarding any known or suspected toxic conditions that may or may not have an impact on the environment; and

(8) If the donation is a water right, a discussion on how the water right will be used, how it meets the criteria of the program, the point of diversion, and how the donation will not injure any legal user of the water.

The donee must record the hearing, prepare minutes of the public hearing, and provide this information to the board as part of the application.