Bill Text

The Natural Heritage Preservation Tax Credit Act

Summary – An Act pursuant to which the <insert applicable state agency> would implement a program that allows property to be contributed to the state, a local government, or nonprofit organization, in order to protect wildlife habitat, open space, and agricultural lands. The Personal Income Tax Law and the Bank and Corporation Tax Law <or insert your state’s equivalents> authorize various credits against the taxes imposed by those laws. This bill would authorize a credit against those taxes under the Personal Income Tax Law and the Bank and Corporation Tax Law in an amount equal to <insert 55% or other amount> of the fair market value of any qualified property contribution, contributed during the taxable or income year, pursuant to the Natural Preservation Tax Credit.

Section 1. Short Title.

This Act shall be known and may be cited as “The Natural Heritage Preservation Tax Credit Act.”

Section 2. Intent.

The state Legislature declares that the intent of this bill is to protect the state’s unique natural and historical resources by rewarding and assisting habitat stewardship by private landowners. To accomplish this goal, the Act authorizes a credit up to <insert total dollar amount of tax credits to be awarded during the program’s tenure> against the state income tax for donations of qualified land and water for permanent conservation.

Section 3. Findings.

(A) The Legislature finds that the state of <insert your state here> contains unique natural, historical, and agricultural resources, wildlife habitats, and open spaces that are of significant benefit to the state and the public;

(B) The Legislature finds that the state of <insert your state here> contains unique natural and historical resources, including habitat for plants and animals, which are being lost at an alarming rate;

(C) The Legislature finds that much of the unique natural and historical resources in the state of <insert your state here> are found on privately owned lands;

(D) The Legislature desires to encourage private landowners to be stewards of lands that are important habitat or designated natural areas, or that contain significant natural, open space, water, agricultural, and historic resources; and

(E) The Legislature desires to provide private landowners with incentives to encourage protection of private lands for open space, natural resources, biodiversity conservation, outdoor recreation, agricultural conservation, historic preservation, and land conservation purposes.

Section 4. Definitions.

The following definitions shall apply to this Act:

(A) “Board” means <insert the entity charged with implementing the tax credit program>.

(B) “Conservation easement” means a conservation easement as defined by <insert applicable state statutes>, which is donated in perpetuity.

(C) “Department” means any entity created by statute within the <insert agency in your state that will receive donations within this program> and authorized to hold title to land.

(D) “Designated nonprofit organization” means any nonprofit organization qualified under Section 501(c)(3) of Title 26 of the United States Code, which has as a purpose the conservation of land and water resources and that is designated by a local government or department to accept property pursuant to this Act in lieu of the local government or department.

(E) “Donor” means a property owner that donates, or submits an application to donate, property pursuant to the program.

(F) “Donee” means any of the following:

(1) A department to which a donor has applied to donate qualified property;

(2) A local government that has filed with the board a joint application with a donor requesting approval of a donation to that local government; or

(3) A designated nonprofit organization.

(G) “Final approval” or “approval for acceptance” means the board’s approval of the granting of a tax credit for a donation of property pursuant to the program.

(H) “Local government” means any city, county, city and county, special district, or any district, as defined in <insert applicable state statutes> or any joint powers’ authority made up of those entities or those entities and state agencies.

(I) “Passthrough entity” means any partnership, S corporation, or limited liability company treated as a partnership.

(J) “Program” means the Natural Heritage Preservation Tax Credit Program authorized by this Act.

(K) “Property” means any real property and any perpetual interest, including land, conservation easements, and land containing water rights, as well as water rights.

(L) “Secretary” means the secretary of <insert state agency specified in subsection(C)>.

Section 5. Natural Heritage Preservation Tax Credit Program.

(A) A board shall be established to review plans for property acceptance to the program submitted by qualified property donees. The board shall be comprised of three persons, including the following:

(1) The director of the state Department of Natural Resources <or insert your state’s equivalent> or designee;

(2) One representative from a nonprofit conservation organization or public or private land trust, appointed by the governor; and

(3) One academic expert in conservation biology, ecology, biodiversity, or related fields, appointed by the governor.

(B) Board members shall not receive compensation for their services on the board, but may be reimbursed for actual expenses incurred while discharging the duties imposed upon them by this Act.

(C) Board members shall serve staggered three-year terms, with one member of the board appointed each year. Initial board terms shall be for one, two, or three years, decided by lot, with one member receiving each term length. Board members shall not be re-appointed more than one time.

(D) The board shall implement the program. The board may request staff services from any department that submits an application and a proposal for a donation of property to the board.

(E) Under the program, upon approval by the board, a donor may contribute his or her qualified property to a donee and receive a tax credit for a portion of the value of the property, as provided in <insert applicable state revenue and tax code>.

(F) The board shall adopt guidelines or regulations to implement the program, including procedures for applications submitted pursuant to Section 7, and for evaluation of properties proposed to be contributed pursuant to the program.

Section 6. Tax Credit.

There shall be allowed as a credit against the Personal Income Tax and the Bank and Corporation Tax <or insert your state’s equivalents> an amount equal to <insert 55% or other amount> of the fair market value of any qualified contribution made on, or after, <insert effective date of this Act>, by the taxpayer during the taxable year to the state, any local government, or any designated nonprofit organization pursuant to this Act.

Section 7. Procedures.

(A) Applications shall be submitted to the donee to which the donor proposes to contribute the property.

(B) At a minimum, each application shall contain all of the following:

(1) The identification of the donor and donee.

(2) A description of the property, including documentation of how the property meets the criteria, as described in Section 8, and qualifies for acceptance under the program.

(3) A property appraisal, meeting the requirements of Section 170 of Title 26 of the United States Code, setting forth the fair market value of the property.

(4)

(a) A certification by the donor that the donor received no other valuable consideration for the donation of property.

(b) Except as noted in subparagraph (c), a certification by the donor that the contribution was not, and is not, required to satisfy a condition imposed upon the donor by any lease, permit, license, certificate, or other entitlement for use, issued by one or more public agencies, including, but not limited to, the mitigation of significant effects on the environment of a project pursuant to an approved environmental impact report or mitigated negative declaration required pursuant to <insert state Environmental Quality Act sections or other state law>.

(c) Donors, who are required to satisfy a condition imposed upon the donor by any lease, permit, license certificate, or other entitlement for use, issued by one or more public agencies entered into voluntarily by the donor, including, but not limited to, voluntary agreements with one or more public agencies to preserve habitat harboring species listed as endangered or threatened under the federal Endangered Species Act or <insert state Endangered Species Act>, shall be eligible for the credit.

(5) A certification by the donor that the application discloses any known or suspected environmental conditions associated with the property.

(C) Each donee shall evaluate applications submitted to it and prepare a plan for the board that sets forth the donee’s priorities for the acquisition of property that qualifies under the program. Consistent with the criteria established for the program in Section 8, each donee may establish its own priority list and procedures in determining which properties or types of properties shall be given priority.

(D) Each donee or the board may request that the applicant supply further information reasonably necessary to allow the donee or the board to evaluate the proposed donation.

(E) The department may accept contributions of money from any taxpayer to pay or reimburse the costs of appraisal, escrow, title, and other transaction costs associated with the contribution of any particular property or set of properties, including any environmental assessments required by the department, and the costs of preparing any necessary management plan for the property or set of properties.

(F) Prior to acquiring an easement or other interest in land pursuant to this Act, a public hearing shall be held by the donee, if the donee is a public agency or, by the Board, if the donee is a designated nonprofit organization in the local community. Notice shall be given by the donee or the board to the county Board of Supervisors of the affected county, adjacent landowners, affected water districts, local municipalities, and other interested parties, as determined by the donee or the board.

(G) When submitting a donation of qualified property to the board for final approval, the donee shall provide the board with the fair market value of the property proposed for acceptance, based on appraisals that have been reviewed and approved by the <insert state department responsible for reviewing and approving appraisals>.

(H) For each donation, the board shall provide a list to the <insert legislative budget committee> and the <insert state tax board>, in the form and manner determined by the <insert state tax board>, of the following: the names; taxpayer identification numbers, including taxpayer identification numbers of each partner or shareholder, as applicable; a legal description of the donated property; and, the total amount of the tax credit approved.

Section 8. Criteria for Acceptance of Property.

(A) One or more of the following criteria must be met before the property can be accepted:

(1) The property will help meet the goals of a habitat conservation plan, multi-species conservation plan, natural community conservation plan, habitat conservation plan, watershed conservation plan, or any other similar plan, subsequently authorized by statute, that is designed to benefit native species of plants and animals, including, but not limited to, protecting <insert forests, wetlands, or other threatened habitats in your state>;

(2) The property will provide quality habitat value, corridors, or reserves for native plants and wildlife that will increase the chances that listed species will recover sufficiently to be eligible to be removed from the list, or will help avoid the listing of species pursuant to the <insert state Endangered Species Act> or the federal Endangered Species Act (16 U.S.C. Sec. 1531 et seq.), or protect <insert names of threatened habitats in your state> or promote the biological viability of important <insert your state here> species;

(3) The property will provide groundwater infiltration, flood control, mitigation of heat islanding, or other natural services and the property will be used as a park or open space, or will augment public access to, or enjoyment of, existing regional or local parks, beaches, or open space facilities, or will preserve historic or archaeological resources;

(4) The property interest is a perpetual conservation easement over agricultural land, or is a permanent contribution of agricultural land, that is threatened by development. Property accepted pursuant to this subparagraph shall be accepted pursuant to <insert applicable laws regulating farmland in your state>; or

(5) The property interest is a water right, or land with an associated water right, and the contribution of the property will help improve the chances of recovery of a listed species, reduce the likelihood that any species of fish or other aquatic organism will be listed pursuant to the <insert state Endangered Species Act> or the federal Endangered Species Act (16 U.S.C. Section1531 et seq.), improve the protection of listed species, or improve the viability and health of fish species of economic importance to the state. The donee receiving the water right, or land with an associated water right, shall retain title to the water right, and ensure that the water shall be used to fulfill the purposes for which the water right, or land associated with a water right, is being accepted with the exception that any contribution of a water right that includes a change in the point of diversion, place of use, or purpose of use may be made only if the proposed change will not injure any legal user of the water involved and is made in accordance with <insert applicable sections of your state water code>.

(B) The board shall grant approval of a proposed contribution of property under the program only upon a determination that:

(1) The donation of property satisfies the requirements for a qualified contribution pursuant to Section 170 of Title 26 of the United States Code. If only a portion (either an undivided fractional interest in the entire property or one or more discrete parcels) of the property satisfies the requirements of Section 170 of Title 26 of the United States Code, or if the property is sold for less than fair market value, only that portion, or the amount representing the difference between the amount paid by the donee and the fair market value, shall be eligible for the tax credit to the extent permitted by Section 170(h) of Title 26 of the United States Code. The board may segregate eligible and ineligible interests in property proposed to be contributed pursuant to this Act. The donor shall receive no other valuable consideration for the donation of property subject to the tax credit;

(2) Except as noted under paragraph (3), for the purposes of this Act, if the property is proposed to be donated to satisfy a condition imposed upon the donor by any lease, permit, license, certificate, or other entitlement, issued by one or more public agencies, including the mitigation of significant effects on the environment of a project pursuant to an approved environmental impact report or mitigated negative declaration required pursuant to <insert applicable section of state Environmental Quality Act>, the donated property shall not qualify for the credit provided in <insert applicable sections of your state revenue and taxation code>;

(3) For the purposes of this Act, if the property is proposed to be donated to satisfy a condition imposed upon the donor by any lease, permit, license, certificate, or other entitlement, issued by one or more public agencies, entered into voluntarily by the donor, including, but not limited to, voluntary agreements with one or more public agencies to preserve habitat harboring species listed as endangered or threatened under the federal Endangered Species Act or the <insert state Endangered Species Act>, the donated property shall qualify for the credit provided in <insert applicable sections from your state revenue and taxation code>;

(4) There has been no release, or threatened release, of hazardous material on the property, unless all of the following occur:

(a) A final remedy in response to the release has been approved by the Department of Toxic Substances Control <or insert your state’s equivalent>, pursuant to <insert applicable state statutes>, or <insert state regional water quality control board or equivalent>, pursuant to <insert applicable state statutes>;

(b) The donor or donee has agreed to implement the final remedy approved, pursuant to subparagraph (a); and

(c) The donor or donee has agreed to fund and has made adequate funding available to pay for the response action, as defined by <insert applicable state statutes>.

(5) Notwithstanding paragraph (3), a donation of property containing hazardous materials may be accepted under the program without satisfying the requirements of paragraph (3), if the donee determines, based on written findings from the Department of Toxic Substances Control <or insert your state’s equivalent> and the <insert state regional water quality control board, or equivalent, with jurisdiction over the property>, that the hazardous materials present will pose no substantial risk to human heath or the environment and no substantial risk of liability on the donee under the conditions which the property will be used. The Department of Toxic Substances Control <or insert your state’s equivalent> and <insert state regional water quality control board, or equivalent, with jurisdiction over the property> shall carry out their normal due diligence when developing the written findings that will be the basis for the written determination regarding the presence and risk of toxic materials on the property by the Department of Toxic Substances Control <or insert your state’s equivalent> or the regional board, whichever is applicable. As used in this paragraph, “hazardous materials” has the same meaning as contained in <insert applicable state statutes>.

Section 9. Eminent Domain Authority.

Nothing in this Act authorizes or increases the authority of any state or local public agency to use eminent domain to acquire private property.

Section 10. Pre-Existing Easements.

Nothing in this Act diminishes existing land or water rights held by easement holders in any property proposed for donation.

Section 11. Unauthorized Use of Donated Land.

(A) If any property, approved for acceptance pursuant to this Act, is later transferred by the donee, the use of the property shall be restricted by deed to the conservation purposes for which the property was contributed pursuant to the program. If the board determines that the conservation purposes for which the property was contributed can no longer be achieved, due to significantly changed circumstances beyond the control of the donee that accepted the property, the proceeds of the sale shall be used by the donee that accepted the property to acquire land in <insert your state here> of equal or greater value and comparable public resources values, as determined by the board. The land acquired shall meet the criteria of Section 8 of this Act. Nothing in this subsection prohibits the transfer of donated property to a nonprofit organization that is qualified to manage the property for the purposes intended by this Act, if the terms of this subsection are met. Any local government or nonprofit organization seeking to sell land pursuant to this subsection shall first obtain the approval of the board.

(B) Other than as provided by subsection (A), property approved for acceptance pursuant to this Act shall be used only for purposes consistent with Section 8.

(C) If any unauthorized use is made of the property, after the property is donated to a local government or nonprofit organization pursuant to this program, the local government or nonprofit organization shall seek to terminate the unauthorized use and restore the conservation benefits for which the property was contributed. If the board determines that the unauthorized use has not been terminated and the conservation benefits fully restored within a reasonable period of time, the fee title owner of the property shall pay to the state the greater of the following:

(1) The fair market value of the property based on appraisals when accepted by the board; or

(2) The fair market value of the property based on appraisals at the time of sale and based on the unauthorized use of the property.

(D) The department that is the donee or the board may seek injunctive relief to prevent the unauthorized use of the property, or may assume ownership or management of the property to assure that it is used in the manner originally authorized.

(E) The board shall develop a process to monitor the uses of any land that a local government or nonprofit organization receives pursuant to this Act in order to ensure those uses are in conformance with the purposes for which the property is accepted.

Section 12. Tenure of Program.

Tax credits may be awarded pursuant to this Act until the full amount of the tax credit available has been expended, at which time this Act will expire.

Section 13. Public Access to Donated Property.

The donee shall allow public access to the property to the extent that public access is consistent with the purposes for which the property is accepted. Before providing public access to the property, the donee is required to develop a plan that minimizes the impact of public access on adjacent landowners and avoid any infringement on the customary husbandry practices on adjacent or nearby agricultural or timber operations, and that establishes a setback or buffer area, as necessary. This section does not require access to privately owned lands for which a conservation easement is contributed pursuant to this Act unless the conservation easement provides for public access.

Section 14. Setbacks and Buffers.

Any donee accepting property pursuant to the program shall own and maintain any setback or buffer area that may be necessary for the use of that property in accordance with this Act, in order to avoid infringement on the customary husbandry practices on adjacent or nearby agricultural or timber operation.

Section 15. Effective Date.

This Act shall go into immediate effect upon its passage.

Section 16. Severability.

If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity shall not affect other provisions or applications of this Act, which can be given effect without regard to the invalid provision or application and, to this end, the provisions of this Act are severable.