Introduction
Many states have developed an impressive policy and planning
capacity to slow sprawl, including statewide growth plans,
smart growth legislation, mapping out green infrastructure,
and conservation financing. Among the successful financing
tools for conservation are conservation tax credits. Landowners
in some states are allowed to deduct a credit from their
income for tax purposes if they donate a piece of property
for conservation purposes. Billions of acres of private
lands harbor vital ecological, agricultural, water, and
historic resources. Watersheds and ecosystems that crossover
to unprotected private lands are jeopardized, and the tax
credit is a strong incentive for landowners to help minimize
this risk. Human life depends on healthy ecosystems. They
purify our air and water, detoxify and decompose wastes,
regulate the climate, regenerate soil fertility, and produce
and maintain biodiversity, from which key ingredients of
our agricultural, pharmaceutical, and industrial enterprises
are derived. Conservation, unlike sprawling development,
isn’t an investment that produces a quick profit; it’s a
smart buy, with immeasurable, long-term rewards.
State Programs
California
The intent of the Natural
Heritage Preservation Tax Credit Act of 2000 is to preserve
wildlife and plant habitat, agricultural lands, open spaces,
and water rights on private lands. All landowners, including
pass-through entities, may apply for the credit. Eligible
donations must meet the goals of a conservation plan, protect
species or habitat, conserve threatened agricultural land,
or increase public access to open space or archaeological
resources. Required donations, such as those for mitigating
the environmental effects of development, are not eligible
for the credit. Donations can take the form of a fee interest,
easement, or water rights transfer. Donors are allowed an
income tax credit of 55 percent of the fair market value
of the donated property against their income, with an eight-year
carry-forward period. There is a $100,000,000 statewide
cap on the credits for FY 01-02 through FY 04-05. Eligible
donees include the State Resources Agency, a local government,
or a 501(c)(3) nonprofit land and water conservation trust.
Colorado
The goal of Colorado’s Gross
Conservation Easement Tax Credit, passed in 2000, is
to preserve habitat, open space, and historical properties.
Colorado residents, corporations, trusts, estates, and members
of pass-through entities can apply for the tax credit. For
putting the land under a conservation easement, donors are
allowed to deduct 100 percent of the first $100,000 of the
fair market value of the property and 40 percent of the
additional fair market value, with a cap of one credit per
year not to exceed $260,000. Credits can be carried forward
for up to twenty years. Acceptable donees include government
entities, and 501(c)(3) nonprofit conservation land trusts.
Maryland
In 1986, Maryland passed the Conservation
Property Tax Credit, which intends to conserve unimproved
property that has not been used for commercial purposes.
All Maryland income tax payers are eligible to apply for
the tax credit. Donors are allowed to deduct 100% of the
property tax for putting their land under conservation easement,
and may carry forward the credit for up to fifteen years.
Donations must go to the Maryland Environmental Trust and
be approved by the Board of Public Works.
The Maryland General Assembly passed legislation in 2001
allowing a state
income tax credit for donations of conservation easements
to the Maryland Environmental Trust. The maximum credit
is $5,000 per year. The remainder of the credit (based on
the appraised value of the easement) may be carried forward
for up to 15 years for a maximum credit of $80,000.
North Carolina
The aim of North Carolina’s Conservation
Tax Credit, enacted in 1983 (and reauthorized most recently
in 2001), is to increase public beach access or use and
access to public water or trails, and conserve fish and
wildlife. Corporations and individuals may apply for the
credit. Donors are allowed a 25 percent deduction of the
property’s fair market value against their income tax. There
is a $500,000 cap on corporate deductions, and a $250,000
cap or individual donations. Credits may be carried forward
for up to five years. The property may be donated as a fee
interest or as a conservation easement. No credits are awarded
on donations required by local ordinance or as required
for a developer to comply with building density minimums.
Donations must go to a state or local government or to a
501(c)(3) nonprofit conservation trust and must be certified
by the Department of Environment and Natural Resources.
State Actions
Massachusetts
The Massachusetts Land Conservation Incentives Act of 2003,
SB
1833, seeks to provide private landowners with incentives
to protect private lands for open space, natural resources,
biodiversity conservation, outdoor recreation, agricultural
preservation, historic preservation, and land preservation
purposes. Donors would be allowed to deduct 50 percent of
the fair market value of the property from an amount not
to exceed $50,000. Credits could be carried forward for
up to five years. The property could be donated as a fee
interest or as a conservation easement. No credits would
be allowed for donations required to fulfill density requirements
to obtain subdivision or building permits. Donations would
go to the state or to a 501(c)(3) nonprofit conservation
trust and would be required to be certified by the Secretary
of the Executive Office of Environmental Affairs or the
Director of the Massachusetts Historical Commission.
New York
AB 966 (2003) seeks to amend the tax law to allow credits
for property donations. This bill would preserve private
property for wildlife conservation and increase public access
to beaches and trails. Both corporations and individuals
would be allowed a 25 percent deduction of the fair market
value of the qualified donation. The credit could not exceed
$250,000 for corporations or $100,000 for individuals, for
four consecutive years. Corporations could carry forward
the credits for fifteen years; individuals for ten. Donations
would be made to the state and approved by the Commissioner
of the Office of Parks, Recreation, and Historic Preservation.
This bill also would create a “Real Property Donation Credit
Transitory Fund,” which would receive cash from the state
Environmental Protection Fund and from bond sales authorized
by the state’s Clean Water, Clean Air Bond Act of 1996,
to compensate for funds lost to the state though the tax
credit program. Any excess money in the fund would have
to be used for conservation purposes. |
