FAQ's
What is a conservation easement? And What are its benefits? A conservation easement is a deed restriction, binding on all current and future owners of the land, intended to preserve the agricultural, open space and natural resource values of the land. An easement limits certain uses on all or a portion of a property, while keeping the property in the landowner's ownership. Easements can be used to preserves the character of the property and are tailored to the property and to fit with the goals of the landowner. Easements can be used to restrict or prohibit further development, support sustainable forestry and to protect lands for agricultural, open space, historical, scenic, recreational or educational purposes. Easements also protect natural resources, which supports the health of our watersheds, woodlands and open spaces. Preservation provides us with the scenic vistas that are a large part of York County's character.
Am I restricted from selling my property? No. Ownership may be transferred. The easement restrictions remain in tact because the easement agreement is in perpetuity. The agreement documentation is filed with the Recorder of Deeds office.
Will I be paid for granting an easement to the Farm & Natural Lands Trust? The Farm & Natural Lands Trust has two land preservation programs.
Our traditional easement program accepts the donation of easements. This charitable gift may result in a tax savings for the donating landowner.
As a result of a grant from the County of York, landowners may now apply to the Trust’s Bargain Sale Open Space Land Preservation Program. A bargain sale program means the landowner will receive a portion of the easement value in exchange for preserving the property. Funds are limited and applications are selected based on evaluation.
Doesn't the County of York also have a land preservation program? Yes, the York County Agricultural Land Preservation Board (commonly referred to as the ‘County Program’) pays landowners for their development rights. They have an application process and a ranking system because funds are limited and will not allow them to satisfy all applicants. However, certain restrictions apply and we encourage you to call them to learn more about their program. Their telephone number is 717-840-7400.
Can I combine the York County Agricultural Preserve Board land preservation program with the Farm & Natural Lands Trust easement program to preserve my property? Yes. Some landowners may find that preserving part of their property with the ‘County Program’ and part with the Trust will improve their score with the County program and increase the dollars they retain after taxes.
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Steps
in donating a conservation easement
-
Learn about the legal document called a “conservation easement” and ask questions.
-
Identify the conservation organization that best fits your needs and desires. Be sure the organization’s mission and easement acceptance criteria fit your own vision for the future uses of the property. The Farm & Natural Lands Trust of York County can provide possible Federal tax benefits to the land owner(s) while the York County Agricultural Land Preservation Board will purchase your development rights. The organization you select will prepare the easement document for you and will assume the responsibility of monitoring the land use forever.
- Work with the conservation organization to draft the easement document. Of course, you will want your lawyer to give careful review of this document as well. Be prepared for several drafts over the next few months—this is a very important document and it is well worth the time to get it right.
- Help the conservation organization prepare the baseline documentation (maps, photos, history of the property, etc.). This is essential for future monitoring and must depict the condition of the property at the time the easement is granted.
- Once everyone is satisfied with the accuracy of the easement document, the landowner(s) will sign the conservation easement; an authorized officer of the conservation organization will also sign the easement before it is recorded in the Recorder of Deeds’ office in the courthouse.
- Make a cash contribution (when applicable) to the conservation organization’s land stewardship endowment fund to ensure financial viability for future inspections of your property.
- Have your appraiser complete a final appraisal, suitable as justification for the tax deductions you intend to claim.
- Work with your conservation organization to publicize the notable accomplishment of permanently protecting your beautiful property. Often, the presence of a preserved property will stimulate your neighbors to seriously consider this option for their property.
- Take pride in knowing you have given a legacy of perpetual beauty to be enjoyed forever by your children, grandchildren and your community.
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Tax Implications
How is the value of the easement determined for a donated easement? The value of the easement is determined by an appraiser, who is selected and paid for by the property owner. The appraiser appraises the land at its market or development value, and at its present use value. The difference between the two values is the value of the easement which is also considered to be the value of the contribution to the Trust.
EXAMPLE: John and Mary Smith own a 50 acre farm.
Market value per acre is...$4000 x 50 acres = $200,000
Present use value per acre is...$2600 x 50 acres = $130,000
(market value) – (present use value) = (contributed easement value)
$200,000 - $130,000 = $70,000
How is the charitable contribution deducted for Federal Income Tax purposes?
- Determine the adjusted gross income figure of the property owner.
- On an annual basis all or a portion of the charitable contribution in an amount not to exceed 30% of the adjusted gross income may be claimed as a deduction. This figure multiplied by the property owner’s income tax bracket percentage equals the amount of tax savings.
- Any remaining balance of the charitable contribution may be deducted based on this formula over an additional five years.
Property preserved through a donated easement: John and Mary Smith own a 50 acre farm which has a contributed easement value of $70,000. Their adjusted gross income is $40,000. Assume that their tax bracket is 15%.
Year 1
(adjusted gross income) x 30% = amount of deduction Easement Donation
$ 40,000 x 30% = $ 12,000 $ 70,000
(deduction) x (income tax bracket percentage) = (tax savings) - $ 12,000
$ 12,000 x 15% = $ 1,800 Balance: $ 58,000
Years 2-5
$ 40,000 x 30% = $ 12,000
$12,000 x 15% = $ 1,800 (tax savings)
Each year Mr. & Mrs. Smith use $ 12,000 of the remaining
charitable
deduction saving $ 1,800 in taxes per year. Balance: $ 10,000
Year 6
$ 40,000 x 30% = $ 12,000
$ 10,000 x 15% = $ 1,500 (tax savings) Balance: $ 0
Total tax savings for John & Mary Smith: $10,500
Property preserved by combining York County Agricultural Preserve Program and Farm & Natural Lands Trust program: Mr. Martin has a 100 acre farm he purchased 40 years ago. His annual taxable income is $30,000 (15% tax bracket). Mr. Martin is placing 75 acres with a fair market value of $300,000 in the County program. The value of the 75 acres with the conservation easement is $135,000. He is receiving $105,000 for this conservation easement from the County. He is placing a conservation easement on the remaining 25 acres with the Farm & Natural Lands Trust. He will receive a charitable contribution of $55,000 for that conservation easement. The farm’s present basis is $60,000 (cost + improvements – depreciation = basis).
Year 1
$105,000 / $135,000 = 78%
$ 60,000 basis x 78% = $ 46,800 deductible basis
$105,000 income subject to capital gains
- $46,800 deductible basis
$ 58,200 taxable capital gain
$ 58,200 + $ 30,000 = $ 88,200
$ 88,200 x 30%= $ 26,460 (maximum charitable contribution: 30%)
$ 58,200
-$26,460 (donation from easement to the Trust*)
$ 31,740 taxable capital gain
$ 31,740 x 10% capital gains tax = $ 3,174
Income tax on $ 30,000 = $ 4,500
Total tax bill in Year 1: $7,674
*$ 28,540 still remaining of the $ 55,000 charitable contribution to the Trust.
Year 2
$ 30,000 income x 30% = $ 9,000
$ 30,000 income
- $9,000 (donation from easement)
$ 21,000 x 15% tax rate = $ 3,150 taxes
Year 3
$ 30,000 income
- $9,000(remaining donation from easement)
$ 21,000 x 15% tax rate = $ 3,150 taxes
$ 10,540 remains of the donated easement value
Year 4
$ 30,000 income
- $9,000(remaining donation from easement)
$ 21,000 x 15% tax rate = $ 3,150 taxes
$1,540 remains of the donated easement value
Year 5
$ 30,000 income
- $1,540(remaining donation from easement)
$28,460 x15% tax rate = $4,269 in taxes
Summary:
With the donated conservation easement, Mr. Martin’s total tax bill over the 5 years was $21,393 on $255,000 of income. Without the donated easement, his tax bill would have been $34,140. Mr. Martin has saved $12,747 in federal income taxes.
Note: These are simply illustrations of the tax benefits that may be possible for a landowner. It should not be relied upon. In all cases you should consult your attorney and accountant.
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How Much Will It Cost?
There are three major expenses involved in donating an easement. They are:
- An appraisal
In order for you to take a tax deduction for your federal tax return, the IRS requires that you have an appraisal done which provides you with two values. (1) Fair market value (the value if you were able to sell the property today at its highest and best use); and (2) The value of the property if it were to stay strictly as farm and/or natural lands. The appraisal costs varies depending upon the property; however, the average is about $1,500.
The cost of the appraisal is not treated as part of the charitable contribution. However, fees paid to determine the value of the easement donation can be claimed by the donor (under Section 212 of the Internal Revenue Code) to the extent that they are other miscellaneous deductions exceed the 2% gross income limitation. This can help offset the appraisal cost.
If no tax deduction is being sought, you can eliminate this expenditure.
- Contribution to the Farm & Natural Lands Trust
In order for the Trust to be an effective steward of the lands that are preserved, we develop a conservation easement agreement and baseline document for each property. At the time that you would authorize us to continue with your easement, we ask for a contribution that will be used to cover the costs associated with this stewardship role. We will request of you a contribution of $500 or more as our costs can reach $4,000 for a typical easement.
Part of our stewardship role also includes monitoring the property annually to insure the easement objectives are being met. As time passes, we often must address issues that arise relative to the easement agreement. We ask landowners to help cover these costs by contributing to our Land Stewardship Endowment Fund after the easement agreement is completed and filed. We will recommend a contribution amount based on the size of the property and number of the building envelopes. This contribution can be paid annually over a period of up to 10 years.
One or both of these provisions can be waived at the discretion of the board of directors of the Farm & Natural Lands Trust.
- Legal and accounting costs
It is always a good idea to talk to your lawyer and accountant when making a decision such as this. These costs would depend solely on your use of these professionals.
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Bargain Sale Land Preservation Program
The Farm & Natural Lands Trust received a $1 million grant in 2007 from the County of York to be expended over three years to preserve land at a bargain sale price on properties located in York County. The term bargain sale implies the landowner will not receive the full-appraised conservation easement value. Applications for this round of funding will be accepted until October 31, 2009.
Applications to the program must meet the following minimum requirements:
-
Parcel(s) must be located in York County.
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Submission of a completed application form with the $25 non-refundable application processing fee.
-
Applications must be signed by the owner(s) of the property.
-
Applications must include a copy of the deed for the property.
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Parcels submitted in the application must contain farmland or natural lands and be 10 acres or more.
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Owner of the property must give permission for the Farm & Natural Lands Trust to enter their property as a part of the evaluation process.
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Farmland parcels located in the Township ASA or in the process of petitioning the Township to be added to the ASA will receive points in the evaluation tool.
How the Program will be operated:
-
Upon the close of the application period, the Farm & Natural Lands Trust will evaluate all applications submitted based on the evaluation tool. Applications must receive a total point score of 25 points or greater from the evaluation tool to be eligible for the program.
-
Based on available funding and total point score of the application, landowners will be notified in writing if they have been accepted into the program.
- If a landowner is notified they have been accepted into the program, the landowner will be asked to sign an Authorization Agreement with the Farm & Natural Lands Trust to begin the process of developing the Conservation Easement Agreement. A non-refundable $250 fee must be submitted with the signed Authorization Agreement to the Farm & Natural Lands Trust within 30 days of the notification. Within the Authorization Agreement, the landowner must also agree to a Land Stewardship Pledge to be paid to the Trust over a maximum of ten years.
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The landowner must agree to have an appraisal of their property to determine the Conservation Easement value. The Landowner is responsible for the cost of the appraisal.
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Upon receipt of the Authorization Agreement and fee, the Farm & Natural Lands Trust will interview the landowner regarding their conservation goals for the property and develop the baseline documentation
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It is the responsibility of the landowner to have a survey conducted for the property if it is needed to accurately identify the boundaries of the Conservation Easement Agreement.
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Upon completion of the preceding steps, a draft Conservation Easement Agreement will be provided to the landowner and their attorney for review. The Landowner should contract with the Appraiser to begin the Conservation Easement appraisal.
- A title search is conducted by the Farm & Natural Lands Trust. If the property has a mortgage, a subordination will be obtained from the lender.
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The Farm & Natural Lands Trust will review the Conservation Easement Appraisal. The Landowner will be offered 33% of the Conservation Easement value up to a maximum payment of $125,000.
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Upon approval of the County of York and the Farm & Natural Lands Trust Board of Directors of the purchase of the Conservation Easement Agreement, settlement will be held with the Landowner(s). The $250 authorization fee will be applied to the landowner’s Land Stewardship Pledge when the Conservation Agreement is recorded.
-
Applications not chosen in the current round or received after the application deadline will be automatically reevaluated in the next round of funding.
What costs are assumed by the Farm & Natural Lands Trust? The Trust pays for the baseline document, title search, and our attorney to develop the Conservation Easement agreement. Each Conservation Easement agreement is tailored to the individual property. With these costs and the time involved in the Conservation Easement Agreement by the Trust staff, we typically spend $5,000 in the easement process.
What are my costs for the entire Conservation Easement Agreement process? The costs to the landowner include: the $25.00 application fee, Authorization Agreement fee of $250.00, Conservation Easement Appraisal, Land Stewardship Pledge and Survey (if needed). We also recommend landowners consult with their accountant and attorney.
If a landowner elects to withdraw from the Conservation Easement process prior to it’s completion, the landowner will be responsible to reimburse the Farm & Natural Lands Trust for all costs incurred up to that point.
Can I use the balance of the Conservation Easement value as a charitable donation to the Farm & Natural Lands Trust? If the Conservation Easement Agreement meets the Conservation Purpose Test of the IRS code, you may be able to use the balance of your Conservation Easement value as a charitable donation. We advise you to consult with your accountant regarding these provisions of the IRS code. Individuals taking a charitable donation for the balance of the value are required to submit Form 8283 and a copy of their appraisal with their tax return.
Why I am being asked to make a Land Stewardship Pledge? Your Conservation Easement Agreement will state that this agreement is in perpetuity. As part of the agreement, the Farm & Natural Lands Trust is committing to an annual site inspection of the property. The annual site inspection insures land use practices remain in compliance as identified in the conservation easement document. Our Land Stewardship Fund provides financially for ongoing site inspections and will allow us to defend the conservation easement if a violation occurs. Because our operating budget is not supported with government funds, the Trust must insure it has the financial resources to undertake this responsibility. The Trust will only use the interest proceeds from the fund for these purposes to insure funds are available in perpetuity to cover this important responsibility.
Where do I get more information? Contact the Trust office at 717-843-4411.
FARMLAND EVALUATION TOOL |
| Items of Interest |
Points |
| County Ag Preserve Program |
|
| Applied sucessfully-score greater than 55 |
30 |
| Applied sucessfully-score greater than 30 |
20 |
| Applied but did not qualify or score less than 30 |
15 |
| Did not apply -40% Soils class I-IV |
15 |
| ASA |
10 |
| Natural Resource Value |
|
| York County Focus Area |
2 |
| Contiguous Forest Cover |
|
25 acres or more
|
10 |
| 10 acres of more |
5 |
| 5 acres or more |
1 |
| Steep Slopes greater 15% |
5 |
| DEP Stream quality |
|
| Exceptional Stream |
10 |
| High Quality |
8 |
| Cold Water Fishery |
6 |
| Warm Water Fishery |
4 |
| Stream/Unnamed Trib/Spring |
2 |
| National Wetland |
5 |
| Riparian Buffers |
5 |
| PDNI hit |
5 |
| CREP |
5 |
| Location |
|
| Easement Location |
|
| Balance of Property preserved |
35 |
| Adjacent |
25 |
| Less than .5 miles |
15 |
| .6miles to 1 mile |
10 |
| 1.1 to 2 miles |
5 |
| Public Lands/Greenway |
|
| Adjacent |
25 |
| Less than .5 miles |
15 |
| .6 miles to 1 mile |
10 |
| 1.1 to 2 miles |
5 |
| Road Frontage- 50 feet or more |
5 |
| Distance to Growth Areas |
|
| More than 3 miles |
20 |
| 1 to 3 miles |
15 |
| Within 1 mile |
10 |
| In growth boundary |
-10 |
| Size of Property |
|
| More than 100 acres |
15 |
| 99-50 acres |
10 |
| 49-25 |
7 |
| 24-10 |
2 |
| Stewardship |
|
| Soil Conservation Plan |
10 |
| Applied for Soil Conservation Plan |
5 |
| Forest Management Plan |
5 |
| Bonus |
|
| Other funding source |
10 |
| Leads to other preservation |
5 |
| Public Access |
5 |
| Other Unique factors |
Up to 20 |
NATURAL LANDS EVALUATION TOOL |
| Items of Interest |
Points |
| County Ag Preserve Program |
|
| Applied sucessfully-score greater than 55 |
N/A |
| Applied sucessfully-score greater than -30 |
N/A |
| Applied but did not qualify |
N/A |
| 40% Soils Class I-IV |
5 |
| ASA |
5 |
| Natural Resource Value |
|
| York County Focus Area |
5 |
| Contiguous Forest Cover |
|
|
25 acres or more |
15 |
|
10 acres of more |
10 |
|
5 acres or more |
5 |
| Steep Slopes greater than 15% |
5 |
| DEP Stream quality |
|
|
Exceptional Stream |
25 |
|
High Quality |
15 |
|
Cold Water Fishery |
13 |
|
Warm Water Fishery |
11 |
|
Stream/Unnamed Tr1b/Springs |
9 |
| National Wetland |
7 |
| Riparian Buffers |
10 |
| PDNI hit |
10 |
| CREP |
5 |
| Location |
|
| Easement Location |
|
|
Balance of Property preserved |
35 |
|
Adjacent |
25 |
|
Less than .5 miles |
15 |
|
.6 miles to 1 mile |
10 |
|
1.1 to 2 miles |
5 |
| Public Lands/Greenway |
|
|
Adjacent |
25 |
|
Less than .5 miles |
15 |
|
.6 miles to 1 mile |
10 |
|
1.1 to 2 miles |
5 |
|
Road Frontage- 50 feet or more |
5 |
|
Distance to Growth Areas |
|
|
More than 3 miles |
20 |
|
1 to 3 miles |
15 |
|
Within 1 Mile |
10 |
|
In growth boundary |
-10 |
| Size of Property |
|
|
More than 100 acres |
15 |
|
99-50 acres |
10 |
|
49-25 |
7 |
|
24-10 |
2 |
| Stewardship |
|
| Soil Conservation Plan |
10 |
| Applied for Soil Conservation Plan |
5 |
| Forest Management Plan |
5 |
| Bonus |
|
| Other funding source |
10 |
| Leads to other preservation |
5 |
| Public Access |
5 |
| Other Unique factors |
Up to 20 |
Download the Bargain Sale Land Preservation Program application.
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Agricultural Security Area
Agricultural Security Areas are intended to promote more permanent and viable farming operations over the long-term by strengthening the farming community’s sense of security in the land use and their right to farm. Township governments create an Agricultural Security Area (ASA) in cooperation with individual landowners who would like to place their land in a ASA. A township or municipality may establish an ASA with 250 acres or farmland owned by multiple landowners with tracts of 10 acres or more. An ASA provides three main benefits to landowners:
-
The Township Supervisors agree to support agriculture by not passing nuisance laws that would restrict normal farming operations.
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Limitations are placed on the ability of government to condemn farmland in the ASA for highways, parks, schools, or municipal projects.
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Landowners will be eligible to voluntarily apply to sell a conservation easement to the York County Agricultural Land Preservation Board. The conservation easement is a covenant on the land that states the land must be available for agricultural use in perpetuity. The value of the conservation easement is appraised and a landowner may sell an easement for cost to the County and/or the Commonwealth of Pennsylvania. (The York County Agricultural Land Preservation Program requires that an owner may only sell the conservation easement if located within an ASA of 500 acres or more.)
Eligible Property
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Land owned by more than one landowner in a township, borough or municipality that totals a minimum of 250 acres. The farms that make up the 250 acres, which must be at least 10 acres each, need not be adjacent to one another and may cross township lines.
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At least 50% of the soils on that land must have a soil capability class of I-IV, as determined by the USDA Soil Survey.
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The land must be viable agricultural land.
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Zoning shall permit agricultural use, but need not exclude other uses.
Procedure for Creating an Agricultural Security Area
- Landowners submit a petition to create an ASA to the Township Supervisors. The petition must include the signatures and address of the landowners, tax parcel numbers and the number of acres of each tract.
- If the proposed ASA contains land in more than one Township, a petition to create an ASA must be submitted to each township involved.
- The Township Supervisors acknowledge the receipt of the petition at their next meeting, publish a notice in the newspaper and post five notices in the township stating that a petition has been received.
- For 15-days after publishing the notice, the Supervisors and the Township Planning Commission may received proposed modifications to the ASA from adjacent municipalities or landowners in, adjacent to, or near the proposed ASA.
- The Chairman of the Township Board of Supervisors appoints five persons to the Agricultural Security Area Advisory Committee: three (3) farmers, one (1) non-farmer, and one (1) Supervisor, who will serve as Chairmen of the committee.
- The Township Supervisors, at the expiration of the 15-day period for receiving proposed modifications, sends the ASA proposal and any modification received to the Township Planning Commission and Advisory Committee. Each body may take up to 45-days to make a recommendation to the Supervisors of whether or not the ASA should be established. (A list of criteria on which to base the recommendations is available from the York County Agricultural Land Preservation Board.)
- Upon receipt of the recommendations from the ASA Advisory Committee and the Township Planning Commission, the Township Supervisors hold an advertised public hearing on the proposed ASA. Notice of the hearing is made to each landowner who in included in the proposal for creation of the ASA.
- The Township Supervisors take action to adopt the ASA proposal or any modification of it. The Township Supervisors must make a decision within 180-days from the date the petition is submitted by the landowners. Failure of the Township Supervisors to act within 180-days shall be deemed adoption of the ASA proposal as originally
submitted without modification.
Additions to Agricultural Security Areas
- Additional lands may be added to an existing ASA on a voluntary basis by the landowners at any time.
- An addition of land to the existing ASA is subject to the same procedure as in the creation of an ASA.
Agricultural Security Area Seven Year Review
An ASA shall be reviewed and re-established every seven-years. The seven-year review serves as a way to check whether the ASA continues to make a contribution to the preservation of agriculture and economic and environmental well being in the community. Only during the seven-year review process can land be withdrawn from the ASA.
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Clean and Green Basics
by Robert R. Lloyd, Jr., Esq.
If you own agricultural lands or woodlands of ten acres or more, the Clean & Green Program provides a wonderful opportunity for real estate tax savings. The assessed value for farmland enrolled in the Clean & Green Program is often reduced by 10% or less of its fair market value assessment. This results in a dramatic reduction in the landowner’s real estate tax bill.
Participants in the program should recognize that the use and development of the property assessed at a Clean & Green value is subject to certain limitations. The property must continue to be used as agricultural lands or forest reserve and cannot be converted to other commercial uses without causing a violation. In addition, the subdivision of the property in the Clean & Green program is limited. While a property owner is permitted to subdivide and convey residential building lots from the original tract placed in the Clean & Green program, the lots conveyed to third parties for residential purposes cannot exceed 2-acres in any one year, nor may they exceed 10-acres total or 10% of the original acreage placed in the Clean & Green Program, whichever is less.
If the program limitations are violated, full rollback taxes are imposed on the property owner causing the violation. Full rollback taxes equal the savings in real estate taxes on the entire property for the past 7-years, together with interest on each year’s savings at the rate of 6% per year.
In addition, a current change imposes partial rollback taxes whenever a residential lot is conveyed off of the original tract placed into the Clean & Green Program, even if the lot is small enough not to cause a violation. For example, the owner of a 100-acre farm who has not previously subdivided any lots off of the farm may subdivide and convey a 1-acre building lot and still have his remaining 99-acres receive Clean & Green tax savings. However, partial rollback taxes will be imposed on the 1-acre lot. This is a change from earlier practice, and will result in partial rollback taxes of a few hundred dollars in many situations.
Thus, while the Clean & Green Program is very attractive for farmer and others who own qualifying land, care should be exercised and professional guidance sought before the sue of the land is changed or land is subdivided and conveyed from the original tract placed into the program.
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