For Landowners

As a property owner you possess not only the land itself but a number of rights that go with that land—such as the right to live on the land, to build a house on it, to restrict access to it, to subdivide it, to sell the land and to pass it on to heirs. The rights to build and to subdivide your property are called "development rights," and these can be separated from the other rights of ownership.

A conservation easement is a legal agreement between a property owner (whether an individual or a group such as a Community Association or corporation) and a qualified land trust, such as the Scenic Rivers Land Trust, whereby the owner agrees to limit the type and amount of future development on all or part of a piece of property.

The landowner donating a conservation easement can continue to use and enjoy the land, sell the property, pass it on to heirs, and so on, but is generally prohibited from further development except within conditions documented in the agreement. A conservation easement does not require any public access to your property—it is still your private property.

The decision to create and donate a conservation easement is entirely voluntary. However, once the restrictions specified in the agreement are set in place, they "run with the land" and are binding in perpetuity on all future owners of the land. The land trust has long-term responsibility for monitoring use of the land to ensure compliance with the terms of the agreement.

The terms of conservation easements are flexible and are tailored to balance the needs and goals of the landowner with the protection needs of the conservation values. For example, on larger properties the terms of the easement may reserve home sites for the owner's children, or, if desired, leave a portion of the property for sensitively designed, limited development.

Selling a property for development can be highly profitable, but a growing number of people are realizing that donating a conservation easement (and maintaining ownership of the land!) is also a financially beneficial option. The tax advantages vary depending on the size and current development value of the property. We strongly encourage you to consult with your personal financial or tax consultant to achieve maximum financial advantage for your situation.

Tax advantages to consider include:

• Property Tax Reduction. Under current law, landowners in Anne Arundel County who donate an easement with Scenic Rivers Land Trust are eligible for a perpetual 100% County property tax relief on the unimproved portion of their land. Scenic Rivers will provide the landowner with the required documentation to secure this tax relief. Given the high rate of property tax, this advantage alone can result in significant savings.
• Income Tax Deduction. A gift of a permanent conservation easement to Scenic Rivers constitutes a qualified charitable deduction for tax purposes.  The value of the easement (the difference between the fair market value of the property before and after the easement is put in place) may be deducted from the donor’s income for purposes of calculating state and federal income tax.  A landowner may be able to claim a deduction of up to 50% of their adjusted gross income. If the landowner qualifies as a farmer or rancher, they can claim a deduction of up to 100% of their adjusted gross income.  Unused deductions can be carried forward for fifteen additional years, or until the value of the donation is reached, whichever occurs first.
• Estate Tax Reduction. For landowners who will leave sizable estates upon their death, the most important financial impact of a conservation easement may be a significant reduction in estate taxes. When property has been put into a permanent conservation easement, the easement limits the amount of development that can occur, thus lowering the appraised value of the land and therefore the estate tax valuation. In addition, there is an estate tax exclusion for certain land that is subject to a donated easement.
• Estate Tax Exclusion. Under the provisions of federal law, 40% of the value of land in an estate that has been put into a conservation easement may be excluded from the value of the estate. This exclusion is currently capped at $500,000 per estate. To qualify for the maximum 40% exclusion, the conservation easement must reduce the value of the property by at least 30% as a result of the development rights foregone by the easement.
• State Income Tax Credit. For larger properties, Scenic Rivers will often recommend that Maryland Environmental Trust cohold your easement. Maryland Environmental Trust easements must be at least 20 acres and may have only one existing residence per 20 acres. With a Maryland Environmental Trust easement, landowners have the option of an alternative to the State Income Tax Deduction, which is a State Income Tax Credit. The credit is up to $5,000 per year per individual landowner against State income taxes for up to 16 years. One limitation is that the credit may not exceed the value of the donation. Also, a landowner will pay no state or local property tax on the unimproved land that is subject to a Maryland Environmental Trust easement for 15 years from date of donation.

This information is for general planning purposes only. The tax advantages of easement donations will vary with individual financial situations. Please consult a tax advisor or attorney for how an easement donation would affect your taxes. For any questions, contact Scenic Rivers at 410-424-4000.

When considering whether a conservation easement is right for you, ask yourself the following questions:

• Do I want to preserve the natural features of my property?
• Do I want to help protect my watershed from the increasing pressures of development?
• Would the tax benefits of a conservation easement relieve my tax burden and help to ensure that we can continue to maintain our property within our family?
• Would the available financial incentives (via a grant program) make this an attractive option to me to limit development on my property?

If you answered "yes" to any of these questions, consider establishing a conservation easement on your property. An increasing number of local residents are discovering that a conservation easement is the best way to meet their family goals, uphold their values and potentially realize thousands of dollars in income, estate and property tax savings.

Conservation values that Scenic Rivers looks for when considering land for conservation are:

• 10 acres or more of undeveloped land;
• High functioning natural habitat, ecosystems or natural features (forest, wetlands, meadows);
• Endangered, threatened or conservation priority species;
• Open space that contributes to the scenic enjoyment of the public when viewed from a public road or navigable waterway and provides a significant public benefit;
• Connection to other open space lands important for movement of wildlife between habitats or through developed corridors;
• Land in agricultural use.

Each easement that Scenic Rivers accepts is approved by our Board of Directors.  We proactively pursue land protection in specific priority areas. When evaluating a potential easement, the Board of Directors will review answers to the following questions:

1. How many development rights will be eliminated under current state and local laws?
2. Where on the property will reserved residences (if any) be located?  What other accessory structures and means of access are reserved to serve the residence(s)?
3. What long-term impact will reserved subdivision (if any) of the property have on the conservation values, with respect to: number, configuration, and size of parcels; continuity of open lands; and multiple ownerships?
4. Does the proposed easement include restrictions or reserved rights, the quantity and/or character of which make it more likely that monitoring and enforcement may become complicated, burdensome, or expensive?
5. Is the property of sufficient size that its conservation resources are likely to remain intact, even if adjacent properties are developed?
6. Can this easement be acquired with reasonable effort in relation to its value or purpose?
7. Is the easement consistent with federal, state, and local government land use policies that relate to managed growth?
8. Does the easement contribute to the protection of lands in furtherance of government plans or policies such as the county Critical Area plan, county general development plan, or Parks and Recreation greenway plan?
9. Does the property have the potential for having a sound management plan and, if so, can Scenic Rivers provide for its monitoring and enforcement?
10. Are there any ethical or public image problems with accepting the property?
11. Is the proposed easement part of a development proposal which, overall, is likely to have significant adverse impacts on conservation resources?
12. For monitoring purposes, is there legal right-of-way for access from public property?
13. Are there any hazards present, or indicated in the map, such as existing or historic fuel or hazardous waste storage, farm waste, evidence of use of biocides, fertilizer storage, fire hazards, waterside cliffs, quarries, landfills, dumps, or any other portents of future personnel hazard or legal action?
14. Is the property already protected by easement, covenant, deed restriction, etc.?

The process of completing a conservation easement will take a minimum of 6 months, and often takes more than a year. Start as soon as possible if you have a particular end date or tax year in mind for completing your easement. The steps to creating an easement with Scenic Rivers are as follows:

1. Let’s talk. A quick call to our professional staff is a great place to start when you are considering conserving your land. Our staff can introduce you to Scenic Rivers and our work, talk you through our process for determining land’s conservation value and recommend next steps.
2. Determine your goals for your land. Every family situation and every easement is a little bit different and there is flexibility to customize an agreement that is right for you. Consider your long-term plans for your property and what you want for it long into the future. Once you have your goals in mind, our staff can meet with you, view your property and present you will options that will meet your goals.
3. Consult your attorney and accountant. Your attorney and accountant or financial professional are best suited to advise you on the tax implications and legal issues associated with placing an easement on your property. Consulting them early in the process is recommended.
4. Approval by Scenic Rivers’ Board of Directors Executive Committee. Scenic Rivers uses specific criteria to determine the conservation value of a property and whether a property aligns with our mission and goals. Staff present your property and proposed easement terms to the five-person Executive Committee. If approved, staff will continue with the easement process. A final approval by the full Board of Directors is required later in the process.
5. Title Search and subordinations. The title report provides a legal description of your property, states the owner(s) and describes any liens, mortgages or existing easements. If there are any liens on your property, IRS regulations require the lien holder to supply a consent agreement for the land to be placed under conservation easement.
6. Draft conservation easement terms. Our staff and legal representatives will work with you to draft a legal agreement that meets our conservation goals, while also addressing your plans for your property.
7. Survey. A survey may be required to determine the boundaries of your property and is particularly important if you have plans to further develop a portion of your property.
8. Appraisal. An appraisal is required in order to take advantage of the tax benefits of conservation easements. Consult your attorney and tax advisors on the implications and opportunities associated with your easement. If your conservation easement has been accepted by the Anne Arundel County Forestry and Forested Land Protection Grant Program, the appraisal may be required to determine the payment amount for an easement.
9. Baseline documentation report. This report, which includes photographs, maps, and written descriptions of the property, documents the condition of your property and the conservation values of the land at the time that the easement is finalized. This report will be the reference point for future annual stewardship monitoring reports.
10. Final approval by Scenic Rivers’ Board of Directors. Upon completion of all supporting documentation, the full Scenic Rivers’ Board of Directors will vote to approve your conservation easement. Scenic Rivers will then be approved to hold your conservation easement.
11. Finalize easement document. All parties, along with legal counsel, review the final easement documents, including all supporting documentation and approve them for moving forward.
12. Conservation easement signed and recorded. Similar to other real estate closings, the easement signing is done in the presence of a notary by you and authorized Scenic Rivers staff. Once signed, Scenic Rivers staff will ensure that it is recorded promptly and you will be provided with a copy for safe keeping. If your conservation easement has been awarded by the Anne Arundel County Forestry and Forested Land Protection Grant Program, you will receive a check for your awarded funds at the closing.

Note: All fees associated with the conservation easement process, such as landowner legal fees and, survey, easement drafting and other supporting documentation, are the responsibility of the landowner. Some of these costs may be covered through the Anne Arundel County Forestry and Forested Land Protection Grant Program.

Appraisals

When seeking an appraisal, we recommend relying on professionals that are Appraisal Institute Designated or Associate Members who have successfully passed the Valuation of Conservation Easements Professional Development Program. You can find a list of appraisers who meet these criteria here.

Forest Management Plans

Many of our conservation easements require Forest Stewardship Plans, also known as Forest Management Plans. Forest Stewardship Plans can be created by a licensed forester. The author can be a Maryland Department of Natural Resources Forester, or a private forester. Often, the DNR Forester will be the more financially viable option. The DNR Forester assigned to Anne Arundel County is Justin Arsenault (contact information below), and he is able to write plans for properties between 10 and 500 acres in size for less than $400. Please allow approximately 2-4 months for a management plan to be completed.

Justin Arseneault
Project Forester, Forest Service
Department of Natural Resources
8023 Long Hill Road
Pasadena, Maryland 21122
410-360-8421 (office)
410-360-9875 (fax)
justin.arseneault@maryland.gov

Below are links to Scenic Rivers’ organizational policies, last updated July 23, 2018. All policies are approved by Scenic Rivers Land Trust's Board of Directors unless stated otherwise.

• Conservation Easement Acceptance Criteria Policy
• Scenic Rivers Land Trust Bylaws

Scenic Rivers adopted the Land Trust Alliance's newly revised Standards and Practices on June 13th, 2017.