DONATE
facebook linkedin youtube

 

Keeping Texas Big,
Wide and Open
Created by landowners for landowners, TALT's mission is to protect private working lands, thus conserving Texas’ heritage of wide open spaces.

Photo © D.K. Langford

Frequently Asked Questions PDF Print E-mail

 

Q.  What exactly is a conservation easement?

A. A conservation easement is an agreement between a landowner and a qualified land trust, conservation group or government agency regarding the future uses of private property. As a private property owner, you have a number of private rights that go along with the ownership of your property. By granting a conservation easement, you agree to give up some of those rights. In a conservation easement, the owner of the property, also known as the easement Grantor, retains all rights of ownership not specifically prohibited or limited by the easement. These include the rights to exclude public access and to sell the property. The easement holder, or Grantee, on the other hand, only has rights specifically included in the easement. The rights typically granted by the landowner to the easement holder include the right to some or even all development and the right to monitor the property on a regular basis for any activity that is inconsistent with the purposes of the conservation easement.

Texas Agricultural Land Trust (TALT) conservation easements are tailored to fit a landowner's individual situation, and the terms of the easement are established only after detailed discussions between the landowner and TALT.  Landowners continue to have complete control over public access to their property after the completion of a conservation easement.

Q.  What does a conservation easement do to the value of my land?

A. As explained above, a conservation easement removes some of the rights that normally come with land ownership. Those rights have a value and are determined by an appraisal. Theoretically, the value of the easement is the diminution in the current market price of the property caused by the restrictions contained in the easement.

Q.  How is the value of an easement determined?

A.  An appraiser will perform an analysis of the market value of a property based upon the "highest and best use" of the land and what similar properties in the area are selling for without the encumbrance of an easement. The appraiser compiles recent comparable sales of lands in the area to determine the approximate market price of the property. This is known as the "Before" value, i.e. the value before an easement is placed on the property. The appraiser will then determine the value of the property with the restrictions in place. Most of the time this means that the appraiser will look at properties that do not have the potential to be developed beyond what the easement allows on the property he is appraising for the easement. This is referred to as the "After" value – the market price after the easement is placed on the property. The difference between these "Before" and "After" prices is the value of the easement.

Q.  What amount can I expect to receive from a conservation easement?

A. The value of a conservation easement is based upon both the extent of the restrictions a landowner spells out in the easement and the market for land in a given region. The more development rights a landowner gives up, the more the easement is worth. Also, the market for both properties with development potential and conservation properties vary from region to region. Typically, most landowners who give or sell easements only reserve the right to build a limited number of new residences to accommodate family members so that they can live on the ranch and help with its operation. As a general rule in these cases, the easement value will run from 35 to 65% of the market value of the property without the easement. However, there are many variables and we have seen the range of easement values span from 20% all the way to 90% in rare cases.

Q.  Is the value of an easement affected by its likelihood of development? For instance, would a conservation easement close to the city limits be valued higher than one in a rural area?

A. The reduction in value (see above, “after value”) is more likely to be greater for a conservation easement close to a city than for one in a rural area with little likelihood of development.

Q. Do I have to enroll my entire property in a conservation easement?

A. No, it is not necessary to enroll your entire property in a conservation easement. A conservation easement document is a dynamic agreement, meaning that its provisions are negotiable and can be tailor-made to meet the needs of landowner. One size does not fit all. In many cases, landowners will designate an area that will not be covered by the conservation agreement, so that family members can build additional homes on the property or the family can use that land for something that is prohibited under the conservation easement. One should bear in mind, though, that the entire property has to be appraised when it is time to conduct the qualified appraisal.

Q.  Does a conservation easement mean that the government will have more oversight over my land?

A. No. A conservation easement is an agreement between the rancher and the Texas Agricultural Land Trust or other qualified land trust. TALT, in cooperation with the landowner, monitors compliance with the easement conditions and does not share that information with government agencies or the public. Occasionally, funds for easement purchases are made available by government programs that require reports from the land trust regarding easement compliance and may even have conditions where an easement would revert to a government agency should the land trust cease to exist as an entity or be unable to carry out its easement monitoring responsibilities. However, the landowner always has the option to decide whether or not to accept these funds with their conditions. TALT will always discuss the pros and cons of any funding program with the rancher prior to accepting any money for an easement purchase.

Q.  Are many conservation easements challenged by the Internal Revenue Service?

A. The IRS has challenged a number of conservation easements, but many of those challenges came as a result of people abusing an income tax credit program in Colorado. The IRS came down hard on the abusers. Today, land trusts are working diligently to ensure that each donation is a legitimate conservation easement, which will prevent future IRS challenges.

Q.  I've heard horror stories about radical environmental groups being able to sue ranchers and land trusts over environmental issues because there is an easement on the property. Is this true?

A. In fact, a lawsuit over endangered species violations or habitat destruction can be filed whether or not a property has a conservation easement. Because an easement is a recorded document, it is true that any member of the public can have access to the easement document and find out what restrictions are placed on the property. Lawsuits are uncommon and generally can occur only if the easement holder fails to monitor and enforce compliance with the easement conditions.

TALT works hard with landowners to ensure that each easement anticipates their long-term needs for the future and that they are comfortable with all terms and conditions of the easement. In addition, TALT has a process in place to ensure that if a ranch is ever sold, the new owners are made aware of the easement and TALT’s role as an easement holder. All these steps help minimize the potential of a legal action from a third party.

It has been the experience of land trusts in other states that, rather than make a property more vulnerable to outside attack over restrictions, ranches with easements are generally the last to be scrutinized for violations because outside groups and government agencies realize that ranchers who have easements are good stewards of the land, and that, furthermore, having a land trust as a "conservation partner" ensures sound management of all environmental resources on the land.

Q.  How do oil and gas and wind operations impact conservation easements?

A. While surface mining is prohibited, Treasury regulations allow sub-surface mineral extraction as long as the landowner can prove that there will be minimal long-term or permanent damage to the surface. Therefore, on easements with oil and gas activity, TALT requests that the landowner either have a surface use agreement or some other demonstrated control over surface damages. The IRS has largely been silent on whether wind turbines are allowed; therefore TALT will determine whether wind energy operations will be allowed on a case-by-case basis. 

Q.  What happens if for whatever reason TALT ceases to exist?

A. The conservation easement document provides for the landowner and TALT to agree on what entity to transfer the easement to. If for some reason that arrangement does not work, the matter would be settled by a judge.

Q.  Can a landowner withdraw from the agreement 10-15 years down the road?

A. Some states allow term easements for purchased conservation easements, but to qualify for a donation under IRS rules, an easement must be perpetual. Generally, one cannot withdraw from the agreement unless you can prove in court that the conservation value no longer exists or the conservation easement no longer protects the conservation values it promised to honor. Since a conservation ease is perpetual, it should not be entered into lightly. Future generations must abide by the agreement’s provisions.

Q.  Does having land under easement protect you from eminent domain?

A. Unfortunately having an easement does not shield a landowner from condemnation. However, an argument can be made that the acceptance of a conservation easement by the IRS (in the case of donated easements) or a public agency (in the case of purchased easements) is recognition of the public benefit of protecting that open space. In the event of condemnation proceedings, the land trust will help the landowner advocate for an alternative solution. 

Q.  Will a conservation easement lower my property taxes?

A. Conservation easements were created as one response to a burdensome and unfair tax system. However, a conservation easement generally does not affect property taxes if the land is already assessed for agricultural use or open space. In the case of TALT, the conservation easement is designed to help keep the land at its agricultural tax value.

Q.  What is the minimum size of conservation easement TALT will take?

A. There is no minimum size. The TALT board reviews each application on a case-by-case basis to determine the property’s conservation values. The determining factor is often whether there is sufficient acreage to support agriculture or wildlife management activities.

Q.  How is TALT funded?

A. Grants from the Meadows Foundation and the National Fish and Wildlife Federation provided initial start-up and operational funds, along with donations from the Board of Directors and private donors.  (See “Our supporters”)

Q.  TALT was established to conserve productive agricultural lands. Are there other options for land that has limited productivity or does not have an agricultural use?

A. Texas is home to at least 49 land trusts that are as diverse as the organizations that created them. Some are devoted to protecting a specific region and will others focus on endangered species. Each land trust has a specific mission and, with careful research, landowners can find a land trust with goals and objectives that align with the landowner’s. (See the Texas Land Trust Council for more information on Texas land trusts: www.texaslandtrustcouncil.org)

Q.  What would be considered a non-ag use? How is hunting classified?

A. Non-ag use is any industrial or manufacturing operation that is not devoted to agriculture such as a golf course or a welding/metal fabrication business. A bed-and-breakfast is an example of a non-traditional use that would be acceptable in a conservation easement held by TALT. Hunting is considered an agricultural activity.

Updated 10/9/10