Info for Landowners
With today’s land values, property you own in Santa Barbara County may be one of your largest assets.
Making that land work economically today, and being able to pass it on to your family’s next generation, requires careful planning.
For many landowners, there is a unique set of tools that can help guarantee that your land stays in agricultural production or natural open space, and in your ownership, while you receive some of the appreciated value.
State and Federal tax incentives and public and private grants provide economic alternatives to paying estate tax bills on appreciated land, or selling land for development. Created by federal and state law for use by landowners and land trusts, these tools are designed to protect the important rural, agricultural and wildlife landscapes of communities through fair, negotiated transactions with private landowners.
The Land Trust works with Conservation Easements – negotiated legal agreements that leave land in private ownership, available for agricultural and/or residential use by the owner. Each easement is unique to the property, and the terms are negotiated privately between the owner and the Land Trust. The easement protects identified conservation values of the property – such as productive agriculture, wildlife corridors, scenic views or historic buildings – and generally limits subdivision and development to an agreed upon number of homes.
Conservation easements allow the owner to benefit now from the market value of their land, by giving up rights to subdivide and develop it in exchange for income and estate tax benefits or grant payments. Landowners often use the tax savings or grant payments to settle estates, cash out family or partnership interests, make improvements to their ranch or farm, buy additional land, or a life insurance policy to benefit their heirs.
The Land Trust acquires land and conservation easements by donation (in exchange for tax incentives), or by purchase (using public and private grants and donations). The Land Trust can also help you learn about technical support and grant programs for voluntary improvements to protect or enhance wildlife habitat on your ranch or farm. Our Resources page lists some sources of information.
Occasionally, the Land Trust will buy part of or all of a property from a private owner. This was the case when we purchased:
• Part of the Sedgwick Ranch from the heirs of Duke and Alice Sedgwick and transferred it to the University of California Natural Reserve System.
• The Carpinteria Bluffs bought from a developer and transferred to the City of Carpinteria.
• Arroyo Hondo Ranch purchased from the Hollister family, now run by the Land Trust as a natural and historic preserve.
• The 462 acre Hot Springs Canyon in Montecito.
Additionally, the Land Trust purchased the Coronado Butterfly Preserve, and important holdings at Carpinteria Salt Marsh, Point Sal and More Mesa. In these cases, the natural resources and the special opportunities for scientific research, outdoor education and public recreation led us to purchase the land.
What Kind of Land is Eligible?
The most important factor in considering conservation options is your own goal as landowner.
Most successful conservation “deals” are between land trusts and people who want to see their land remain open and less developed, rather than getting “top dollar” through its potential for subdivision and development.
Each landowner needs to carefully evaluate their specific, long-term goals and needs and determine what development or use rights they need to keep, and what they are willing to give up in a conservation transaction. Land conservation planning needs to be done in conjunction with your family’s business, financial, and estate planning.
To be eligible for a Land Trust transaction, your land must have recognized conservation values. These conservation values may be land important to the community for its agricultural production, wildlife habitat, wetlands, scenic open space, historic buildings or cultural resource sites.
If your land has these values, the Land Trust can help you and your advisors evaluate conservation scenarios and potential incentives that fit your property and family needs.
When considering a conservation project, the Land Trust consider factors like the size of the property; it’s proximity to other conserved land; the extent and quality of the habitat, agricultural, scenic or historic resources; the feasibility of raising funds or securing tax incentives to complete the transaction; and how ready the owner is to act. We also consider the existing or potential development risks to a property.
We favor conservation easement projects that help preserve agricultural use, that provide greenbelts on the borders of our cities, towns and foothills, or that limit development and protect areas with recognized wildlife or ecological importance.
It is important to know that conservation easements do not require public access.
At times, the Land Trust works with landowners who are willing to make their land available for public access – by selling or donating property so the public may enjoy it. We occasionally negotiate and hold trail easements where the underlying land remains private but the owner is willing to allow a hiking trail. Property adjacent to existing public park or national forest land may be eligible for acquisition and transfer to state or federal agencies, although funding is limited.
When considering any purchase or donation of land, we must plan carefully for its future ownership or management – either by the Land Trust or by transferring it to another public or private organization to manage. The Land Trust cannot accept land without knowing that the resources are there to take care of it. We work with other community groups to raise property endowments, organize trail and habitat project volunteers, and develop partnerships to ensure land we acquire is well managed.
What is a Conservation Easement?
Often land can best be protected if the owners are motivated to pursue economically viable alternatives to subdividing and development.
A conservation easement is a voluntary, incentive-based agreement between a landowner and a non-profit land trust or a government agency that restricts use of property to protect its “conservation values”.
Placing a conservation easement on private land:
• Protects agreed upon conservation resources such as the utility of the land for productive agriculture, unique wildlife habitat, scenic view and historic structures. It may apply to all or part of a property.
• Creates a permanent deed restriction that sets limits on subdivision and development. May allow a limited number of lots to be subdivided and sold.
• On ranch and farm land, allows continued agricultural use and development consistent with “sound, generally accepted agricultural practices.”
• Typically allow a limited number of homes to be built for the landowner’s family and employees.
• Keeps the land in private ownership. If you sell the property, the easement stays with the land and is binding on the new owner.
• Leaves your land, water and mineral rights intact, with certain restrictions on surface mining.
• Can result in significant income and inheritance tax savings, or may be purchased with grant funds raised by a land trust.
• Does not grant any rights of access to the general public.
• Gives legal rights to the land trust to monitor and enforce the terms of the easement, but does not cause any new government regulation of the land.
Granting a conservation easement creates a permanent deed restriction. The easement may be held by a qualifying non-profit organization (land trust or conservancy) or by a government agency.
The law allows for a conservation easement to be terminated in court only if the reasons for creating the easement in the first place no longer can be served, but this has rarely happened in the thirty-year history of modern conservation easements. A conservation easement does not override any existing public or private easements on the property.
The Land Trust for Santa Barbara County works with landowners to craft land preservation strategies that benefit both the property owner and the public interest. All conservation easements, to qualify the landowner for tax or grant incentives, must have certain provisions required by federal and state law. Download our Model Conservation Easement publication for more information.
Our staff is available, at no charge, to meet with eligible landowners and their advisors to discuss conservation options. Call 966-4520 or email us.
Agreeing to deed land or a conservation easement is one way to realize the appreciated value in your land without selling it for subdivision or development.
The value of land or a conservation easement to be granted is determined by an independent real estate appraisal. For a conservation easement, the appraiser looks at the fair market value of the land as it exists, and what the market value would be with the conservation easement in place. The difference is the value of the easement. The landowner’s tax benefits or grant payments are based on this appraised value.
Conservation easement values typically range from 25% to 60% of the fair market value of the land. The easement value, and therefore the owner’s financial benefit, is larger when significant development rights are given up. For example, an easement that gives up the right to build homes on existing legal parcels will likely have higher appraised value than giving up the right to subdivide an existing parcel. Easement values tend to be higher for land nearest to cities or towns, where the potential for development is more realistic. Donating a conservation easement over land that is likely not suitable for subdividing, building or cultivation – such as very steep slopes or land designated as environmentally sensitive habitat on county zoning maps – will not be highly valued.
At the state and federal level, current law provides an income tax deduction for the donation of land or a conservation easement. Deductions are limited to a percentage of adjusted gross income, but may be taken over several years.
Donating land or an easement can also yield significant estate tax savings. The value of the land or easement donated for conservation is no longer part of the taxable estate. In addition, a percentage of the remaining appraised value of land subject to a conservation easement is exempt from federal estate tax. Since 1998, the law also allows a conservation easement to be donated by the estate for a short period of time after a landowner’s death. Conservation easements can also be used with the “like-kind exchange” provisions of the tax law to defer or avoid taxes on capital gain.
The Land Trust can help you develop and appraise qualifying conservation strategies that fit with your family and business plans. Your tax advisor can then compare the economic outcome of donating or selling a conservation easement to other possible futures for your land.
Sometimes a landowner offers a bargain sale of land or an easement. This means selling at a price below the full appraised value. The difference in price is considered a charitable contribution, generating a tax deduction that helps offset income or capital gains taxes from selling the land or easement. You should consult your own tax advisor to structure the best transaction possible.
It is generally easier for the Land Trust to complete projects where land or a conservation easement is being donated. A donated land interest, if based on the Land Trust model easement (or a similar one), and after a qualified real estate appraisal is done, is eligible to be claimed as a deduction beginning the year it is recorded with the owner’s income tax filings.
Purchasing land and easements requires some combination of community fundraising, writing grants to government agencies and foundations, plus a lot of paperwork and negotiating with those funding sources. All of this takes time and money. The availability of grants varies from year to year. Conservation easements purchased with government grants may come “with strings attached.” Projects with multiple funding sources mean more agency staff and lawyers, with different views on how easement restrictions or legal clauses should be written. The Land Trust helps negotiate these issues between the landowner and the agencies.
Land that is required to be protected as a mitigation or condition of approval of a government permit for development is not eligible for either tax incentives or grant funding. The Land Trust does hold some conservation easements for mitigation land, where the developer chose to grant the easement to our organization rather than to a government agency.
Our Links page and the Resources tab above offer sources of detailed information on these landowner conservation incentives.
The Land Trust’s Role
With conservation easements, the Land Trust holds, monitors and enforces all of the easements it obtains.
In accepting a conservation easement, we take on the legal responsibility to do this “in perpetuity.” In 2002, the Land Trust holds easements on 21 properties throughout Santa Barbara County.
When the easement is completed, the Land Trust prepares a Baseline Property Inventory including maps, photographs and written material describing the condition of the land, existing buildings and the conservation values. Both parties sign an acknowledgment that this represents the condition of the property when the easement is granted.
Generally, a Land Trust staff member and one or two of our board members conduct a monitoring site visit once or twice each year. Visits are scheduled in advance with the owner. We document changes in land use and the land itself, whether natural or human caused, in written notes and photographs. If necessary, we may engage specialists, such as biologists or agricultural advisors, to help us evaluate compliance with specific terms of the easement. We send the landowner a monitoring report describing our observations, and whether the property is being used in accord with the conservation easement.
In some cases, a conservation easement gives the Land Trust the right to be notified and to approve of certain improvements before they are built. For example, the location of permitted new homes or large agricultural buildings may be subject to Land Trust approval to minimize the impact on recognized scenic views. Our conservation easements do not specify the type of agriculture or the farming and ranching practices that an owner may employ. Easements protecting wildlife habitat may limit things like clearing vegetation or cutting of new roads in mapped areas of the property without Land Trust approval.
If the Land Trust determines that our easement has been violated (which has rarely happened), we request the owner to cure the violation, and have the right to require that any identified conservation values that have been damaged be restored. If a dispute over terms or enforcement of the easement arises, our easements call for mediation or arbitration. Ultimately, the Land Trust has specific enforcement rights, given only to the holder of the conservation easement, to take an owner to court to enforce the easement. In our history with local landowners this has never happened, but we take our responsibility seriously and are prepared to go to court if necessary to uphold and defend the easements we accept.
To ensure the Land Trust’s capacity to monitor and enforce our easements, we have a separate Stewardship Fund, restricted by our board of directors to be used only for monitoring and enforcement costs. When we accept a new easement, we ask the landowner to make a tax-deductible contribution to the Stewardship Fund. The suggested donation is based on the size of the property, the retained development rights and the complexity of the easement.
Publications and Resources
The Land Trust maintains a library of information of interest to owners and their advisors interested in land conservation strategies.
Here are some fact sheets you may download:
- Frequently Asked Questions About Land Conservation
- Agricultural Conservation Easements Fact Sheet – (American Farmland Trust)
- LTSBC Model Conservation Easement
- LTSBC Stewardship Fund Policy
- Natural Heritage Preservation Tax Credit (State of California)
The following are some publications we can send you. Please call 966-4520 or email us with your mailing address to order these, or to make an appointment to review our library.
- Conservation Options for Landowners (Land Trust Alliance, 2003)
- Preserving Family Lands (Steven Small, 2009)
- Protecting Your Land With A Conservation Easement (Land Trust Alliance)