USING CONSERVATION COVENANTS TO PROTECT PRIVATE LAND Judy Atkins Hillyer Atkins

What is a Conservation Covenant?  voluntary, written agreement between landowner and conservation organization to protect private land  interest in land (s. 219 LTA)  designated conservation group holds covenant and can enforce it against owner  filed in Land Title Office  binds future owners  can cover all or portion of land

Possible applications protect sensitive habitat protect cultural and scenic values create buffer zone for stream create greenways or trails restrict uses of land protect for specific uses: sustainable forestry, agriculture prohibit subdivision of land contain building areas protect/restore habitat site specific purposes

When is it the right tool? permanent protection willing landowner available conservation organization conservation objectives a good fit with conservation group need to retain other uses of land a flexible tool tailored to conservation objectives and parties

Benefits retains private ownership can allow other consistent uses can be held by NGO no need for NGO to buy land permanently on title statutory basis eliminates old rules voluntary arrangement benefits natural environment and future generations

What to put in the covenant Purposes allowed by Land Title Act – protect land or amenity in natural state – use of land or building – building restrictions – subdivision requirements – concurrent sale of parcels

Other issues to address in conservation covenants ecological values conservation objectives baseline information management access (s. 218 LTA) monitoring enforcement rent charge dispute resolution

Possible holders local groups large national or provincial groups (e.g. TLC) jointly with local government government agencies (e.g. Islands Trust Fund) NOTE: non-governmental groups must be designated by provincial Minister of Sustainable Resource Management

Steps in the process identify land to be protected identify natural characteristics that need protection choose conservation organization with objectives that fit negotiate terms and conditions prepare baseline information obtain legal and tax advice and appraisals prepare covenant and management agreement prepare survey register covenant and monitor

Tax issues FEDERAL income tax donation of gift – ecological gifts – other gifts taxable capital gains PROVINCIAL income tax property tax property transfer tax

Income tax treatment of gifts of conservation covenants donating a conservation covenant has income tax implications donations may give rise to additional tax liability but also additional tax benefits ecological gift rules provide specific benefits

Capital property gift is a disposition and deemed to give rise to proceeds of disposition tax receipt issued if gift is of capital property (such as land or an interest in land) which has increased in value, may give rise to capital gain after October 17, 2000 generally must include 50% of amount of any gain in income for year unless exemption available tax receipt generally offsets gain

Ecological gifts gifts of ecologically sensitive land – necessary to meet specific criteria three steps: – land must be certified as ecologically sensitive – gift to qualified recipient – fair market value of land must be certified by Minister of the Environment

Ecological gifts eligible for tax credit based on value of gift up to 100% of donor’s net income for year certain recipients subject to special tax (penalty) if future transfer or land use changes without approval percentage of capital gain to be included in income is 25% for gifts made after October 17, 2000