1. Conservation Easements: Preserving Agricultural Land and Water
Sarah Parmar
Colorado Open Lands
Colorado Congreso de Acequias
October 11, 2014

3. What is a Conservation Easement?
A conservation easement is a legal document whose purpose is to protect specific conservation values of land (including agriculture), by restricting certain uses of the land that are not consistent with those values.
That legal document represents a relationship between you, as the landowner, and the “holder” of the conservation easement – a land trust or government agency.

4. Typical restrictions in a conservation easement
No subdivision or limited subdivision
Limited homes and other buildings within identified areas (“building envelopes”)
Prohibition or restrictions on mining
Water rights must be kept with the land (cannot sell or change use of water)

5. What a Conservation Easement Is NOT
A quick and easy way to make money
A way for a land trust or government to gain control of your property
There are potential cash and tax benefits associated with conservation easements, but if this is your only motivation, you probably shouldn’t do it.
Land can still be used, sold, mortgaged, and passed on to future generations. Easements do not mean that the public can access your property.

6. Why a Conservation Easement? Land Trust/Government Perspective
We want to protect those things that make Colorado special!
We believe that ranchers and farmers are the best owners and managers of their land.
Conservation Values
Agricultural Operations (working farms and ranches)
Relatively Natural Wildlife Habitat
Open Space (scenic views that property provides to the public)
Public Education and Outdoor Recreation (fishing, wildlife
viewing, trails)
Historical Sites

7. Why a Conservation Easement? Landowner Perspective
You care about keeping your land open for future generations
Keeps land and water available for ag
Peace of mind knowing that land won’t be turned into a subdivision
Provides a one-time source of income and/or stream of tax benefits
Can make it easier to pass the land to your heirs

8. How is a Conservation Easement Valued?
“Before Value” –
“After Value”
Conservation Easement Value
“Before value” is what your property would sell for today (based on comparable sales)
“After value” is what your property would sell for with the conservation easement restrictions on it
The difference is the value of the rights you are giving up in the conservation easement
*Key question is whether the conservation easement really changed the “highest and best use” of the land

9. Tax Benefits of Conservation Easements
Federal
Tax Deduction: Qualified farmers and ranchers may deduct up to 100% of their income for up to 16 years up to the value of their conservation easement (others may deduct up to 50% of AGI)
State
Tax Credit: Landowners generate a credit equal to 50% of their conservation easement value up to $375,000 which they can either:
Use to offset their own tax bill (for up to 20 years)
Or sell to someone else to use (going rate is 82 cents on the dollar)
Estate
A conservation easement reduces the value of your land; therefore reducing the estate tax burden on your family when land passes from one generation to the next

10. Example
Current farm
Highest and best use
Before value of $500,000

11. Example Highest and best use Conservation easement
after conservation easement
Conservation easement
Before value of $500,000
After value of $300,000
Easement value of $200,000
Federal deduction of $200,000
State tax credit of $100,000
Sale of credit = $82,000
Don’t forget costs!

12. What is the process like?
Contact a land trust – COL, RiGHT
Costs and Tasks – average cost of conveying an easement is $40,000
Landowner Assistance
Funding – NRCS, GOCO, private
Time involved – at least 6 months for a donated conservation easement; often 2 years for a funded conservation easement

13. NRCS Agricultural Land Easement Program
Provides funding up to 50% of the conservation easement value for qualifying cropland and grassland Land trust applies for this funding to pay landowner for conservation easement Farm Bill program and new program rules still being set

14. QUESTIONS? Colorado Open Lands Sarah Parmar (719) 695-0060 RiGHT
Rio de la Vista
(719)