Preserving Forested Lands
Maryland Woodland Stewards
October 3, 2014
Megan Benjamin, Western & Central Region Planner
Forestlands in Maryland
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Forests cover 41% of the State
2.6 million acres
Ownership
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24% public
76% private
Why Preserve
Forestland?
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Air Quality
Estate Planning
Habitat
Natural Legacy
Quality of Life
Recreational opportunities
Scenic Rural Landscapes
Viability of Forestry
Water Quality
Stressors to Resource Lands
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Unprecedented development pressure
Employment centers & jobs accessible from
“remote” areas
Patterns of development
Techniques to Preserve Land
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Zoning
Comprehensive Planning, Water, Sewer, etc.
Preferential Tax Assessments
TDR (Transfer of Development Rights)
PDR (Purchase of Development Rights)
Donated Conservation Easements
Types of Conservation Easements
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Donated Conservation Easements
 MET
 Local Land Trusts
Purchased Conservation
Easements
 County Preservation Programs
 MD Agricultural Preservation
Foundation (MALPF)
 Rural Legacy
 Conservation Reserve Enhancement
Program (CREP)
 Farm and Ranchland Protection
Program (FRPP)
 Forest Legacy
 Established in 1967, accepted first
easement donation in 1972
 Statewide land trust, affiliated with
the Department of Natural
Resources and governed by a citizen
Board of Trustees
 To date, MET has protected over
132,000 acres on 1,080 easement
properties state-wide
 One of the largest land trusts in
country
What is a Conservation Easement?
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A legal agreement
between a landowner
and a nonprofit land trust
and/or government entity
that permanently limits
the uses of the land in
order to protect specified
conservation values.
Conservation Values
Conservation values: the key values or attributes on
the property which are the focus of protection efforts.
Examples:
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Scenic viewshed protection from public roads and
waterways
Protection of wildlife habitat
Protection of water quality
Preservation of significant historical and cultural sites
Protection of productive agricultural land
Protection of forested land
Shoreline and riparian protection
Property Ownership
 Property ownership is a collection of
individual rights
 This collection of rights is often
compared to a “bundle of sticks”
because individual rights can be
removed from the collection just as a
stick can be removed from the bundle
Characteristics of a
Conservation Easement
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Easements are
perpetual (forever!)
Voluntary
Contain flexible terms
Allows landowners to
continue to own, use,
and manage their
property, and sell it or
pass it on to their heirs
Terms and Provisions of a Typical
Conservation Easement
 Industrial and
commercial activities
 Agriculture
 Timber Harvest
 Buffers around water
bodies
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Number of residences
Subdivision
Public access not required
Perpetuity
Benefits to landowners
 Preserve family lands while maintaining their
agricultural, forested, historic use of the
property
 Preserved desired land uses into the future
 Potential tax benefits
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Property, Income, Estate
Tax Incentives for Conservation
Easement Donors
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Federal Income Tax
Deduction
State Income Tax
Credit
Property Tax Credit
Federal Estate Tax
Benefit
Conservation Easement Value
Determination:
Before and After Analysis
Before Value
$1,000,000
- After Value
- $700,000
Value of the CE
$300,000
Federal Income Tax Deduction
Deduction of 30% of AGI income in the year
of the donation and for 5 years forward, or
until the value of the donation is reached.
Federal Income Tax Benefit
Calculation of Deduction
Easement
$300,000
Taxpayers AGI
$145,000 x
Ann. Deduction limit
30%
$43,500 x
# of years allowed
6
$261,000
Federal Income Tax Benefit
Calculation of Tax Savings
Federal Bracket
31%
State Bracket
5.75%
Combined
36.75%
Applied to
allowed deduction $300,000
Tax Savings
$110,250
State Income Tax Credit
Credit of up to $5,000 per year, for each individual
landowner. A further $5,000 credit may be taken
for each of the following 15 years, for a maximum
total of $80,000 in credit, not to exceed the value
of the donation.
Federal Estate Tax Benefit
• Reduction-An easement limits the amount
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of development that can occur, thus
lowering the appraised value of the land.
Exclusion-of 40% of the land value up to
$500,000 per owner, for certain land that is
subject to a donated conservation
easement.
Property Tax Benefits
No County or State property tax on unimproved
land for 15 years from the date of donation.
Internal Revenue Code §170(h)
Conservation Purposes
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The preservation of land areas for outdoor recreation
by, or the education of, the general public
The protection of a relatively natural habitat of fish,
wildlife, or plants, or similar ecosystem
The preservation of open space (including farmland
and forest land) where such preservation is- For the scenic enjoyment of the general public, or
 Pursuant to a clearly delineated Federal, State, or
local governmental conservation policy, and will
yield a significant public benefit, or
The preservation of an historically important land
area or a certified historic structure.
Steps to Complete a Conservation
Easement Donation
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Field visit
Background research
Conservation easement negotiation
Appraisal process
Lien subordination
Presentation of the easement proposal to the land
trust board for consideration
Baseline conducted
If approved - All parties sign the Deed of
Conservation Easement
Deed of Conservation Easement is submitted to the
Maryland Board of Public Works for ratification
Deed of Conservation Easement is recorded in
County Lands Records Office
How is Conservation Easement
Donation Value Determined?
 Based on “Qualified Appraisal”- by an appraiser
holding a state certified general license
 Applicable Standards
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Appraise entire contiguous parcel
Address enhancement to other nearby lands owned by
family or business partners
60 day rule
Completed before you file your return
Uses comparable sales
 Complying with USPAP and Treasury Regulations.
MET Easements
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Standard Language
Forest Stewardship Plans
Costs of Establishing an Easement
 Appraisal
 Survey (sometimes)
 Optional fees
 Attorney
and/or accountant
 Stewardship donation
Questions?
www.dnr.maryland.gov/met
Megan Benjamin
Megan.Benjamin@Maryland.gov
410-514-7912