CONSERVATION
EASEMENTS –
LEGAL ASPECTS
AGRICULTURE MEETING
HON. PHILLIP PELLETIER
HENDRY COUNTY PROPERTY APPRAISER
JANUARY 21, 2010
Gaylord A. Wood, Jr.
Wood & Stuart, P.A.
Bunnell FL 32110
© 2010 All Rights Reserved
Gaylord A. Wood, Jr.
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Limited practice principally to ad
valorem tax cases since 1968
Firm exclusively represents Property
Appraisers in 14 counties including
Hendry County since 1979 or so
Regular Member of International
Association of Assessing Officers and
Member of the Legal Committee
WHAT IS PROPERTY?
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A House and Lot?
A Diamond ring?
Water Rights?
A Pet Boar Hog?
WHAT IS PROPERTY?
Answer:
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A House and Lot?
A Diamond ring?
Water Rights!
A Pet Boar Hog?
PROPERTY is the rights flowing
out of the ownership of an
object. If you can see it, smell
it, touch it, hear it or taste it, it is
not property.
What are conservation easements?
Conservation easements are, in
principle, voluntary legal agreements
between landowners and a land trust
or government agency that
permanently limit land uses in order
to protect wildlife habitat and other
natural resources, while allowing
certain carefully planned activities
that will not damage these
conservation values.
Florida Statutes define
conservation easements:
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Section 704.06, F.S.
“…a right or interest in real property
which is appropriate to retaining land or
water areas predominantly in their
natural, scenic, open, agricultural, or
wooded condition; retaining such areas as
suitable habitat for fish, plants, or wildlife;
retaining the structural integrity or
physical appearance of sites or properties
of historical, architectural, archaeological,
or cultural significance….” A N D 
Section 704.06 Prohibits:
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Construction or placing of buildings,
roads, signs, billboards or other
advertising, utilities, or other
structures on or above the ground
Dumping or placing of soil or other
substance or material as landfill or
dumping or placing of trash, waste,
or unsightly or offensive materials
Section 704.06 Prohibits
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Removal or destruction of trees, shrubs,
or other vegetation
Excavation, dredging, or removal of
loam, peat, gravel, soil, rock, or other
material substance in such manner as to
affect the surface
Surface use except for purposes that
permit the land or water area to remain
predominantly in its natural condition
Section 704.06 Prohibits:
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Activities detrimental to drainage, flood
control, water conservation, erosion
control, soil conservation, or fish and
wildlife habitat preservation
Acts or uses detrimental to such
retention of land or water areas
Acts or uses detrimental to the
preservation of the structural integrity or
physical appearance of sites or properties
of historical, architectural, archaeological,
or cultural significance
Section 2 – How created?
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By restriction, easement, covenant,
or condition in any deed, will, or
other instrument executed by or on
behalf of the owner of the property,
or in any order of taking
Property Owner Incentives:
Owner receives a huge tax
deduction!
Up to 50% of Adjusted Gross
Income for 15 years
Farm property – 100% through
end of 2009
Landowner Incentives
Section 170, Internal Revenue Code
 Preservation of land areas for
 outdoor recreation by, or the education
 of, the general public,
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Protection of a relatively natural
habitat of fish, wildlife, or
plants, or similar ecosystem,
Preservation of an historically
important land area or a certified
historic structure, or
Landowner Incentives (Cont’d)
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the preservation of open space
(including farmland and forest
land) where such preservation is
either: for the scenic enjoyment of the
general public and will yield a
significant public benefit or
Pursuant to a clearly delineated
federal, state, or local governmental
conservation policy
and will yield a significant
public benefit.
But, IRS will deny deduction…
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If the landowner contends it is
creating an “open space” easement
and
Retains rights to develop and use
the land that could interfere with the
essential scenic quality of the land or
the governmental conservation policy
being furthered by the donation.
(“Inconsistent Use” test)
Some Concerns about
Conservation Easements
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How do you measure whether they
provide a public benefit equal or
greater to the public subsidy from
tax deductibility?
How do you appraise the
easements for IRS and tax purposes?
Will the holder of the easement
enforce them in perpetuity?
Conservation Easements come
in two flavors:
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Public Easements
Private Easements
Private Easements (704.06)
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May be acquired by “a charitable
corporation or trust whose purposes
include protecting natural, scenic, or open
space values of real property, assuring its
availability for agricultural, forest,
recreational, or open space use, protecting
natural resources, maintaining or
enhancing air or water quality, or
preserving sites or properties of historical,
architectural, archaeological, or cultural
significance.”
HUGE LOOPHOLE:
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“A conservation easement may be
released by the holder of the
easement to the holder of the fee
even though the holder of the fee
may not be a governmental body or
a charitable corporation or trust.”
Washington Post 2003 – “Nonprofit
sells scenic acreage to allies at a
loss” (Nature Conservancy)
PUBLIC EASEMENTS
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“Conservation easements may be
acquired by any governmental body
or agency.” (704.06)
No central registry from which one
can determine which governmental
body holds which easements.
Nationally, believed that 1,700
trusts hold 37,000,000 acres of land
in fee and conservation easements.
Is there a “Standard
Conservation
Easement?”
Is there a “Standard
Conservation
Easement?”
Short answer – “No!”
FISHEATING CREEK – GLADES COUNTY
FISHEATING CREEK
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Lykes Bros. owns 320,000 acres in
Glades and Highlands Counties.
Creek: “Place Where Fish are Eaten”
Lykes Bros. had two concessions for
canoeing and public access
Closed the waterway when faced with
poaching and vandalism
State of Florida sued to declare
Fisheating Creek a public navigable
waterway.
To settle the case (1999) --
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Fisheating Creek Ecosystem Project
State of Florida acquired WHIP –
Wildlife Habitat Incentive Program
easements and some ownership of
59,910 acres
Cost of $55,628,563
On the list: State seeks to acquire
an additional 116,966 acres
2003 assessed value: $15,326,651
2003 Proposed Acquisition
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24,000 acres – proposed agreement
with State of Florida for $24,000,000
Stated Purpose: To protect delicate
wetlands, forest and native range
ecosystems.
Limit some of Lykes’ agricultural uses
Limit the number of times the land
could be subdivided and sold….
B U T – Also permitted:
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Developing commercial wellfields
that could dry up the wetlands
ecosystem
Drill oil and gas wells, build roads
and pipelines over 71% of the land
Cover the land with deep resevoirs
for water storage
Conduct “Water Management
Activities” like deep well injection…
Conclusion of Florida Department
of Environmental Protection (2003):
"This proposal wasn't a conservation easement, it
was a development permit, with taxpayers
footing the bill," said Nina Baliga of the Florida
Public Interest Research Group. "Allowing this
proposal to go forward would have undermined
the very concept of the conservation easement,
and opened the door to all sorts of shady deals
aimed at exploiting our natural heritage."
Property Tax
Ramifications:
Exemption
Assessment
Florida Constitution
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2008 Tax and Budget Reform
Commission, Amendment 4
Art. VII, Sec. 3 – Provides
exemption for real property
dedicated in perpetuity for
conservation purposes, including
property encumbered by perpetual
conservation easements, as defined
by general law.
Florida Constitution
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Article VII, Section 4(b)
“As provided by general law and
subject to conditions, limitations, and
reasonable definitions specified
therein, land used for conservation
purposes shall be classified by
general law and assessed solely on
the basis of character or use.”
Article VII, Sec. 4(b)
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Implemented by Section 193.501,
Florida Statutes
Land qualified as environmentally
endangered pursuant to paragraph
(6)(i) and so designated by formal
resolution of the governing board of
the municipality or county within
which such land is located;
Section 193.501
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“land designated as conservation
land in a comprehensive plan
adopted by the appropriate municipal
or county governing body; or any
land which is utilized for outdoor
recreational or park purposes may,
by appropriate instrument, for a
term of not less than 10 years… ”
Section 193.501
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“or any land which is utilized for
outdoor recreational or park
purposes ”
Where the development right is
conveyed to a public agency or
private trust,
Section 193.501, F.S.
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“If the covenant or conveyance
extends for a period of not less than
10 years from January 1 in the year
such assessment is made, the
property appraiser, in valuing such
land for tax purposes, shall consider
no factors other than those relative
to its value for the present use, as
restricted by any conveyance or
covenant under this section. ”
Section 193.501
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“If the covenant or conveyance
extends for a period less than 10
years, the land shall be assessed
under the provisions of s. 193.011,
recognizing the nature and length
thereof of any restriction placed on
the use of the land under the
provisions of subsection (1).”
Why has no one used 193.501?
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In a word ---
RECAPTURE!
Section 193.501
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Also, “A person or organization
that, on January 1, has the legal title
to land that is entitled by law to
assessment under this section shall,
on or before March 1 of each year,
file an application for assessment
under this section with the county
property appraiser.”
No application, no problem.
EXEMPTION
2009 Legislature Issues were:
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What form of easement required?
Who permitted to hold the easement?
Minimum size of land?
What environmental values?
What Best Management Practices if other
uses also permitted?
What Payments in Lieu of Taxes?
What other uses also permitted?
“conservation purpose, as defined
in 26 U.S.C. s. 170(h)(4)(A)(i)-(iii)”
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(i) the preservation of land areas
for outdoor recreation by, or the
education of, the general public,
(ii) the protection of a relatively
natural habitat of fish, wildlife, or
plants, or similar ecosystem,
(iii)
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(iii) the preservation of open space
(including farmland and forest land)
where such preservation is (I) for the scenic enjoyment of the
general public, or
(II) pursuant to a clearly delineated
Federal, State, or local governmental
conservation policy, and will yield a
significant public benefit.
TOTAL EXEMPTION
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“(2) Land that is dedicated in perpetuity
for conservation purposes and that is used
exclusively for conservation purposes is
exempt from ad valorem taxation. Such
exclusive use does not preclude the
receipt of income from activities that are
consistent with a management plan when
the income is used to implement,
maintain, and manage the management
plan. ” Also: > 40 acres.
PARTIAL EXEMPTION
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“(3) Land that is dedicated in
perpetuity for conservation purposes
and that is used for allowed
commercial uses is exempt from ad
valorem taxation to the extent of 50
percent of the assessed value of the
land.”
40 ACRE WEASEL
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“(4) Land that comprises less than 40
contiguous acres does not qualify for the
exemption provided in this section unless,
in addition to meeting the other
requirements of this section, the use of
the land for conservation purposes is
determined by the Acquisition and
Restoration Council created in s. 259.035
to fulfill a clearly delineated state
conservation policy and yield a significant
public benefit. ”
Buildings and Improvements
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“Buildings, structures, and other
improvements situated on land receiving
the exemption provided in this section and
the land area immediately surrounding the
buildings, structures, and improvements
must be assessed separately pursuant to
chapter 193. However, structures and
other improvements that are auxiliary to
the use of the land for conservation
purposes are exempt to the same extent
as the underlying land.”
ENFORCEMENT
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“Water management districts with
jurisdiction over lands receiving the
exemption provided in this section have a
third-party right of enforcement to enforce
the terms of the applicable conservation
easement for any easement that is not
enforceable by a federal or state agency,
county, municipality, or water
management district when the holder of
the easement is unable or unwilling to
enforce the terms of the easement. ”
Fiscally Constrained Counties
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After November 1, 2010
May apply for grants to replace
taxes lost as a result of Amendment
4.
QUESTIONS?