In general, any private landowner has the option to forego development, however there are mechanisms to offer financial benefits to the landowner and to ensure permanent protection of the land. The basic mechanism is the conservation easement, which protects significant resources of a property on a permanent basis while maintaining private ownership and economic use of the land. In order to encourage private landowners to make donations of conservation easements, the Internal Revenue Service (IRS) has established criteria for real estate donations, which, if met, entitle the property owner to reduce the value of the affected property. These requirements are also recognized by the State of Colorado and Boulder County. In return for granting an easement, a landowner may receive a number of tax benefits. The IRS allows tax deductions for donations of easements in five categories:
A benefit of conservation easements is that an easement is written specifically for a certain property and can be tailored to fit both the landowner's wishes and the needs of the resource to be protected. A conservation easement is a deed restriction that is attached to the legal description of the property. It might limit how much development can occur, it can specify where homesites can be located or it can outline management directives such as how many cattle can be grazed on a certain site. Private landowners voluntarily donate easements to a qualified non-profit organization or to a government agency. Easements might also be purchased by those agencies or organizations. It is the responsibility of the organization or the agency that holds the easement to ensure that the landowner is meeting the requirements of the easement and to take action if the easement is violated. When a conservation easement is donated to a qualified conservation entity, it is treated like a contribution to a charity, such as the Red Cross or Girl Scouts. The value of the easement depends on how much the landowner has given away. A donation of development rights is valued as the difference between the "before" and "after" values of the property which are determined by an appraisal.
Private landowners also have other options.
Purchase - A property can be acquired by a conservation organization or government agency "fee simple", that is, through outright purchase of all of an owner's interest in a property. While in many instances, obtaining cash payment of full market value yields the greatest return to the landowner, capital gains and other taxes may significantly reduce net return and make other types of transactions more attractive.
Donation or Gift - For certain landowners the charitable donation of land to a public entity or a non-profit organization is attractive for tax, family and estate planning reasons.
Bargain Sale - A property owner may sell the property at a price well below its appraised value; the difference between the sale price and the appraised value is treated as a gift, which is tax deductible.
Donation with Reserved Life Estate - A property will be donated outright through bequest of lifetime estate, also called a life tenancy. This device allows the donor to live on the property until their death or the deaths of specified heirs, while giving them the tax benefit of a large donation before their death. After death, the property is transferred to the receiving organization. A management or conservation agreement can be executed to ensure that the land is kept in the condition promised by the donor until the transfer.
Charitable Gift Annuity or Charitable Remainder Trust - Instead of cash sale, a landowner may wish to donate a property to a governmental entity or non-profit organization in return for an annuity or fixed payments to fund retirement.
Installment Purchase - An installment purchase is simply a purchase spread over a term of years to benefit both buyer and seller. An interest rate is built into each installment payment, and one of the benefits of selling to a public entity is that the interest may be tax exempt.
Lease-Option - A lease-option agreement permits the conservation entity to lease a property for a period of time with an option to purchase the property during or at the end of the term of the lease. Such an arrangement would permit the leasing organization to determine whether it is in its long term interest to acquire the property, assess management costs, and provide additional time to assemble funds to complete the purchase.
Rolling Option - A rolling option is a series of options to buy portions of a property and thus extend the purchase over a period of years. Rolling options are frequently used by public entities that do not have sufficient funds for a fair market purchase, but can expect an annual appropriation for a portion of the sales price.
Right of First Refusal - Through a right of first refusal, landowners agree to inform the public entity or non-profit organization of their intention to sell a property, providing those organizations with the opportunity to match the best offer. A right of first refusal does not bind the agency or organization to buy, but would give it the opportunity to purchase if desired.
Management Agreement - A management agreement identifies a plan according to which a property will be managed, either by a public entity or the landowner. It permits a landowner and the public entity to cooperate on managing a specific property to meet mutual objectives. A management agreement does not protect a property permanently.
Because the tax and legal issues surrounding land conservation are complicated, education of private landowners should be a priority of land conservation efforts. Even landowners who may own small vacant parcels can benefit from conservation actions and will be serving to limit density and resource depletion in the mountain environment. Because estate taxes are assessed at a high rate and Boulder County land values have appreciated dramatically in recent years, some long-term landowners may need expert advice in order to pass land on to family members, or to carry out estate planning. Others wishing to gain tax benefits will also need technical assistance. Providing expert advice is one way that the Magnolia community can help each other and preserve the landscape at the same time. Workshops could be organized that would bring conservation experts (volunteers from area land trusts, local real estate associations, estate lawyers, accountants, etc.) into the community to present different options and to answer technical questions. These workshops might also serve to build community support for land conservation goals.
There are a wide variety of conservation organizations and land trusts that are qualified to accept donations of easements and to carry out the other conservation activities described above. Each of these organizations has its own set of goals and objectives, which may be more or less compatible with different property and landowner needs.
Boulder County Nature Association (BCNA) has a broadly defined mission to preserve the natural and cultural heritage of Boulder County. BCNA has been instrumental in inventorying and researching flora and fauna in the County and ecosystem planning at the landscape level for over seventeen years.
The Colorado Cattlemen's Agricultural Land Trust is a land trust organized in recent years by the Colorado Cattlemen's Association that focuses on ranching properties. This land trust holds the conservation easement on the Scates Ranch.
Colorado Open Lands (COL) is one of the few state-wide land trusts, and one of the oldest. COL is flexible as to the type of land conservation projects it accepts. COL holds a conservation easement on the Arapaho Ranch west of Nederland.
The Nature Conservancy (TNC) operates a Colorado Field Office in Boulder. TNC is a national and international membership organization with offices in every state whose mission is to preserve plants, animals, and natural communities that represent the diversity of life on Earth by protecting the lands and waters they need to survive. TNC has worked cooperatively with the County on open space preservation on properties such as the Heil Ranch.
The Rocky Mountain Elk Foundation is a hunter's organization devoted to the preservation of elk habitat. Most of the group's effort is devoted to land owner education concerning the needs of elk and the need for public access as well as the acquisition of real estate interests to preserve elk habitat and hunter access. The group accepts donations and acquires property rights through purchase.
The Trust for Public Land (TPL) is a national organization, with a Colorado projects office, which has broadly defined objectives for conservation. TPL has focused on lands in or near urban areas and emphasizes lands which will have public access. TPL has worked to assist local land trusts through its regional offices and assists in the formation of new conservation organizations, providing fund-raising, legal and accounting support.
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