How and Why To Set Up a Conservation Easement

Conservation easements are a valuable tool that allows you to protect your property interests, sell wildlife and habitat interests, and continue to use your land as you see fit. It provides a vehicle for conservation and ways for landowners to monetize their land, as well as provides a mitigation path for development projects.

Property laws vary by state, and your state’s property tax and development potential can determine whether a conservation easement is right for you. For legal advice about conservation easements and your property rights, talk to a land use and zoning lawyer.

Why Do Property Owners Seek Conservation Easements?

G. Braiden Chadwick, a land use and zoning lawyer in Roseville, California, has established countless conservation easements for a wide assortment of clients. The legal agreement between landowners and government agencies not only protects the land for conservation purposes but also has financial benefits for the real property owner.

“The drivers for looking into doing a conservation easement are varied and many, as are the benefits,” Chadwick says. Most of Chadwick’s clients fall into one of three categories:

1. Agricultural conservation operations. “It could be from a landowner’s desire to protect agricultural uses for federal tax write-offs or a profit.”
2. Part of an industrial project. “It could be spurred by the needs of a project proponent to mitigate the impacts of development elsewhere or to generate credits for a mitigation bank.”
3. Environmental and natural resource stewardship. “Or, it could be on the environmental side of things — for habitat restoration or preservation of a unique property.”

Chadwick summarizes by saying, “I’ve seen motivations running the gamut from all kinds of situations. It might seem big and scary, but if you get the right person and the right team together, it’s something that could provide great value to a project proponent or property owner in a litany of ways.”

Find top Land Use/Zoning lawyers easily

Connect with a qualified attorney today.

Find a lawyer today

1. Agricultural Purposes

“I’ve worked with a lot of farming interests, especially in California, who have used conservation easements to great effect to provide a long-term permanent assurance that the land that they are currently farming will remain forever an agricultural operation,” Chadwick says, citing Napa wine operations, Central Valley stone fruit and almond producers, and more.

Often, he says, they sell the easement to a third party for a mitigation project, or they create it for tax benefits such as an income tax write-off. “You can work miracles for your bottom line because you are taking a reduction in the easement value of the land, generating tax incentives, all the while continuing to farm in the same manner you always have,” Chadwick says.

“I’ve done this for several large farming operators who have had a bumper year in production and sales profits. What they will do is put a conservation easement on large areas of their agricultural land that they have no intention of ever abandoning anyway, which limits the use of that land to agricultural operations and buildings.” The restrictions in the easement generate a tax deduction, allowing the farming operation to keep more of what it earned that year.

2. Industrial Use of the Land

Creating easements in conjunction with sand and gravel mining is common. That is because aggregate mining is generally allowed on agricultural land. “Despite being the source of all the materials society needs to build roads, schools, buildings, and everything else, no one likes a mine in their backyard,” he says. “So mines are pushed further and further out of town, and mining operators are forced to operate on agricultural-zoned land.”

Areas such as Fresno County, he says, have created ordinances that demand establishing agricultural mitigation along with the mining project to mitigate the impact on that farm or forest land. “Under the California Environmental Quality Act, you have that same obligation to analyze and mitigate impacts to agricultural uses, if you’re going to impact them at all,” Chadwick adds. “You see that in a very similar situation for biological impacts, for riparian and stream impacts, for impacts to species and habitat. Agricultural impacts are no different.”

3. Environmental Reasons

Land conservation easements are an integral part of wildlife habitat restoration, including mitigation and conservation banking.

“A mitigation bank will go out and purchase a property. The mitigation banker will still have to go through an entitlement process, with the alphabet soup of state and federal agencies,” Chadwick says, citing the Environmental Protection Agency (EPA), California Department of Fish and Wildlife, U.S. Fish and Wildlife Service, regional water quality control boards, and more.

“They’ll undergo a permitting process, much like any other project. As part of that, they will usually have an enhancement proposal to restore natural habitat and will place a conservation easement over the property, protecting it in perpetuity.”

Afterwards, it will vest that property with a number of “credits” based on the type and amount of habitat conservation values of the property. The mitigation banking company then sells credits to developers who need to mitigate the impact of other development projects.

Planning for Perpetuity

“The process itself can be rather daunting,” Chadwick says. “If you are a landowner and you are selling a conservation easement on your property, chances are you’re using the private property for certain things, and there is a quote from an old farmer that I represented, and I think he encapsulated it perfectly. He said, ‘Conservation easements are in perpetuity, and perpetuity is a long time. It’s forever.'”

Conservation Easements Work Much Like a Local Land Trust

When Chadwick works with private landowners, it’s not uncommon for them to seek an easement, much like an estate planning tool. Landowners want to ensure the open space land will remain usable for future uses — their children, children’s children, and so on. “It happens all the time — especially with intergenerational farming families who want to keep the farming tradition alive forever,” he says.

Easements Involve Diverse Ventures

Easements involve tax law, real estate, energy and natural resources, the environment, and agriculture.

“When it comes to making sure that you’re covered under tax laws, you’re going to want to get an opinion letter from an expert tax attorney on what is an allowable write-off. An opinion letter from a tax attorney usually provides you with some shelter from the state and federal tax authorities if they decide to challenge that easement,” he says.

Find an Experienced Land Use Attorney

“At the end of the day, you first want to have someone who is familiar with the process involved,” says Chadwick. “Second, you want to make sure that if you’re a landowner, your rights are protected, that the restrictions in the easement are narrowly defined because the private landowner retains every right except for those that are specifically given away in the easement. So you’ve got to make sure it’s very clear which uses are being restricted and which are protected.”

Like a lot of things, conservation easements sound a bit scary on the surface, Chadwick says. “But it can be explained in context in a much simpler way: providing a financial incentive for continuing to farm or ranch is definitely something that shouldn’t be out of the conversation when an agricultural landowner is looking at estate planning, especially when a farmer is looking for ways to keep a family farm in business and profitable for future generations. It’s worth a conversation.”

Visit the Super Lawyers directory to find an experienced land use and zoning lawyer in your area for legal help.