Acre By Acre

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These land-protection strategies can help landowners preserve what they value.

By Laurie Allmann

A bluff-top nature preserve paid for in part by a children's lemonade stand. A working farm with an easement that protects a neighboring prairie restoration project. The gift of parkland as a parting "thank you" to a community. Behind each of these Minnesota stories is a private landowner who made a personal choice to safeguard a natural area.

Have you wondered what the future will hold for your land? Have you enjoyed watching the wildlife that resides there, or the passage of seasons reflected in the natural landscape-and wondered how you might keep it intact for years to come?

If so, this article is for you.

Whatever your goals for your land, there are tools and strategies that can help you protect what you value. This overview will get you started and suggest organizations and resources that can offer help. As you review the options, please note that all references to potential tax benefits are subject to tax law. You'll need to consult a tax professional regarding your ability to make use of such benefits.

Begin by identifying the qualities you hope to preserve (e.g., wildlife habitat, farmland, scenic views, natural features such as a wooded ravine or native prairie). Then consider your personal goals. Do you hope to live out your lifetime on the land? Sell it when you retire? Pass it on to your heirs?

Keep It

The following options allow you to protect your land while retaining ownership to it.

Property Tax Relief Program. Are rising property taxes forcing you to consider selling land for development when you don't wish to? You may be eligible for property-tax reduction and exemption programs based on your land's conservation values.

Things to consider:

  • The program may limit use of the enrolled property. For example, it may allow haying but prohibit grazing.
  • Programs may have minimum acreage requirements and may be limited to particular counties.
  • Enrollment may require commitment of a period of years and be subject to renewal.
  • Benefits may include exemption from undesired public works projects and related assessments.
  • Some programs only defer taxes until land is no longer enrolled. Upon withdrawing your land from such a program, you may be obligated to pay all or a portion of the taxes incurred during the enrollment period.

Some Property Tax Relief Programs

Native Prairie Tax Exemption Program. Call the state prairie biologist, DNR Scientific and Natural Areas Program, 218-739-7576.

Wetland Tax Exemption Program. Contact your county assessor or DNR Waters, 651-259-5674.

Minnesota Agricultural Lands Preservation Program. Contact your county assessor or the Minnesota Department of Agriculture, 651-296-5226.

Deed Restriction. A deed restriction limits development and use of a property. An attorney can help you add it to your property title.

Things to consider:

  • State law limits enforceability to 30 years.
  • No formal monitoring program ensures compliance.
  • Because it "runs with the title" when property changes ownership, it can guide use of land that you intend to sell or donate. This may be of particular interest if you will continue to own and/or live on adjacent property.
  • One type of deed restriction, the mutual covenant, may be used by neighboring landowners to set up commonly desired restrictions on land use and development.

Attorneys Who Can Help

The Minnesota State Bar Association administers a referral service that can provide you with the name of an attorney in your area who specializes in real property. Attorneys on the list have been screened to ensure they have malpractice insurance and have not been subject to disciplinary action by the Lawyers Professional Responsibility Board. Visit www.mnbar.org.

Perpetual Easement. A perpetual, or permanent, conservation easement is the key to protecting your land whether you keep it, sell it, or donate it. It's a legal agreement between a landowner and a private land trust or government agency. It places a permanent limitation on a property's development and use. The land trust or agency is said to "hold" the easement and monitors the land to ensure that easement terms are upheld in perpetuity.

Under Minnesota law, a conservation easement may be established on land in order to "assure its availability for agricultural, forest, recreational or open space use, protecting natural resources, maintaining or enhancing air quality, or preserving the historical, architectural, archaeological, or cultural aspects."

Things to consider:

  • You retain ownership of the property. Should you decide to sell, give, or transfer the land, the easement "runs with the title" to obligate any and all future owners.
  • Depending on the holder of the easement, terms may be negotiable, designed to accommodate your interests while providing appropriate protection for the land's conservation values.
  • A perpetual conservation easement may be conveyed to a qualifying nonprofit land trust or government agency in the following ways: sold at fair market value, sold in a bargain sale (in which part of the value is donated), donated during your lifetime, or donated as a bequest (in your will).
  • If an easement results in a decrease in the overall appraised value of the land, it has the potential to reduce your property taxes and reduce estate taxes for your heirs. Donation of an easement-unless made by bequest-may qualify as a charitable deduction for income-tax purposes. For example, if you donate an easement and the appraised land value drops from $215,000 to $45,000 due to loss of development potential, you might be eligible for a $170,000 charitable income-tax deduction.
  • You may be responsible for some of the related expenses such as attorney fees, appraisals, and an "endowment fee" to help defray the easement holder's long-term expenses.

Potential Easement Holders

Minnesota Land Trust. Nonprofit specializing in donated easements, 651-647-9590.

Minnesota Native Prairie Bank Conservation Easement Program. Administered by DNR Scientific and Natural Areas Program, 218-739-7576.

Permanent Wetland Preserves Program. State program that purchases easements to protect natural wetlands. Contact your local Soil and Water Conservation District office or the Minnesota Board of Water and Soil Resources, 651-296-3767.

Wetland Reserve Program. Federal program that purchases easements to restore wetlands. Contact your local U.S. Department of Agriculture Natural Resources Conservation Service office.

*See also "Some Potential New Owners," page 50.

Sell It

If you no longer wish to own your land, or are looking ahead to a time when you will want to transfer title, here are a few approaches for selling your land.

Is your land appropriate for a school nature area, park, wildlife area, or preserve managed by a public agency or nonprofit organization? You can help make it possible for such "conservation buyers" to acquire the land by informing selected organizations or agencies of your interest in selling, and by working cooperatively with them on the timing and terms of the transaction.

Remember, whether you sell or donate your land, you have no long-term guarantee about the property's use unless you establish a perpetual conservation easement before you transfer the title.

Things to consider:

  • If the buyer needs time to finance the purchase, an Option to Buy agreement can be a useful tool. This gives the buyer the exclusive right (though not the obligation) to buy the land during a specified period. If the purchaser's policies permit, you could be paid a nonrefundable option fee, which may (if you wish) be applied toward purchase of the land.
  • If you make the sale subject to reservation of a life estate, you (and any named heirs) will be able to live out your life on the land. Be aware that this will likely reduce the price you receive for your land.
  • A bargain sale could make the transaction affordable for a conservation buyer with limited financial resources. It also could reduce your capital gains tax and qualify you for an income-tax deduction.

Donate It

Donation of your land can be structured to suit your needs and interests. Your first task will be to select the potential recipient and determine whether the organization is interested in the land.

Note that the following considerations also apply to donating conservation easements.

Things to consider:

  • If you donate land during your lifetime, you may be eligible for an income-tax deduction. Current tax law allows you to spread this deduction over six years. You can extend this period if you make the donation in increments, referred to as "donation of undivided partial interest." Your tax advisor can help you weigh the pros and cons.
  • If you donate land as a bequest (in your will), you will not be able to take advantage of a related income-tax deduction during your lifetime. However, the donation may reduce estate taxes owed by your heirs.
  • If you donate land subject to reservation of a life estate, you (and any named heirs) will retain the right to live out your life on the land. You may be eligible for an income-tax deduction based on a formula that estimates the value of the reserved life estates.
  • A donation can be one aspect of a larger, fair market value sale of property. You'll pay less in capital gains tax, and the income from the acreage sold at fair market value may help you to maximize use of any income-tax deduction related to the donated parcel.

Some Potential New Owners

Minnesota DNR. Interested in land (or easements) appropriate for scientific and natural areas, wildlife management areas, state parks, and state forests. Donations may be eligible for RIM matching dollars to acquire other conservation land, DNR Information Center, 1-888-646-6367 or 651-296-6157.

Local Units of Government. City, township, or county.

The Nature Conservancy, Minnesota Chapter. Private nonprofit group interested in land or easements to preserve high-quality natural landscapes, 612-331-0700.

The Trust for Public Land. Private nonprofit purchases land, then resells to public agency or nonprofit to manage as park or for other conservation-related uses, 651-999-5325.

Putting It All Together

The landowner conservation initiatives described here illustrate just a few of the many ways land-protection tools can help you meet your goals for your land. As you consider scenarios for your property, be sure to get input as needed from your attorney, financial planner, and estate planner. Good luck!

Laurie Allmann is an environmental writer from Marine on St. Croix. She is the author of Far From Tame and a handbook for landowners called Land Protection Options.

Future Prairie

The Broden brothers had good reason to participate in the U.S. Department of Agriculture's Wetlands Reserve Program by selling a permanent easement on 2,600 of their 4,500 acres of farmland near Mentor in northwestern Minnesota. "It was somewhat marginal land to begin with," notes Arvid Broden, "and we were able to do a land exchange. You don't have any tax consequences (related to capital gains) from selling the easement if you use the proceeds to buy other land." Although it's not guaranteed, Arvid and Roger Broden also hope that the easement will reduce their property taxes as provided for by state law.

The Brodens had another reason that had nothing to do with taxes. Their property borders the Glacial Ridge Project, a roughly 24,000-acre preserve owned by The Nature Conservancy. The preserve is a restoration project that aims to return the area to a semblance of the tallgrass prairie/wetland complex that once characterized the landscape. The Brodens' easement property, part of which will be seeded with native grasses, will help provide a buffer to the preserve.

"I'm proud to be part of such a big project," says Arvid Broden, "It'll take awhile, but it'll be a really unique area."

Alternative View

Mildred Billings already had an offer pending from a developer when she learned that local citizens wanted her 72 acres of bluffland to be part of a community natural area. Her consideration of this alternative set in motion a whirlwind of activity in the river town of Red Wing. City officials and private groups worked to raise the funds to buy the property. Citizens raised $15,000, including $11.05 from a children's lemonade stand. A local conservation group raised money from the sale of other property. The city received $45,750 from the DNR Natural and Scenic Area Grant Program. A private attorney donated his services.

Billings decided to donate some of her land, and neighboring landowners donated another seven acres. The city contributed the final $24,000 to complete the sale.

The city council voted to donate a permanent conservation easement to the Minnesota Land Trust. This easement will guard against any unforeseen future pressure to develop the site.

Now, instead of new houses on this windswept hilltop, there is the 79-acre Billings/Thomfor Natural Area-a testament to conservation-minded landowners and a broad-based community effort.

Green Bequest

The Sunfish Lake city council was pleased to accept the 22-acre parcel Elizabeth Musser had bequeathed to the city in her will. The forested land would make a fine park for this small community in Dakota County.

Title to the property came with a deed restriction detailing Musser's instructions that the land be kept in a natural, undeveloped state. Since deed restrictions last only 30 years, the local city council-led by then-mayor Frank Tiffany-decided to add another layer of protection to ensure that the Musser family interests would be protected in perpetuity. In December 2002, the council voted to donate a permanent conservation easement on the property to the Minnesota Land Trust.

Tiffany had been a longtime friend of "Betty" Musser and her husband, John. "They had a lot of happy years here, and they wanted to do something for the city," he said. "I know they intended this gift of parkland to say, "Thank you, Sunfish Lake. It's been a wonderful place to live."

Laurie Allmann is an environmental writer from Marine on St. Croix. She is the author of Far From Tame and a handbook for landowners called Land Protection Options.

Online:

Land Protection Options. Call 651-259-5100 for a free copy. Find links to print or view at Minnesota DNR - Ecological Resources - Publications by Title. Financial Assistance Directory July 2001-July 2003. Visit Minnesota DNR - Grants or call the DNR Information Center (see page 63).