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NFLT Policy on Land Protection Costs

Steps to Donating a Conservation Easement

What follows is a brief outline of the steps involved with donating a conservation easement. We have found it helpful to inform landowners ahead of time about the easement process so they know what to expect and can ask any questions they may have regarding the process.

1. Introduction of Land Trust and Landowner. This is an opportunity for landowners to share with the NFLT staff their goals, needs and interests regarding their property. The NFLT staff explains the role of the NFLT and how conservation easements work.

2. Property Visit. It is important for the NFLT staff to see the property firsthand and to be familiar with its different features and characteristics.

3. Completion of Landowner Questionnaire. This is a short questionnaire that we ask all landowners to complete. It tells us more about specific interests that should be addressed in the conservation easement.

4. NFLT Board Approval. The NFLT Board of Directors must approve all protection projects.

5. Completion of Mineral and Title Research. The NFLT will need mineral and title information that identifies mineral ownership and ensures that the title is clear.

6. Resolution of Other Title/ Mineral Related Issues. Depending on the results of the mineral and title research, it may be necessary to address other title-related issues like mortgages, liens, or access easements. If all minerals are not owned by the landowner, it may be necessary to contract with a geologist to evaluate mineral development and if possible have what is called a Remoteness Letter prepared.

7. Resolution of Mortgage Issues. If the land is mortgaged, the mortgage must be subordinated for the conservation easement to be effective and for a tax deduction to be available.

8. Determination of Conservation Easement Tax Deductibility. There are certain IRS requirements that must be met in order for an easement to be tax deductible. If necessary, the NFLT staff can assist landowners to determine if these requirements can be met.

9. Conservation Easement Drafting and Discussion of Conservation Easement Terms. The NFLT usually prepares the first draft of the easement and then the landowner and his/her lawyer review it. This can require a significant amount of time depending on the complexity of the easement. The NFLT is in frequent contact with landowners, or their representative, in order to create a mutually acceptable easement document.

10. Legal Description for the Property. The NFLT will need to be provided with accurate legal descriptions and maps of the property. If the property does not have a survey, then one can be contracted with a surveyor or, in some cases, a surveyor can prepare a metes and bounds legal description.

11. Signing of Final Conservation Easement. This can be done via the mail or at our office. In either case, the landowner’s signature must be notarized.

12. Recordation of the Conservation Easement. The signed easement documents, usually including the Baseline Report, are recorded at the county courthouse. The original is then returned to the NFLT, and the NFLT sends a copy to the landowner.

13. Stewardship Gift. We invite conservation easement donors, if they are able, to assist the NFLT with the cost of monitoring and enforcing the conservation easement in perpetuity. The amount of these contributions varies.

14. Completion of an Appraisal. If an easement donation is tax deductible, the easement gift must be appraised to establish the value of the charitable contribution. The appraisal is completed after the easement is signed. It is useful, however, to involve an appraiser earlier in the process if the extent of the tax deduction is an important factor in the design of the conservation easement.

If you're interested in more information, please e-mail or call Bonnie Barnes at the Land Trust at 904-827-9870.

 

NFLT POLICY ON LAND PROTECTION COSTS
Approved 03/05/01

The donation of a conservation easement is a major commitment for any landowner. Although tax benefits may result from such a gift, the primary reward for granting an easement is the knowledge that a cherished property will be forever protected.
In accepting an easement, North Florida Land Trust (NFLT) is also making a major commitment. The Trust assumes the legal responsibility to carry out the donor’s intentions by upholding the terms of the conservation easement—forever. The generous gift of an easement to NFLT allows the organization to further its mission of the permanent preservation of natural areas and open spaces in North Florida, but each easement also represents a perpetual obligation for the Trust. Although it is very unusual for grantors of easements to violate the terms of those easements, the likelihood that violations will occur increases as time passes and properties change hands.
In order for NFLT to care properly for the easements it holds, it must regularly monitor those easements and be prepared to enforce their terms. This will involve staff time and travel. In the worst case, NFLT may need to defend the terms of an easement, perhaps through court action, the expense of which will be incurred by NFLT.

Purpose of a Stewardship Fund

The Stewardship Fund has been established solely for the purpose of covering the costs associated with monitoring and defending NFLT’s easements. Annual income from the fund is available to pay the costs of two related activities:

        • Monitoring responsibilities, including periodic site visits with the landowner;
        • Enforcement expenses, including initial follow-up with the landowner, review and inspection of remedial measures, and legal, engineering, and other professional services.

 

Stewardship Fund Payments

Each donor will be asked to consider the following:

    1. When making a contribution to the Stewardship Fund, donors are asked to consider the following complicating factors that may suggest a higher than average contribution: a) difficulty of access to the property for monitoring personnel; b) size of the parcel; c) degree of future development permitted; d) present and future risk that the easement terms may be violated. NFLT staff can help you access which, if any, of these factors may apply to your property.
    2. There are many ways to structure a contribution to the Stewardship Fund. Most landowners choose to make a one-time cash contribution at the time their easement is signed; others pledge contributions over a period of years. Contributions of appreciated assets, including stock, bonds and personal property, can also be an effective way to contribute as the actual cost to the donor is usually far below market value.
    3. The amount of the landowner’s contribution to the Stewardship Fund may vary, based upon the complexity of the restrictions and the degree of monitoring required. However, the minimum amount of the contribution required is 5% of the value of the conservation easement. In cases of hardship or financial difficulty, the contribution to the Stewardship Fund may be lessened or waived by request on the Board of Directors of the North Florida Land Trust. All contributions to the Stewardship Fund are tax deductible to extent allowed by law.

 

Uses of the Stewardship Fund

  1. Monitoring property under easement held by NFLT; possible expenses include staff time travel and time, professional engineering services, photography, administration.
  2. Enforcement expenses, primarily legal fees and court costs.
  3. Preventative measures, in addition to monitoring, such as orientation meetings with new landowners, surveys, and boundary markers.

Management of the Stewardship Fund
The Stewardship Fund consists of principal invested in insured accounts. Income received accrues to principal, unless expended for uses specified above. The invested funds are generated primarily from cash and securities contributed to NFLT by conservation easement grantors.
Donations to the Stewardship Fund are pooled in a single account for administration and for investment purposes. Because funds are pooled, contributions made by an individual primarily to safeguard a particular property may be used toward payment of monitoring and enforcement costs for other properties over which NFLT holds an easement. All properties will be defended equally and to the fullest extent that NFLT resources allow. Special fundraising efforts will be undertaken as necessary to replenish any expenditure of principal and to increase the fund.