RD429 - Calendar Year 2008 Land Preservation Tax Credit Conservation Value Summary


Executive Summary:
The Virginia Land Preservation Tax Credit (LPTC) Program has proven to be a valuable incentive for landowners interested in voluntarily conserving their property through perpetual conservation easements or fee-simple donations. The LPTC’s transferability feature is especially important to persons with little or no state income tax liability. Responsibilities for oversight of the program are shared by the Virginia Department of Taxation and the Department of Conservation and Recreation.

Virginia’s Land Preservation Tax Credit Program has continued to excel and to advance the preservation of important lands across the Commonwealth. The Virginia Department of Taxation’s records indicate that between January 1, 2000 and December 1, 2009, 456,654 acres, appraised at slightly over $2.15 billion, had been protected through 2,181 donations represented by $1 billion in tax credits.

The Department of Conservation and Recreation’s (DCR) review of Land Preservation Tax Credits (LPTC), begun in January of 2007, has served as an important tool utilized by the Commonwealth to ensure that the lands protected for which a tax credit is issued of $1 million or more are worthy of protection and that the natural and historical resources they contain are adequately protected in perpetuity. The tax credit report contained herein summarizes the donations for which taxpayers claimed Land Preservation Tax Credits within the period of January 1, 2008 and December 31, 2008 (LPTC), within the $102 million cap established by § 58.1- 512.D.4.a of the Code of Virginia. Based on the information provided to DCR, 224 applications were filed for the $102 million in tax credits available in 2008. The appraised value of these donations was approximately $256 million. These 224 applications requested LPTC for easements and donations on 56,000 total acres, which means that up to 61% of the total acres protected in 2008 (easement or fee-simple) could have received a tax credit counted against the 2008 cap. Clearly, the LPTC is an important incentive for Virginia to utilize to reach its land conservation goals.

Taxpayers in 65 localities claimed a LPTC in calendar year 2008. The largest number of donations and acreage preserved was in Rockbridge County and the largest amount of tax credit dollars was requested by Loudoun County applicants.

Of the eight conservation purposes that a landowner can apply under, approximately 77% or 43,475.64 acres were in the Scenic Open Space category. Forestal Use (30,298 acres) and Watershed Preservation (25,964 acres) were also prominent categories as each represents approximately 54% and 46% of the total respectively. The remaining purposes in rank order were Agricultural Use; Lands Designated by the Federal, State, or Local Government; Natural Habitat and Biological Diversity; Historic Preservation; and Natural Resource Based Outdoor Education and Recreation. Applications may claim more than one conservation purpose, even though it is not necessary in order to request the LPTC.

In addition to the responsibility to prepare an annual report, DCR was also charged beginning in 2007 with conducting reviews of the Conservation Value of LPTC requests of $1 million or more (based on a 40% credit for a donation valued at $2.5 million or greater) and with verifying the conservation value of these donations in advance of the Virginia Department of Taxation issuing the tax credit. This review is in accordance with criteria adopted by the Virginia Land Conservation Foundation for this purpose.

In 2008, DCR reviewed and commented on the conservation value associated with 40 of the 224 LPTC applications. Of the 40 reviews, 20 final applications were filed requesting over $42 million in LPTC for 12,969 acres. The potential donations yet to be completed may have been delayed for any number of reasons including changes in the real estate market, but all successfully completed DCR’s review. The cap of $102 million for 2008 was met on December 30, 2008 and all donations submitted after that date were allocated against the 2009 cap. In addition, one applicant chose not to undertake the pre-filing review and submitted a final application. This application was reviewed by DCR and the applicant subsequently withdrew the review once it was determined they could not identify a conservation purpose and failed to a majority of the required restrictions in the deed of easement.

These 20 donations represented 9% of total applications and 21% of the LPTC acres preserved, but over 40% of the total LPTC credits claimed in 2008. DCR’s oversight continued to provide benefits to the Commonwealth’s efforts to ensure the conservation value of properties applying for the LPTC. DCR’s review process resolved a number of problems with applications that would have negatively affected the donation’s conservation value if the applicant had completed as submitted. In addition, DCR’s review helped to ensure that persons eligible for $1 million or more in state land preservation tax credits also addressed water quality and forest stewardship issues associated with their conserved lands. Although state law allows DCR 90 days to complete its review, DCR took only 30 business days on average to review a pre-filing application (including a site visit) and 14 business days to verify the conservation value of final applications.