RD154 - Calendar Years 2009 and 2010 Land Preservation Tax Credit Conservation Value Summary
The Virginia Land Preservation Tax Credit (LPTC) Program has proven to be an important incentive for landowners interested in voluntarily conserving their property through perpetual conservation easements or fee-simple donations. The LPTC’s transferability feature is especially valuable to persons with little or no state income tax liability. Responsibilities for oversight of the program are shared by the Virginia Department of Taxation (TAX) and the Virginia Department of Conservation and Recreation (DCR).
Virginia’s Land Preservation Tax Credit Program continues to excel and to advance the preservation of important lands across the Commonwealth. TAX’s records indicate that 549,751 acres appraised at about $3.1 billion have been permanently protected through 2,687 donations represented by $1.24 billion in tax credits between January 1, 2000 and January 23, 2012.
DCR’s 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 have worthy conservation values 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 two-year period of January 1, 2009 through December 31, 2010, within the $106.6 million cap for 2009 and the $106.8 million cap for 2010 established by § 58.1- 512.D.4.a of the Code of Virginia. Based on information provided to DCR, 228 applications were filed for the $106.6 million in tax credits available in 2009 protecting 63,485 total acres. In 2010, 144 applications were filed for the $106.8 million in tax credits, which protected 41,776 acres. Clearly, the LPTC provides a critical incentive for Virginia to utilize to reach its land conservation goals.
In calendar year 2009, taxpayers in 63 localities claimed a LPTC. The largest number of individual donations was in Fauquier County, the most total acreage preserved was in Rockbridge County, and the largest amount of total tax credit dollars was requested by applicants in Culpeper County. Of the eight conservation purposes that a landowner can claim to be eligible for a LPTC, and understanding that an acre of land can meet multiple purposes, approximately 26 percent or 51,921 acres were claimed to be in the Scenic Open Space category. Forestal Use (35,493 acres) and Watershed Preservation (33,460 acres) were also prominent categories as each represents approximately 17 percent of the total. The remaining purposes in order of rank were: Agricultural Use; Natural Habitat and Biological Diversity; Lands Designated by the Federal, State, or Local Government; Natural Resource Based Outdoor Education and Recreation; and Historic Preservation. Applications may claim more than one conservation purpose, even though it is not necessary in order to request or qualify for the LPTC Program.
In calendar year 2010, taxpayers in 57 localities claimed a LPTC. The largest number of individual donations, total acreage, and the highest total amount of tax credit dollars requested in 2010 occurred in Albemarle County. Of the eight conservation purposes that a landowner can claim to be eligible for a LPTC, approximately 25 percent or 34,520 acres were claimed to be in the Scenic Open Space category. The next most popular categories claimed were Watershed Preservation (24,759 acres) and Forestal Use (24,348 acres) both at approximately 18 percent, and Agricultural Use (23,638 acres) at 17 percent. The remaining purposes in order of rank were Lands Designated by the Federal, State, or Local Government; Natural Habitat and Biological Diversity; Historic Preservation; and Natural Resource Based Outdoor Education and Recreation.
In addition to the responsibility to prepare an annual LPTC 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 TAX issuing a land preservation tax credit. DCR’s review is carried out in accordance with criteria adopted by the Virginia Land Conservation Foundation for this purpose.
In 2009, DCR reviewed and commented on the conservation value associated with 36 LPTC applications for over $1 million. Of the 36 reviews, 13 final applications were filed with TAX requesting more than $36 million in LPTC for 15,949 acres. In addition, another seven DCR-approved applications from the previous year were applied to the 2009 LPTC because they had filed with TAX after the 2008 annual cap of $102 million was met on December 30, 2008. Those 20 DCR-approved donations represented 9 percent of total applications, 34 percent of the LPTC acres preserved, and over 46 percent of the total LPTC dollars claimed in 2009.
In 2010, DCR performed 25 pre-file reviews for the LPTC, with 14 of those applications filed with the Tax Department requesting more than a total of $65 million. Another three applications from 2009 requesting over $1 million in tax credits were applied to the 2010 LPTC. Together, those 17 DCR-approved donations represented 12 percent of the year’s total applications, 20 percent of the LPTC acres preserved, and 69 percent of the total LPTC in dollar value.
The many potential donations that did not complete the LPTC process and file for a credit with TAX may have been delayed for any number of reasons, including timing issues, fluctuations in the real estate market or difficulties with bank subordinations, but all successfully completed DCR’s pre-file review. Applications for tax credits in 2009 met the LPTC cap of $106.6 million on December 4, 2009. In 2010, requests for LPTCs met the cap of $106.8 million much earlier in the year, on July 21, 2010. Subsequent LPTC requests received by TAX in 2010 were carried over to be first in line for the 2011 LPTC program, with a cap of $108.4 million.
DCR’s oversight continued to advance the Commonwealth’s efforts to ensure the conservation value of properties applying for $1 million or more of LPTCs. DCR’s review process resolved a number of issues with applications that would have negatively affected the donation’s conservation value if the applicants had recorded their deeds as originally submitted during DCR’s pre-filing review. 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 protections associated with their conserved lands. Although state law allows DCR 90 [business] days to complete its review, DCR took only 42 business days on average to review a pre-filing application (including a site visit) and less than two weeks to verify the conservation value of final applications.