RD511 - Calendar Year 2014 Land Preservation Tax Credit Conservation Value Summary (including an update of the 2012 and 2013 Summaries)
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 transferability feature of Virginia’s tax credit program is especially valuable to landowners with little or no state income tax liability, enabling them to sell their tax credits for income. Responsibilities for oversight of the LPTC 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 began in January 2000 and continues to advance the preservation of important lands across the Commonwealth. TAX’s records indicate that as of October 31, 2015, land owners have received tax credits for permanently protecting 741,785 acres across the Commonwealth through 3,401 land donations since program inception. The appraised value of this conserved acreage is about $3.86 billion, with land owners receiving $1.44 billion in tax credits.
DCR’s review of LPTC applications for $1 million or more began in January of 2007. As directed by § 58.1-512 D.3.a. of the Code of Virginia, DCR follows the Conservation Value Review Criteria as adopted by the Virginia Land Conservation Foundation to verify the conservation value of donated land or conservation easements. This verification process serves as an important tool for the Commonwealth to ensure that the lands protected have worthy conservation values and that their natural and historical resources are adequately protected in perpetuity.
The tax credit report contained herein provides an updated accounting of the remaining balance for the 2012 Land Preservation Tax Credit cap of $111,054,000 and the 2013 cap of $100 million, as established by § 58.1-512.D.4.a. of the Code of Virginia. The report also summarizes the land donations for which landowners applied for 2014 Land Preservation Tax Credits, within that year’s cap of $100 million. Legislative changes enacted during the 2015 Session of the Virginia General Assembly now close the LPTC cap at the end of every calendar year. So, as of January 2015 if a cap is not expended by the end of the calendar year the balance will be closed out and will no longer carry forward.
Based on information provided to DCR from TAX, for 2012, a total of 227 applications were granted $64,084,200 in land preservation tax credits protecting 45,268 acres. LPTC applications for land donations recorded in 2012 or earlier and received by TAX through December 31, 2014, are included in the 2012 portion of this report. For the 2013 cap, there were 234 applications that were granted $78,882,596 in land preservation tax credits protecting 64,890 total acres. For the 2014 cap, TAX received 91 applications that were granted $38,123,803 protecting 24,214 acres. For these two latter years, LPTC applications recorded in 2013 and 2014 received by TAX through December 31, 2014, are included in these sections of the report respectively. The unexpended balances for these three LPTC caps were retired by TAX on January 1, 2015, pursuant to Chapter 680 of the 2015 Virginia Acts of Assembly (SB 1019).
For the 2012 LPTC, taxpayers in 73 localities claimed a tax credit. The largest number of individual donations occurred in Albemarle County with 19 properties. The greatest total acreage preserved occurred in Smyth County with 2,787.30 acres. Loudoun County land owners requested the largest amount of total tax credit dollars at $8.89 million.
For the 2013 LPTC, taxpayers in 70 localities claimed a tax credit. The largest number of individual donations occurred in Fauquier County with 13 properties. The greatest total acreage preserved occurred in Essex County with 5,518.12 acres. Loudoun County land owners requested the largest amount of total tax credit dollars at $9.62 million.
For the 2014 LPTC, taxpayers in 45 localities claimed a tax credit. The largest number of individual donations occurred in Fauquier and Loudoun Counties with seven properties each. The greatest total acreage preserved occurred in Charlotte County with 3,400 acres. Fauquier County land owners requested the largest amount of total tax credit dollars at $4.37 million.
In the 2014 LPTC program, of the eight conservation purposes that a landowner can claim to be eligible for a LPTC, approximately 81.08 percent of the total acreage preserved were claimed to be in the Scenic Open Space category. Applicants may claim more than one conservation purpose and many in fact do, however it is not necessary in order to request or qualify for the LPTC program. The other prominent categories claimed were: Forestal Use at 70.49 percent of the total acreage, Agricultural Use at 41.44 percent, and Watershed Preservation at 37.36 percent. The remaining purposes claimed in order of rank were: Natural Habitat and Biological Diversity at 31.72 percent; Lands Designated by the Federal, State, or Local Government at 23.17 percent; Natural Resource Based Outdoor Education and Recreation at 8.48 percent; and Historic Preservation at 7.95 percent of the total acreage.
As reported by land owners in their LPTC application packages to TAX, under the 2014 cap about 4,418 acres of active agricultural land and 10,052 acres of active forestal land were conserved. Within the LPTC application, land owners are also asked to report on the total length of riparian buffers with a minimum width of 35 feet required in their donated easements or gifts of land. The applications for 2014 indicate a total length of 499,870 linear feet of forested buffers and 19,206 linear feet of no-plow buffers along rivers, streams, wetlands, ponds, springs, and shorelines. The two different categories of buffers are differentiated by the types of activities that are restricted or allowed within the conservation easement or deed of gift. Activities such as mowing or timber harvesting are restricted in forested buffers, but are allowed within no-plow buffers to maintain non-woody vegetation such as pasture or grasslands.
In 2014, the Virginia Land Conservation Foundation (VLCF) distributed dedicated funding to land conservation agencies and organizations for their stewardship efforts. Pursuant to the authority granted in Virginia Code § 58.1-513 C.2., the VLCF Board of Trustees distributed a total of $1,088,822 in stewardship funds to 47 land trusts, conservation organizations, and agencies to support their ongoing monitoring and enforcement of donated lands. The dedicated funding is generated from a two percent fee imposed on the sale of LPTCs.
In addition to the responsibility to prepare an annual LPTC report, DCR is also charged with conducting reviews of the Conservation Value of LPTC requests of one million dollars 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 VLCF for this purpose. In 2014, DCR reviewed and commented on the conservation value associated with 14 LPTC applications that were above the one million dollar review threshold.
DCR’s oversight continued to enhance the Commonwealth’s efforts to ensure the conservation value of properties applying for the LPTC. 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 one million dollars 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 days to complete its review, DCR took 16 days on average to review a pre-filing application (including a site visit) and approximately two days to verify the conservation value of final applications.