RD85 - Calendar Year 2015 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 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, 2016, land owners have received tax credits for permanently protecting 786,717 acres across the Commonwealth through 3,621 land donations since program inception. The appraised value of this conserved acreage is about $3.88 billion, with land owners receiving $1.52 billion in tax credits.

DCR’s review of LPTC applications for one million dollars 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 the natural and historical resources are adequately protected in perpetuity.

The tax credit report contained herein summarizes the land donations for which landowners applied for 2015 Land Preservation Tax Credits, within that year’s cap of $75 million. Based on information provided to DCR from TAX, for 2015, a total of 182 applications were granted $48,625,672 in land preservation tax credits protecting 42,362 acres. TAX retired the unexpended balance for the LPTC cap on January 1, 2016, pursuant to § 58.1–512 (C)(1).

For calendar year 2015, taxpayers in 66 localities claimed a tax credit. The largest number of land donations occurred in Albemarle County with 17 properties. The greatest total acreage preserved occurred in Halifax County with 9,415 acres. Albemarle County land owners requested the largest amount of total tax credit dollars at $8.13 million.

During the 2015 LPTC program year, of the eight conservation purposes that a landowner can claim to be eligible for a LPTC, approximately 79 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 64 percent of the total acreage, Watershed Preservation at 51 percent, and Agricultural Use at 42 percent. The remaining purposes claimed in order of rank were: Lands Designated by Federal, State, or Local Government at 25 percent; Natural Habitat and Biological Diversity at 22 percent; Natural Resource Based Outdoor Education and Recreation and Historic Preservation both at three percent of the total acreage.

As reported by land owners in their LPTC application packages to TAX, under the 2015 cap, about 11,656 acres of active agricultural land and 19,206 acres of active forestal land were conserved. Within the LPTC application, landowners are also asked to report on the total length of riparian buffers, with a required minimum width of 35 feet, in their donated easements or gifts of land. The applications for 2015 indicate a total length of 762,928 linear feet of forested buffers and 49,375 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 2015, 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 $855,400 in stewardship funds to 45 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.

DCR is also charged with conducting reviews of the Conservation Value of LPTC requests of one million dollars or more (based on a 40 percent 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 2015, DCR reviewed and commented on the conservation value associated with ten 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, on average DCR took 21 days to review a pre-filing application (including a site visit) and one day to verify the conservation value of final applications.