A land conservation program Congress sweetened in December by marrying land conservation with federal income tax breaks has created a win-win result for North Olympic Peninsula land owners and land trust organizations, they said last week.
As part of the 10-year, $858 billion federal tax cut package President Barack Obama signed into law Dec. 17, Congress reinstated enhanced tax incentives for land owners who donate conservation easements to such organizations as land trusts to keep their property undeveloped forever.
The incentives had been allowed to lapse for most of 2010 but were retroactively revived to cover 2010 on Dec. 17. The enhancement program will last through Dec. 31, 2011.
The enhanced tax incentives, which are applied to a landowners’ federal income tax, increase the one-time deduction non-farmers and non-ranchers can take for donating conservation easements from 30 percent to 50 percent.
Farmers and ranchers can deduct up to 100 percent of their income, depending on the value of the easement.
In addition, the enhancement increases the years over which easement donors can spread out the deduction. It was six years, and now it’s 16.
The assessed value of the land is adjusted downward in an amount equal to the value of the easement to reflect the loss of development rights.
“I feel blessed with that legislation,” said Chiggers Stokes, 60.
The conservation easement he donated to the North Olympic Land Trust protects habitat for the elk that often graze outside his window.
In making the donation, he also gained a $35,000 tax deduction on his rustic, 18.5-acre parcel next to salmon-bearing Hemp Hill Creek, 10 miles south of Forks, just over the Jefferson County line.
John Bellow and Roxanne Hudson, a Chimacum couple who own certified organic SpringRain Farm & Orchard, have a conservation easement on 21 of 26 acres.
They raise sheep and free-range chickens and grow apples, Asian pears, blueberries, raspberries and strawberries.
The conservation easement program netted Bellow $82,000 in tax savings he realized over two years.
“Very simplistically, this is exactly the same as a charitable donation,” Bellow said.
He acknowledged that the tax break he gains places a heavier burden on other taxpayers.
“What I did was a positive thing,” Bellow said.
“It is a common good for everybody. It’s only fitting that the cost of having done that is shared throughout the community.”
While Stokes donated his easement to the North Olympic Land Trust in Clallam County, Bellow and Hudson donated theirs to the Jefferson Land Trust in Jefferson County.
Both trusts benefit, too, in advancing their goal of land preservation — without have to pay landowners.
The land trusts commonly pays landowners for the loss of development rights and in return grant conservation easements to protect land from development.
But under the federal enhancement program, the land is donated to the trusts in return for the tax breaks, said Barbara Arnn, outreach coordinator for the Jefferson Land Trust.
The Jefferson Land Trust “had its hands full,” so Stokes obtained his conservation easement from the North Olympic Land Trust, which used a $14,000 state Department of Fish and Wildlife grant Stokes obtained to assess wildlife habitat on his property, Stokes said.
Under the enhancement program, the value of Stokes’ conservation easement is $35,000, or the value of the property that’s lost through the restriction on development.
That amount was deducted from the $100,000 value of his house, so now he pays taxes on $65,000.
Half of his property is meadow and half is woods and Hemp Hill Creek shoreline.
He generates all of his own electricity and power for a few neighbors from a hydroelectric device at Hemp Hill Falls.
Now, 16 of his 18.5 acres are protected in return for the tax breaks.
“The financial benefits did not enter my head when I got involved, in all honesty,” Stokes said.
“It’s an estate thing,” he added, noting that just the other day, he saw four otters chowing down on salmon in the creek.
“What this gives me is the knowledge that when I finally do check out, the people that get this property whether they choose to inhabit it or not are bound to respect the wildlife virtues that are manifest here,” Stokes said.
“It’s a very comforting feeling for me, and far more rewarding than any tax benefit for me. It’s profound.”
“Probably dozens” of landowners have taken advantage of the conservation easement program in Jefferson County, Arnn said.
The program is of particular benefit to the aging population of farmers and ranchers, many of whom can’t pass on their property to their children and must sell it but still want to guarantee the land stays in agriculture, Arnn said.
“Those people operate on thin margins,” she said.
North Olympic Land Trust Executive Director Greg Good said more than 200 acres were preserved in Clallam County in 2010 by way of conservation easements, which also apply to forested land.
“There are many landowners that are not necessarily cash-rich but land-rich,” Good said.
“The benefit of allowing them to protect their land and at the same time to have an advantage to reduce their taxes, in a sense, allows them peace of mind,” Good said.
The lower assessed property value that’s caused by taking away development rights also makes it more economical for younger people who want to farm to buy property with conservation easements.
But Bellow, 44, has no intention of selling SpringRain Farm & Orchard anytime soon.
He’s proud of the conservation easement, which protects 1,100 feet of Chimacum Creek “one of the more important salmon-bearing streams in Jefferson County,” Bellow said.
“We were able to write into the easement stringent standards that protect Chimacum Creek.”
________
Senior staff writer Paul Gottlieb can be reached at 360-417-3536 or at paul.gottlieb@peninsuladailynews.com.
