Conservation Easements & Info for Landowners

Conservation Easements protect the land while allowing the landowner to keep the title and use of the land… a true “win-win” for everyone.

Donating or selling property to a land trust is not always the best approach for conservation, especially for lands that require involved management or in cases where the landowner desires to continue to live on the land. Conservation Easements are an effective, time-tested tool for these situations.

Conservation Easements are voluntary legal agreements between a landowner and a land trust that forever limits a property’s uses in order to preserve its “conservation values” (scenic open space, wildlife habitat, water quality, agriculture, etc.). Conservation Easements are permanent agreements, recorded by the County as an easement on the deed of title to the land, and all subsequent landowners are bound by their terms and conditions.

Note: An “Agricultural Conservation Easement” is a type of Conservation Easement that includes as part of its main purpose the conservation of agricultural land. Generally, the term “Conservation Easement” is used for both types of agreement.

Conservation Easements keep land in private ownership. When you own land you also own many rights associated with it, such as the rights to farm, graze, harvest timber, and build structures. When you donate or sell a Conservation Easement to a land trust, you voluntarily give up some of those rights. For example, you might give up the right to build additional residences while retaining the right to grow crops. In some cases, a Conservation Easement may apply to just a portion of the property leaving the option of development open for the remaining part (a family residence, for example).

Placer Land Trust’s Conservation Easements (including Agricultural Conservation Easements) are negotiated to meet the specific needs and desires of both the landowner and the land trust. Placer Land Trust can be flexible about some terms of each Conservation Easement, and its staff can assist landowners by preparing a document that meets specific needs. Before donating or selling a Conservation Easement to Placer Land Trust, each landowner must obtain independent financial and legal advice.

If you have questions or after reading the information below, please contact Janet Voris at 530-887-9222 x 102.

Frequently Asked Questions

To jump to the Agricultural Easement FAQ, click here.

A conservation easement is a deed restriction that landowners voluntarily place on their property to protect the land’s habitat and natural resources. It is a permanent, legal agreement between the landowner and a land trust or other qualified entity that prohibits subdivision and limits development and other intensive uses. Conservation easements are designed to protect the land from development, allow compatible uses, and provide financial benefits to landowners and their families.

Benefits:

Can often be tailored to fit the needs of landowners and their properties.
Donated easements provide several potential tax benefits including income tax reductions.
Purchased easements provide income for current operations and/or to pass along to heirs.
Conservation easements provide assurance that the land will stay as it is when transitioning to the next generation, or when selling to someone outside the family.

Each easement is unique but they typically limit development and prohibit subdivision and other high-impact activities or uses that are not consistent with natural resource protection. The landowner retains ownership of the land and most rights associated with it, including the right to allow or deny public access, the right to manage the land, often the right to allow limited development within one or more “building envelopes,” and any other rights of ownership that are not restricted by the easement. Restrictions within the easement are determined on a case-by-case basis to both meet the landowner’s interests and needs and protect the land’s conservation values.

Existing houses/ homesites can be placed into a “building envelope.” A building envelope is a designated zone within the easement where limited development is allowed, generally 1 to 4 acres in size. In addition to envelopes around houses and structures that exist at the time of the easement, one or two additional building envelopes may be allowed for future homesites on a case-by-case basis, depending on property size and funding source restrictions. Building envelopes generally need to be clustered together rather than spread out, to limit the impact on natural resources.

An agricultural conservation easement is specifically designed to allow and protect agricultural and forestry uses on the property, while affording some compatible natural resources protections. Whereas a conservation easement is typically designed with an emphasis on natural resources and habitat protection. A conservation easement may allow or may prohibit limited agriculture and forestry uses, depending on the conservation values, landowner’s interest, and funding sources.

Good candidates for a conservation easement will have many or at least some of the following:

Provides quality habitat for wildlife, including streams, wetlands, and oak woodlands
Large enough in size to support wildlife habitats and natural resource protection
- 30-acre minimum, unless adjacent to other protected lands or a productive farm, in which case an agricultural easement would be considered
In danger of encroaching development and becoming subdivided
Connected to or close to other protected lands (public or private)
Provides scenic open space views for the public
Has historical and/or cultural significance

Both! Easements may be sold at “Fair Market Value” (as determined by an independent, qualified appraiser), below Fair Market Value (“bargain sale”), or donated. Which option is feasible for a particular project depends on the landowner and land trust, as well as the conservation values of the property and availability of and fit for grant programs. Grant funding is limited and extremely competitive, so donating easements for tax benefits is often the most feasible route.

First, we have to say that Placer Land Trust cannot provide tax advice and we strongly recommend you consult with a tax advisor about the potential tax benefits of donating a conservation easement. That said, here are some general guidelines that may (or may not) apply to you:

Income Taxes

A qualifying farmer or rancher (making more than half of his/her income from farming and ranching per Internal Revenue Code 2032A(e)(5)) may deduct federal income tax up to 100% of their annual income each year for up to 15 years.
A non-farmer or rancher may deduct federal income tax up to 50% of their annual income each year for up to 5 years.
The value of the total tax deduction can equal but not exceed the value of the easement.

Property Taxes

Unfortunately, at this time Placer County does not reduce property taxes when a conservation easement is placed on the property. We recommend that landowners speak with the County Assessors/Tax Collector’s office prior to completing a conservation easement project to learn if/how the County will change landowners’ property taxes.
Placing a California Land Conservation Act (aka Williamson Act) contract on the property does lower property taxes significantly, and can be done concurrently with (or entirely separate from) placing a conservation easement on the property, provided agricultural uses are allowed.

As noted, funding for purchased easements is limited and extremely competitive. However, there are sometimes state and federal grant funds available from sources such as the California Natural Resources Agency (CNRA), California Sierra Nevada Conservancy (SNC), California Wildlife Conservation Board (WCB), and California Department of Fish and Wildlife (CDFW). Placer Land Trust staff will assess the property’s natural resource values and determine if it would be eligible and competitive for grant funding. If not, then donating the easement would be the only option as Placer Land Trust does not have funding available for purchasing land or easements without grant funding.

Stewardship Funding

Maintaining conservation land and easements creates long-term, legal obligations with real costs for the land trust. In the case of both land and easements, costs include administration, monitoring, coordination, legal defense, and sometimes remediation; in the case of land, additional costs include managing and restoring the land. Collectively, these are called “stewardship costs.” Stewardship costs are calculated specific to each project and must be covered in order to approve a project.

The majority of these funds will be invested in a pooled by Placer Land Trust into a Stewardship Sustainability Fund to protect your property and other conservation properties, while a portion will be used to fund project development costs.

Unfortunately, no public grants pay for stewardship funding, and the amounts are usually higher than we can privately fundraise, so landowner donations are the primary way we can cover these costs. Stewardship funding donations are charitable contributions and are likely eligible for a tax deduction. Consult with your tax advisor for details; Placer Land Trust cannot provide tax advice.

If the above-stated contribution level is not possible for the landowner, in certain cases there may be alternative options. We are happy to further discuss these options with you.

Easement values can vary greatly and must be determined by an independent appraisal by a qualified appraiser. We often see easement values between 30% and 60% of the current total property value. For example, if the current property value is $1M, the easement value might be between $300,000 and $600,000. This is a ballpark and may be higher or lower depending on location, size, zoning, development potential, easement restrictions, and other factors. Often, the highest easement values are found on properties under high development pressure and/or that include the strongest protections in the easement. A short-form “restricted” appraisal is often the first step in determining potential easement value; then, a full appraisal report will determine the final value. Placer Land Trust typically requests that interested landowners split the cost of the appraisal as part of the landowner/land trust partnership.

No, the land remains under the landowner’s control and ownership. And no, an easement does not automatically allow for public access. Instead, it reserves the landowner’s normal right to allow or prohibit public access. There are many misconceptions and myths about how easements work; here are a few more common ones:

Is a conservation easement like a road or utility easement? No, it is also totally different. We work with each landowner to design a customized agreement to suit their needs.
Is a conservation easement the same as the Williamson Act? No, it is a permanent deed restriction held by Placer Land Trust, whereas the Williamson Act is a 10- or 20-year agreement with the County to protect agricultural land. Placer Land Trust is not involved in Williamson Act contracts.

Jane has a 150-acre oak woodland property worth $1M. The property has scenic views, oak woodlands, a creek, an existing house, and a large barn. The property has moderate development/ subdivision potential but Jan would like to see it preserved as a ranch. Jane would like to reserve a 3-acre building envelope around the existing house and barn but otherwise keep it undeveloped. No building envelope is needed for her utilities; they can stay as they are now (and may be maintained and modified in the future).

An independent appraisal values the conservation easement at $500,000, or 50% of the full $1M property value. Unfortunately, grant funds can only cover a purchase of half this amount ($250,000), so Jane agrees to donate the other half ($250,000). The donation is considered a “qualified conservation contribution” eligible for a tax deduction. So, Jane sells the conservation easement for $250,000, paid to her upon closing, and then takes a $50,000 deduction from her income taxes each year for 5 years until she has deducted the remaining $250,000 in value that she donated.

She also makes a 15% stewardship donation to the land trust ($75,000) to help with the long-term costs of monitoring and upholding the easement, and takes a tax deduction on this amount as well.

Meanwhile, Jane continues to own, live on, and preserve the property. She hopes her kids will keep the property and continue the operation, but regardless of what happens, she is glad to know it will remain protected indefinitely.

The process and timeframe for each project are unique; however, below are some common steps and approximate timeframes. Grant-funded projects take much longer (1-3 years) due to the fundraising process and agency review, while donated projects are typically faster (+/- 1 year).

While Placer Land Trust would love to work with every interested landowner, we must undergo a project selection and approval process before moving forward, and we can only process a limited number of projects at any one time based on our staff capacity.

Agricultural Easements FAQ

An agricultural conservation easement (“ag easement”) is a deed restriction that landowners voluntarily place on their property to protect productive agricultural land and natural resources. It is a permanent, legal agreement between the landowner and a land trust or other qualified entity that prohibits subdivision and limits development and other intensive uses. Ag easements are designed to protect farms and ranches from development, conserve grazing and cultivated lands, and provide financial benefits to landowners and their families.

Benefits:

Can often be tailored to fit the needs of ranchers and farmers and their properties.
Donated easements provide several potential tax benefits including income tax reductions.
Purchased easements provide income for current operations and/or to pass along to heirs.
Ag easements provide assurance that the land will stay in agriculture when transitioning to the next generation, or when selling to someone outside the family.

Each easement is unique but ag easements typically limit non-farm development, subdivision, and other high-impact activities or uses that are not consistent with agriculture and certain natural resource protections. The landowner retains ownership of the land and most rights associated with it, including the right to allow or deny public access, the right to manage the land for agricultural uses, often the right to allow limited development within one or more “building envelopes,” and any other rights of ownership that are not restricted by the ag easement. Restrictions within the ag easement are determined on a case by case basis to both meet the landowner’s interests and needs, and protect the land’s agricultural and conservation values.

Yes, existing houses and surrounding development can be placed into a “building envelope.” A building envelope is a designated zone within the easement where limited development is allowed, generally 1 to 4 acres in size. In addition to envelopes around houses and structures that exist at the time of the easement, one or two additional building envelopes may be allowed for future homesites on a case-by-case basis, depending on property size and funding source restrictions. Building envelopes generally need to be clustered together rather than spread out, and avoid prime farmland and natural resources.

The Williamson Act protects agricultural land by allowing landowners to enter into a 10-year or 20-year nondevelopment contract with the County. The landowners receive property tax assessments based on the farm production value as opposed to full market value, thereby lowering property taxes. This contract is automatically renewed but can also be cancelled by the landowner. Ag easements, on the other hand, are permanent – they run with the deed of the land and are binding on future successors/heirs/owners.

Good candidates for an ag easement will have many or at least some of the following:

Supports current or future planned productive agriculture (i.e ranching, farming)
Large enough in size to sustain agricultural use in future
In danger of encroaching development and becoming subdivided
Connected to or close to other protected lands (public or private)
Provides quality habitat for wildlife, including streams, wetlands and oak woodlands
Provides scenic open space views for the public
Has historical and/or cultural significance

Agricultural conservation easements are specifically designed to support and protect agricultural activities and prevent subdivision and development, which is the primary goal. However, compatible “conservation values,” like oak woodland, stream and wetland habitat, are often important secondary values that play a role in project selection and fundraising. Conservation values are included in ag conservation easements to the extent that they align with current agricultural uses. For example, rangeland grazing is compatible with oak woodland protection, so both likely would be included in an ag conservation easement, with allowance for maintaining and in some cases expanding irrigated pasture or cultivated cropland.

Both! Easements may be sold at “Fair Market Value” (as determined by an independent, qualified appraiser), below Fair Market Value (“bargain sale”), or donated. Which option is feasible for a particular project depends on the landowner and land trust, as well as the conservation values of the property and availability of and fit for grant programs. Grant funding is limited and extremely competitive, so donating ag easements for tax benefits is often the most feasible route.

First, we have to say that Placer Land Trust cannot provide tax advice and we strongly recommend you consult with a tax advisor about the potential tax benefits of donating an ag easement. That said, here are some general guidelines that may (or may not) apply to you:

Income Taxes

A qualifying farmer or rancher (making more than half of his/her income from farming and ranching per Internal Revenue Code 2032A(e)(5)) may deduct federal income tax up to 100% of their annual income each year for up to 15 years.
A non-qualifying farmer or rancher may deduct federal income tax up to 50% of their annual income each year for up to 5 years.
The value of the total tax deduction can equal but not exceed the value of the ag easement.

Property Taxes

Unfortunately, at this time Placer County does not reduce property taxes when an ag easement is placed on the property. We recommend that landowners speak with the County Assessors/Tax Collector’s office prior to completing an ag easement project to learn if/how the County will change landowners’ property taxes.
Placing a California Land Conservation Act (aka Williamson Act) contract on the property does lower property taxes significantly, and can be done concurrently with (or entirely separate from) placing an ag easement on the property.

As noted, funding for purchased easements is limited and extremely competitive. However, the primary grant sources are:

The Agricultural Conservation Easement Program (ACEP) is a voluntary federal conservation program implemented by the USDA Natural Resources Conservation Service (NRCS). If applicable, ACEP can provide up to 50% of the ag easement value, so the remainder must be donated or other grant funds found.

The Sustainable Agricultural Lands Conservation Program (SALC) is funded through the California Strategic Growth Council and the California Department of Conservation (DOC). SALC provides planning and agricultural conservation easement grants to eligible entities to support the protection of critical agricultural lands from development. If applicable, SALC can provide up to 75% of the ag easement value, so the remainder must be donated or other grant funds found.

Both the SALC and ACEP Program complement farmland conservation efforts by the state and Placer County, including the Williamson Act, the Placer Legacy Open Space and Agricultural Conservation Program (Legacy Program), and other local and regional agricultural land conservation policies. In limited cases, additional funding may be available through the Legacy Program.

Stewardship Funding

Unfortunately, no public grants pay for stewardship funding, and the amounts are usually higher than we can privately fundraise, so landowner donations are the primary way we can cover these costs. Stewardship funding donations are charitable contributions and likely eligible for a tax deduction. Consult with your tax advisor for details; Placer Land Trust cannot provide tax advice.

If the above-stated contribution level is not possible for the landowner, in certain cases there may be alternative options. We are happy to further discuss these options with you.

Easement values can vary greatly and must be determined by an independent appraisal by a qualified appraiser. We often see easement values between 30% and 60% of the current total property value. For example, if the current property value is $1M, the easement value might be between $300,000 and $600,000. This is a ballpark, and may be higher or lower depending on location, size, zoning, development potential, easement restrictions, and other factors. Often, the highest easement values are found on properties under high development pressure and/or that include the strongest protections in the easement. A short-form “restricted” appraisal is often the first step in determining potential easement value; then, a full appraisal report will determine the final value. Placer Land Trust typically requests that interested landowners split the cost of the appraisal as part of the landowner / land trust partnership.

Does an ag easement grant public access? NO, an ag easement does not automatically allow for public access. Instead, it reserves the landowner’s normal right to allow or prohibit public access.
Is an ag easement like a road or utility easement? NO, it is also totally different.
Does an ag easement mean I lose control of my property? NO, the land remains under the landowner’s control and ownership.
Is ag an easement the same as the Williamson Act? NO, it is a permanent deed restriction, whereas the Williamson Act is a 10- or 20-year agreement.

Sally has a 150-acre cattle ranch worth $1M. The ranch has scenic views, oak woodlands, a creek, an existing house, a large barn, and a small orchard. The ranch has moderate development/ subdivision potential but Sally would like to see it preserved as a ranch. Sally would like to reserve a 3-acre building envelope around the existing house and barn, but otherwise keep it undeveloped. No building envelope is needed for her corrals, irrigation lines, fencing and other utilities; they can stay as they are now (and may be maintained and modified in the future).

An independent appraisal values the ag easement at $500,000, or 50% of the full $1M property value. Unfortunately, grant funds can only cover a purchase of half this amount ($250,000), so Sally agrees to donate the other half ($250,000). The donation is considered a “qualified conservation contribution” eligible for a tax deduction. So, Sally sells the ag easement for $250,000, paid to her upon closing, and then takes a $50,000 deduction from her income taxes each year for 5 years until she has deducted the remaining $250,000 in value that she donated.

She also makes a 15% stewardship donation to the land trust ($75,000) to help with the long-term costs of monitoring and upholding the easement, and takes a tax deduction on this amount as well.

Meanwhile, Sally continues to own, live on, and operate the ranch. She hopes her kids will keep the ranch and continue the operation, but regardless of what happens, she is glad to know it will remain protected and used for ranching indefinitely.

The process and timeframe for each project is unique; however, below are some common steps and approximate timeframes. Grant-funded projects take much longer (1-3 years) due to the fundraising process and agency review, while donated projects are typically faster (+/- 1 year).

Initial review and selection: 2-3 months

Initial discussions with landowner, exchange of information, & initial land trust review
Pending mutual interest, a site visit of the property, & landowner questionnaire filled out
Full review and ranking based on selection criteria and staff capacity
The staff recommendation to Board of Directors (pursue; waitlist; or do not pursue)
Board of Directors site visit (if needed); Board approval or denial

Fundraising, if grant-funded (skip if donation): 1-2 years

Preliminary appraisal
Letter of Intent, or Purchase and Sale Agreement
Grant applications by Placer Land Trust, funding awarded, funding agreements signed

Transaction: 6-12 months

Purchase & Sale Agreement or Donation Agreement
Pledge Agreement for a stewardship funding contribution
Full appraisal (generally required)
Due diligence: title review, site assessments, baseline documentation report
Survey of building envelopes (if applicable)
Agricultural Conservation Easement deed drafted and reviewed by all parties
Subordination agreements (if applicable, in the case of a lien or mortgage)
Funder final review and approval (if applicable)
Board of Directors final review and approval
Funding disbursement request (if applicable)

Closing: several weeks

Escrow instructions
Documents signed and delivered to escrow
Funds delivered into escrow (if applicable)
Close of escrow