Conservation Easement Profiles Examples of Mississippi using conservation easements to conserve strategic plant and wildlife habitat

Conservation Easement Profiles

Examples of Mississippi using conservation easements to conserve strategic plant and wildlife habitat. The six landowners profiled in the following pages have used conservation easements to accomplish their specific land use objectives in the future. The properties described in these profiles vary from a few acres of mixed upland hardwoods and pine to several thousand acres of pristine bottomland hardwood forest. Any tax benefit associated with the use of a conservation easement is unique to the terms of the agreement and the landowner's tax situation. Landowners should discuss the benefits of conservation easements with experienced professionals to determine their impact on specific tax situations. Presbyterian Church Preserves Old Growth Uplands In 1945 the Presbytery of Mississippi determined to provide a place for summer camps and a conference center. The Presbytery purchased the property which consists of approximately 176.5 acres approximately 11 miles east of Okolona, Mississippi and 4 miles west of Amory, Mississippi (Monroe County). A lake was constructed and other improvements were made. In 1952 the Presbytery of West Tennessee became a partner with Mississippi in developing the grounds and operating the center. In 2000 the Presbytery of Mississippi donated the property to the Wrenwoode Trust and donated a perpetual conservation easement to the Mississippi Land Trust to further the original purposes of the Wrenwoode Natural Area by preserving its ecological integrity and serving to educate the public about biodiversity and the conservation of upland hardwoods. The Wrenwoode property has some very significant conservation values. The maximum elevation is approximately 300 feet mean sea level. The site supports one of the tallest bluffs (70 feet) in Mississippi. Several plant communities are found within this area of high biodiversity. Twenty plants that are on the Mississippi Natural Heritage Program's Special Plant List are found there. In addition American ginsing, three birds orchid, shadow-witch orchid and climbing milkweed are found on the area. Although this forest represents a common community type, this type is declining across the state. The overall forest composition consists of approximately 75% hardwood with 25% pine. The relatively old growth forest of the Wrenwoode Natural Area is of exceptional ecological quality. Undisturbed for over sixty years, the site is unique in the northern part of Mississippi. Trees of special interest are an American beech of approximately 48 inches in diameter, two Japanese varnish trees and four Canadian hemlocks about 50 feet tall, the largest of this species known in Mississippi. The area provides choice wildlife habitat because of its rough topography and isolation. The area provides excellent recreational opportunities including, hiking, wildlife viewing, fishing, limited hunting and nature study. Few areas in Mississippi provide a view like the bluff across the floodplain. The conservation easement on Wrenwoode prohibits most commercial activities on the property. While restricting new construction, the easement allows for the maintenance and upkeep of existing roads and buildings. The camp facilities at Wrenwoode can be rebuilt and added to, but they cannot be significantly enlarged. The easement prohibits recreational hunting and tree cutting except when needed to maintain the biodiversity of the area. The conservation easement that the Presbytery donated to the Mississippi Land Trust reduced the property value of Wrenwoode because of these restrictions. The donation was eligible for a tax deduction but was not used. The desires of the Presbytery are preserved in perpetuity. The conservation easement that the Presbytery donated to the Mississippi Land Trust protects not only that beautiful area, but all of the old-growth uplands and diverse plants that the Presbytery cherished. Fred Bordelon's and Ernie Lane's Forest Ernie Lane and Fred Bordelon grew up Greenville, Mississippi where they developed an appreciation for the bottomland hardwood forests in the floodplain of the Mississippi River. They both enjoy fishing and duck hunting and exploring the natural world around them. Few people have spent more time hunting ducks in the Mississippi Delta than Bordelon and Lane. In 1989 Bordelon and Lane convinced a friend to sell them the beautiful bottomland forest they now own and manage. Approximately 40% of the land had been in catfish ponds and agricultural fields until 1990 but was enrolled then in the Conservation Reserve Program to produce a more natural state. In 1999 Lane and Bordelon learned about the conservation easement program of the Mississippi Land Trust. They agreed to donate a conservation easement to the Trust on their 189 acres with the understanding that Bordelon and Lane would be the stewards of the entire property. Lane, an attorney, wrote his own conservation easement agreement. It restricts all commercial and industrial activity and any commercial access through or across their 189 acres. The easement allows the landowners to build in two designated sites on the property. In these areas Bordelon and Lane can add to their camp house, construct outbuildings, storage sheds, a wood shop, fences, parking and even a sauna. They can use the property for hunting, fishing, education and research, and they offer use of the property to nature groups, biologists and students. The conservation easement allows Bordelon and Lane to selectively harvest sweetgum and other trees to improve the property's timber stand for both tree quality and wildlife. It also provides for some fire management to enhance diversity and control the cane around the house. Bordelon and Lane want to use the property in ways that will not harm it, which is why Lane wrote a strict conservation easement. Lane explains, "When I bought this property I wanted to protect it permanently and completely. I wanted it to be a shining example of how to preserve such an important ecosystem and practice waterfowl management." These two lifelong friends are glad to have people observe the protection of the natural character of the property. "This property is special because it has some of everything: a small bayou, big hardwood trees, clean drinking water and lots of good deer and waterfowl hunting," stated Bordelon.Barthell Joseph and the Wetland Reserve Program While in college, Barthell Joseph made several trips to the home of a friend whose family owned property near Hollandale, Mississippi, close to the Mississippi River. Joseph and his friend would spend their mornings in the rice fields hunting ducks and their afternoons telling stories and relaxing by the fire. "I enjoyed myself so much on these trips, I knew I would come back to this area after I finished school." He moved back home to Greenville in the early 1990s to work in a small business and several years later bought an 80 acre farm a few miles from Greenville. But Joseph was more interested in duck hunting than farming. The farm, near Black Bayou, is part of a major flyway for migrating ducks and geese. Its wetlands, some of which are created by flooded rice fields, are a favorite stop for wintering waterfowl. "I got involved in the farming business because the ducks on this property were super." Working and operating a small farm was a lot of work, but Joseph enjoyed taking care of the property and hunting ducks on cool winter days. In 2000 Joseph applied for the Wetlands Reserve Program. Although his stewardship has been a blessing for migrating birds each winter, its value to ducks and geese could be improved. Since the 1950s, waterfowl populations have declined in part because of the loss of wetlands along the Mississippi River and other parts of the country. The Natural Resources Conservation Service (NRCS), the U.S. Fish and Wildlife Service, the Mississippi Fish and Wildlife Foundation and Ducks Unlimited work to protect and restore habitat for these birds through programs like the Lower Mississippi Valley Joint Venture's Mississippi Partners Project. This program provides technical assistance and shares costs with landowners who enhance, create or restore wetlands. As a participant in the Mississippi Partner's Project, Joseph developed a strong friendship with Ron Hudspeth, the District Conservationist at the NRCS office in Greenville. With the help from the Mississippi Partners Project, Joseph installed water control structures that flood large parts of his farm for migrating birds during the winter. Reserve Program (WRP), Barthell Joseph immediately recognized that his land would be a good candidate for the program. The WRP authorized the NRCS to restore and protect one million seventy-five thousand acres of agricultural wetlands across the country. The NRCS can pay Mississippi landowners the appraised agricultural value of their property, up to $750 dollars per acre, for perpetual conservation easements. WRP participants also receive technical and financial assistance for habitat restoration and improvement projects. Joseph enrolled the 80 acres of soybean land in the WRP. The easement will be permanent. "In the last few years, our rental payments provided us a little extra funds. Now I want to concentrate on what's best for wildlife and for me and my family."Now that the agreement is finalized, Joseph still owns the property. He will ontinue his stewardship of the farm, including managing for waterfowl. Joseph will plant 5% of the tract, or four acres per year in food plots for wildlife and continue to hunt on his land. According to the requirements of WRP, the property can no longer be used for crops, but Joseph retains income from hunting or fishing leases and ownership of mineral rights.The WRP requires the NRCS, the U.S. Fish and Wildlife Service and the landowner to agree on a management plan for WRP property. Management plans take into account vegetation, hydrology and soil types for wetlands restoration projects. Joseph's plan divides his property into shallow wetlands, green tree reservoirs and bottomland hardwood forests. Financial assistance from the WRP will pay for the reforestation of 55 acres. "I am excited that I can keep the property as long as I want without putting more money into it. Without the WRP I probably would have sold this place," explains Joseph.Coles Creek Land and Timber CompanyColes Creek Land and Timber Company (Coles Creek) is located approximately ten miles north of Natchez, Mississippi across the river from Waterproof, Louisiana. This 1,355 acre tract is located in a strategic area of the Mississippi Flyway. Approximately 500 acres were reforested to bottomland hardwoods in March 2001. The owners of Coles Creek are striving to provide a diversity of habitat types to ensure that the needs of all animals, not just waterfowl, are met. Their restoration is providing for the habitat needs of threatened and endangered species like the least tern and Louisiana Black Bear, migratory bird species such as the prothonotary warbler and resident wildlife species including turkey, squirrel and white-tailed deer.One natural moist soil impoundment and one deep-water area is maintained on the Coles Creek property. The shallow-water impoundment provides habitat for a variety of shorebirds, waterfowl and aquatic and amphibious species like turtles, frogs and crayfish. This management will benefit a variety of shore and wading birds as well as waterfowl. The deep water area offers alligators complete protection from human depredation and disturbance. In 2001 the landowners undertook an extensive nest box program for wood ducks and prothonotary warblers. This restoration project of the Mississippi Fish and Wildlife Foundation and the U.S. Fish and Wildlife Service is restoring migration and winter habitat for neotropical songbirds, shorebirds and waterfowl species. It is restoring habitat for resident wetland wildlife and fish species and improving water quality. The project will benefit high priority and priority species of waterfowl as well as other high priority and priority species including plovers, kites, sandpipers, godwits, warblers, bitterns, rails, terns, sparrows and wrens.Members use the property as they have from the time they purchased it. The easement prohibits clearcutting trees or draining wetlands on the property, but oil and gas exploration, drilling and production are permitted. The members may build hunting blinds and maintain roads to reach them, but any other development is restricted.Coles Creek Land and Timber Company donated the easement to benefit their property's bottomlands for wildlife and future members. Jeff Clark, a member of the club says, "We gave the easement because we love Coles Creek. We know that areas of this type tend to disappear if they are not protected. This is one of the few bottomland hardwood areas of its size and quality in Southwest Mississippi." Preserving Big Black River of MississippiGrey Ferris of Vicksburg recently donated a conservation easement to the Mississippi Land Trust. This donation includes bottomland hardwoods and a small portion of pasture on the farm covering 2,114.20 acres.The Mississippi Land Trust and Ferris negotiated the terms of the conservation easement together. This binding agreement prohibits any development not compatible with a relatively natural preserve. The property's roads, walking paths and a small shed can be maintained. A camp house can be built, but no commercial structures can be built. The terms of the conservation easement protecting the property reduced its appraised value and its property taxes by more than 60 percent. Federal tax law also allows the Ferris family to deduct their charitable contribution from their income taxes for a period of up to six years.According to Ferris, "Those of us who are blessed with the ownership of natural resources have a responsibility of being good stewards of the land. We should all strive to ensure that we leave our lands in better shape than we found them." Ferris Farms has a very colorful history. The land was purchased in 1918 by E.B. Ferris, the founding director of Mississippi's Agricultural Experiment Stations. He employed his vast knowledge of diversified agricultural practices in the management of his farm. In 1935 his son, Bill Ferris, graduated from Millsaps College and moved to the farm, where there were many sharecroppers. As the country's economy improved, the sharecroppers left the farm in search of a better life. Bill and his bride, Shelby, were busy raising five children and decided to begin the slow process of restoring the land and creating their own vision for the farm. The bottomland hardwoods of the Big Black River were allowed to return. The Ferris family were pioneers in the region in employing agricultural conservation techniques. They terraced the fields and provided other erosion control measures to protect the farm. Their son, Grey Ferris, left his law practice in Vicksburg in 1974 to return to the farm where he works and lives today with his family.Shelby and her daughter, Martha Ferris Kostmayer, also reside on Ferris Farms. Martha and her family occupy a house built in 1825 by B.L.C. Wailes, the first president of Washington-Jefferson College and founder of the Mississippi Historical Society. The University of Alabama has identified Native American burial mounds on the property. General Grant once marched across the property to Vicksburg. Today Ferris Farm has grown to over 6,000 acres. During the past three years, all cropland has been converted to pasture and there are more than 1,000 cows on the property."If you are a landowner in Alabama and care about fish and wildlife resources, you need to consider a conservation easement," concluded Ferris.This is an example of an easement with the Mississippi Land Trust on land on the Mississippi River Goldsby Easement Helps Preserve Mississippi RiverThe bottomland hardwood forests of Mississippi are an important and valuable natural treasure for the nation. Over the last 20 years, much attention has been directed toward this region and the significant role it plays as a functionally vital part of our natural ecosystem. The acreage of hardwood forests in Mississippi declined steadily throughout the 1900s. The most dramatic and possibly the most environmentally significant losses have occurred since the 1950s. Because of the local, regional and national importance of the state's hardwoods, non-profit wildlife and conservation organizations, as well as state and federal resource agencies, have focused much of their attention on restoration of these ecosystems. Initial conservation efforts included federal and state funding to purchase hardwood areas to be set aside as state wildlife management areas, federal refuges, and national forest lands. Though these acquisition efforts are important, they have a limited role in efforts to insure broad-based protection for these valuable ecosystems.The Duck Lake Project exemplifies what can happen when business, government and conservation interests work together to protect the environment. The conservation easement is the project's cornerstone; it establishes the legal framework that outlines the future of Duck Lake. Tommy Goldsby puts it plainly, "The conservation easement provides for the needs of wildlife and industry in a way that the entire system, and the community, are better off than they were previously." Approximately 95% of this tract of land is in bottomland hardwoods. Six miles of the western border of the 1,200 acre property borders the Mississippi River. In 2000 Thomas Goldsby, the landowner, learned about the conservation easement program of the Mississippi Land Trust. He agreed to donate a conservation easement to the Trust on his 1,200 acres.The easement restricts all commercial and industrial activity on the property, including the development of casinos, which are located less than one mile away. The easement allows the landowners to build in two designated sites on the property. In these areas Goldsby can add to his camp house, construct outbuildings, storage sheds, a wood shop, fences, parking and even a sauna. He can use the property for hunting, fishing and education.The conservation easement allows Goldsby to have up to five percent of the property as forest openings. He can harvest trees selectively to improve the property's timber stand for both tree quality and wildlife.

Financial Benefits Of Conservation Easements Both federal and Mississippi laws provide tax benefits to landowners who protect natural or historic land with qualifying conservation easements. Conservation easements are not suited for every situation. It is important that landowners consult tax professionals for more specific information. A conservation easement donation can qualify as a charitable contribution if: A. it is granted in perpetuityB. it is granted to a qualified organization, either 1. a nonprofit, 501(c)(3) charitable organization (i.e., a land trust) with a conservation purpose and the means to enforce the easement, or 2. a local, state or federal public agencyC. it achieves a least one of the following: 1. preserves land for public outdoor recreation or education, 2. protects relatively natural habitats of fish, wildlife or plants, 3. preserves open space including farms, ranches or forests either for scenic enjoyment or in keeping with an adopted public policy (such as a local open space plan), or 4. preserves historically important land or certified historic structures.For a conservation easement donation to qualify for a federal income tax deduction, the following instruments usually need to be prepared:1. the conservation easement document;2. an inventory (including photographs) of the property's condition at the time of donation listing man-made structures, water resources, agricultural and ecological features;3. a qualified appraisal of the conservation easement prepared by an independent real estate appraiser working for the donor, completed no more than 60 days prior to the donation and no later than the time the tax return claiming the deduction is filed;4. title report, copy of the deed and copies of any mortgages with subordination agreements from the mortgage holder;5. a legal land survey; and6. IRS Form 8283 (an attachment to the federal income tax return of anyone claiming charitable contributions of more than $5,000).Federal Income Tax DeductionThe federal income tax benefits of donating a conservation easement are similar to those of other charitable contributions. A landowner may deduct up to the full value of the conservation easement from his or her federal income taxes.Tax laws require that the value of the conservation easement be determined by a qualified appraiser. A conservation easement donation is greater in areas where development pressure is intense and lower in remote areas. Likewise, a conservation easement that prohibits any development will have a higher value than an easement that permits a property to be divided or developed.A tract of land may be worth $120,000 as a potential residential development, but worth only $20,000 as open space or recreational property. If a landowner donates a conservation easement to a land trust that prohibits new construction on his or her property, he or she makes a charitable contribution of $100,000. The landowner may then be eligible for up to $100,000 in federal income tax deductions.If the conservation easement meets IRS criteria, the landowner may deduct the full value of the conservation easement donation from his or her adjusted gross income, up to 30 percent of the landowner's income for the year of the gift. If the donation exceeds this amount in the year of the donation, the balance of the donation may be deducted for up to five succeeding years, subject to the same 30 percent limitation.A landowner with a $60,000 adjusted annual income might donate a conservation easement worth $100,000 to a land trust. The landowner could deduct 30 percent of his $60,000 income, or $18,000, in each of years 1-5 and the remaining $10,000 in year 6.In some situations landowners may opt to use the "step down election" which increases the limit of the deduction from 30 percent to 50 percent of an individual's annual adjusted gross income. However, the step down election generally requires that the deduction be based on the property's "tax basis," which is usually the amount paid for the property when purchased. Landowners should discuss the implications of both the 30 percent and 50 percent deduction limits with tax professionals.Conservation easements may be phased on portions of a property over time, should the value of the charitable donation exceed a landowner's ability to use the income tax deduction over the allowed six years. Subject to certain limitations some of the expenses incurred by a landowner in the donation process, including the costs for appraisals, surveys, legal review and title insurance, can also be tax deductible.Estate TaxesEstimated federal estate taxes for an individual:Value Of The Estate Total Estate Taxes Paid (2000)
$600,000 $0
$1,000,000 $153,000
$2,000,000 $588,000
$2,500,000 $833,000
$5,000,000 $2,198,000
$10,000,000 $4,948,000
To calculate the value of inherited property for estate taxes purposes, federal law requires that the value of the land be based on that property's "highest and best use," instead of actual use. For example, a landowner might own a small family ranch near a growing city which might be more valuable as a residential development. When the landowner dies, taxes on the property will be based on the land's value as potential home sites, even if the heirs do not intend to develop the land for home sites. A conservation easement can place restrictions on the use of a property that limit its "highest and best use." Because the property's "highest and best use" is restricted, its value and the estate taxes are reduced accordingly. If the landowner in the example above donates a conservation easement on the family ranch that prohibits the construction of new home sites, estate taxes on his or her land would be based on the land's value as a ranch, rather than a potential residential development. As noted earlier, there are limits on the income tax deduction for a conservation easement donation, but there are no such limits for estate tax purposes. Therefore, the savings on estate taxes can be substantial.To realize estate tax benefits, a landowner must donate the conservation easement during his or her lifetime or in a legal will. Heirs cannot donate easements to avoid payment of estate taxes. A landowner intending to convey a conservation easement by will must contact the potential holder to ensure that the organization will accept the donation.A widowed landowner purchased a property 30 years ago that has appreciated significantly. The property, which is located near a growing suburban community, has a current fair market value of $900,000. The landowner donates a conservation easement to a local land trust that reduces the property's value to $500,000. Assuming the landowner has $100,000 in taxable assets in addition to the property and that no prior taxable gifts have been made, the effect of the conservation easement on estate taxes for heirs would be as follows. Without Easement Donation With Easement Donation
Value of the land $900,000 $500,000
Other valuable assets $100,000 $100,000
Total taxable estate $1,000,000 $600,000
Total federal estate taxes $153,000 $0
Local Property TaxesConservation easements may reduce property taxes. However, property taxes on agricultural land in Mississippi are reduced because they are based on a property's productivity rather than fair market value. Conservation easements on land not classified as agricultural may reduce property taxes to the extent the value of the land is reduced. But it is important to remember that property taxes are determined by the county tax assessor/collector.

Books On Conservation Easements Available from Preserving Family Lands, P.O. Box 2242, Boston, Massachusetts 02107, Ph: (617) 357-1644:Preserving Family Lands, Essential Tax Strategies for the Landowner by Stephen SmallPreserving Family Lands, Book II, More Planning Strategies For The Future by Stephen SmallAvailable from the Land Trust Alliance, 1319 F Street NW, Suite 501, Washington D.C. 20004-1106, Ph: (202) 638-4725):The Federal Tax Law of Conservation Easements by Stephen SmallThe Conservation Easement Handbook (with model conservation easement and historic preservation easement) by Janet Diehl and Thomas BartlettTax Economics of Charitable Giving, prepared and published by Arthur Anderson & Co.Available from The Back Forty, Hasting College of Law, 200 McAllister Street, San Francisco, California 94102, Ph: (415) 565-4857:The Back Forty, a bi-monthly newsletter that focus on legal issues in land conservationThe Back Forty Anthology: Selected Articles from the Newsletter of Land Conservation Law
Contents Of A Conservation Easement Parties: Grantor (landowner) and Grantee (easement holder)Date of ConveyanceRecitals ("whereas" clauses)Title representation (assures that grantor owns the property)Conservation values of the propertyLegal description of propertyDocumentation of "pre-easement characteristics" of propertyContinuation of existing usesConveyance of rights to protect conservation values to granteeQualifications of grantee to hold the easementGrant (transfer of property interest)Consideration: nominal dollar amount or gift languageCitation of statutory authority Duration: perpetualProvisions1. Purpose: only uses consistent with protection of conservation values are permitted2. Ingress and Egress: access to property by grantee3. Prohibited Land UsesThe three methods for defining prohibited land use are:Exclusive: any land use not expressly prohibited is permittedUnreserved: any land use not expressly reserved is prohibitedInconsistent: any land use inconsistent with the easements' purpose is prohibited4. Reserved Rights (the landowner's rights which are reserved for possible future use)5. Access (public is typically denied access)6. Amendment (if mutually agreeable between easement holder and landowner at the time, certain provisions of easement may be modified in the future as long as original intent is achieved)7. Assignment (grantee retains right to transfer easement to another eligible holder)8. Subordination (if property is mortgaged, the mortgage holder must guarantee that it will uphold easement provisions in the event of foreclosure)9. Subsequent transfers (easement "runs with the land," i.e., provisions bind all future landowners in perpetuity, even if the property is sold to another)10. Recordation (easement documents recorded in county in which the property is located)11. Successors (easement "runs with the land," i.e., provisions bind all future landowners in perpetuity, even if property is inherited by another)

Contact:
Jerry D. Davis
Alabama Waterfowl Association, Inc.
1346 County Road 11
Scottsboro, Alabama 35768

www.alabamawaterfowl.org