Wednesday, March 22, 2006

The Land Use Debate Shifts to Conservation Easements

State and local leaders have mobilized to voice support for Virginia's conservation tax credit program, which they claim is jeopardized by state Senate legislation. The Senate proposes to cap individual credits for landowners to curb the cost of the program and halt perceived abuses. A competing House bill seeks to augment the program, according to the Charlottesville Daily Progress, by extending the duration of the tax credits, clarifying the credits’ transferability and ensuring that the credits are inheritable.

More than 150,000 acres have been put into conservation easement since the tax incentives were put into place five years ago. “This is a program that works, and we have to do everything we can to support it, sustain it and reinforce it,” said Chris Miller, president of the Piedmont Environmental Council.

House Speaker William J. Howell aligned himself with the conservationists, portraying the tax credit incentive as a "proven free-market tool against sprawl and for land conservation. "

Personally, I'm agonistic on the issue of conservation tax credits. I don't know enough about them to make an informed judgment. But I do have some concerns about the program, and I think it bears watching. As Ed Risse pointed out in one of his Bacon's Rebellion columns, the conservation credits may have an unintended consequence: Once a parcel of land is protected from development, it increases the attractiveness of neighboring parcels for development. The knowledge that the original parcel will not be developed, and that the landscape will not change, makes housing in the neighboring tract all the more desirable. Thus, in theory, conservation easements could serve to accentuate the scattered, disconnected pattern of development.

That concern is theoretical. It may not be happening in practice. If conservation easements are grouped in large, contiguous blocks, they are less likely to act as magnets for unwanted development. But I do think it is important to keep a close eye on the real-world impact that the conservation credits have on development.


At 5:09 AM, Blogger Larry Gross said...

I attended an all day seminar entitled "rural preservation" yesteday that spent much time on the various methods that can be used to permanently remove land from development.

And it was pointed out that indeed that land set aside permanently can lead to the remaining land becoming more scarce and more expensive - and yes - an "ammenity" for those who already own a home (or to buy one) that backs up to park-like land rather than other homes.

So, the argument at the GA level is essentially - is it good public policy for taxpayer dollars to be spent to do this.

It's a legitimate debate in terms of what is or is not good public policy with respect to land use.

Do we essentially "direct" growth to areas that remain as a consequence of permanently removing other land from development?

Some would say that "designating" areas for growth - does not preclude those areas not so designated being developed and become de-facto growth areas.

Conservation easements, on the other hand, can not only direct growth away from land - and towards land not so designated but, in fact, be an enforcement mechanism.

The passage of the TDR legislation will require a more formal approach because it would require that "sending" and "receiving" designations be actually established.

I predict that landowners will have a LOT to say about whether their land is designated as a "receiving" or "sending" district.

At 7:02 AM, Anonymous Anonymous said...

I've heard, without confirmation, that the folks at Wintergreen want a massive tax credit for a conservation easement on a mountain that couldn't be developed anyway, and that will enhance the value of all the properties that have a view of that particular mountain. This program cannot be allowed to get out of control.

At 3:53 AM, Blogger Larry Gross said...

One of the speakers at the Rural Preservation seminar was the person who manages the PDR (Purchase of Development Rights) in Albemarle County.

He said that their program was designed on a sliding scale based on income with virtually no benefits for those who had a high income.

This was done after a concern surfaced that apparently that those who had high incomes could use the program to benefit their financial bottom-line - and in the process, bankrupt the program itself.

So the program was set up to maximize benefits to those with the lowest incomes - which were basically folks that were land rich and money poor - who wanted to stay on their land but could be forced off by higher taxes.

At 4:15 AM, Blogger Larry Gross said...

re Wintergreen - and undevelopable land.

This part is interesting.

It's true that perhaps a mountainside is not developable in a traditional sense and also true about wetlands... but isn't the real issue about whether the land has values BEYOND developability?

Does undevelopable land have a beneficial use?

For instance, it's legal to cut forests on mountainsides. It's actually legal to mine beneath mountains and of late to clear the tops of mountains to get at the coal inside.

Similarily, with wetlands - trees can be cleared; the land adjacent can be developed right up to the edge of wetlands leaving very minimal buffers that, in fact, are inadequate to prevent storm water runoff.

There's one other important aspect to this and that is that if the rules are stiffened to rule out certain types of land from being included in a conservation easement - then that means that the owner would have to pay for a very expensive survey to delineate the land - rather than use the existing survey that delineats the current boundaires of the owned land.

So I hope that the legislative "surgery" is delicate and precise and not "chainsaw".

This looks like one of those issues that would benefit from a GA Study from JLARC and if there is a major concern that in the interim that really bad stuff could get out of hand.. then place a temporary cap/moratorium until JLARC returns with it's recommendations.

This is a very important program that has long-term benefits for both residents and taxpayers in the Commonwealth. Rather than crippling it or killing it - they need to tune it up for better performance.

At 8:26 AM, Anonymous Anonymous said...

In my experience, properties under open space easement have not been attracting development. It is an interesting theory which appears to hold water, but I don't think it's happening.

I can confirm at least interest on behalf of Wintergreen resort ownership/management in a conservation easement. The property (800ac?) was appraised 1-2 years ago for such a purpose.

At 8:43 AM, Blogger Ray Hyde said...

You've never seen ads for land for sale that "backs to park land" or "backs to protected land?"

Isn't one of the complaints that people build or subdivide their lot or family compound and then enhance the value at public expense by granting an easement on the surrounding land, which may not be developable anyway?

This all boils down to an attempt to prevent change at one persons permanent detriment while the value to others continues to vary upward, partially as a result. Everone wants Metro to be built thinking it willmake their drive easier, and everyone wants their neighbor's land in conservation. EMR is exactly right on this. But isn't he arguing against his own argument the the market demands higher density?

Anybody who thinks this is a free market tool for conservation hasn't thought it through, or else has and is lying. These programs are full of problems, not the least of which is elitism. If you look at the conservation map of Fauquier county, the vast majority of land under easement is in the high dollar north end of the county. I don't know the figures but by appearance half to three quarters of the land there is under easement.

Once the conservation density gets this high, it becomes a self fulfilling prophesy, and wahtever remaining land really should be preserved is easier to identify. Otherwise, it is a scattershot process, and rather than identifying land that needs to be preserved to serve a public purpose and preserving that, we allow the "market" to decide what gets preserved based on personal circumstances of the moment. In that respect it is no different than allowing the "market" to decide what density or pattern of development we have: we can't control the result, and someone is likely to be unhappy with it.

Either we have master land use control, or we don't, or else it comes down to the contant political battles we have now.

So in Fauquier, it is clear that easements are mainly in the prosperous north end. A tax accountant at UCAL calculated that the easement and land use programs in Fauquier caused taxes to be from 24 to 28% higher than they would be without the program. At least in Fauquier, the program appears to patently serve the wealthy. What is worse, according to the accountant, even farms that participate in the program may be paying higher taxes than otherwise, because infrastructure and buildings don't benefit. Since the wealthy have high value homes that don't get benefits in the program, they may actually be shooting themselves in the foot, as well, but since they are also the primary beneficiaries of the environmental aspects of the program, the rest of the county is still footing part of the bill.

If you are selling development rights, then you are selling valuable property, so what is the tax credit for? It has to be to provide incentive for the wealthy who can afford to "give away" that valuable property as long as they get to keep the property and get paid for doing so.

From a policy standpoint conservation easements are indefensible, except that they are more durable than zoning: they are exactly an enforcement mechanism, and that is their main problem as I see it. They take policy out of the hands of policymakers, and therefore amount to stealing the right to vote from future generations.


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