Protecting the Ecological Continuity of Real Property

1. Protecting the Ecological Continuity of Real Property • Agricultural land • Biological Diversity – rare and endangered species, communities, ecosystems • Forest land • Wetland, Shoreland, Floodplain • Water Bodies – surface, groundwater • Open Space • Scenic Vistas – visibility • Historic/Cultural structures – battlefields, artifacts, districts, facades • Concerned about regulating landowners using surface in ways that degrade the ecological characteristics of an area or structure – pay less attention to specific activities

2. “Protecting open space in and around the Twin Cities Metropolitan Area” in Bengston, David N. (tech. ed.). Policies for Managing Urban Growth and Landscape Change: A Key to Conservation in the 21st Century. General Technical Report NC-265. St. Paul, MN: USDA Forest Service, North Central Research Station. 14-20

4. Assuming the responsibility of protecting particular ecological characteristics – merely a good, such as an automobile, or service, such as education, we need to protect • characteristics of lands owned by the federal government • characteristics of lands owned by the state governments and local government • characteristics of lands owned privately, by individuals or organizations • Different strategies ya think?

6. State Partners • Regional Parks • In 1974 Metropolitan Parks Act created a partnership between the Metropolitan Council, the regional planning agency, and the local governments operating the units that belonged to the Regional Recreation Open Space System • 46 regional parks and park reserves • 22 trails and six special recreation areas • Parks are operated by the respective cities and counties • Dakota County Parks • Minneapolis Park & Recreation Board • St Paul Parks & Recreation

7. Minnesota Agricultural Land Preservation Statutes • Perceived as an urban or metropolitan area problem where often regarded as much an ecological and open space issue as it is an economic and livelihood issue • “The preservation of America’s prime agriculture lands is deemed by many policy-makers to be a vital long-term strategic interest” • Minnesota Agricultural Land Preservation Program • (1) preserve and conserve agricultural land, including forest land, for long-term agricultural use in order to protect the productive natural resources of the state, maintain the farm and farm-related economy of the state, and assure continued production of food and timber and agricultural uses • (2) preserve and conserve soil and water resources • (3) encourage the orderly development of rural and urban land uses.

8. Tools • The goals of the policy “will be best met by combining state policies and guidelines with local implementation and enforcement procedures and private incentives” • 1967 Minnesota Agricultural Property Tax Law established the “Green Acres” program • The statute protects agricultural landowners from high property taxes that are caused by nonagricultural market forces, such as city and recreational development • Land values are usually assessed based on the highest and best use • Under the program, counties assess eligible agricultural land based on agricultural use • In fiscal year 2006, the program reduced taxes on agricultural land in 43 counties by about $42.8 million

9. Metropolitan Agricultural Preserves Act • Agricultural Preserves • Minnesota Agricultural Land Preservation Program • Dakota County Farmland and Natural Areas Program

11. Federal Public Lands1796-1934 Privatizing land the principal objective • 1796-1812  Early attempts to privatize land under Congressional supervision • 1812-1934  Privatizing land - the federal real estate agency the General Land Office • 1812-1862  Land as a source of revenue • 1862-1935  Land as a subsidy for settlement - homestead, railways, etc • 1872 Yellowstone National Park established • 1891 President authorized to reserve forest land still in federal ownership • 1906 President authorized to protect antiquities on federal land • 1911  Weeks Act, allowing the USDA to acquire privately owned cutover forestland for watershed purposes • 1924  Clarke-McNary Act, allowing the USDA to acquire cutover forestland for forestry demonstration purposes • 1934 The Taylor Grazing Act ending privatization in general • 1946 The Bureau of Land Management established as successor to the General Land Office

12. National Park System National Forests National Grasslands Wilderness Areas National Wildlife Refuges Reservoirs Voyageurs National Park Wild and Scenic Rivers Legislation St Croix National Scenic Riverway Lower St. Croix Mississippi National River & Recreation Area Pipestone NM Grand Portage NM North Country National Scenic Trail Park Histories Major Rural Uses of Federal Land

13. US Fish & Wildlife Service in Minnesota • National Wildlife Refuge Legislation • Upper Mississippi Fish & Wildlife Refuge • Minnesota Valley National Wildlife Refuge • Minnesota Valley National Wildlife Refuge Protection Act of 1999 • Impact of Airport Expansion on the Minnesota Valley NWR (House Committee on Resources)

14. State-owned Lands Chronology

15. Current Management by DNR 4,907,898 acres of lakes 7,500,000 acres of wetlands 92,000 miles of rivers and streams Also 800,000 acres outside any management unit Severed mineral estate ca 1 million acres

16. Protecting Privately Owned Land • Public Acquisition • Regulatory • Financial Incentives • Private Action – deed restriction

17. Protecting Privately Owned Land as Open Space • Approximately 60 acres of land lost locally in the Twin Cities each day • Need to restore and protect open space and natural areas within the metropolitan region increases

18. Conservation Easements • “Conservation easements, as we know them today, are a fairly recent approach to land conservation. As government acquisitions and regulatory restrictions on land use have become prohibitively invasive, costly, and ineffective, governments have looked to conservation easements as a potentially effective and less expensive conservation method than government ownership and/or regulation” (National Policy Analysis) • A conservation easement is a restriction placed on a piece of property to protect the ecological values of the parcel • The easement is either voluntarily sold or donated by the landowner, and constitutes a legally binding agreement that prohibits certain types of development from taking place on the land • Like other easements it “runs with the land” • May be eligible for federal and state tax deductions

20. Conservation Easements as Real Property Rights • Uniform Conservation Easement Act (1981) • Conservation Easements (Minnesota Statutes)

21. Financial Incentives to Conservation Easements • Tax benefits for gifts of conservation easements were first provided by Congress to promote conservation in the United States in the Tax Reform Act of 1976 and the Tax Reduction and Simplification Act of 1977 • In 1980 Congress passed the Tax Treatment Extension Act (creating IRC section 170(h)), which made permanent the income tax charitable deduction benefits for gifts of qualified conservation contributions • In 1997 Congress passed the Taxpayer Relief Act, which created a new estate tax benefit (IRC section 2031(c)) for landowners who donate conservation easements

22. 26 USC US Internal Revue Code • § 2522. Charitable and similar gifts • (d) Special rule for irrevocable transfers of easements in real property • A deduction shall be allowed under subsection (a) in respect of any transfer of a qualified real property interest (as defined in section 170 (h)(2)(C)) which meets the requirements of section 170 (h) • Subtitle A > CHAPTER 1 > Subchapter B > PART VI > § 170(h)(2)(C))

23. The conservation purpose must be exclusive • The conservation purpose must be protected in perpetuity • No surface mining is permitted • In general where there is a retention of a qualified mineral interest a contribution does not qualify if there may be extraction or removal of minerals by any surface mining method • With respect to any contribution of property in which the ownership of the surface estate and mineral interests were separated before June 13, 1976, and remain so separated the contribution does qualify if the probability of surface mining occurring on such property is so remote as to be negligible

24. General Rule • There shall be allowed as a deduction any charitable contribution - payment of which is made within the taxable year • A ''charitable contribution'' means a contribution or gift to or for the use of • A state, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes • A corporation, trust, or community chest, fund, or foundation

25. Qualified Conservation Contribution • Qualified conservation contribution means a contribution • of a qualified real property interest • to a qualified organization • exclusively for conservation purposes • A qualified real property interest means any of the following interests in real property • the entire interest of the donor other than a qualified mineral interest, • a remainder interest, and • a restriction (granted in perpetuity) on the use which may be made of the real property

26. Qualified Organization • Organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals; • No part of the net earnings of which inures to the benefit of any private shareholder or individual; and • Which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office

27. A Conservation Purpose • The preservation of land areas for outdoor recreation by, or the education of, the general public, the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem, the preservation of open space (including farmland and forest land) where such preservation is • for the scenic enjoyment of the general public, or pursuant to a clearly delineated Federal, State, or local governmental conservation policy, and will yield a significant public benefit, or the preservation of an historically important land area or a certified historic structure

28. Certified Historic Structure • Any building, structure, or land area which • is listed in the National Register, or • is located in a registered historic district (as defined in section 47(c)(3)(B)) and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district • A building, structure, or land area satisfies the preceding sentence if it satisfies such sentence either at the time of the transfer or on the due date (including extensions) for filing the transferor's return under this chapter for the taxable year in which the transfer is made

29. Federal Tax Benefits • Federal income tax deduction • Donated conservation easements are considered a qualified charitable donation under the federal tax code, property owners can deduct the value of the easement, defined as the difference between the value of the land just before the easement is granted and the value of the land immediately after the donation • In August 2006, Congress passed the revised Pension Protection Act raising the maximum federal tax deduction for conservation easements from a maximum of 30% of adjusted gross income to 100% for farmers and ranchers, and to 50% = for non-farmers. • The increase expired at the end of December 2007, but a provision now pending in the Food and Energy Security Act of 2007 (the "farm bill") would extend the tax deductions for two more years

30. Federal Tax Benefits • 2. Federal estate tax deduction • Relief from estate taxes is the most significant tax benefit for landowners granting conservation easements, particularly those who inherit sizable estates • In 1997, Congress passed estate tax relief legislation for conservation easement grantors • The purpose was to encourage property owners to hold on to property they might otherwise want to sell to land developers to offset debilitating estate tax burdens • The tax provisions allow the grantor to deduct the value of the easement from the fair market value of the deceased's estate • The donor may also deduct up to 40% of the value of the estate at the time the owner dies

31. State income tax credits • Twelve states provide tax credits, though most are not as substantial as the federal income tax benefit. • The most significant tax incentives are provided by Colorado and Virginia, which allow grantors to sell partial or full amounts of their credit to other taxpayers in the state • 2. Property tax relief • At least 17 states also provide property tax incentives, allowing donors to deduct the value of the easement from the assessed value of the property

33. Land Trusts (Wikipedia) • Land Trust Alliance • The Nature Conservancy • Nature Conservancy Minnesota • Minnesota Land Trust • The Trust for Public Land • The Trust for Public Land Minnesota

34. The nation's 1,663 local, state and regional land trusts control land use on 12 million acres of private lands • Approximately half that amount - 6.2 million acres - is controlled through conservation easements, up from 2.5 million acres in 2000 • Most of the controlled land is managed by large, national environmental organizations, such as The Nature Conservancy, The Trust for Public Land, Ducks Unlimited, American Farmland Trust and The Conservation Fund.  • Over three million acres is protected through conservation easements by TNC, a fivefold increase since 1997, when the land trust held 645,000

35. Dakota County • Area of rapid urbanization south of St. Paul/Minneapolis • Plan to protect a variety of open spaces and prevent farmland and other open space, primarily along protected waterways, from being lost • inventory and rank the quality of natural areas and farmland • 42,000 acres of farmland and 36,000 acres of natural areas, about 2 percent of the County, have been identified as eligible for the program • B. protect the ecological continuity of these areas

36. Dakota County • November 2002 voters in Dakota County approved the sale of $20 million in bonds to acquire real property interests, either fee title or permanent conservation easements, from private landowners • In the program most protected land would remain privately owned, the landowners paid for keeping land open • Some land will be acquired by public entities • Practice • permanent easements on privately owned high quality farmland within ½ mile of DNR rivers and streams outside of the area planned for orderly extension of city sewer and water services acquired by county • permanent easements  on privately owned natural resources acquired by county and fee title acquired either by nonprofits or public agency

37. Farmland Protection • To date the county has acquired six easements on farmland totaling 637 acres at a total cost of $2.4 million  • Federal matching funds and landowner donation have reduced the county’s cost to $1 million • Nine other farmland properties, totaling 1330 acres, are being negotiated • County has been awarded $993,925 in matching funds from the United States Department of Agriculture Natural Resources Conservation Service for farmland protection • A total of $3.3 million in such funds have been awarded to the program

38. The Trust for Public Land acquired a 22-acre remnant of the Big Woods from private landowners conveyed 15 acres of woods to the City of Wayzata conveyed 7 acres containing building and lawn to The Retreat, a private nonprofit organization encumbered both titles with perpetual conservation easements held by the Minnesota Land Trust Funding $3 million public bond referendum passed by Wayzata citizens in November 2003 the Retreat's own financing private contributions from residents in and around Wayzata

39. Trust for Public Land Acquisitions • Wayzata Big Woods • Eagan Greenway • Anoka Wildlife • Twin Cities Mississippi Program • Minnesota Greenprinting

40. Community Land Trusts • Rondo Community Land Trust

41. Lessard Outdoor Heritage Council • Dennis Anderson: More power to the people • Panel weighs plan to take over parcel in Itasca County • Editorial: Beware of end-runs on legacy spending • Proposals pour in for spending on prairies, wetlands