Enhancing Conservation Property Tax Benefits through H.350

1. Working with Properties that Qualify Under 105-275(12) 2012 Advanced Real Property Seminar NC Department of Revenue Joseph S. Koury Convention Center Greensboro, NC September 21, 2012

2. Need for H 350 • Clarify existing statute – 105-275(12) • Better define public purpose/benefit • Greater consistency across state • Reduce “carrying costs” for land trusts • Incentive to accept land donations

3. Property Tax Uniformity - 2010 In 2010, CTNC documented: • 58 counties consistently exempting conservation properties • 14 counties taxing conservation properties at market value • 7,800 acres of conservation land taxed at market value • $94,000 in tax revenue

4. Qualifying Purposes Under H 350 Used exclusively for one OR more of the following: • Scientific or educational purposes • Public access to pubic waters or trails • Wildlife habitat conservation • Forest stewardship • Subject to a permanent conservation easement to protect water quality • Transfer to government agency for permanent conservation

5. Other Key Provisions in H 350 • Limited to nonprofits organized to receive and administer lands for conservation purpose • 5-year deferred tax payments if property is disqualified • Disqualifying events: • Sold for development/no longer used for conservation • Income produced not incidental to conservation purpose • No deferred tax payments when sold subject to an easement or transferred to government agency

6. Scientific and Educational Purposes • Preservation of natural flora and fauna for observation and study • Scientific and educational defined in NCGS 105-278.7(f) • Research/experimentation • Natural sciences • Transmission of knowledge or skills

7. Public Access Hiking trails Coastal/river Paddling/boating

8. Wildlife Habitat Conservation • Property managed under a written habitat conservation agreement w/ NC Wildlife Resources Commission • Use process developed for Wildlife Land Conservation Program • None to date

9. Forest Stewardship • Managed under a Forest Stewardship Plan approved by NC Forest Service (NCFS) • NCFS has developed “Forest Stewardship Plan Review Form” • NCFS, private contractor, landowner, county resource agencies may develop plan • At least eight properties have qualified under this option

10. Water Quality Easement • Must be under a permanent conservation easement to protect water quality • Easement must meet requirements of Chapter 121, Article 4 of the NCGS • Many held by the NC Clean Water Management Trust Fund • Easements recorded with deed • More than 20 properties have qualified under this purpose

11. Transfer to Government Agency for Permanent Conservation • Land being held for transfer to government conservation agencies • National Park Service, US Forest Service, NC State Parks, Local Governments • Documentation of agency intent • Eight properties qualified under this purpose

12. Challenges Ahead • Determining what is/is not income incidental to the conservation purpose • hunting leases • timber revenues • mitigation payments • carbon sequestration or other “ecosystem service” payments • Conservation buyers programs

13. Other Issues • Reclassification of previously exempt properties as deferred under the new 105-275(12) • Application process? • Property tax listing schedule • Land being used for production agriculture

14. Contact Info Edgar Miller Director of Government Relations Conservation Trust for NC edgar@ctnc.org 336-793-8219