Conservationists seek permanent tax breaks
Land trust account for twice as much area than national parks
CRYSTAL LAKE – With a key tax provision set to expire at the end of the year, conservation groups are pushing for permanent tax breaks they say are needed to preserve open space.
Even with the lingering effects of the recession, voluntary land conservation has increased significantly since 2005. But advocates say tax incentives are needed to build on those gains.
The Land Conservancy of McHenry County, a nonprofit group, secured permanent conservation easements on more than 1,900 acres in McHenry County from 2006 to 2010. That's more than five times as many acres as the 257 protected from 1991 to 2005, Executive Director Lisa Haderlein said.
Nationwide, 10 million acres have been added to conservation rolls since 2005. That includes more than 90,000 acres in Illinois alone, according the National Land Trust Census by the Land Trust Alliance. The census shows a 27 percent increase in land conservation.
Land trusts hold more than 47 million acres across the country. That's an area twice the size of all of the national parks in the lower 48 states, according to the census.
Increasingly, local groups such as the Land Conservancy of McHenry County are adding acres for conservation, Haderlein said.
While many people who put acreage in trusts do so to preserve the land, the tax breaks are an added incentive.
Judy Kugler of Woodstock put 158 acres of farmland west of Woodstock in the Land Conservancy of McHenry County. The land includes a family cemetery where her husband, Lowell, is buried. Kugler wanted the conservation easement to make sure that the farmland was never turned into a subdivision.
"I can't imagine there being houses there; it's just so nice the way it is," she said.
With a permanent easement restricting future development on the property, those acres likely will stay that way.
Randy Rapp and his wife, Susan McCowin, who live in unincorporated McHenry County near Alden, gave easements on 2 acres along a branch of Nippersink Creek to the Land Conservancy of McHenry County. They wanted to protect the land and would have done so regardless of the tax benefits, Rapp said.
"I believe it's important and worthwhile that this part of the Nippersink is treated right and restored," he said. "It's hard to overstate how important this little bit of the Nippersink is."
Rapp and his wife have been working with experts to restore the land and rid it of non-native species. This branch of the Nippersink flows into a rare sedge meadow, or open wetlands similar to a bog.
Land owners can take a charitable tax deduction equal to the value of the easement. The land remains private and on property tax rolls.
Owners also can deduct up to 50 percent of gross income under current tax provisions set to expire at the end of the year, Haderlein said. They have 16 years to capture the full value of the easement. If the provision expires, owners would be limited to 30 percent of adjusted gross income within six years to capture the full value. Farmers and ranchers would be able to deduct up to 100 percent of adjusted gross income.
The change wouldn't mean much to wealthy landowners with seven-figure annual incomes, but it would make it nearly impossible for lower-income landowners to recoup the value of the donated easement, said Russell Shay, director of public policy for the Land Trust Alliance.
If the incentive lapses, a farmer earning $50,000 a year who donates an easement valued at $1 million would be able to take total tax deductions of only $90,000 over the six-year period. That's less than a tenth of the value of the donation. However, under the same scenario, a landowner making $1 million a year would be take the full value of the easement in tax deductions, Shay said.
"There is this assumption that only the fabulously wealthy would be doing this, but that's not the case," he said. "[The enhanced incentive] evens the playing field."
The tax break has expired before only to be reinstated retroactively, Haderlein said.
The Land Trust Alliance, a national group, has been lobbying members of the U.S. House of Representatives to pass an extension for the enhanced easement incentive before the end of the year. If the incentive lapses, it may be unavailable for all of 2012, though it could be brought back retroactively.
A permanent easement incentive would cost the government $761 million over 10 years, according to the Joint Committee on Taxation.
U.S. Rep. Don Manzullo, R-Egan, supports the House bill, H.R. 1964.
"Many farmers and ranchers are land rich, but cash poor," he said. "These landowners make a modest living off the land and, in this economy, need the right tools to move toward conservation."
The incentive is needed at least until more meaningful tax reform can be passed, Manzullo said.
“The tax code isn’t going to be totally reformed anytime soon in this Congress," he said. "This particular tax incentive expires at the end of this month. So this bill is needed to keep this current tax policy in place and to encourage conservation while we still work on comprehensive tax reform.”
U.S. Rep. Randy Hultgren, R-Winfield, has co-sponsored the bill.