Summer 2003

Membership Dollars at Work: Partnering to Retore Fish and Wildlife Habitat

Mississippi is blessed with a rich natural heritage. From prairies, red clay hills, bottomlands and bayous, coastal savannas, longleaf pine forests and scenic rivers and streams, Mississippi has a diversity of habitat types. The Magnolia State's private citizens own approximately 75 percent of the state's land. But the Mississippi landscape is changing. Today about 80 percent of all Mississippians live in cities and towns, compared to about 25 percent 50 years ago. As our urban population grows, natural habitats and scenic open spaces are lost forever.

" The Mississippi countryside is changing too. One of the most significant factors affecting our landscape is the continued breakup of family owned farms. Family owned farms, plantations and recreational lands are affected by changing economics and the increasing tax burden on property owners. Passing on a family farm or plantation to the next generation is a time honored tradition in Mississippi. However, estate taxes, which can be as high as 55 percent of an estate's total value, may force heirs to sell all or part of a family property," continued Clark.

One estate planning tool many landowners in Mississippi are using to protect fish and wildlife habitat and lessen the tax burden on themselves and their heirs is a conservation easement. By installing a conservation easement on their property, landowners take the first steps in insuring future generations will be able to enjoy the property as they have enjoyed it. However many landowners are unfamiliar with what conservation easements are and how they work.

A conservation easement is a restriction a landowner voluntarily places on specified uses of his or her property to protect their land, wildlife habitat, scenic areas or historic buildings. Every conservation easement document is individually crafted and reflects the special qualities of the land protected and the needs of the landowner. Conservation easements can be tailored to meet a landowner's specific needs, whether he or she owns 3,000 acres or 5 acres.

With a conservation easement the landowner still retains legal title to the property while determining the types of land uses to be continued and those to be restricted. As part of the arrangement the landowner grants the holder of the conservation easement the right to assess the condition of the property periodically to ensure that it is maintained according to the terms of the legal agreement.

The simplest way to understand the concept involved in conservation easements is to look at the basic rights that come with land ownership. When a conservation easement is placed on a property, the owner may give up certain rights (e.g., the right to subdivide the property, develop the property, etc.). Those restrictions the landowner decides to place on the property are specified in the easement document. The conveyance of the property must be made in perpetuity (forever) in order to receive federal tax benefits. The easement document itself is a legal instrument signed and recorded in the county of record. Since the conservation easement continues on the land forever, the restrictions remain on the property even after the landowner dies or sells the property.

"Conservation easements are one of the newest and most owner friendly conservation management tools available for private landowners wishing to preserve and/or promote a certain conservation ethic on his or her property. Conservation easements are an increasingly important tool in the efforts to protect and conserve important habitat types and open space," stated Clark.

Landowners interested in conservation usually have two principal concerns. First is the desire to protect the natural or productive qualities of their property. The landowner is interested in conserving special features of their property such as fertile soil, mature trees, wildlife habitat or a piece of history even after his or her ownership comes to an end.

Along with maintaining the natural productivity of their property, the second concern of many Mississippi landowners is contending with the increasing tax burden associated with property ownership. Estate taxes, property taxes and the financial incentive to sell or develop are all factors that affect land use decisions. The economics associated with land ownership are changing and fewer family owned properties are the primary source of a family's income.

Once a landowner decides that a conservation easement is right for them, the next step is to find a holder for their easement. A holder can be any nonprofit conservation organization like the Mississippi Land Trust, which was formed by the Mississippi Fish and Wildlife Foundation to hold easements throughout Mississippi, or government agency.

According to Daniel Coggin, a Field Biologist/Forester with the Mississippi Fish and Wildlife Foundation and Director of the Mississippi Land Trust, "Once contact has been made with us (the holder), a meeting is usually set up where we, as the potential holder, will come out and review the property to see if it is an easement that meets the goals of the Mississippi Land Trust. Holding an easement is a major responsibility and is not taken lightly. We understand that the holder should be an organization with similar goals and objectives as the landowner."

The Mississippi Land Trust has been holding easements since 1999 and currently holds approximately 15,000 acres in easements (Table 1.). An additional 20,000 acres should be held by the end of 2003.

Once the potential easement holder decides that they would be willing to hold the easement, the next step for the landowner is to contact a certified appraiser and a baseline preparer. The appraiser is needed to determine the exact value of the property. This is a very important step as this value will be used to determine the value of the easement the property owner will be donating to the holder.

Here is an example. For instance, Joe Smith has 600 acres of longleaf pine in Hancock County. Based on surrounding land values, the appraiser determines that the property is worth about $1,500,000. The appraiser then places a conservation easement on the property which restricts development. This lowers the value of the property to $500,000. So the value of the donated easement is determined to be $1,000,000 (before value minus after value). Of course, this is a very simply example. Many other factors are involved in determining the property value such as value of the timber resources, agricultural rights and any gravel or other mineral resources the landowner chooses to relinquish.

The preparer of the baseline, or baseline documentation report as it is sometimes called, is used to gather the information required for the baseline document. The baseline document is a snap shot of the property as it exists today and is used to document the conservation values required by the Internal Revenue Service (IRS). The document will include information on the fish and wildlife habitat, forest resources, at-risk species, historical or scenic features of the property and any other pertinent information. This will be an important document for future monitoring as it, along with the easement document, will outline future goals and objectives the landowner has for property.

Other professionals (i.e., geologist, petroleum engineer, forester, etc.) may be needed if other unique features exist on the property. If large gravel or mineral deposits exist on the property, a geologist will be required to quantify the amount present on the property which is necessary for determining the value of the deposits. Also, if an easement is used to protect an historic structure, the services of a real estate appraiser will be necessary.

It is important to note that even though conservation easements are an excellent tool for landowners, they are not applicable for everyone. Costs for conservation easements are high and can range from $10,000 to $25,000. However, most of these costs are tax deductible and may even qualify for state tax income tax credits if the easement benefits a scenic river or stream or lands of the Mississippi Natural Heritage Program. However, the tax benefits are significant and average about $1,000/acre in tax deductions. But the greatest benefit of all the is the perpetual protection of significant fish and wildlife habitat and a property that may have been in the family for a hundred or more years.

If you would like more information about conservation easements, you can contact the Mississippi Land Trust at (662) 256 4486 or visit them on the web at www.mississippilandtrust.org.

Table 1. Conservation Easements Currently Held By The Mississippi Land Trust.