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Option might be worthwhile for many Mississippi landowners

Conservation easements preserve land, gain tax credits

One of the lest known tools to preserve natural areas — while also benefiting from tax breaks — is a conservation easement. Experts say that the advantages of

conservation easements are little known in Mississippi. But the word is starting to get out about this tool that can preserve green spaces and farmlands while providing

important tax benefits to individuals and corporations.

Jack Mann, associate appraiser, Jorgenson & Mann Inc., Ridgeland, has been doing appraisals for conservation easements since the 1980s.

“The appraisal is one of the most critical parts of the whole thing,” Mann said. “The tax dollars that the property owner gets by donating the conservation easement are

based on the appraisal. The land is considered to be worth less if you give up rights that are taking away value.”

Mann got started doing conservation easements when he was employed by The Nature Conservancy to appraise a 40,000-acre track of bottomland hardwood lands

owned by a paper company that was considering donating the land. Mann has also done conservation easement appraisals for Ted Turner for the past 20 years, appraising

the ranches Turner has bought out West and on St. Phillips Island off the coast of South Carolina.

Turner wanted to preserve the properties in their natural state while also taking advantage of tax credits.

“The ‘bundle of rights’ theory says real estate itself has no intrinsic value,” Mann said. “The real value lies in the use of the property. If you give up rights such as the right

to develop the property or clearcut timberlands, for giving up those rights, you get tax credits. The procedure is that I as an appraiser make a market value appraisal of the

property at its highest use. Then I make second appraisal after the easement is placed on it prohibiting certain uses.”

Mann said if the property was originally appraised at $1 million, and is appraised at $500,000 after the conservation easement is placed on it, the property owner can use

that $500,000 as a deduction for up to 30% of his adjusted gross income over a five- to six-year period.

“You can see the value of that, particularly if a person is in the 30% to 40% tax bracket,” Mann said.

Mann said that millions of acres of land per year are lost to development, but that it isn’t fair to restrict uses of land without providing the property owner with


“This is a democratic way to preserve property,” Mann said. “It’s an excellent program, in my opinion. It is voluntary. In most cases they give up rights they have no

intention of using at all. And the entity that accepts the conservation easement must monitor it forever to make sure that those rights are not re-established. The Nature

Conservancy, Ducks Unlimited and hundreds of small organizations are qualified to receive these conservation easements.”

Cynthia Ramseur, director of the Mississippi Gulf Coast program for The Nature Conservancy, said that conservation organizations can’t own all the land needed to

protect resources.

“I think the real important thing is that you can protect a resource with a conservation easement and the landowner can keep the land and pass it down,” Ramseur said.

“People who have an attachment to the land want to pass it down, but they also want to protect it. They also get huge tax benefits. There are income tax benefits over

five to six years, and also estate tax benefits.”

Ramseur said there is increasing interest in conservation easements in Mississippi. The Land Trust for the Mississippi Coastal Plain is a new, non-profit organization that

has been formed to accept conservation easements in the six southern counties.

Besides individual landowners, industries can also benefit from conservation easements, especially industries that own large tracks of land.

International Paper (IP) used the conservation easement to preserve a riparian barrier along the state’s only Wild and Scenic River, a special federal designation to

recognize and protect rivers with special scenic and aquatic resources. The IP easement is for 300 feet from the edge of the tree line on the Wolf River for 15 miles.

Biloxi attorney Sandy Steckler, who was part of the team that handled the IP conservation easement that was given to the Wolf River Conservation Society, said

conservation easements are particularly valuable to persons, firms or corporations whose current and planned property uses have a relatively low impact on the

environment. The tax benefits accrue from giving up the right for a higher impact such as commercial or industrial development.

Tax benefits alone, though, usually aren’t the driving force behind conservation easements. “We have learned that most conservation easements are actually granted

because the grantor loves the land and doesn’t want to see it diminished in quality by future generations,” he said.

Steckler said conservation easements haven’t been used as much in Mississippi as elsewhere in the country partly because the state doesn’t have the high density of

population seen in many other regions of the U.S. that has caused people to become more aware of the need for preservation.

“Therefore we are considerably behind most of the rest of the nation in recognizing the benefits of and utilization of these lands trusts,” Steckler said. “Now that

Mississippi and especially the Coastal area, which has such a sensitive ecosystem, are being rapidly consumed by urban sprawl, more attention is being given to the land

trust as a tool to preserve the quality of our land for future generations.”

Conservation easements can be used to preserve farmland while helping heirs avoid inheritance taxes that might force the sale of the farm to pay estate taxes. By utilizing

the land trust, farm owners give up the right for commercial development. But the heirs who inherit the land are still allowed to use it for farming.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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