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    Document Summary
    - Report Published -

    Report Document No. 68
    PUBLICATION YEAR 2013
    View PDF Version*

    Document Title
    Calendar Year 2011 Land Preservation Tax Credit Conservation Value Summary

    Author
    Department of Conservation and Recreation

    Enabling Authority
    58.1-512 (C.2.)

    Executive Summary
    The Virginia Land Preservation Tax Credit (LPTC) Program has proven to be a valuable incentive for landowners interested in voluntarily conserving their property through perpetual conservation easements or fee-simple donations. The transferability feature of the tax credits is especially valuable to persons with little or no state income tax liability. Responsibilities for oversight of the LPTC program are shared by the Virginia Department of Taxation (TAX) and the Virginia Department of Conservation and Recreation (DCR).

    Virginia’s Land Preservation Tax Credit Program began in January 2000 and continues to advance the preservation of important lands across the Commonwealth. TAX’s records indicate that in the first twelve years of the program, land owners permanently protected 591,612 acres across the Commonwealth through 2,774 land donations. The appraised value of this conserved acreage is about $3.4 billion, with land owners receiving $1.26 billion in tax credits.

    DCR’s review of LPTCs, which began in January of 2007, serves as an important tool for the Commonwealth to ensure that the lands protected for which a tax credit is issued of $1 million or more have worthy conservation values and that the natural and historical resources they contain are adequately protected in perpetuity. The tax credit report contained herein summarizes the donations for which taxpayers claimed 2011 Land Preservation Tax Credits, within the $108,424,000 LPTC cap established by 58.1-512.D.4.a. of the Code of Virginia. Based on information provided to DCR from TAX and the applicants, in 2011, there were 367 applications that were granted tax credits protecting 75,024 total acres. Clearly the LPTC provides a crucial incentive to further Virginia’s land conservation goals.

    In 2011, for the first time in the history of the LPTC program, the annual tax-credit cap was not met by the end of the calendar year. As allowed by statute, TAX continued to apply applications for land donations recorded in 2011 or earlier to the 2011 balance. The 2011 cap of $108.4 million was finally met on May 1, 2012. Once the 2011 cap was met, all approved applications for tax credits were then applied to the 2012 cap ($111.1 million).

    For the 2011 LPTC, taxpayers in 85 localities claimed a tax credit. The largest number of individual donations occurred in Albemarle County with 27 properties (about 7 percent of all donations). The greatest total acreage preserved occurred in Halifax County with 3,784 acres or 5 percent of the total acres preserved in the 2011 LPTC program. King William County land owners requested the largest amount of total tax credit dollars at $9.29 million or almost 9 percent of the total LPTCs requested.

    Of the eight conservation purposes that a landowner can claim to be eligible for a LPTC, approximately 80 percent of the total acreage preserved in the LPTC program or 59,938 acres were claimed to be in the Scenic Open Space category. Applicants may claim more than one conservation purpose and many in fact do, however it is not necessary in order to request or qualify for the LPTC Program. The other prominent categories that were claimed were: Forestal Use (41,649 acres) 56 percent of the total acreage, Watershed Preservation (36,627 acres) 49 percent, and Agricultural Use (33,102 acres) 44 percent. The remaining purposes claimed in order of rank were: Natural Habitat and Biological Diversity at 27,463 acres or 37 percent of the total acreage; Lands Designated by the Federal, State, or Local Government at 14,754 acres or 20 percent; Historic Preservation at 4,514 acres or 6 percent; and Natural Resource Based Outdoor Education and Recreation at 1,718 acres or 2 percent.

    As reported by land owners in their LPTC application packages to TAX, under the 2011 cap approximately 27,594 acres of active agricultural land and approximately 22,520 acres of active forestal land was conserved. Within the LPTC application, land owners are also asked to report on the total length of riparian buffers with a minimum width of 35 feet required in their donated easements or gifts of land. The applications for 2011 indicated a total length of 820,742 feet of forested buffers and 273,142 feet of no-plow buffers along rivers, streams, wetlands, ponds, springs, and shorelines. The two different categories of buffers are differentiated by the types of activities that are restricted or allowed within the conservation easement or deed of gift. Activities such as mowing or timber harvesting are restricted in forested buffers, but are allowed within no-plow buffers to maintain non-woody vegetation such as pasture or grasslands.

    In 2011, the Virginia Land Conservation Foundation (VLCF) for the first time distributed dedicated funding to land conservation agencies and organizations for their stewardship efforts. Per authority granted in Chapters 229 and 248 of the 2010 Virginia Acts of Assembly, the VLCF distributed a total of $118,762 in stewardship funds to 59 land trusts, conservation organizations and agencies to support their ongoing monitoring and enforcement of donated lands. The dedicated funding is generated from a two percent fee imposed on the sale of LPTCs.

    In addition to the responsibility to prepare an annual LPTC report, DCR is also charged with conducting reviews of the Conservation Value of LPTC requests of $1 million or more (based on a 40% credit for a donation valued at $2.5 million or greater) and with verifying the conservation value of these donations in advance of TAX issuing a land preservation tax credit. DCR’s review is carried out in accordance with criteria adopted by the VLCF for this purpose.

    In 2011, DCR reviewed and commented on the conservation value associated with 28 LPTC applications that were over the $1 million review threshold. Of the 28 reviews, 11 final applications were filed with TAX requesting more than $19 million in LPTC for 2,784 acres. In addition, another four DCR-approved applications from the previous year were applied to the 2011 LPTC because they had filed with TAX after the 2010 annual cap of $106.8 million was met on July 21, 2010. Two applications that were reviewed by DCR in 2009 also applied for tax credits in 2011. Those 17 DCR-verified donations represented 4.6 percent of total applications, 7.5 percent of the LPTC acres preserved, and 23.5 percent of the total LPTC dollars claimed in 2011. The 17 remaining potential donations reviewed in 2011 that did not complete the LPTC process by filing for a credit with TAX may have been delayed for any number of reasons, including timing issues, fluctuations in the real estate market, or difficulties with bank subordinations, but all successfully completed DCR’s pre-file review.

    DCR’s oversight continued to provide benefits to the Commonwealth’s efforts to ensure the conservation value of properties applying for the LPTC. DCR’s review process resolved a number of issues with applications that would have negatively affected the donation’s conservation value if the applicants had recorded their deeds as originally submitted during DCR’s pre-filing review. In addition, DCR’s review helped to ensure that persons eligible for $1 million or more in state land preservation tax credits also addressed water quality and forest stewardship protections associated with their conserved lands. Although state law allows DCR 90 days to complete its review, DCR took only 43 days on average to review a pre-filing application (including a site visit) and less than two weeks to verify the conservation value of final applications.