Blogmaster’s note: The following is a guest post from Jim Brown of J.F. Brown Real Estate Services in Lexington.

Bob McDonnell’s announcement that, if elected governor, he’ll raise the land preservation tax credit from 40% to 50%, with a view to conserve 400,000 acres of rural land in Virginia, is a bipartisan continuation of promoting open space. Governor Kaine has had a similar goal and has seen more than 300,000 acres protected under his tenure to date. For those readers unfamiliar with conservation easements, they are one of the few tools that a private landowner can use to protect open land from development and ensure that those lands remain a viable farm or forest indefinitely. Though far too complex to fully or technically explain in this format they are, in essence, a way for an owner/family to limit the development rights to a farm or other open lands. By voluntarily placing a conservation easement on the property the owner has made a charitable donation, held by a state agency or a qualified non-profit land trust, to ensure the preservation of open-space. It does not necessarily allow for public access, it just takes away some or all of the development potential. To name but a few benefits, this helps Virginians in the form of protection and continuation of scenic view sheds (tourism and quality of life), farm lands for food production (independence), and water and air quality (health for the environment and citizens).

Conservation easements aren’t for every landowner. The gifting of a conservation easement is complex and requires legal and tax counsel in its implementation, so that it fully meets the intended goals and guidelines of Virginia and the Federal tax code. Basically, the value of an easement is the difference between the appraisal of the land before and after the placement of the easement.

Donating a conservation easement is a big decision and is most often contemplated out of a strong land ethic of stewardship, though the available tax benefits help make it more attractive during consideration. In addition to being a deductible charitable gift on the State and Federal levels, easement donations in Virginia can qualify for a program allowing the landowner to claim a transferable state income tax credit equal to 40% of the value of the easement. This allows the landowner, who might not have the income to be able to recoup all the tax benefits over a set number of years, to obtain income from the sale of some or all of the tax credit (the income from such a sale is taxable, by the way). Instead of selling the family lands to survive, this incentive might just enable a landowner to keep all the land in the family or, if later sold, still an intact property with limitations on just how much it can be divided. Virginia also states that these protected lands are taxed under land use guidelines.

Candidate McConnell has proposed a 50% land preservation tax credit, which was the original amount of the credit before the General Assembly lowered it to 40% in 2006. Just as it’s hard to say whether the 10% decrease has affected the pace of land protection in the past couple of years, it’s impossible to predict whether McConnell’s proposed increase would make a big difference going forward. Because of the interplay between the Federal and state income tax incentives, the folks for whom the 10% increase might make the biggest difference are farmers and other “land rich, cash poor” landowners who don’t have enough income to take full advantage of the Federal incentives. An extra 10% might convince a conservation-oriented farmer that he can afford to protect his land in perpetuity after all.

Again, conservation easements aren’t for everyone but they are a strong tool and incentive for landowners who want their lands to remain open. The good news is that conservation easements are strictly voluntary: they are desirable for some landowners and not for others.

How does a conservation easement affect property for resale from a Realtor and landowner perspective? A developer is not going to buy it, most likely. The landowner, by placing an easement on the property, has limited the number of buyers who will consider the property. The property appeals to buyers who want the beauty, protection, and benefits of open space. If anything is Green it’s open space. In the future, that might be a rare commodity if our population continues to expand at projected levels. Who knows what value will be in the future for a legacy property? But today, taking away development potential lowers appraised value, that’s a fact. A sale would command fewer dollars than a similar property with all development rights still in place. The economic sacrifice is real, but for the easement donor or buyer of that land, there is more than money at stake. There are fields to plant and sell the harvest; there is a desire to leave a place better than one found it; there is this and future generations to enjoy the view from the land or from afar; there are the saved expenditures from keeping up with the demand for services that comes with development. And as candidate McConnell has said, the preservation of open space can be very good for tourism.