Protecting easements to protect greenspace

This year, the Georgia legislature adopted Governor Roy Barnes’ community greenspace program, which creates incentives for high-growth counties and municipalities to permanently preserve 20 percent of their geographical area as neighborhood accessible greenspace. The resulting law requires communities to devise plans for greenspace protection by December. To help implement the program, the legislature set aside $30 million for distribution by the Georgia Department of Natural Resources to local communities for greenspace trust funds.

However, the legislation provides little guidance on the tools available to county and city governments to implement the 20 percent requirement. The report of the governor’s advisory committee discusses several options, including conservation easements, public/private partnerships with local land trusts and conservation subdivisions.

The only type of conservation easement that provides the permanent protection required under the Governor’s greenspace program is the model conservation easement popularized by the Washington, D.C.-based Land Trust Alliance, a national service organization that supports local land trusts. The model easement allows the land owner and a land trust to permanently limit development of the property (all future owners of the land would be subject to the provisions of the trust); and it is enforced by the land trust as the other party to the easement.

In general, the Land Trust Alliance model conservation easement provides significant federal income tax and estate tax benefits to encourage preservation of land. Granting a conservation easement to a land trust can be a powerful tool in dealing with the estate tax dilemma faced by families in areas with rapidly escalating land values. (In Georgia, it is common in high-growth counties for families to hold tracts of 20 to 40 acres that can be worth $1 million or more because of development potential.)

While Georgia’s current use-assessment program does offer some short-term relief from rapidly escalating annual property taxes, heirs of current landowners will be forced to pay high estate taxes in order to keep the land in the family. Voluntarily restricting development of family tracts by recording a conservation easement in favor of a land trust can eliminate or significantly reduce the estate tax consequence and provide additional federal income tax benefits as well.

Conservation easements in favor of land trusts can be used in “smart growth” projects, such as conservation subdivisions which preserve environmentally significant greenspace and allow development on the part of the tract that is “density neutral” when compared to other zoning categories. In Gwinnett County, Ga., title to the open space in residential developments is typically transferred to a mandatory homeowners’ association, which in the past has produced uneven results. Adding a conservation easement in favor of a local land trust gives assurance to the community that the open space will be preserved in a relatively natural state.

That would allow open space in conservation subdivisions to count toward the local government’s 20 percent goal, provided the open space is subject to a conservation easement in favor of a land trust or is otherwise permanently protected.

Title donation is a second option for protecting greenspace. Recently in Gwinnett County, several developers for subdivisions with open space have opted to donate title — especially for environmentally sensitive land along stream corridors — to the Gwinnett Open Land Trust, rather than pursue conservation easements. The developer will be entitled to a federal income tax deduction based on the value of the donation to the extent that the open space donated exceeds the amount required by local zoning. The deduction can be up to 50 percent of the development company’s adjusted gross income and can be carried forward for five years.

The protection of greenspace, especially in the metropolitan Atlanta area, has never been a high priority for local governments. But the legislation promises protection of greenspace for future generations. Citizens and developers who take advantage of it can realize two benefits: continued beautification of their communities and favorable tax consequences.

This article was written by Sherri Labovitz, a real estate attorney with Greenberg Traurig’s Atlanta office, and Joyce Nuszbaum, a founding member and member of the board of the Gwinnett Open Land Trust. Labovitz can be reached at (404) 261-8000. Nuszbaum can be reached at (404) 815-6233.