Study puts values on working easements
A recent study in the Bethel Community revealed that “working land conservation easements” would be valued as high as $7,900 to $9,400 per acre for flat or rolling land outside the floodway of the Pigeon River or other streams.
A conservation easement is a voluntary and permanent agreement that limits certain development on a property in exchange for possible federal, state, and local tax benefits, a cash payment, or some combination. Conservation easements can be tailored to suit each landowner’s present and future needs. Through a working land conservation easement, a property owner still owns the land and can continue activities related to farming and forestry.
To carry out the Bethel study, a qualified real estate appraiser conducted a detailed analysis of three sites in the Bethel Community, including an analysis of the value of the properties with and without working land conservation easements. The difference in those values represents the value of the easement. No two properties are exactly alike, and certain factors can greatly impact the value of any proposed easement.
The Bethel study showed that easements on flat or rolling lands outside the floodway can be worth 50-70% of the land’s total value, because the landowner is giving up the development potential of those lands. In dollar figures, these non-floodway lands in the study had an estimated value of $11,300 to $16,800 per acre, and the easement values translated to roughly $7,900 to $9,400 per acre.
Floodway lands present a much different situation. Floodways include the channel of a river or stream and the adjacent overbank areas necessary to convey floodwaters (rather than store them). Floodways are determined and mapped by government agencies, and regulations generally prohibit development within the floodways. For these reasons, the value of property in the floodway is not affected by an easement, because the landowner isn’t really giving up any development potential in those areas, so the value of an easement on floodway acreage is $0 per acre.
Also, the value of the easement is usually reduced if the landowner has or wants to have one or more home sites on the property. Having protected open space nearby makes a house more valuable, so the overall appraisal of an easement will take into account the increase in home value.
Other factors that could affect the value of an easement include steep slopes and rights-of-way on, to, or through the property. Current efforts to update the maps of the floodways and floodplains of the Pigeon River watershed may also impact the value of easements on properties closest to rivers and major streams.
“We will use these study results to help individuals, families, and the whole community plan for the future,” said George Ivey, coordinator of a rural lands preservation effort for the Bethel Rural Community Organization.
Typically, once the value of the easement has been determined for a particular property, it is then up to the landowner and a conservation group or government agency to work together to figure out how to cover the costs of protecting that land. Some landowners are able to donate the easement in return for various tax breaks, while other landowners may seek full cash payment for the estimated value of the easement. In some cases, a landowner may undertake a “bargain sale” whereby the landowner accepts some combination of tax breaks and cash.
For instance, if the property is ten acres in size and the easement is valued at $9,000 per acre, the landowner could donate the easement and apply the $90,000 value toward various tax breaks, accept a cash payment of $90,000, or seek a combination of donations and cash totaling $90,000. The conservation group or government agency then holds the development rights for the property in perpetuity, but the underlying property can still be bequeathed or sold to the landowner’s heirs or other parties.
“Easements are one of many valuable tools we can use to help conserve land and protect our community’s heritage,” added Ivey. “We want to share this information with local landowners, and if they are interested in pursuing an easement, we will try to help make it happen.”
Funding for this conservation easement study was made possible as part of a $9,750 grant from the North Carolina Agricultural Development and Farmland Preservation Trust Fund. Additional outreach on rural land protection is being supported by a $20,000 grant from the Pigeon River Fund. Both grants are being managed by the Southwestern NC Resource Conservation and Development Council on behalf of the Bethel Rural Community Organization.