In July 2013, a tax reform package passed by the NC General Assembly eliminated a key state income tax credit designed to encourage land conservation. The Conservation Tax Credit, which had provided property owners significant tax incentives for placing easements limiting future development on their land, would no longer be available effective January 1, 2014.
Enacted in 1983, this incentive has often been a deciding factor in persuading landowners to donate rather than develop land. By the end of 2012, the tax credit had helped encourage land owners to conserve 238,000 acres across North Carolina.
When the Conservation Trust for North Carolina (CTNC) learned of this pending change in July 2013, they had to think fast. A long-time grantee of ZSR that supports 23 land trusts across the state, CTNC recognized that hefty transaction costs, including surveys, appraisals, administrative and legal fees associated with conservation easements and bargain sales (which run as high as $20,000 to $30,000) can often prove the deal breaker for a landowner trying to determine whether or not to preserve land.
To help overcome this barrier, CTNC initiated a "Money in the Ground" campaign to convince as many landowners as possible to take advantage of the tax credit before the end of 2013. By reallocating funds that had been restricted for another purpose and seeking additional funds from other donors, CTNC was able to raise $1.5 million to facilitate land projects, including donated conservation easements and bargain sales. Land trusts could apply for a grant from CTNC for up to $25,000 to cover transaction costs for each property.
Local land trusts across the state immediately began revisiting landowners with whom they had established relationships, advising them of impending changes and encouraging them to take advantage of the conservation tax credit before it expired. The strategy worked. Over the course of the fall, CTNC approved 63 grants totaling more than $1 million. These grants helped 16 North Carolina land trusts protect over 7,400 acres with a donated land value of more than $28 million.
CTNC, as well as local land trusts, are busy developing new conservation strategies in light of the elimination of this tax credit. In the meantime, they should take pride in the creativity, nimbleness and hard work that allowed them to take a great leap forward in protecting North Carolina's special places.
