W I L L I S T O W N C O N S E RVA T I O N T R U S T
HEROES OF THE WILLISTOWN COUNTRYSIDE A Landowner’s Guide to Conservation Easements
HEROES OF THE WILLISTOWN COUNTRYSIDE Join The Many Landowners Who Have Donated Conservation Easements
A
s a community we are proud that visitors arriving in the Willistown area for the first time are smitten by the beauty of our countryside. Driving west on Goshen Road from the Philadelphia suburbs, one notices dense suburban neighborhoods dramatically giving way to open meadows, split rail fencing, grazing horses, and Chester County vernacular stone barns and buildings. A similar visual transformation occurs driving east on Route 3 from West Chester. Strip malls and gas stations start to thin out while expanses of grasslands and wooded hillsides begin to appear at Dutton Mill Road. This oasis of rural landscape amidst a burgeoning metropolitan area has not happened by chance. It is the result of many private landowners like you who love the land and have decided to permanently protect it. The remarkable Willistown community enjoys a land conservation ethic that has developed over the past 35 years. With help from the founders of the Trust, a few visionary landowners protected their land from development back in the early 1980’s. These brave landowners paved the way for numerous others who have since added their land to this reservoir of open space, creating an extraordinary haven for people and wildlife. The critical mass of protected land in the Willistown area preserves a particularly beautiful and special part of Chester County. The area is rich with gently rolling hills, streams, woodlands, and an agricultural history marked by farm houses, barns, mills and pasture land. The undeveloped land in the Willistown area provides refuge for such a diversity of birds that the Audubon Society has designated
it as an “Important Bird Area�, part of a global network of places recognized for their outstanding value to bird conservation. Despite the nearly 7,200 acres already protected, encroaching suburban development still threatens the Willistown countryside. The Trust has identified over 4,000 acres of critical lands which remain vulnerable to development. If these lands are not protected, much of what remains of our rural landscape eventually could be transformed by sprawl development that is neither sensitive to the pastoral landscape nor to the Chester County architecture that makes this place so special. The primary tool used to protect land from development in the Willistown area has been the conservation easement, a legal document that allows landowners to retain private ownership and enjoy certain financial benefits while preserving the natural and scenic resources of their land. This guide to conservation easements is designed to assist landowners who are considering protecting their land for future generations. It provides testaments from some of our friends and neighbors who have donated conservation easements and explains how you as a landowner can use this legal instrument to add the land you love to the acres of protected countryside in the Willistown area. Enjoy, and please feel free to call me at any time (610.353.2562 ext. 23) with your questions or comments. Executive Director
HEROES OF THE WILLISTOWN COUNTRYSIDE
WHAT IS A CONSERVATION EASEMENT?
A FLEXIBLE TOOL FOR PROTECTING LAND
Landowners in the Willistown area are the primary stewards of the natural and historic heritage of our countryside. Fortunately, the use of conservation easements provides a flexible option for private landowners who wish to preserve the natural resources of their lands while still meeting their financial objectives. A conservation easement is a flexible tool that protects land while leaving it in private ownership. It is a legal and binding agreement between a landowner and a qualified conservation organization such as the Willistown Conservation Trust. The easement exists in perpetuity, is recorded with the deed to the property, and applies to all future owners.
Open meadows, rolling hills and split rail fencing are characteristic of the Willistown rural landscape, just 45 minutes from center city Philadelphia. W I L L I S T OW N C O N S E RVAT I O N T RU S T
1
HEROES OF THE WILLISTOWN COUNTRYSIDE
As holder of the easement, Willistown Conservation Trust agrees to see that the restrictions detailed in the easement are upheld in perpetuity.
Does The Easement Permit Public Access?
The landowner retains title to the property and continues to have all rights and obligations of ownership except for those rights specifically restricted under the terms of the easement. The retained rights include the right to sell, lease, bequeath, and subdivide the property subject to the terms of the easement.
The conservation easement does not necessarily permit public access to the property unless it is the specific desire of the landowner to include an accessible area or a trail easement corridor as part of the easement. Many landowners who have donated conservation easements in the Willistown area have
What Are The Typical Restrictions? Under the terms of the conservation easement agreement, the landowner agrees to restrict certain future uses of the property. Each easement is unique and tailored to the specific property and the needs of the landowner. Typical restrictions are designed to:
• Protect the special natural, historic and scenic features of the property such as woodlands, wetlands, streams, open fields, steep slopes, historic buildings and scenic views.
• Limit the future development of the prop- erty. Future residential sites may be designated depending upon the size of the property and its special features and the needs of the landowner.
• Prevent harmful activities such as commer cial and industrial uses, quarrying and excavation, and the dumping of solid or liquid waste. Conservation easements assure the protection of the special natural historic and scenic features of your property in perpetuity.
2
W I L L I S T OW N C O N S E RVAT I O N T RU S T
included trail easement corridors, resulting in a wonderful network of preserved walking and riding trails throughout the countryside. The inclusion of a trail easement corridor often enhances the deductibility of the easement donation by helping to meet the IRS “public benefits” test.
“The care of the Earth is our most ancient and most worthy, and after all our most pleasing responsibility. To cherish what remains of it and to foster its renewal is our only hope.” -Wendell Berry
HEROES OF THE WILLISTOWN COUNTRYSIDE
How Do Conservation Easements Benefit The Willistown Community? Conservation easements serve to protect the Willistown area’s important natural and scenic assets–its water resources, wildlife habitats, agricultural lands, open space, historic structures, trails, and scenic views–without the need for appropriating public funds. Lands under conservation easement remain in private ownership and do not require public funds for support and maintenance. Because conservation easements are granted in perpetuity, the community can depend upon eased lands as permanently protected open spaces– a lasting result not possible through zoning or other land use regulations.
“The fact that our family could participate in some small way in this larger preservation effort is personally rewarding. As the world around us continues to be developed at an accelerating pace, we are part of something unique and special, a place where people and animals can enjoy the natural beauty of the land; an experiment gone right.” Tim Rubin Conservation Easement Donor Providence Road
W I L L I S T OW N C O N S E RVAT I O N T RU S T
3
HEROES OF THE WILLISTOWN COUNTRYSIDE
How Do Conservation Easements Benefit The Landowner? Landowners who donate conservation easements derive immense satisfaction from knowing that the scenic and natural resources of the land that they have lived on and cared for will be protected for the use and enjoyment of future generations. Conservation easements often provide families with the opportunity to plan together for the future use of the land thereby avoiding possible conflict and misunderstanding at a later time. Neighboring landowners who donate conservation easements on contiguous properties can provide mutual protection against unplanned development, and share the benefits of protecting larger resource areas such as watersheds, woodlands, and scenic landscapes. Landowners who donate conservation easements generally are eligible for significant financial benefits through the reduction of federal income, gift, and estate taxes.
Conservation easements in the Willistown area preserve special features such as public viewsheds, like this special image captured on Providence Road.
Conservation easements give landowners peace of mind, knowing that their commitment to protecting their land will forever remain an enduring legacy for their family and the community. Protected open spaces in the Willistown area are helping to facilitate a resurgence in small scale sustainable farming, as exemplified by the Trust’s Rushton Farm CSA on Delchester Road. 4
W I L L I S T OW N C O N S E RVAT I O N T RU S T
HEROES OF THE WILLISTOWN COUNTRYSIDE
FEDERAL INCOME TAX BENEFITS In l969 Congress enacted legislation which permits a landowner to take a charitable deduction for the donation value of a qualified conservation easement. Internal Revenue Service regulations issued in l986 better defined the guidelines, including certain “conservation purposes” which must be met for an easement to qualify as a tax deductible charitable donation (Reg. Sec. 1.170A-14).
Passing The “Conservation Purposes” Test
FINANCIAL CONSIDERATIONS
The value of an easement may be deductible for federal income tax purposes if the easement is donated to a qualified organization such as Willistown Conservation Trust, and meets at least one of the following “conservation purposes”.
The owners of Crossbrook Farm on Crum Creek wished to ensure that development would never occur near its sensitive banks. Willistown Conservation Trust designed a conservation easement tailored to the natural and special features of the property.
W I L L I S T OW N C O N S E RVAT I O N T RU S T
5
HEROES OF THE WILLISTOWN COUNTRYSIDE
Conservation Purposes
1. The preservation of land areas for recreation by, or the education of, the general public.
2. The protection of a relatively natural habitat of fish, wildlife, or plants, and similar ecosystems.
3. The preservation of open space, including woodland and farmland, for either the scenic enjoyment of the general public or when such preservation is pursuant to a clearly delineated governmental conservation policy. In either case, a significant public benefit must result from the preservation of such open space.
4. The preservation of an historically important land area or certified historic structure.
Conservation easements in the Willistown area have been drafted to address most or all of the conservation purposes. The rolling hills, lush stream valleys, and historic Chester County homes and barns make the Willistown countryside highly suitable for conservation easement donations. In addition to meeting at least one of the four conservation purposes, the IRS requires that an easement must be granted in perpetuity and given to a qualified recipient organization such as the Willistown Conservation Trust. The qualified organization must (1) hold the easement solely for the stated conservation purposes; and (2) be able to enforce the easement and be prepared to take legal action, if necessary, to uphold its terms.
6
An 18th century mill was among several historic buildings on this 20 acre farm on Grubbs Mill Road, now permanently protected by conservation easement.
Value Of The Donation The value of the donation is determined by a qualified appraisal and is generally equal to the difference between the fair market value of the property before and after the donation of the easement. The difference between the “before value” and the “after value”, less any ancillary benefit to the donor, is the amount which can be considered as a charitable donation for income tax purposes. Assume, for example, that the owners of an unrestricted property worth $1,000,000 place a conservation easement on the land precluding future residential development and protecting the environmental features for the benefit of the general public. If a qualified appraiser then determines that the property’s fair market value is reduced by the easement to $600,000, the charitable donation would be valued at $400,000.
W I L L I S T OW N C O N S E RVAT I O N T RU S T
If the donor were in the 35% tax bracket the tax savings would be $140,000: ($400,000 X 35%) = $140,000 (Approximate tax savings) While virtually all conservation easements reduce property values, there is no rule of thumb for determining the diminution in value. Reductions in value can range from less than 10% to more than 90% of the fair market value depending on the limitations put on the property and the purposes for which it can thereafter be used. In general, the reduction tends to be greatest where a highly restrictive easement is placed on prime developable land in an area experiencing intense growth.
HEROES OF THE WILLISTOWN COUNTRYSIDE
Limitation On Annual Charitable Deductions The tax law limits the maximum annual charitable deduction a donor can take. A gift of appreciated property (which includes most gifts of land and conservation easements) formerly limited the tax deduction to 30% of the donor’s adjusted gross income with an allowance for the unused balance to be carried forward for an additional five years. Beginning in 2016, permanent changes were made to the tax code, raising the maximum deduction a donor can take for donating a conservation easement to 50% of their adjusted gross income in any year, and increasing the number of years over which a donor can take deductions to 16 years.
“We have six children and one of the best things we can give them and their children is a place where nature’s beauty will stand forever. Otherwise they’ll never know what a farm is, where food comes from, or the joy of galloping over our hills. These are things we want to have carried on for generations. I can’t think of a more important gift for our children than the permanent protection of this land.” -Janice Murdoch Conservation Easement Donor On Point Farm Goshen Road
W I L L I S T OW N C O N S E RVAT I O N T RU S T
7
HEROES OF THE WILLISTOWN COUNTRYSIDE
ESTATE TAX BENEFITS Reduction of Taxes Estate taxes may prevent a family from passing land easily from one generation to the next. When landowners die and leave land to their children, the heirs may find that the property has appreciated dramatically since it was purchased, making it difficult to pay inheritance and estate taxes. This may force heirs to sell all or part of the land to pay the estate tax. The federal estate tax and state inheritance tax are based on the fair market value of a property at the time of a landowner’s death. Because conservation easements reduce the appraised fair market value of the land, an easement donated by a landowner prior to death, or by will, reduces the total value of the estate. While annual income tax deductions for such gifts are limited, as discussed, the reduction in federal and state estate taxes can provide significant additional tax savings.
Estate Tax Exclusion As part of the Tax Relief Act of 1997, a landowner’s estate is now additionally entitled to exclude from taxation a portion of the estate net assets equal to a percentage of the value of a qualified conservation easement placed on the property by the descendant or his or her family. The maximum exclusion of $500,000 potentially represents substantial tax savings. The qualification for and calculation of this exclusion is dependent upon a number of intricate considerations which should be carefully reviewed by the landowner and their advisors.
8
Protected open spaces in the Willistown area make riding, hiking, birding, fishing, hunting, beagling, fox hunting, farming and other outdoor activities possible now and forever.
Donating An Easement By Will A conservation easement can also be granted by will. With this option estate taxes can be reduced; however, you will not receive an income tax benefit. If you intend to donate an easement by will, it is necessary during your lifetime to agree upon the terms of the easement with the Willistown Conservation Trust. This collaborative planning ensures that the easement meets your conservation goals as well as the objectives of the Trust. The proposed easement may be added as a
“The earth is common ground and gradually the idea is taking form that the land must be held in safekeeping, that one generation is to some extent responsible to the next.” -E.B. White W I L L I S T OW N C O N S E RVAT I O N T RU S T
codicil to your will, with specific instructions to your executor to complete the easement in the event of your death. Your will can be amended later if family or financial circumstances change, or if you grant the easement in your lifetime. Meanwhile, you will have protected the land and potentially lowered your estate taxes.
LIFETIME GIFT TAX BENEFITS The donation of a conservation easement reduces the appraised value of the land, and thus may reduce federal gift taxes associated with a gift of land to others during your lifetime.
HEROES OF THE WILLISTOWN COUNTRYSIDE
“We have been the most prodigal of people with the land, and for years we wasted it with impunity. There was so much of it, and no matter how we fouled it, there was always more over the next hill, or so it seemed.”
-William H. Whyte
Please note: Landowners considering the donation of a conservation easement should consult their personal advisors regarding all legal and tax implications.
“It was the best scenario that could have happened. If the Trust hadn’t been here to advise us, there would probably be another cloche of naked behemoths with Palladian eyes covering these farm fields and forests. Now instead, together with our neighbors who followed, there are many hundred contiguous acres of open country. So, I advise you, put your land under conservation easement. You will never regret it, as I haven’t.” Frances Ellen Paul 1916 - 2004 Conservation Easement Donor Featherfiield Farm, Marlborough Road
W I L L I S T OW N C O N S E RVAT I O N T RU S T
9
HEROES OF THE WILLISTOWN COUNTRYSIDE
THE CONSERVATION EASEMENT PLANNING PROCESS
The most important part of the easement process for the Willistown Conservation Trust is to understand your individual needs and desires in planning for the future of your property. We will then work closely with you to design a Conservation Plan which will preserve the natural and scenic characteristics of your property, meet your specific financial objectives, and further the conservation goals of the Trust and the community. Because easement donations require approval by the Board of Trustees, the Conservation Plan must meet the criteria for accepting easements established by the Trust. For property owners interested in receiving favorable tax treatment, the Trust will carefully research and document the “conservation purposes” of the easement.
“While we had always shared a rational understanding of how important it is for all of us to help with conservation, it wasn’t until we had actually bought Garrett Mill Farm and conserved it that we truly understood the joy of knowing that this land will be much the same in 200 years as it was 200 years ago”. Tony Hitschler Conservation Easement Donor Garrett Mill Farm Garrett Mill Road
10
W I L L I S T OW N C O N S E RVAT I O N T RU S T
“The planning process of preparing the easement documents took some time, but it was enjoyable because we got to know Bonnie and the capable staff at the Trust. Agreeing on details like the location of the new house and barn and trail corridors was easy because our thinking was parallel.” -Janice Murdoch
HEROES OF THE WILLISTOWN COUNTRYSIDE
3. Evaluation of the Property and Preparation of Natural Features Map The Willistown Conservation Trust will prepare a natural features map of the property which carefully details its physical characteristics, highlighting sensitive resources. 4. Development of Conservation Plan Proposals One or more conservation plans will be proposed for the landowners’ consideration. 5. Preparation of the Conservation Plan and Draft Conservation Easement Agreement The Trust will draft conservation easement documents for review by the landowner and his or her advisors.
EASEMENT PLANNING STEPS The process for planning a conservation easement includes the following steps: 1. Defining the Landowner’s Objectives The Trust will meet to discuss landowners’ desires for the future preservation of the property and to understand the family’s financial and tax planning considerations. We will walk the property with the landowner and evaluate the natural, historic and scenic resources of the property. 2. Preparation of the Proposal and Cost Estimate A proposal and cost estimate will be presented to the landowner for planning and preparation of the easement documents.
W I L L I S T OW N C O N S E RVAT I O N T RU S T
6. Preparation of Background Documentation Report The Trust will prepare a baseline documentation report establishing current conditions of the property, including research intended to meet IRS requirements for easement donations. 7. Approval, Signing, and Recording of the Final Easement Agreement The final easement agreement will be approved, signed and recorded with copies of the documents delivered to the landowner for safekeeping. If there is an existing mortgage on the property at the time of the easement donation, the lender is required to subordinate the mortgage to the conservation easement.
11
HEROES OF THE WILLISTOWN COUNTRYSIDE
ESTIMATING THE COSTS OF PREPARING AN EASEMENT In order to be able to continue our work, we ask that the landowner reimburse the Trust for its costs in preparing an easement. These costs will be estimated in the proposal prepared for the landowner at the outset of the project, and will cover the materials and staff time needed to complete the easement. In addition, easement donors will have their own legal, appraisal, and in some cases, surveying costs to consider. Surveying needs vary widely and depend upon the nature of the Conservation Plan in which the landowner is interested. In many cases no surveying is required. In addition to the preparation costs, we request a onetime contribution toward our easement endowment fund in order to assure that the Trust is able to meet its obligation to uphold the terms of the easement in perpetuity. The amount of endowment requested is based on the size of the property, the complexity of the easement, and the amount of staff time which will be required on an annual basis to administer and monitor the easement. A certain amount of each endowment contribution is designated for legal fees should the need ever arise for the Trust to meet its obligation to defend the terms of the easement. The easement endowment contribution and most of the costs of preparing the easement are deductible for income tax purposes.
Willistown area landowners are leaving an irreplaceable legacy of preserved open space and natural resources for the use and enjoyment of many future generations.
“Each generation has its own rendezvous with the land...By choice or by default, we will carve a land legacy for our heirs.�
-Steward L. Udall The Quiet Crisis
Why not become part of the Willistown land legacy?
12
W I L L I S T OW N C O N S E RVAT I O N T RU S T
Frances Ellen Paul
Mr. and Mrs. William S. Stokes, Jr.
Eliza T. Thayer
Eugenia C. Madeira
Martha Stengel
Miller Mr. and Mrs. Robert H. Page Mr. and Mrs. Lawrence E. MacElree Mr. and Mrs. Alan Ameche Mary Stokes Drayton Mr. and Mrs. Michael Foxman Mr. and Mrs. W. Perry Gresh Mr. and Mrs. Thomas H. Lewis, Jr.
Mr. and Mrs. Frederick S. Nicholas
Dr. and Mrs. Donald E. Red
Mr. and Mrs. Anson W. H. Taylor
Mr.
and Mrs. Robert A. Thomas Mr. and Mrs. James L. Van Alen, II Mr. and Mrs. David L. Van Schaick Fox Creek Associates David W. Kirby Willistown Land Associates Thaddeus R. Trout Mr. and Mrs. John G. Harkins, Jr. Mr. and Mrs. Peter O. Hausmann Mr. and Mrs. Jerome R. Keough Mr. and Mrs. Robert McClements, Jr. Edward S. and Ruth C. Neilson Mr. and Mrs Douglas Peel Mr.and Mrs. John C. Haas Willistown Friends Meeting
Conservation Easement Donors Are Heroes of the Willistown Countryside
Mr. and Mrs Paul B Harron, Jr Mr. J Gibson McIlvain Mr. and Mrs George Strawbridge Mr. and Mrs. Henry M. Chance, Jr.
Steve, James, Henry and Mark Chance: Mr. and Mrs. Robert C. Legnini Gwynne G. McDevitt
Mr. and Mrs. John J. Nesbitt Mr. and Mrs. Douglas C. Walker Susanna M. Wall Mr. and Mrs. George S Hundt
Mr. and Mrs. Richard S Koffey
Mr. and Mrs. Robert N. Spahr
Mr. and Mrs. Richard H. Thompson
Anne
French Thorington Mr. and Mrs. William L. Van Alen Mr. and Mrs. Daniel S. Berman Bentley Construction Company Mr. and Mrs Brice M. Claggett Mr. and Mrs Henry H. Meigs Mr. and Mrs. A.J. Clegg Mr. and Mrs. Thomas J. Scanlon Gwynne G. McDevitt Freedom Industies Mr. and Mrs. James Nolen Mr. and Mrs William Wilson Mr. and Mrs. Paul Gansky Dr. and Mrs. Leldon P. Pitt Mr. and Mrs. Robert S. Douglas Mr. and Mrs Thomas S. Gates Mr. and Mrs. Edward B. Leisenring, Jr. Mr. and Mrs. William L. Oliver Radnor Hunt Pony Club Mr. and Mrs. Owen B. Rhoads Mr. and Mrs. Lee T. Stull Mr. and Mrs. Michael A. Wall Mr. and Mrs. Arthur A. Zimmerman Mr. and Mrs. Eric McKechnie Mrs J. Maxwell Moran Radnor Hunt Mr. and Mrs. Dale B. Goodman Drs. Richard M. and Maureen L. Yelovich Mr. and Mrs Richard A. Barlow Mr. and Mrs. Philip J. Harvey Mr. and Mrs. George H. Knoell, III Gwynne G. McDevitt Mr. and Mrs Francis L. Doyle Eloise M. Hill Groves Mr. and Mrs. Francis E. Buzan Russell/Keough/Clement Trust Applebrook Associates Mr. and Mrs. Alejandro Zozaya Open Connections Mr. Timothy Rubin and Mrs. Lisa Kizuik-Rubin Mr. and Mrs. Jeffrey R. Westphal
Mr. and Mrs. Abner Kingman Mr. and Mrs. Charles C. Moller Mr. Robert G. Roskamp Willistown
Township Malvern Borough Mr. and Mrs. William Howard Mr. and Mrs. Ralph Thurman Mr. and Mrs. John Mullen Mr. and Mrs. Eustace Mita Mr. and Mrs. Mark Turner Marsh Family Mr. and Mrs. John Marsh and Karen Heft Mr. and Mrs. Paul Thompson Mr. and Mrs. Michael Stolper Mr. and Mrs. Rodman Thompson Mr. and Mrs. Richard Shorr
Natural Lands Trust
Dr. Patricia Torna/Dr. Richard DiSimone
GCV Soccer Association
Mr. and Mrs. Anthony Hitschler
Mr. and Mrs. Stephen Sordoni
Mr. William Warden III
Historic
Sugartown, Inc. Mr. and Mrs. Daniel W. Potts Mr. Calvin W. Schmidt Ravenwood Trust Ellen Mary Meigs/ Crumdale Assocs. LP
Mr. and Mrs. Gary Gorton
Mr. and Mrs. Nathan Schwartz
Mr. Britton H. Murdoch
Penelope W. Watkins Mr. and Mrs. Sean E. O'Hara Willistown Township Mr. and Mrs. James W. Hutchin Mr. and Mrs. George F. Rubin Ms. Shirley Lear & Ms. Marijane Lear Mr. Robert G. Roskamp Kirsten G. White (list incomplete)
W I L L I S T O W N C O N S E RVA T I O N T R U S T 925 Providence Road Newtown Square, PA 19073 (610) 353-2562 ~ Fax: (610) 325-0869 E-mail: land@wctrust.org www.wctrust.org
“Here is your country. Cherish these natural wonders, cherish the natural resources… the history…the romance, for your children and your children’s children. Do not let selfish men or greedy interests skin your country of its beauty, its riches or its romance.” -Theodore Roosevelt
Special thanks to Timothy B. Barnard, Esq. of Barnard, Mezzanotte, Pinnie & Seelaus for his generosity in providing legal review. Photography: Betsy Block, Mary Hunt Davis, Fred de Long, Elizabeth Stokes, Chris Thompson, John Turgeon, Bonnie Van Alen, Chris White
Heroes of the Willistown Countryside A Landowner’s Guide to Conservation Easements was made possible by a grant from the William Penn Foundation
Rev. 01/16 Printed on recycled paper