Preserving Your Land

• Where is your land located?
• How is the land being used?
• Do you own the land or is it in a trust or estate?
• Do you need cash or can you benefit from a tax deduction?
• What are your wishes for future use of the land?

The Natural Land Institute works in twelve counties in Illinois within the Rock River watershed, in Rock County, Wisconsin, and along the Mississippi River bluffs of northwestern Illinois. The counties are:

We can help you find a conservation organization in other counties in Illinois, or you can check the website of the Prairie State Conservation Coalition for a land trust located near you, www.prairiestateconservation.org.

Depending on your needs and wishes and the conservation values of the land, there are a variety of land protection methods to help land owners conserve their land.

Sometimes a land owner cannot or does not want to retain ownership of their land. Individual financial situations may dictate that the land be sold. But, a land owner can sell a conservation easement on the land and still retain ownership, donate the land or a conservation easement and qualify for a charitable deduction, and sell or donate land while retaining use or income from the land during your lifetime.

You can also leave your land to be protected through your will, trust or estate plan. Click here for information that you need to know to make a gift of land to the Natural Land Institute through your will or trust.

Click here to learn more about Conservation Easements, and how they are a flexible legal tool to protect conservation values while retaining ownership and use of your land.

For more information about ways to protect your land click here to down the brochure: “Conserving Your Land.”

A conservation land trust is a private nonprofit organization that promotes and utilizes a variety of tools to help citizens and communities accomplish their land protection objectives.  Conservation land trusts demonstrate public interest in the goals of preserving open space, rural lands, and natural features.

The history of land trusts dates back more than 100 years; today there are more than 1,700 land trusts throughout the country.   Some statistics about Land Trusts:

• The nation’s local and regional land trusts have protected more than 37 million acres of natural areas
• About two million people are members and financial supporters of land trusts
• More than 100,000 people are active volunteers of land trusts

To find out about other land trusts, visit The Land Trust Alliance’s Web site at: www.landtrustalliance.org.

Conservation easements are individually tailored agreements through which landowners voluntarily limit the use and development of their property to permanently preserve its natural or scenic features. These features are conservation values and might include significant wildlife and plant habitat, lake or river shoreline, wetlands, or important scenic or cultural lands which benefit the public.

In order to protect these conservation values, certain restrictions on the use of the property and the reserved rights of the landowner are detailed in the conservation easement, which is a legal, recorded document. Conservation easements are perpetual; they apply to the current owner and all future landowners, permanently protecting the property.

For more information, please refer to the Easement FAQ and our Overview of Conservation Easements.

Land Donation
You can also donate your land to the Natural Land Institute outright.  If appropriate, we will protect the land with a conservation easement.

Legacy Bequests
You can create your own land protection legacy by including the Natural Land Institute in your will, insurance policy or retirement fund.  You can also make a gift of land, stock or other securities.  If you are interested in leaving your land in this manner, please contact us so that we can discuss your conservation goals for the land.  Our staff can be reached at 815-964-6666.

Please click here to view information on claiming tax deductions.

Please click here to read about the Enhanced Federal Tax Incentive for Conservation Easement donations.

Initial contact
Interested landowners complete a landowner questionnaire to help us learn more about the property and better understand your goals and conservation objectives.

Site Visit
One of our staff members visits the site, with you, the landowner and your family whenever possible, to evaluate, document and photograph the property’s natural and scenic values.  This information is used to quantify the conservation values and to determine if the site fits the criteria for a conservation easement.  If the property fulfills these criteria, staff will continue with the next steps.  A site that is on the threshold of meeting the criteria may be presented for discussion at the NLI Land Conservation Committee prior to further steps.

 Gather information
The Natural Land Institute obtains maps, title work and other information about the property and the surrounding area.
Our staff and you, the landowner, continue project discussions and identify funds needed to cover costs associated with the project, including the funding to cover our ongoing responsibilities for monitoring and stewardship.
You, the landowner, contact an attorney and, if interested in potential tax benefits, arrange for the property to be appraised.

Draft conservation easement
The Natural Land Institute attorney prepares a draft conservation easement for review by you, the landowner, and your attorney.

Secure approvals
Natural Land Institute staff prepares a project summary to present the project for review to our Land Conservation Committee. The Committee evaluates the project by examining the conservation values of the property, the public benefits provided by the project, threats to the property, transaction details, and financial considerations.
The Natural Land Institute Board of Directors reviews and approves the project at its next regularly scheduled meeting.

Finalize and record documents
After additional review and discussion, final documents are prepared for signature and recording.

Complete project follow-up
In addition to completing the easement itself, our staff prepare a baseline property report documenting with text, photographs and maps the property’s history, natural features, vegetation, structures and improvements.
Our staff also finalizes stewardship funding, creates a monitoring plan, and implements any publicity plans.

 Defend easement forever
The Natural Land Institute, in partnership with you, the landowner and the community in which the property sits, begins its long-term commitment to protecting the land and preserving its conservation values into the future.

Because conservation easements are forever, the Natural Land Institute accepts the responsibility to protect that land and its conservation values into the future. The Stewardship Easement Program is designed to make sure that we meet our responsibility for each conservation easement over time.

Components of an Easement Stewardship Program
There are a number of specific components to the Natural Land Institute’s conservation easement stewardship program.  These include:

• Creating the baseline property report
• Easement administration
• Annual Monitoring
• Landowner relations
• Community relations
• Easement enforcement and defense

Each part of our program plays a critical role in making sure that we fulfill our obligations to our landowners and the lands they have placed in our care.

Working in Partnership
The Natural Land Institute recognizes that it cannot be successful without working in cooperation with the many landowners dedicated to protecting their lands through conservation easements.  Because we respect the commitment made by these landowners, we are dedicated to working with them in a respectful and professional manner.  In all of our stewardship activities, we strive to:

• Establish and maintain good relationships with our landowners
• Provide professional, timely responses and resources to our landowners
• Establish and maintain good relationships with the communities in which our easements are located

Recordkeeping
Our land preservation commitments are met by managing our program to keep track of the status and condition of the lands protected by our conservation easements.  Therefore we also:

• Document the condition of lands protected by each easement at the time the easement is completed by completing a baseline conditions property report
• Monitor the condition of the property over time
• Maintain accurate records regarding each conservation easement accepted by us

Funding
The Natural Land Institute has created a dedicated stewardship and enforcement fund to provide a long-term, ongoing source of income to cover the short and long-term costs associated with monitoring and managing our portfolio of conservation easements.  The fund is also available to cover extraordinary expenses associated with managing, upholding or defending an easement should its terms or validity be at risk.

Contributions to the Stewardship Fund are pooled from a number of sources, including landowners, and are managed to support the overall needs and obligations of the Natural Land Institute.

We strive to be as efficient and effective as possible in using these funds to support our ongoing stewardship activities.  Contributions to the fund are always needed. Please contact us for information on how to support our stewardship work.

Volunteer Monitoring Stewards
Annual monitoring of conservation easements and maintaining good relationships with our easement landowners takes a lot of resources.  Natural Land Institute is the oldest land trust in Illinois and subsequently holds conservation easements in many parts of the state.  Because we are a small staff we are always looking for volunteer monitors who live in areas that are near to some of our easements that are outside of our current service area.  We provide training and support for volunteers to monitor easements, and if you are interested in becoming a Volunteer Monitoring Steward, please contact Jill Kennay in our Rockford office at 815-964-6666.

Voluntary Compliance vs. Legal Enforcement
The primary objective of our Stewardship Program is to preserve the conservation values of those lands protected by conservation easements. Ensuring compliance with the terms of each easement is critical to meeting this objective.  The Natural Land Institute is prepared to legally defend and enforce its easements when necessary.  Legal enforcement, however, is a remedy of last resort.  Our program is most successful when compliance is voluntary. Therefore a critical part of our program is to work in partnership with landowners and local communities in which our protected lands are located to encourage voluntary compliance with the terms of our conservation easements.

WHAT IS A CONSERVATION EASEMENT?
A conservation easement is a set of restrictions a landowner voluntarily places on his or her property in order to preserve its conservation values. The conservation values of the property and the restrictions created to preserve those values, along with the rights reserved by the landowner, are detailed in a legal document known as a conservation easement. This document is filed with the local county land records.

A conservation easement is conveyed to a government agency or nonprofit conservation organization qualified to hold and enforce easements. Most conservation easements, including all of those held by the Natural Land Institute are perpetual. They apply to the current owner and all future landowners, permanently protecting the property.
Each conservation easement is unique, specifically tailored to the conservation values of the land and to the particular situation of the landowner.

WHAT TYPES OF LAND CAN BE PROTECTED THROUGH CONSERVATION EASEMENTS?
Conservation easements can be used to protect a variety of lands, but the Natural Land Institute concentrates its efforts on relatively undisturbed natural habitats, the shoreline of lakes, rivers and streams, and scenic landscapes, particularly those with local significance.

WHAT RESTRICTIONS ARE INCLUDED IN A CONSERVATION EASEMENT?
First, the conservation values of the land are defined, and then restrictions are created to protect those values. Restrictions may apply to all of a landowner’s property or to only a portion of it.
Typically, easements address subdivision, commercial or industrial uses, mining, construction of buildings or roads, utilities, disturbance of the vegetation or topography and any activities on the property that might interfere with the conservation purpose for the easement.
For example, an easement preserving rare woodland habitat may require that the property be left entirely in its natural state, prohibiting all development.  Or, to protect a lake or stream, an easement may allow limited inland construction of buildings or trails while restricting such activities along the more fragile shoreline.  Some easements may permit continued farming or limited timbering. Others may provide for enhancement of wildlife habitat or restoration of native prairie.

WHAT ARE THE EFFECTS OF A CONSERVATION EASEMENT ON A LANDOWNER’S PROPERTY RIGHTS?
A landowner retains all rights to the property not specifically restricted or relinquished by the easement. The landowner still owns the land and has the right to use it for any purpose that is consistent with the easement, to sell, to transfer or to leave it through a will. Typically, landowners also retain the right to restrict public access.

WHAT OBLIGATIONS COME WITH A CONSERVATION EASEMENT?

Landowner Obligations:
The landowner remains responsible for the land—for its maintenance and upkeep, for paying taxes and for otherwise meeting the typical obligations of land ownership. Conservation easements add a few further requirements:

• To comply with the restrictions in the easement
• To notify the Natural Land Institute of proposed changes to the property
• To allow annual monitoring visits
• To notify the Natural Land Institute when selling or transferring the property

Natural Land Institute Obligations:
We are obligated to oversee and enforce the terms of the easement, and will legally defend it in the event of a violation. We do not otherwise have the right to use the property without the landowner’s permission.

WHAT ARE THE BENEFITS OF A CONSERVATION EASEMENT?
Land Protection:  Conservation easements are a cost effective way to protect land, costing much less than purchasing land outright.
A Living Legacy:  Conservation easements give landowners the knowledge that their special place will remain an enduring legacy to their family and their community.
The Common Good:  Conservation easements contribute to the common good by protecting the land and water resources that provide all of us with our cherished quality of life.
Financial Benefits:  Conservation easements may reduce a landowner’s tax obligations in the following ways:

• Income Taxes: As with other charitable contributions, the donation of a conservation easement may allow the landowner to claim a federal income tax deduction for the value of the easement.
• Estate taxes: A gift of a conservation easement may reduce estate taxes, making this an effective way to transfer land to the next generation.
• Property Taxes: An easement that reduces the value of the land may result in lowered property taxes.

NOTE: The rules governing all of these potential tax savings are complex, may change, and require the advice of professional advisors.

What is the purpose of an appraisal?
A conservation easement appraisal may have several uses.  For charitable contribution purposes, the appraised value of the easement is used to determine the amount of any income tax deduction available.  In this case, the appraisal procedure and report must conform to specific IRS standards noted below.
An appraisal may also be important for estate planning or in reviewing value for property tax purposes.  Additionally, while the Natural Land Institute does not routinely purchase conservation easements, an appraisal may be used to substantiate the purchase price in such a situation.

Is an appraisal required?
An appraisal is not always necessary.  However, a landowner is required to obtain a qualified appraisal if the landowner is donating a conservation easement valued over $5,000 and intends to seek a federal charitable income tax deduction for the gift.
A landowner may also need an appraisal to obtain a mortgage subordination, to support a request for a property tax adjustment or to receive payment in exchange for the easement.  In other situations, an appraisal may not be necessary.

What is a “qualified appraisal”?
For federal tax purposes and until further guidance is issued, the IRS currently considers a qualified appraisal to be one that complies with the requirements in Treasury Regulations Section 1.170A-13(c) and is conducted by a qualified appraiser in accordance with generally accepted appraisal standards.

What are “generally accepted appraisal standards”?
An appraisal will be treated as having been conducted in accordance with generally accepted appraisal standards if the appraisal is consistent with the substance and principles of the Uniform Standards of Professional Appraisal Practice or “USPAP.”  These standards can be found on the web site of the Appraisal Foundation, www.appraisalfoundation.org

Who is a “qualified appraiser”?
The IRS defines a qualified appraiser as an individual who has:

• Earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary,
• Regularly performs appraisals for which the individual receives compensation, and
• Is licensed or certified by the State of Illinois for the type of property being appraised.

What should landowners consider in selecting an appraiser?
Landowners should ask a number of questions when considering who should conduct this critical part of the conservation easement process, including:

• Is the appraiser aware of the new regulations and penalties for appraisers?
• Have they had to defend appraisals in front of the IRS?

How does an appraiser estimate value of an easement?
Typically, an appraiser determines the value of an easement by comparing the value of the property without the easement restrictions in place and the value of the property with the restrictions in place.  The difference between the two is the value of the easement itself.  This procedure is typically known as the “before and after approach.”
As a simple example:  
Value of the land before the conservation easement:  $500,000
Value of the land after the conservation easement:     $275,000
Difference = value of the conservation easement:       $225,000
Proportionate value of the conservation easement:             45%
Generally, a more restrictive easement will result in a higher proportionate easement value.  But each parcel of land and each set of conservation restrictions are unique.  Therefore, no set or average percentage of value can be attributed to the rights relinquished in an easement.

What does an appraiser consider in estimating the value?
An appraiser will look at a variety of factors concerning both the specific property subject to the easement and the surrounding area.  Relevant factors will include:

• Location and character of the property,
• Existing zoning regulations and other laws or contracts that affect the property, and
• Development potential and future land use trends.
• The specific restrictions placed on the land
• The specific rights reserved by the landowner
• The existence of contiguous or other property owned by the landowner or the landowner’s family and the potential of the easement to enhance the value of the other property.

What information needs to be included in an appraisal?
While the specific format, length, and content of appraisals vary, the IRS requires very specific information for charitable gift appraisals.  Click here for more information.

When should the appraisal be completed?
For charitable deduction purposes, the appraisal must be completed no earlier than 60 days before the date of the gift (the date on which the conservation easement is signed and accepted by the Natural Land Institute) and no later than the date on which the tax return for that year is due.  In some circumstances, an older appraisal can be updated with more current data.  For other non-tax purposes, timelines may vary.  Conservation easement appraisals are complex and time consuming.  As such, landowners should contact an appraiser early in the process as it may take up to 4 to 6 months or more to complete an appraisal.

Is it necessary to be concerned about the integrity of the appraisal?
YES.  The IRS views this issue very seriously and may impose substantial penalties on both the landowner and the appraiser for gifts that are overvalued for tax purposes.  Congress recently created new thresholds and penalties for donors and appraisers who artificially inflate the value of an easement for tax purposes.  Landowners are well advised to choose an appraiser carefully and to work with the appraiser, a tax advisor and the Natural Land Institute throughout the process of completing a conservation easement.
Remember the simple rule: if it looks too good to be true, it probably is.

What are some additional resources?

• IRS Publication 561 Determining the Value of Donated Property
• IRS Notice 2004-41 Charitable Contributions and Conservation Easements
• Pension Protection Act of 2006, Section 1219
• IRS Notice 2006-96 Guidance Regarding Appraisal Requirements for Noncash Charitable Contributions
• Appraising Easements, Third Edition, published by the Land Trust Alliance and the National Trust for Historic Preservation 

CONSERVATION EASEMENT APPRAISALS INFORMATION REQUIRED BY THE IRS
The Internal Revenue Service has very specific requirements for appraisals of conservation easements where a landowner is claiming a charitable contribution deduction for the value of the easement.
In general, a qualified appraisal of a conservation easement should include at least the following information:

• A description of the property in sufficient detail for a person who is not generally familiar with the type of property to determine that the property appraised is the property that was contributed.
• The date of the contribution.
• Terms of any agreement or understanding by the donor related to the use or disposition of the property.
• Name, address and taxpayer identification number of the appraiser.
• The qualifications of the appraiser including background, experience, education and membership in professional appraisal associations.
• Purpose for which appraisal was prepared.
• Date on which the property was valued.
• The appraiser’s assumptions and conclusions regarding the fair market value of the property on the date of the contribution, including fair market value of the property before the easement was in place and the fair market value of the property after the easement was conveyed to the Land Trust (if the before and after approach was used).
• Appraisal method or approach (such as the income approach, the comparable sales or market value approach, or the replacement cost less depreciation approach).
• The specific basis for the valuation, such as any comparable sales transactions.
• An objective analysis of the likelihood that the property would be developed absent the restrictions in the conservation easement, including the effect of any zoning or conservation laws that already restrict the property’s highest and best use.
• An analysis of the impact of permitted uses and any reserved development rights set out in the conservation easement.
• The impact of the conservation easement on the value of any contiguous land owned by the landowner or a relative of the landowner.
• The impact of the conservation easement on the value of any other non-contiguous land owned by the landowner or a related party.

Natural Land Institute Legal, Financial and Technical Advisors Experienced with Conservation Easements
Please click here to view PDF.

NLI Landowner Worksheet click here to view PDF.

Using the Conservation Tax Incentive – click here to view PDF.