To the surprise of some, Congress passed a few laws to help keep Montana’s land whole and its families on the land.
After Congressional inaction allowed both the Land and Water Conservation Fund and tax breaks for conservation easements to expire this year, some have wondered how to save what’s left of rural Montana. The question was answered on Friday, when the U.S. Senate joined the House of Representatives both in extending the LWCF at least short-term and in allowing tax incentives for conservation easements to become permanent.
With a bipartisan vote of 65-33, the Senate supported making conservation-easement tax incentives permanent and retroactive to Jan. 1, 2015. The vote in the House a few days before was 318-109.
The move helps both landowners and the land trusts that help create easements by taking the guesswork out of creating easements that has existed for the past eight years.
Conservation easements have taken on greater importance over the past few decades as more people have moved to Montana, creating the need for more housing.
What to do with one’s property is a personal decision, but bad years can force some ranchers and farmers to sell before they’d want to. With skyrocketing land values, some landowners crumble under the relentless pressure to sell.
Some want to make the most money possible, and the way to do that is to sell to a developer who can subdivide the land and sell it as several lots. But some cherish their land and would prefer to see it conserved mostly as it was.
Conservation easements can provide landowners with extra income so they can stay on the land longer and allow them to save the land that they love even after they are gone. If a landowner creates a conservation easement, the land can never be developed. They can continue to use the property but give up the additional value of the property if it had been developed. For example, if a developer could have taken $100,000 of agricultural land and sold it as a subdivision for $300,000, the landowner gives up the difference of $200,000.
Some landowners have enough money to sacrifice the additional value, but many do not. That’s where the tax break comes in.
Up until 2005, the landowner could use one-third of that difference to offset his gross income in any tax year, and he could carry over the remainder for five years of tax returns.
In 2006 and 2007, thanks to former Montana Sen. Max Baucus (D) and Iowa Sen. Chuck Grassley (R), the incentive was increased to offset up to half of a landowner’s gross income and it could be carried over for 15 years.
But after 2007, Congress renewed the incentives sporadically and sometimes they had to be retroactive. Most recently, the incentive expired at the end of 2014, and since then, landowners and land trusts have been waiting for either good or bad news.
About 17 nonprofit land trusts hold more than 1,500 conservation easements in the state, most of which have been created since 2000.
Grant Kier, Five Valleys Land Trust executive director, said he had a number of conservation easements all worked out, but they were waiting on his desk until the tax incentives were renewed again. Now, he will never have to wait again.
One family will get a conservation easement before the end of the year, Kier said, and many more will follow in 2016.
“This allows a conservation easements to go through that wouldn’t have otherwise. This is a big deal for conservation in Montana,” Kier said. “The whole community gets a Christmas present in our mind.”
Sometimes, landowners get more than just a tax break; some can qualify for grant money. The Land and Water Conservation Act used to be a reliable source of such funding, using money from offshore oil leases to buy or improve parks, public land and wildlife corridors.
Funding for conservation easements have allowed ranchers such as Karl Rappold of Dupuyer to not only stay on the land but then use the money to buy more land to allow their children to stay on the ranch. That provides hope for keeping the rural nature of Montana.
The 50-year-old LWCF expired in September, and many have hoped that it would be permanently extended.
Unfortunately, legislation passed this week extended it for only three years and allocated up to $450 million annually, half of what the LWCF is supposed to receive.
While many are happy that the LWCF is still alive, a three-year window makes it difficult to plan conservation easements and land purchases. Some agreements take years or decades to cobble together and matching funds need to be raised.
“This temporary passage and partial funding may allow some projects to move forward. But the future of good conservation work is being planned now, and if people don’t have the ability to plan five or 10 years out, that’s really hard to make good work happen. So it’s really imperative that we figure out how to make the land and water conservation fund permanent,” Kier said.