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Tax bill may affect land protection
[August 25, 2006]

Tax bill may affect land protection


(Richmond Times-Dispatch (VA) (KRT) Via Thomson Dialog NewsEdge) Aug. 25--A special General Assembly subcommittee has begun studying ways to protect open space and farmland by buying development rights.

The panel, created by the 2006 assembly, heard that some efforts to preserve open land have been successful but that more needs to be done.

One tool available for land preservation might have its effectiveness reduced by the legislature on Monday. The assembly will meet in special session to vote on a bill that would eliminate Virginia's estate tax. The bill links elimination of the tax to a cut in a seven-year-old tax credit for those who donate land or easements for conservation.



Lawmakers passed the estate-tax bill during their special budget session in June. Gov. Timothy M. Kaine, however, suggested changes in the measure that would lighten its impact on the land-preservation tax credit, thus requiring the special session. The conventional wisdom is that lawmakers, who have long sought to kill the estate tax, will agree to Kaine's changes.

The preservation tax credit is based on 50 percent of the value of land donated for preservation. No more than $100,000 per taxpayer can be taken as a credit in any one year, but unused credit can be carried forward for five years.


Virginia taxpayers as a whole have been claiming well over $100 million in tax credits each year. Kaine's proposal would cap the amount of credits allowed in any one year at $100 million. The General Assembly had wanted to set the cap at $50 million next year and $75 million yearly from 2008 on.

Kaine and the assembly agreed to increase the maximum credit available to landowners from $500,000 to $1 million by extending the carryover period to 10 years. But they also agreed to reduce the percentage of the fair-market property value on which a credit can be claimed from 50 percent to 40 percent.

Kaine rejected a proposal by lawmakers to offer a lower credit to landowners outside the Chesapeake Bay watershed.

The legislation would impose a fee on those who cannot use their tax credit and want to sell it.

Deputy Secretary of Natural Resources Nikki Rovner told lawmakers on the special subcommittee that the tax credit has been critical to the donation of conservation easements. But some cannot afford to donate even with the tax benefit, she said.

For those landowners, private and state and federal government money is sometimes available to purchase land, conservation easements or buy the right to develop the land.

Rovner noted that the General Assembly has put $12.5 million in the Virginia Land Conservation Fund this year and $2.5 million in each of the next two years. North Carolina, on the other hand, has dedicated well over $100 million yearly to a similar land-preservation fund.

The Virginia fund provides grants to state agencies for land preservation, including the quasi-governmental Virginia Outdoors Foundation. The 40-year-old foundation has 1,900 properties covering 330,000 acres under conservation easements. The Department of Historic Resources holds 20,000 acres under easement, Rovner said.

Deputy Secretary of Agriculture and Forestry William Dickinson described the urgency in finding ways to preserve farmland.

The Virginia farmer's average age is 56-plus. His or her assets are tied up in land, buildings and equipment. A large majority lack any retirement plan, Dickinson said.

A Virginia Tech study, he said, has determined that 70 percent of the state's farms and forestland will change hands in the next 15 years. The subcommittee's charter notes that between 1992 and 2000, Virginia lost 490,000 acres of forestland, and between 1982 and 1997, it lost 480,000 acres of cropland.

Virginia localities have been trying to preserve farmland with such incentives as farm and forestland zoning and lower property taxes for farm and forest owners. Another tool some localities have used is the purchase of development rights from farmers.

Ten Virginia localities have funded purchased-rights programs. The goal is to have 70 such programs by 2020, Dickinson said.

To see more of the Richmond Times-Dispatch, or to subscribe to the newspaper, go to http://www.timesdispatch.com.

Copyright (c) 2006, Richmond Times-Dispatch, Va.
Distributed by McClatchy-Tribune Business News.
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