What Commercial Real Estate Pros Need to Know About Conservation Easements.
Suburban homes overlooking nature preserve

© jimfeng / E+ / Getty Images

Tom and Rose Rupert were “in a bit of a quandary,” they recall. After decades spent working an 84-acre ranch in the mountains 20 miles north of Aspen, Colo., Tom was ready to take it a little easier, and they were dreaming of starting a new chapter on the coast of Mexico. They were eager to leave behind the snow masses in Old Snowmass and return to the place they chanced to meet in 2010, when each was seeking solace after the recent loss of a spouse.

Taking some value out of their land was their best hope for realizing the dream. They were adamant that the wildlands, wetlands and fields of the ranch should remain intact, but there were few suitors for the full acreage. “It’s not the rich man’s dream,” says Rose, adding that the dwelling-related structures are kind of funky. “But if we’d wanted to break it up for development, we wouldn’t have had a problem selling it,” she adds. Then there was the question of Tom’s three children, one of whom was raising his family on the land. “He’s lived on that property since he was born,” Tom says.

Pitkin County’s office of Open Space & Trails had already been looking at putting some of the surrounding property in conservation. The couple began talking with staff of the agency about the possibility of preserving the Rupert ranch by putting some or all of it under a conservation easement. Such an easement allows landowners to retain ownership while surrendering the development rights on the conserved property in perpetuity.

In exchange for the value of those development rights, the Ruperts would receive tax credits from the state of Colorado that they could use themselves or sell to others. “It seemed like a win-win,” Rose says. After a somewhat lengthy and complex transaction, the couple agreed to conserve 77 acres in perpetuity, keeping a “development envelope” of seven acres. Ultimately, they netted enough to realize their retirement aspirations while keeping the ranch intact and in the family.

A Tool for Land Conservation

“A conservation easement is a voluntary, legal agreement a landowner makes to limit the type and amount of development that can occur,” says Dan Lobbes, vice president for land and watershed programs at The Conservation Foundation. The foundation has used easements, along with other tools, to preserve roughly 36,000 acres in eight counties surrounding the Chicago metro area. “The purpose is to safeguard natural resources while keeping the land in private ownership,” Lobbes says. “Government agencies can’t afford to buy every property that has natural value, and taxpayers wouldn’t want [them to do] that.

“The easements are tailored to the vision of the owner and characteristics of land,” Lobbes says. “The property can be sold or inherited. Every other right is in place.” In nearly all cases, the resulting agreements are monitored and enforced by a public agency—as in the case of the Ruperts’ ranch—or by a nonprofit entity, which ensures that the conditions specified in the resulting deed are upheld.

Local land trusts like The Conservation Foundation are easily the most common such stewards, says Rex Linville, eastern division director of field programs for the Land Trust Alliance, a nationwide 1,000-member local nonprofit organization that safeguards lands under conservation easements.

While the concept of the conservation easement has existed in various forms for a century or more, its use accelerated dramatically beginning in the 1980s, when federal income tax incentives were formalized, Linville says. Federal taxpayers can take a charitable deduction equal to the value of the surrendered development rights. Many states, such as Colorado, offer additional inducements (more on that later).

As of 2020, about 61 million acres of privately held land were under conservation via restrictive easements—more than all national parks combined, according to the LTA. Through the 2010s, land was conserved at a rate of roughly 1 million acres a year. The LTA is pursuing an ambitious goal of adding another 60 million by 2030.

“The most common properties under easements are working forest or agricultural lands,” Linville says. “They stay as part of the economic productivity of a community, because the restriction makes sure the land continues to be available for productive use and doesn’t get developed.” Conservation easements also play a growing role in efforts to preserve or improve water quality, establish wildlife and pollinator corridors and, more recently, sequester carbon in the face of climate change.

“Along the Mississippi River, which has huge problems with agricultural runoff problems, farmers are putting riparian land in easements to compensate them for declining to farm on that area,” says Dan Wagner, senior vice president of government relations for Inland Real Estate Group in Oak Brook, Ill., and a board member of The Conservation Foundation and the REALTORS® Land Institute. Often these open space set-asides come as mitigation for a development project under regulatory requirements, though those arrangements aren’t eligible for tax benefits.


Atwater subdivision nature preserve

©The Conservation Foundation

A 92-acre preserve—a collaboration between The Conservation Foundation, the city of Naperville, Ill., the Army Corps of Engineers and Pulte Homes—provides a scenic view for residents of the Atwater subdivision and a habitat for birds, butterflies and other wildlife.
Tom and Rose Rupert

Tom and Rose Rupert

Taking some value out of their land was Tom and Rose Rupert's best hope for realizing their retirement dream, but there were few suitors for the full acreage.

States Get Into the Act

Many states interested in seeing more of their natural and working lands preserved from development offer additional tax incentives. In Illinois, for example, land under conservation receives a 75% property tax reduction, Lobbes says. “In one case, I know [this incentive] helped an elderly owner stay on her property.” It’s important to note that property taxes aren’t reduced for the part where building is allowed.

In addition to, or in place of, property tax cuts, about a dozen states offer tax credits for preservation. Colorado and Virginia even allow owners to sell the tax credits.

“A tax credit pays your taxes dollar for dollar,” says Ariel Steele, owner of Tax Credit Connection Inc., a Loveland, Colo., consultancy that helps people earn money by conserving their land with conversation easements. “In Colorado, we not only give you tax credits but also let you sell those tax credits. We don’t want just people who have a lot of money to make use of this.”

The state caps its annual outlay for credits at $45 million, with 40 to 70 landowners a year opting for them. The program is popular enough that the annual allotment is mostly spoken for through half of 2025, Steele says.

“It has dramatically raised the rate of conservation so that Colorado is one of the most conserved states in the country,” she says. Approximately 800,000 acres have been conserved using tax credits in Colorado since the state’s division of conservation began tracking that information in 2011.

Costs and Considerations

“There are a lot of moving parts to an easement deal,” Linville says. As with a typical property sale, the process involves appraisals, a real estate attorney and often a surveyor. For deals involving a land trust as guarantor, a contribution is made to a fund to support the defense of the easement terms. “On the land trust side, there’s a fair bit of complexity to ensure they are protecting the right property, with the right terms, and creating a robust document that will last in perpetuity. If at the outset an owner isn’t committed to a higher purpose, many would walk away.”

And more than a few do just that, Steele notes. For starters, appraising the value of conserved land is a specialized practice, and getting a result isn’t cheap. A preliminary appraisal to let an owner assess a deal’s potential can cost $5,000 to $10,000, with a full appraisal for closing costing as much as $30,000, she says. “Somewhere between 25% and 50% walk away after the preliminary appraisal.”

Deeds can number in the dozens of pages. Though much is boilerplate, deeds will detail permitted uses—farming, hunting, recreation and so on—and require careful legal review. In Colorado, landowners, or a sponsoring organization, can expect a deal to cost $70,000 to $100,000, plus an endowment for the organization providing stewardship if it is other than a government agency.

Selling a property with a conservation easement can be tricky, too, and could again involve a specialized appraisal. But there are selling points to such properties, too. “Typically, it will have a lower sticker price than a similar property with all of its rights intact. This is important for farmland near urban areas, because it stays affordable even in the face of development pressure,” Lobbes says.

At the same time, in some growing areas, the portion of a property that retains development rights might be more valuable: “Parcels adjacent to or surrounded by preserved land might increase in value over time as they become more and more rare.”

Recreational Preservation

In states where environmental protection regulations require substantial mitigation of sensitive natural areas, conservation easements can be part of a solution that is both cheaper and more ecologically beneficial, Lobbes says. Often, a regulatory agency identifies portions of a development site that should be preserved, such as wetlands, watersheds, pollinator paths and migratory bird corridors.

“Too often a developer will be required to do some restoration, but there’s no long-term management and they become weedy messes,” he says. That’s where a guarantor agency such as the Conservation Foundation comes in. With funding supplied by the developer, a land trust will manage the ecological health and aesthetics of preserved areas. Often a trust will sustain recreational elements such as trail systems, while the developer can regain its investment by putting premiums on the units closer to the preserved areas.

What Could Your Role Be?

“It’s really exciting for real estate professionals to understand what a conservation easement can do,” Wagner says. Whether you practice commercial or residential real estate—or some combination—“you know that a house near a park or a preserve will sell for more,” he says, “and [preserved land] also raises the value for the entire community.”

A lot of land trusts work very closely with real estate agents, Linville says, because “the real estate community is well connected to landowners in a region. Practitioners who know the area very well have been some of the people most committed to identifying land and landowners for preservation.”

Like any real estate transaction, executing a conservation easement is business—but it’s done on a firm foundation of love, Linville says. “Your financial adviser might say conservation, like any charitable gift, is a ‘bad’ financial decision. But owners are primarily motivated by a love of the land. There are financial incentives, sure, but first and foremost, the decision comes from loving the place.”

Case Study—An Easement Success Story in the Chicago Suburbs

Conservation easements and independent monitoring will play a key role in the development of a 211-acre industrial/warehouse project in the western suburbs of Chicago, in partnership with the adjacent city of Geneva, Ill., which is extending an arterial road and electrical service to the site. Regulations required the developers to mitigate impacts to over 15 acres of wetland and to employ “naturalized” stormwater management.

Tom Slowinski, technical director of wetlands and ecology for V3 Companies, responsible for wetland permitting and mitigation design on the Geneva development, says paying into a fund for offsite mitigation turned out to be significantly more costly than restoring, preserving and managing a chunk of the overall parcel. As a result, the approved plan now conserves a larger 41-acre area.

“We will end up with 12.39 acres of wetland while preserving and improving 9.8 acres of woodland and woodland buffer,” Slowinski says. “We’re creating 5.4 acres of prairie buffer of the wetland and 13 acres of naturalized stormwater mitigation facilities.” The Conservation Foundation will hold the conservation easement, and the property owners will pay into a fund. “There’s definitely an environmental benefit,” Slowinski says, “and it will be an amenity for the tenants as well.”

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