In accepting a conservation easement, Kachemak Heritage Land Trust assumes the legal obligation to forever carry out the donor's desires by upholding the terms of the easement. Although the easement donor has given something of great significance, the Land Trust has, in a sense, assumed a perpetual liability. The donor, of course, is not likely to violate his own easement, but eventually others will own the property. Someone who wants to put condominiums on the hay meadow or dredge the spawning stream may try to violate the easement. KHLT must be prepared to monitor and defend all of its easements.

Planning for the cost of monitoring and enforcement is also required by the IRS. If the donor claims a tax deduction for the easement, IRS requirements state that an "eligible donee" of tax-deductible conservation easements (KHLT) "must ...have the resources to enforce the restrictions" of the easements. It is standard land trust procedure to establish a stewardship fund, setting aside funds solely for monitoring and defending easements. KHLT strives to realize a return of at least three percent over the annual rate of inflation on its stewardship investments. This "real interest" is withdrawn from the stewardship fund and used to cover the Land Trust's annual monitoring costs.

KHLT requests a stewardship donation with every gift of a conservation easement. Generally, this contribution is made by the owner of the property. This stewardship gift is a one-time fee, which generally reflects a small contribution in relation to the owner's tax savings.

The stewardship fund acts as security that the landowner's intent will be carried out and has been compared to an insurance policy. The stewardship contribution is the premium. To determine the amount of the stewardship contribution, KHLT estimates the annual cost of monitoring the easement, including visiting the property, photographs, writing up a report, informing landowners of any changes, and so on. The principal required to earn this amount at 3% real interest becomes the stewardship contribution.

1. Legal and tax counsel (strongly recommended, but not mandatory).
2. Limited liability report from title company to verify clear title: $250.
3. KHLT service fee: $300 (to minimally cover costs of preparing the conservation easement).
5. Baseline inventory: estimated cost $1,500. This can cost far less if the owner does the work. Baseline data is required by the IRS for tax-deductible easement gifts. IRS regulations require that the donor of an easement gift provide the easement holder (KHLT) with "documentation sufficient to establish the condition of the property at the time of the gift." The baseline report establishes the condition of the property at the time the easement is signed and is used to measure future development against the terms of the conservation easement.
7. Sub-surface mineral survey (required by the IRS if the landowner does not own the subsurface rights): estimated cost - FREE
8. Recording fee: estimated to be approximately $65 (based on the number of pages in the easement document.)
10. If donor is seeking an income tax deduction or property tax reduction, the government requires a qualified land appraisal "before and after" the easement to establish the reduction in value.

Recently passed legislation offers the following new land conservation tax benefits for landowners, especially farmers and ranchers:

Raises the deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income in any year to 50%.

Allows qualifying farmers and ranchers to deduct up to 100% of their income, provided the land remains available for agriculture production.I

Increases the number of years over which a donor can take deductions from 5 years to 15 years.

Only applies to easements donated in 2006-2007, including bargain sales.

These tax benefits, the most sweeping changes to conservation tax law in two decades, offer an unprecedented opportunity to conserve the lands we cherish and preserve America's traditional land uses.

For additional information about this legislation, please visit www.lta.org.

eases