By Todd Hagenbuch
Like most self-employed business owners, people involved in production agriculture face a number of threats to their business’s survival.
What if I get ill and cannot continue to work? What if a natural disaster ruins my land so that I cannot continue production? How do I pass along my farm or ranch to the next generation without losing it to taxes, assuming there is even someone who wants this potential headache?
One of the most eminent threats in the mountain portion of our three states is development. The development of homes, businesses, and resorts is driving up the costs of land so high that agricultural production can never pay the cost of investing in land.
This keeps new people from buying farms and ranches and keeps farmers and ranchers from expanding. In Routt County alone, some property owners have seen their property valuations increase as much as 85% in the past year.
When I attend meetings on the subject of land development and the loss of agricultural ground, I hear many landowners put the burden of saving their farm or ranch on others. “If you do this…” or “This is your fault…” are common comments.
Yes, those statements may have a basis, but isn’t it time to look at ourselves and ask “What can I do to ensure that my property isn’t developed?”
Conservation easements, a tool used for protecting your land, are not a new concept. As an owner of land, you may have many rights associated with the land that include mineral and water rights. These rights can be conveyed to others and removed from your land.
The same goes for development rights. By placing a conservation easement on your property, you remove the right to build on your land.
Language can be built into the easement allowing for agricultural buildings, limited home sites for agriculture employees, etc. The right to develop other residential or commercial buildings is held by one of a number of organizations, typically a ‘Land Trust,’ a non-profit group charged with holding the development rights ‘in perpetuity.’ Under strict regulation from the IRS, the trusts make sure that your land remains as is forever.
What do you gain? Lower land values, which mean fewer taxes, less value to pass along to the next generation, and, in some cases, cash for a portion of the value you are giving up. Tax credits you cannot use can be sold for cash as well, improving your bottom line.
My family placed a portion of our ranch under a conservation easement ten years ago. I now sit on the board of directors for our local land trust, helping to ensure that other farmers and ranchers have this opportunity.
If you’re interested in exploring this option for your family, contact one of the many national or local land trusts for information. Or stop me at the upcoming convention to visit about it – I’d love to tell you more!