The period before a formal “Initial Site Visit and Project Selection Evaluation” is often characterized by several contacts between a landowner and HeadWaters during which the landowner learns about conservation easements and HeadWaters staff learns about some features of the property and the landowner objectives. The first contact can occur by means of a telephone call, an office visit, or a property visit. During the initial contact period, HeadWaters discusses considerations for all conservation easements, including:
- The project selection criteria and conservation values policies.
- The outline of the conservation easement process.
- The responsibilities of each party.
- The significance and permanence of a conservation easement.
- That the landowner should contact their financial advisor for specific tax implications.
Initial Site Visit and Project Selection Evaluation
The proposed easement property will be thoroughly inspected by HeadWaters staff, a board member, or a member of its Land Committee to identify and document all conservation values. In addition, the current condition and any associated risks or concerns regarding the property will be recorded for review by the Land Committee to help decide if the project will be approved.
The Land Committee evaluates the potential easement donation. If the property satisfies the criteria for a conservation easement project, the Board of Directors will authorize the Land Protection Director to proceed with the process, including:
- Create a “Draft Easement” with the landowner.
- Complete the “Title Search” and other background investigation.
- Initiate the “Baseline Report” of the property.
The “Draft Easement” is developed collaboratively by HeadWaters and the donor based on the “Michigan Model Conservation Easement”. The document will reflect:
- Needs and desires of the donor, to the extent that they do not impair the important conservation values.
- Aspects and features of the property to be protected, including the conservation values and the public benefits. It is HeadWaters Land Conservancy policy that each easement complies with the requirements of the Internal Revenue Service for a qualified conservation contribution. Descriptions of monitoring and enforcement procedures.
- Legal obligations of both parties.
- Enforcement and remediation provisions.
The landowner is responsible for the costs associated with the title search. The purpose of the “title search” is to:
- Verify the legal property description.
- Identify encumbrances on the property such as underlying mortgages, leases, and ownership structure. The prospective donor can assist HeadWaters by providing copies of existing title insurance policies and/or title reports.
The purpose of the “Baseline Report” is to completely assess and document the current condition of the property including its boundaries, exiting infrastructure, uses, and resources. Using text, maps, photographs and other attachments, this detailed document defines the present condition of the property and the conservation values that are protected by the conservation easement.
The Baseline Report includes:
- The public benefit of acquiring the Conservation Easement.
- Identification, documentation, and condition of the significant features of the property being protected. Assessment of any future management needs.
- Identification and documentation of any reserved rights or special areas, such as a building envelope or a discrete area of endangered species habitat.
- Identification and location of existing infrastructure such as buildings, roads, utility or pipeline corridors, sand or gravel pits, etc.
Conservation Easement Stewardship Plan – Draft
A Stewardship Plan draft is prepared by HeadWaters staff or a Land Advisory Committee member. The annual monitoring of the conditions of the conservation easement is a requirement of the IRS and a policy of HeadWaters. The Stewardship Plan also provides the Board of Directors with an initial analysis of the long-term monitoring (Stewardship) costs associated with the protection of the property.
All landowners who intend on taking a tax deduction, based on their donation of a conservation easement, must utilize a qualified appraiser (USPAP). The landowner is responsible for all costs associated with the appraisal. Internal Revenue Service regulations penalize donors and appraisers for the over-valuation of gifts. The donor must attach a copy of the appraisal (signed and dated by a qualified appraiser) to his/her tax return. For more information on conservation easement appraisals click here.
The “Final Easement” will be legally reviewed by a qualified attorney, and then approved by the Board of Directors before it is signed by the Executive Director and the landowner. Once the Easement is signed by both parties, HeadWaters will have assumed the legal obligation to insure that the terms of the easement are maintained in perpetuity. A copy of the recorded conservation easement with all supporting documents will be sent to the landowner.
Once the conservation easement is recorded, HeadWaters will continue to assist the landowner with any remaining work including:
- Signing the IRS form 8283 and providing the contemporaneous letter.
- Assisting with stewardship efforts for continuing land protection.
Ongoing Monitoring and Stewardship Activities
The Stewardship Plan will be used for the annual monitoring of the easement property, permitting at least one site visit per year by HeadWaters. Annual monitoring is required to satisfy Internal Revenue Service requirements for tax-deductible conservation easements. Each monitoring visit will include an inspection of the property, checking all areas of special concern and reserved rights, and a meeting with the landowner to discuss potential changes of ownership, property changes observed, and/or future plans. For more information visit the HWLC Conservation Easement Stewardship Program page.
Costs to the Landowner
- All title investigation
- Survey if necessary
- Appraisal for tax purposes if taking a charitable deduction
- Recording fees
- Stewardship fund
Advancing land protection in northern Michigan
When HeadWaters Land Conservancy accepts the donation of a conservation easement, it accepts a legal responsibility to uphold the terms of that easement forever. Some of the costs associated with these responsibilities include:
- Monitoring the easement every year to ensure compliance.
- Overhead costs such as office/program expenses and personnel.
- Investigating suspected violations of the easement terms and enforcing the terms of the easement to protect the conservation values.
For every Conservation Easement that HeadWaters accepts, we must raise the funds for stewardship of the easement. As the Conservancy continues to protect more land, we rely even more on the generosity of our supporters. Without such support we truly wouldn’t be able to protect the natural treasures of northern Michigan.
*Because Conservation Easements are voluntary a fee is never charged, however, contributions are always deeply appreciated. After the completion of your Conservation Easement, a representative of HeadWaters may contact you to discuss how you can continue helping to protect northern Michigan’s lands and waters.