Land conservation bill passes

[Hamilton Reef]

Land conservation bill passes

http://www.mlive.com/news/bctimes/index.ssf?/base/news-8/115900656013910.xml&coll=4

Saturday, September 23, 2006 TIMES STAFF

Conservation groups are hailing the passage of state Senate Bill 1004, meant to encourage people to conserve land in areas covered by groups like the Saginaw Basin Land Conservancy in Bay City.

The bill, passed this week by House members in an early morning session, eliminates the so-called ''pop-up'' tax on lands with qualified conservation easements. The legislation passed the Senate in May.

A conservation or preservation easement is a voluntary agreement with a group like the Saginaw Basin conservancy that restricts development of land in perpetuity.

Supporters of the bill, introduced by Sen. Michelle McManus, R-Leland, said they hope it will encourage more land owners to put conservation easements on their properties.

Current laws discourage easements in one respect, because huge tax bills can ''pop up'' when land is reassessed when passed to family heirs.

Under the bill, the pop-up tax is eliminated for the land itself, but still assessed for residences and buildings on the property, said Rachel Kuntzsch, programs director for Heart of the Lakes Center for Land Conservation Policy, a Lansing nonprofit that represents Michigan land trusts.

''It helps provide incentives to people,'' Kuntzsch said.

The bill is to be presented to the governor by the Senate on Nov. 9. If signed by the governor, the ''pop-up'' tax would be eliminated for 2007, Kuntzsch said.

For more information about area land conservancies, see heartofthelakes.org or lakehuronalliance.org.

[Hamilton Reef]

Conservation easements exempted from Proposal A

Spinal Column Online http://www.spinalcolumnonline.com/

October 04, 2006 - There could be some tax relief in sight for the recipients of property transfers if the property received includes a conservation easement, under a Michigan Senate Bill (SB) that received state House of Representatives approval on Thursday, Sept. 21.

SB 1004, which was originally introduced last January, would exempt conservation easements from a Proposal A taxable value "pop-up" that currently kicks in and increases the property tax obligation for a recipient of a property transfer.

"Currently under Proposal A, properties' (taxable) values increase at a consistent rate, but once they're transferred there's a pop-up in the (taxable value) to match state equalized value (SEV)," said Alicia Gensler, legislative assistant to bill sponsor Sen. Michelle McManus (R-Lake Leelanau). "Under the bill, any land that falls under the definition of a conservation easement would not receive that pop-up tax, meaning (taxable value) would continue to increase annually at the rate of inflation or 5 percent — whichever is lower. (Taxable value) would not jump up to the state equalized value (after a transfer)."

According to state legislative analysis of the bill, it would amend the General Property Tax Act's definition of "transfer of ownership" to exclude a transfer of land — but not buildings or structures located on the land — if the land were subject to a conservation easement under the Natural Resources and Environmental Protection Act; or if a transfer of ownership of the land or a transfer of interest in the land were eligible for a deduction as a qualified conservation contribution under the Internal Revenue Code.

According to the legislative analysis, the bill could result in a reduction of property tax revenue by less than $1 million during an average year. In any given year, the cost could be more if an above-average share of all property in conservation easements were to change ownership. The loss in revenue would affect local governments, school districts, and the School Aid Fund, according to the analysis.

Gensler said SB 1004, which has not had any substitutions added in during the legislative process, was sparked by an incident in McManus' district.

"We had some constituents come to us who wanted to transfer their property to their next of kin," Gensler said. "It was a property that passed from generation to generation, but the property tax was just way too high for the next group to take over."

Kirt Manecke, owner and founder of the Milford-based LandChoices, a non-profit organization designed to help inform people of options other than letting open land be purchased and developed, including conservation easements, said the bill is a good idea.

"As it is now, if you have a conservation easement on your property and your property was assessed for the highest and best use, as most properties are, its value may be raised," he said. "The assessor doesn't care if you can't put 40 houses on a 40-acre property you just put a conservation easement over 39.5 acres of, but it's assessed as if you could."

He said the current procedure is much like assessing farmland at its highest and best use.

"It's kind of an unfair tax," he said. "And the problem is the conservation easement is permanent; it's not going to become a subdivision some day, like a farm might. When you put a conservation easement on a property, you've given up some of your development rights and lowered the value of that property."

Manecke said the bill's exclusion of buildings within an easement is sensible.

"Sometimes within a conservation easement, it will have a building envelope where the easement will simply go around the buildings," he said. "It would make sense if (the bill) excludes the buildings so those could be valued for what they're assessed at, but the rest of the property wouldn't be assessed at that highest and best use."

All lakes area legislators have voted in favor of the bill.