Relates to a conservation, open space and farmland protection credit trading program

Summary of provisions

Section 1 establishes the legislation as the "Conservation, Open Space and Farmland Protection Credit Trading Program."

Section 2 sets forth the legislative intent.

Section 3 amends section 210 of the tax law to create a tradable conservation, open space and farmland protection tax credit with a value of fifty percent of the fair market value of the qualified real property. The amount of the credit shall not exceed $100,000. This section defines the lands that qualify for the credit as well as the use, limitations and transferability of the tax credit. This section also defines eligible parties who can participate in the program, the types of property eligible for the program, approval process required for the transfer of the tax credit and the rules applicable to the transfer process.

Next, the legislation sets forth the administration process for the program. The legislation creates the Conservation Easement Credit approval board and sets out its duties and responsibilities, sets standards for appraisals and requires that the Department of Taxation and Finance issue yearly reports on the program.

The legislation also provides that property may only be transferred to "public bodies" or "not-for-profits" that register and become certified for inclusion in the program. The department of environmental conservation is instructed to promulgate rules and regulations to develop the registration and certification system. The department of environmental conservation and the attorney general will also have the authority. to revoke a registration if a "not-for-profit" willfully and with the intent to defraud creates an easement that does not match the value of the credit received.

Section 4 amends Section 606 of the tax law to create a transferable conservation, open space and farmland protection credit that can be applied to corporate and franchise taxes. This section creates the identical program as in section 3, making it applicable to the corporate and franchise tax.

Justification

Easement donations often result in very large charitable deductions. While those large deductions are useful to high-income land owners, they offer very little incentive to most real farmer/ranchers, who rarely have high income tax liabilities. This legislation would address this situation.

An income tax credit for real property taxes paid on land under a conservation easement will help landowners bear the annual carrying costs of land that provides multiple public benefits. This income tax credit will have a large impact on those landowners who have modest incomes and are unlikely to benefit significantly from existing tax deductions. An income tax credit will provide them with an incentive to make a gift to perpetually conserve land that they otherwise could not afford to make.

Several states have already enacted similar legislation, including Colorado, Virginia and South Carolina. In the first two years of Virginia's program, credit was not transferable. When credits were made transferable during the following four years of the program, the average number of donations doubled and the acres protected tripled. With this legislation, landowners receive a financial reward for protecting their land, the state advances its goals of land conservation through tax policy rather than general fund expenditures, and the public reaps the benefit of lands preserved as open space at a fraction of their cost.

Legislative history

2013-2014 - S.5522

Fiscal implications

To be determined.

Local fiscal implications

None.

Effective date

This act will take effect on the first January next succeeding the date on which it shall have become law.