Conservation Easements as Business Strategy: Part 2
In part one, David Coltrane, chair of the Carolina Farm Credit Board of Directors, and a director since 2009, shared the pros and cons of conservation easements and why his family decided to use that option as a business strategy in expanding their dairy farm operation.
Here, he shares helpful advice, along with some helpful resources, for anyone considering a conservation easement.
- Do your homework. David credits Dewitt Hardee, program director of the farmland preservation staff of the N.C. Department of Agriculture & Consumer Services with providing helpful information and introducing him to a local contact with the Piedmont Land Conservancy, the one located closest to David. He attended meetings of the conservancy to learn more details. There are 24 land trusts in the state. The Conservation Trust for North Carolina provides this helpful fact sheet with a list and contact information for the trusts. The Farmland Information Center may also be a good starting point. Use the Browse by State feature to find information specific to North Carolina.
- Talk with other farmers. There is nothing like talking with someone else who has gone through the process. They can share ins and outs, what they learned, and what to consider.
- Allow adequate time. “It’s a process,” says David. “Allow plenty of time. It takes about three years.” This includes the application, approval or selection (a limited number of conservation easements are granted each year, depending on funds), land survey, and inspector visits from the land trust and state and federal agencies to check your property, which is ongoing and occurs once or twice each year. The process also includes meeting with an attorney for the easement on the deed and other paperwork.
- Establish open communication channels with all family members before signing any application. “Sit down with your family and talk about all the different concepts that you may come up with down the road. We talked with our kids about it. We talked with our Mom and Dad. We wanted to make sure everybody was on board. It’s a lifetime changer,” says David. He also cautions that it may not be for those who have a several-generation family farm unless you always want it to be a farm. The key is doing your homework and considering what is best for your family. David put only the new property under easement; he chose not to put the 800-acre farm that has been in his family for generations under an easement. He hopes the family farm will remain in farming but if circumstances change and he needs to develop it, he could.
- Talk with the land trust about the future. If you think you may buy additional land after putting land in an easement, you may be eligible to put any money from the government’s portion of the payment into a trust to avoid income taxes. There may be a time limit so inquire about this option with your local land trust.
- Realize conservation easements are not for everyone. David stresses that while this ended up being a good option for him, it’s not for everyone. “This was a way for us to grow our farm more quickly. By doing this, we can keep our debt load low so that we might have a shot at buying other farms close to us in a few years.” Each individual circumstance is different, that’s why doing your homework and talking with others is crucial.
See part 1 of this 2-part series for pros and cons.
By Leah Chester-Davis