Much has been written in recent weeks regarding Nashville’s rapid economic growth and the increasing density within the city. During this growth, the city has made extensive efforts to improve and preserve its parks and open spaces. Without a doubt, Nashville’s rolling hills, open spaces, and other natural beauty has contributed to Nashville’s success. A recent article in The Hollywood Reporter cited Nashville’s proximity to “rural setting[s]” and “farmlands” as one of many reasons that Nashville has become so popular with celebrities. However, with growth and success in Nashville, one downside can be the loss of open spaces and natural beauty.
To protect Middle Tennessee’s natural beauty, one increasingly popular tool is the conservation easement. A conservation easement is a legal means by which landowners can voluntarily restrict the use of a designated piece of land. Because conservation easements are freely negotiated between the landowner and the receiving agency or organization, they are a flexible tool to preserve scenic land, historic sites, cultural resources or other types of property. The parties may choose to restrict uses of the land permanently or for a specific period of time. The agency or organization receiving the conservation easement, such as the Land Trust for Tennessee, is charged with monitoring the use of the property and ensuring that the property is being used according to the easement’s terms. The restrictions run with the land, so they bind present and future owners of the affected property.
Several significant conservation easements have been granted in Davidson and Williamson counties over the past few years, including acreage around the Radnor Lake State Natural Area, the “Hill Tract” adjoining Percy Warner Park and Harlinsdale Farm in Franklin. The Park at Harlinsdale Farm is a great example of the flexibility offered by conservation easements. Instead of developing this valuable tract of property, located across Franklin Road from the Factory in Franklin, the Harlin family chose to donate the property to the City of Franklin for a park. The city partnered with the Land Trust to ensure that the family’s wishes for a passive park that preserves the walking horse history of the property were met.
If you are wondering what is in it for the landowner other than preservation of property, there are also potentially substantial tax benefits. Conservation easements may lower property taxes by decreasing the assessed value of the land. Instead of calculating the value based on fair market value, the assessed value is the fair market value less the reduction in value of the land as a result of granting the conservation easement. Granting a conservation easement usually also qualifies as a charitable donation for federal and state income tax purposes. Additionally, a conservation easement can provide estate tax benefits.
Conservation easements are one of many tools in our playbook for preserving open spaces. I think they will continue to be used with increasing frequency as Middle Tennessee continues to grow.
This post was first published by the Nashville Business Journal on May 23, 2013. It was also re-published by the Land Trust for Tennessee on July 11, 2013. To read more commercial real estate articles by Walt Burton at the Nashville Business Journal, click here>