State pressured to expand conservation tax credit
BOSTON — A tax break for landowners who shield property from development has a nearly three-year wait because of a state cap that environmentalists say is undermining conversation efforts.
Landowners who set aside property under the state program can get income tax credits for 50 percent of their land's value. A landowner may claim up to $75,000 in tax credits, but the program is capped statewide at $2 million per year.
Environmental groups want to raise the limit to $5 million, if not eliminate it.
"There are hundreds of landowners who are aging and don't have heirs to take over the property but want to preserve the land for conservation value," said Steve Long, a lobbyist for the Massachusetts chapter of The Nature Conservancy. "Many of these people are land rich but cash poor, so if they have to wait too long and need the money, they might be tempted to sell to developers."
Plans to raise the cap were approved by a legislative committee but stalled in the House of Representatives. Lawmakers tacked on a similar provision to the current budget, but it was rejected.
More than $6 million worth of tax credit requests await state review. Those represent at least 90 tracts encompassing more than 3,500 acres.
The backlog includes 50 acres in Essex, another 50 acres in Haverhill, 20 acres in Newbury and a similarly sized parcel in West Newbury.
Long said would-be land donors will likely have to wait until at least next year for state approval.
The conservation program has helped preserve 12,000 acres since it was created in 2011.
In Essex County, the tax credit was used in a 2012 deal to preserve nearly 60 acres of pasture on the Bailey farm in Haverhill, and it allowed the Pearson family to protect 4 1/2 acres in Byfield.
Two tracts in Ipswich, totaling 60 acres, were protected with help from the credits. Wheeler Brook Farm in Georgetown also benefited.
To qualify, donated land must be valued at $100,000 or more, and it must be protected through a trust overseen by a local government or a conservation nonprofit. Property must be preserved for wildlife habitat or farming.
Sen. Kathleen O'Connor-Ives, D-Newburyport, said not increasing the cap is a "missed opportunity."
"We can't get that conservation land back once its developed," said O'Connor-Ives, a primary sponsor of the bill raising the cap. "And there is a huge public benefit from conserving land by protecting air and water quality, wildlife habitat and recreational open space."
The cost of tax credits to the state is a drop in the pan compared to other tax incentives.
Massachusetts doles out more than $60 million a year in tax credits to film studios and production companies that shoot locally. That tax credit is valued at 25 percent of production costs, wages, food, security and other expenses.
The film tax credit is one of the most generous in the country, having cost the state an estimated $400 million in forgone revenue since 2006, according to government watchdog groups.
A program for historic renovations parceled out more than $32 million in tax credits two years ago, according to the state, while a program to clean up polluted industrial sites distributed more than $22 million in tax breaks to developers in 2014.
The federal government also provides funding and tax credits to preserve environmentally sensitive lands.
At least 13 other states offer tax breaks for land conservation, as well, some of which are far more generous than Massachusetts.
Virginia provides tax credits of 40 percent of market value of land donated for conservation, allowing landowners to claim up to $100,000. Its program is capped at $100 million a year statewide.
North Carolina and Georgia offer credits up 25 percent of fair market value, capping them at $250,000 for individuals and $350,000 for corporations.
Connecticut offers a credit of 50 percent of fair market value, and there is no cap.
In some states, conservation tax credits are transferable out-of-state and can be bought and sold.
But the incentive programs haven't always worked out. Two years ago, Colorado moved to reclaim $220 million worth of credits it said were based on inflated property assessments, putting about 500 landowners on the hook for overdue taxes.
In Massachusetts, conservationists have faced a backlash from local leaders who worry about the drain on their budgets when large tracts are taken off the tax rolls.
In a recent case, officials in Hawley taxed a 120-acre parcel of woods, known as the Stetson-Phelps Memorial Forest, in the town north of Springfield. The New England Forestry Foundation challenged the bill, and the town argued that the land didn't deserve tax-exempt status because it wasn't publicly accessible.
The Supreme Judicial Court sided with conservationists, saying the land's status serves the public by protecting open space from development.
Environmental groups say the state needs to increase financial incentives to boost conservation efforts.
"This is an arbitrary cap that's holding back our conservation efforts," said Erica Mattison, legislative director for the Environmental League of Massachusetts. "We have large tracts of open space that are vulnerable to development because of this backlog."
Christian Wade covers the Massachusetts Statehouse for the North of Boston Media Group's newspapers and websites. Reach him atcwade@cnhi.com.
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