The Sierra Nevada  Land Trust Handbook

Tools that Land Trusts Use

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Land Trusts are able to protect open space using a variety of methods. Those methods, which we refer to here as "tools", are summarized below.

To more clearly understand how Land Trusts use the wide variety of tools available to them, it's helpful to divide their work into 2 basic steps:

The first step in preserving any piece of land is to establish a  means of protection through some sort of legal agreement with the landowner. The landowner may choose to establish this protection through a donation, sale, or combination of both. The agreement between Land Trust and landowner generally results in the Land Trust either attaining the land outright, or attaining just the development rights.

The second step is to provide stewardship for the land once the protection is in place. This can involve many different options, depending on how the protection was established in step one.

Follow the links below to learn more about each land protection tool in the context of these 2 steps.

Attaining the land  - If a landowner wishes to donate or sell a piece of property to the Land Trust, ownership is transferred to the Trust through a legal contract. The Trust may then apply protection to the property as appropriate. Attainment of the land has the advantage of being a simpler transaction than attaining just the development rights (such as through a conservation easement). Unless the property is donated, however, the cost is generally significantly higher than a conservation easement.

Fee Title Acquisition - A fee title acquisition is one in which the Land Trust attains, or "acquires" full title (or ownership) of the land, including all the rights associated with that land, which may include rights to water, development, grazing, access, timber, and minerals. Generally those rights that are associated with the property are acquired with the title. This is generally a relatively straightforward process, as it involves only a basic purchase and sale agreement and the  associated escrow process. 

Fee title can be acquired through purchase of the land by the Trust, through donation by the land owner, or through a "bargain sale" which is generally some combination of the two.

If purchased, the Land Trust can obtain the funds necessary for the transaction through membership donations, grants from private foundations, or grants from public agencies (such as the State Department of Fish and Game, the US Fish and Wildlife Service, the Federal Bureau of Land Management, etc.). When using grants that are from public monies, the purchase price must be limited to that determined to be fair market value by a certified (and funder approved) appraiser. 

If the land owner is interested in donating the land to the Land Trust, fee title can be transferred without any financial transaction. In this case, the land owner is allowed (in most cases) to claim the fair market value of the property as a tax deduction. 

A bargain sale involves selling the land to the Land Trust at less than fair market value. The difference between the selling price and the fair market value may in this instance be deducted for tax purposes.

Purchase Option - A Land Trust may enter into a contract where it buys the right to purchase the property within a given period of time (usually one year or less). In the case where land is threatened, but the funds to purchase it have not been secured, the purchase option has the advantage of "buying time" for the Land Trust.

Attaining just the development rights - the various rights that are associated with a parcel of land (such as water rights, mineral rights, etc.) can be separated, allowing each to be sold individually. Of greatest interest to Land Trusts are the development rights, which can be obtained without having to acquire the title to the land. Though this makes the transaction more complex than a fee title acquisition, it has many advantages which are outlined in the sections below.

Conservation Easement - a very common, though powerful tool that Land Trusts use is the conservation easement, which entails a legal contract that preserves the condition of a parcel of land in perpetuity. The easement contract is recorded with the deed of ownership, and applies to all subsequent owners of the land if it is sold.

The landowner keeps title to the land, but gives up his/her right to develop the land beyond what is spelled out in the contract. Depending on the use the landowner has intended for the parcel, existing structures or construction of a small number of additional buildings may be allowed. Existing grazing or ranching operations are commonly also accepted. 

A conservation easement benefits the landowner as well as the Land Trust. The Land Trust establishes that the land is protected from development and other ecologically destructive actions. The landowner can benefit in a number of ways. 

If the landowner sells the easement to the Land Trust, he earns cash amounting to the difference between the value of the land if developed compared with its value once development rights are removed. The development value of a parcel is often between 30% and 60% of its total value. This transaction is sometimes called a Purchase of Development Rights, or "PDR".

In addition to the cash from the transaction, property taxes are usually reduced, and estate taxes, assessed when the land is transferred to beneficiaries, are reduced as well. 

If the owner chooses to donate the easement, he/she can generally claim the value of the donation as a deduction for tax purposes. 

Transfer of Development Rights - also referred to as a "TDR", this option allows a landowner to transfer the rights to develop from one property to another. This tool is generally employed when a piece of land has specific preservation value, but the landowner or local government does not wish to reduce the total development in a region. 

Once the development rights are transferred from the "sending" parcel, a conservation easement is recorded, and the land remains protected as described in the easement. The "receiving" parcel acquires the development rights, and the net amount of development remains the same.

Purchase of Subdivision Map Entitlements - If a subdivision map exists for a given property, a Land Trust is sometimes able to purchase the entitlements to subdivide. With these entitlements in hand, and working with local government officials, the property can be "re-subdivided" to achieve, for instance, a more appropriate balance between open space and development. The newly re-divided parcel can then be sold. 

This approach is a relatively complex one, and is not commonly used.

Lease with Purchase Option - in the event that a purchase option does not allow sufficient time to close a purchase transaction, this alternative can provide further flexibility. A lease can be established for a period of time, generally up to one year, allowing the landowner continued use of the land. After expiration of the lease, a purchase option is activated that allows up to one more year for the Land Trust to complete the transaction. 

Stewardship - once the property has been protected, improvements such as trail systems might be desired, and maintenance to fences, trails, structures, etc. is often required as well. Even in the simplest case where upkeep is minimal, the land must be monitored to make sure that intended protections are not being violated. Especially in the case of a conservation easement, adherence to the agreed upon terms of the easement must be routinely monitored. 

Though a Land Trust can hold the title or easement to a property, any of the stewardship obligations mentioned above can be a serious burden, both financially and in availability of staff. Many of the smaller groups consist primarily of volunteers, and can have difficulty providing the necessary supervision that property management demands.

A common solution to the management of the property occurs when the Land Trust can transfer the title or easement to another organization, often a public agency such as the California Department of Fish and Game, or the Federal Bureau of Land Management. And national Land Trusts, with their financial and staffing ability to support land management, are willing to receive larger parcels for management purposes if the land meets their criteria. When a transfer of property is planned, the terms for eventual transfer are usually agreed upon with the recipient before the attainment of property or development rights takes place. 

If a Land Trust purchases property with its own funds, such as from membership support, the Land Trust can often sell the parcel to a third party with all appropriate protection agreements in place, and thereby recover its funds for further properties. In the case where funds come from outside agencies or organizations, the Land Trust operates primarily as broker on behalf of the landowner and other parties involved. 

A leaseback is another option for stewardship that allows a Land Trust to hold title to the land, but lease it back to those who wish to use the land, generally for farming or ranching operations. This recovers some of the costs incurred by the Land Trust in attaining the land, and shares the burden of stewardship with the lessee.