2007-12-28 (2007 PONC Annual Report to the Mayor)

Home

Commission Training ➢ "Open Space and Land Conservation: Historic Trends and Future Prospects" Teleconference On January 17, 2007, a teleconference held by Lorman Education Services provided the Commissioners with information on resources available to foster conservation funding, planning and closing transactions for the preservation of open space. This highlighted on the conservation of open space as an ongoing issue across the country and the availability of new funding sources and opportunities. ➢ "Understanding the New Tax Incentives: Conservation Easements & Other Charitable Contributions" Workshop On May 30, 2007, The Hawaii Island Land Trust and The Nature Conservancy convened a full -day workshop at the King Kamehameha Kona Beach Hotel, "Understanding the New Tax Incentives: Conservation Easements & Other Charitable Contributions." The faculty for the workshop were attorneys William Hutton, Ellen Fred, and Jocelyn Garovoy from the law firm Coblentz, Patch, Duffy & Bass, LLP as well as tax attorney and ranch land asset manager Gregory Hendrickson from the Hokukano Ranch and Kealakekua Heritage Ranch. They were joined by appraiser Paul Cool of John Child & Company based in Honolulu. The workshop introduced the concept of conservation easements, and covered the Internal Revenue Code and Regulations pertaining to tax - deductible donated conservation easements and bargain sales, including the "conservation purposes" test that a conservation easement must satisfy to be considered a deductible charitable contribution. The faculty addressed specific components of the Hawaii enabling legislation for conservation easements, Hawaii Revised Statutes Section 198, and worked through specific examples of how an individual landowner donating a conservation easement or selling it to a government agency or land conservation organization for below- market value can benefit from income and estate tax incentives. The workshop faculty also reviewed and discussed each provision of a sample conservation easement for a real ranch property in Hawaii. The faculty also addressed issues that may arise with respect to amending a conservation easement. Some of the tax benefits discussed was as follows: for qualifying conservation easements, a landowner may take an income tax deduction, based on the appraised value of the conservation easement, of up to 30% of his /her adjusted gross income with a carry forward period of 5 additional years to utilize the deduction. Additional income tax incentives are available under the Pension Protection Act of 2006.1 A conservation easement can also reduce the estate tax burden on the next generation of landowners who inherit land from their families. By limiting the allowable uses of the property and restricting development rights, a conservation easement effectively devalues the property, and thereby reduces the value of that property as it enters the taxable estate. For families with few other assets aside from their land, a conservation easement can help keep family lands in the family, rather than having those who inherit the property and the estate tax bill be forced to sell the property to pay estate taxes.