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E%PLANATION OF CONSERVATION TA% CREDIT LEGISLATION
<br />N.C. GENERAL ASSEMBLY, 1887 SESSION
<br />SENATE BILLS 176 (structure) and 176 (appropriation)
<br />lead sponsors Sen. E. Sinnaird and H. Horton
<br />HOUSE BILLS 260 (structure) and 241 (appropriation)
<br />lead sponsors Rep. L. Gray and F. Mitchell
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<br />PURPOSE: To increase the state income tax credit awarded to private property owners who
<br />voluntarily donate land or easements for conservation purposes. Current state law provides a
<br />maximum of $25,000 in income tax credits for each land conservation gift made to public agencies or
<br />qualified not-for-profit, private conservation organizations. (The credit is based dollar-for-dollar up to
<br />25% of the appraised value of land gift, but no more than $25,000 per gift. Any unused portion of the
<br />credit can be carried over by the taxpayer for five succeeding years) The bill (SB 176 and HB 260)
<br />will increase the maximum credit to $100,000 for individual donors and $250,000 for corporate donors.
<br />The appropriation bill (SB 175 and HB 241) provides funds to the NC Department of Environment,
<br />Health and Natural Resources to: (s) cover program information and administrative costs to review
<br />and certify donated properties as qualified for the required public benefits for park, public recreation,
<br />and other land conservation purposes; and (b) establish agrant-in-aid program ($300,000 annually) to
<br />cover expenses of qualified, private conservation organisations incurred in arranging land and easement
<br />donations and managing or monitoring those properties.
<br />LEGISLATIVE ORIGINS: Thss legislation has been recommended by the Governor's Coastal
<br />Futures Commission and the Year of the Mountains Commission. It was recommended in the
<br />Governor's Coastal Agenda. It is recommended by the joint House-Senate Environmental Review
<br />Comrr,iaaion. It is supported by the NC Department of Environment, Health, and Natural Resources.
<br />It is supported by North Carolina business and industry, by local government associations, and by
<br />environmental organizations.
<br />PROGRAM HISTORY: The state income tax credit for sand conservation was first enacted in 1983
<br />(with a $5,000 maximum credit). The cap was raised to $25,000 by the General Assembly in 1989. Tn
<br />the period from 1983-88 ($5,000 cap) 37 land donations (average of 6 gifts per year) qualified for tax
<br />credits (total of 2,383 acres valued at $b,642,000); and from 1989-95 ($25,000 cap) 95 land donations
<br />(average of 13.6 each year) qualified for tax credits (a total of 23,714 acres valued at $34,264,000).
<br />[Note that the maximum tax credit allowed is 25`k of the value of the property donated, and,
<br />therefore, the current credit related revenue reduction is less than $300,000 per year for conservation
<br />lands annually donated for public benefit valued at $1,210,000. By DEHNR calculations, the tax credit
<br />program has delivered a 13:1 value to the public, with $13 in donated land values for every $1 of
<br />income tax credits.] The NC DEHNR has no funded staff positions to fulfill its obligations to review
<br />and approve applications for the tax credit, or to promote and explain the program.
<br />RATIONALE FOR THE CREDIT INCREASE: State and local public agencies and a statewide
<br />network of private, non-profit land conservation organizations are responding to the rapid destruction
<br />of North Carolina's natural areas and rural landscapes with programs designed to encourage voluntary
<br />conservation by private landowners. We need alternatives to relying on land use regulations or public
<br />purchases at full market value of all lands important for protection of river natural corridors, natural
<br />wildlife habitats, parks and greenways, beach access, scenic and open space landscapes, and farmlands
<br />in urban areas. New state programs have established funds to acquire and protect important
<br />environmental lands, such as the Clean Water Management Trust Fund, the Natural Heritage Trust
<br />Fund, the Parks and Recreation Trust Fund, and Wetlands Restoration Fund. Those public funds can
<br />go further when landowners are willing to sell for less than the full property value (i.e., partially
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