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25 <br />qualified entities to conduct their farmland <br />protection programs. These entities acquire <br />conservation easements from landowners. <br />Q. How is the value of a conservation <br />easement determined? <br />A. The value of a conservation easement <br />usually is determined through a <br />professional appraisal. A qualified <br />appraiser assesses the difference between <br />the fair market value of the property, often <br />using comparable sales, and its restricted <br />value under the easement. <br />Q. What restrictions are found in a typical <br />easement? <br />A. The easements generally restrict non -farm <br />development and subdivisions. Some farm - <br />related housing may be allowed. <br />Generally, there are few restrictions on <br />improvements and construction related to <br />the farming operation. The easements <br />become part of the land deed and are <br />recorded in the local land records. <br />Q. Are all agricultural conservation <br />easements the same? <br />A. The basic purpose and structure of all <br />agricultural conservation easements are the <br />same. However, each easement is tailored <br />to the specific farm being protected. Exact <br />language in the easement may reflect <br />future expansion plans of the landowners, <br />including the needs of their heirs. <br />Q. How do the easements affect other <br />rights of ownership? <br />A. The landowner controls the land and use of <br />the land according to the agricultural <br />conservation easement. The land is still <br />owned by the landowner and can be <br />transferred, deeded, or sold, just as any <br />other property. The easement does not <br />require any provisions for public access, <br />unless such access was negotiated as part <br />of the easement purchase transaction. <br />Q. Does a conservation easement affect a <br />farmer's ability to borrow money? <br />A. A farm loan usually is based on the ability <br />of the farm operation to carry the loan. <br />Therefore, a conservation easement, which <br />only affects non -farm development <br />activities, not the farm operation, should <br />not have a bearing on the farmer's ability <br />to borrow operating funds. If a lending <br />institution holds a lien on a property, it <br />must review the sale of the conservation <br />easement just as it would need to. approve <br />any transaction on the property. <br />Q. What are the local property tax <br />implications of protecting farmland with <br />conservation easements? <br />A. Because the landowner still owns the <br />property, he or she is still responsible for <br />paying any associated property taxes. <br />Since many states have programs that tax <br />farmland based on its use or farm value, <br />the net effect of the easement on local <br />property tax revenues is little to none. <br />Q. How are the proceeds from the sale of a <br />conservation easement treated for tax <br />purposes? <br />A. The easement sale proceeds are treated as <br />any other capital gain for Federal, State, <br />and local income tax purposes. Some. State <br />or local programs have provisions that <br />allow for installment purchases or have <br />used securable tax- exempt bonds as a <br />method of payment. <br />Q. What is the role of the Federal, State, <br />Tribal, and local governments and non- <br />governmental organizations? <br />A. Cooperating governmental or non- <br />governmental organizations process the <br />easement acquisition, hold, manage, and <br />FPP Questions and Answers page 2 <br />