The state’s environmental gurus have devised a way to increase the amount of preserved land in the commonwealth, at the same time as potentially spurring development on other parcels.

Massachusetts Office of Energy and Environmental Affairs officials are hoping to boost conservation in the commonwealth by offering tax credits to residents who donate land to the state.

Through the new program, land donors can receive a state income tax credit equal to half the appraised value of the land. Donated land must be valued at $100,000 or more, and the credits are limited to $50,000 per parcel. The program is capped at $2 million for land expenditures.

According to some commercial real estate executives, the plan could prove beneficial to both tree huggers and developers. Countless developers have had projects stymied by the global downturn of the last three years. But if they donate currently undevelopable property in one location to the commonwealth, those tax credits could help jumpstart a project elsewhere, local developer and land use specialist Sam Park told Banker & Tradesman.

“I think the idea of creating tax credits on conservation land could be a great gap-closer for making some projects economically viable,” Park said. “In this day and age, when the economy is keeping several projects from getting off the ground, it seems like a win-win … for developers and conservationists. I think it’ll give a great economic boost to the development community, and in perpetuity it preserves the land with the conservation restrictions.”

‘One More Incentive’

Park himself contributed 100 acres of land in Manchester to the Manchester Essex Conservation Trust a few years ago. While he did forego some profits, the tax transfer structure created for the contribution provided him with deductions and other incentives that essentially covered purchase costs. But for Park, who recently purchased 90 acres and 640,000 square feet of commercial development rights in Littleton, the main reason for giving the property to a land trust went deeper than just participating in another transaction.

“If there are pieces of land worth preserving, most developers I speak with are eager to do what’s right for the environment,” Park said. “A lot of developers are eager to preserve natural resources. This encourages people to seriously consider deeding the land for future generations to enjoy.”

While the program is operated by the commonwealth, it is not required that land be donated to Massachusetts, per se. For example, if a couple owns property adjacent to a Massachusetts Audubon Society preserve, they could choose to donate their acreage to the society to be incorporated into the preserve. In that case, the donated land would be subject to the rules governing Mass Audubon’s property, said Stephanie Cooper, the commonwealth’s assistant secretary for land and forest conservation.

In another case, the owner of a working forest could decide to donate part or all of the acreage to a land trust or a state agency to preserve it. In the case the land is given to the commonwealth, public access would be required, Cooper said.

“We’re not creating a new bank of land the state now owns,” Cooper said. “It just provides one more incentive for folks to choose to conserve their land.”

Some observers have expressed reservations about the public cost of maintaining donated lands. While it’s true that the state Department of Conservation and Recreation, which oversees state parks and other lands, is funded by taxpayer dollars, that’s not the whole story, according to Cooper.

“It’s not as if when five acres is donated that they get more money to take care of it,” Cooper said. “They just take care of it with the same dollars that they have.”

Revenue Questions

Besides, industry executives said they would rather see the commonwealth buy the land with tax credits instead of regulating it out of use and driving down the property’s value or taking it by eminent domain, said David Begelfer, chief executive officer of NAIOP Massachusetts. And since the incentives are capped at $2 million, it “is certainly a reasonable program,” he said.

“The state’s program is an effective way of providing enough of an incentive for people that want to do a good thing and to provide that land in perpetuity for the public,” Begelfer told Banker & Tradesman. “Our feeling is that if someone wants to buy a property and take it off the market for conservation, that’s fine. That is, in essence, competing in the open market. There are certain locations that are very, very important for the environment.”

All told, to some degree there will be some lost revenue for a municipality through the loss of taxable land if and when it is donated to the commonwealth. But the odds are that only a couple of parcels from a given town will be contributed, Begelfer opined.

“You’re not really going to have any diminishing of the tax base in the town because of this,” he added.

And it’s not like Massachusetts is the first state with such a program. In fact, compared to North Carolina, Massachusetts is somewhat stingy. Scott Pohlman, director of North Carolina’s conservation incentives program, said that between 2003 and 2008, the state spent $20 million in tax credits to acquire about 70,000 acres. However, the total estimated value of those properties is about $120 million. The state does not cap its incentive, other than on the individual expenditure.

The North Carolina conservation tax credit offers up to 25 percent of the fair market value of interest in the property donated. That equals up to $250,000 for individuals and $500,000 for corporations, pass-through entities, or married couples filing jointly.

North Carolina’s program came about in the early 1980s. There was ample undevelopable land along a portion of the state’s coastline, and someone decided it would be a good idea to create public access to beaches there.

“Tax credits are usually more palatable for legislators and others because they’re not considered an expenditure,” Pohlman said.