Preserving Open Space
From: Conservation Easements: The Federal Tax Rules and Special Considerations Applicable to Syndicated Transactions
By: Bryan Mick, JD, MBA and Bradford Updike, JD, LLM
Mick Law P.C.
The donation of a qualified real property interest to protect open space must be either created “for the scenic enjoyment of the general public,” or alternatively created “pursuant to a clearly delineated federal, state or local governmental conservation policy[.]”1 As such, the open space purpose provides two possible avenues of regulatory qualification so long as the easement also provides a significant level of benefit to the public.2
The preservation of open space may be for the scenic enjoyment of the general public if the property’s future development would harm the scenic nature of a rural or urban area.3 An example of such harm would include, by way of example, future development activities undertaken on the subject property that interfere with an unbroken view of a vast natural area viewable to the public from parks, roads, waterways, trails, historic structures, or land areas.4 The variable that are considered when determining the extent of a property’s scenic enjoyment include:
- The compatibility of the land use with other land in the vicinity [(e.g., the consistency of the visual appearance of the property to other property in the surrounding area)];
- The degree of contrast and variety provided by the visual scene;
- The openness of the land (which would be a more significant factor in an urban or densely populated setting or in a heavily wooded area);
- Relief from urban closeness [(e.g., whether the scenic attributes of the property in the future are threatened by encroaching urban development)];
- The harmonious variety of shapes and textures;
- The degree to which the land use maintains the scale and character of the urban landscape to preserve open space, visual enjoyment, and sunlight for the surrounding area;
- The consistency of the proposed scenic view with a methodical state scenic identification program, such as a state landscape inventory; and
- The consistency of the proposed scenic view with a regional or local landscape inventory made pursuant to a sufficiently rigorous review process, especially if the donation is endorsed by an appropriate state or local government agency.
Bryan S. Mick is the President of Mick Law P.C. in Omaha, Nebraska, and a provider of independent due diligence legal services for various broker-dealers and registered investment advisors throughout the country.
Brad Updike joined Mick Law in August 15, 2006, and his areas of practice include securities law, oil and gas, private equity, conservation real estate, DPP due diligence, taxation analysis relating to securitized financing, and securities advertising practices. On a local level, Mr. Updike has also served the legal needs of Omaha-based clients on matters relating to estate planning, private placements, trademark law, and 501(c)(3) non-profit taxation matters.
Bryan Mick, Bradford Updike, Mick Law P.C., SANDLAPPER Securities, LLC, Sandlapper Wealth Management, LLC, and TRIPS are unaffiliated.
1 I.R.C. § 170(h)(4)(A)(iii)(2014)(emphasis added)
3 Treas. Reg. § 1.170A-14(d)(4)(ii)(A).
Comments are closed