Land Trusts: Final Thoughts

Land Trusts:
Final Thoughts

We hope you have enjoyed this series on Land Trusts.  But alas; all good things must come to an end. We are wrapping up this series.  Then, we are going to take a couple of weeks off to compile this information into an ebook.  (Subscribe to this blog and/or follow us on Facebook or Twitter to be advised as to when this book is available.)  When we return, we'll be highlighting other  important Real Estate Law and Real Estate Investing subjects.  

Land Trusts: Summary of Advantages

Throughout this series, we have focused on all the advantages of putting properties into a Land Trust. To sum up, these advantages include:

1. Privacy: Using a Land Trust keeps property ownership private, and it keeps your name out of the public records.
2. Liability Protection: Using a Land Trust can help shield you from many frivolous lawsuits.
3. Protection from Judgements: A Land Trust helps protect your personal assets from being subject to a judgement.
4. Protection from Liens: IRS and other government judgements do NOT attach to property held in a Land Trust.
5. Avoiding Probate: Land Trusts help your assets pass DIRECTLY upon your death, rather than having to pass through probate.
6. Eases Transferability and Control: Property held in a Land Trust is much easier to sell, transfer, and manage.  This is especially true of "distressed properties," "under-water properties," and those in danger of foreclosure.
7. Minimizes Fees: Minimizes fees related to deed recording, transferring properties, title insurance, etc.
8. Eases Multiple Ownership: A Trust can have many beneficiaries.
9. Asset Protection: A Land Trust can help shield assets in case of ownership issues, such as bankruptcy or divorce.
10. Keeps Pricing Information Private:  A Land Trust helps protect your privacy regarding what individual parcels of land are worth.

Land Trusts: Summary of Concerns

1. You will need a Skilled Attorney: Few lawyers are experts when it comes to Land Trusts. You will need to find an attorney with skills and training in this area to receive the maximum benefits.
2. There are ongoing fees: A Land Trust will always have nominal ongoing fees associated with it.  After all, few Trustees are willing to do the job for free.
3. Privacy May Be Revealed with a Court Order: Although a Land Trust makes it more difficult to determine ownership, a Court can order ownership information be disclosed.
4. May Only Hold Real Property as Assets: Other forms of trusts allow multiple types of assets to be held by the trust.  A Land Trust, however, may ONLY hold real estate as assets.
5. Statutes Vary by State: Only a few States have their own, specific statutes regarding Land Trusts.  Their validity in other States relies on Case Law.  However, in those states that HAVE specific laws, you must ensure you follow them to the tee, or the Land Trust may not be valid.  Again, this is where engaging a skilled attorney is of supreme importance.

Land Trusts: Should I use One?

The choice to use a Land Trust is very individual.  No one can say definitively whether a Land Trust is the investment vehicle for you.  In writing this series, we hope we have equipped you with the tools and information you need to make this decision for yourself.  If you are leaning towards "yes," we suggest you gather your own information and documentation, and you meet with a skilled Land Trust Attorney in your area.  (If you live in the New York-Connecticut area, we'd be happy to meet with you to discuss your individual circumstances.  We offer free consultations for these purposes.)  

Again, we believe in Land Trusts.  We use them ourselves.  And as we branch out into property investments to enhance our own personal portfolio, we have begun using Land Trusts even more.  We want to invest in our own community, and we know that using Land Trusts are our most effective way of doing so.  And we live in a State that is using Land Trusts to revitalize neighborhoods and to provide affordable housing to our local workforce.  We have seen how effective Land Trusts can be, both on an individual and an organizational level.

Whether you already own real property, or there is property you have your eye on, we suggest you identify an attorney to help you now.  Having an attorney you know and trust will ease the process as you begin to accumulate property.  And you will need to interview this attorney to ensure s/he has the skills and knowledge you need.  Pick a few items from this series and use them as the basis for your interview questions.  If your prospective attorney cannot answer them to your satisfaction, move on to a lawyer who can.  

Final Thoughts

Again, we welcome your comments and feedback, whether you have been with us from the start or you are just finding this series now.  You can always find us through our website, hartelawoffice.com. We are also active on Facebook and Twitter.  We are also interested in what you would like to see in upcoming blog posts.  Do you have a burning question in the area of Real Estate Law?  Is there any topic you'd just like to learn a little more about?

Stay tuned for details on our Land Trusts e-book!

Community Land Trusts Part III: Stories and Resources

Community Land Trusts:
Stories and Resources

Last week, we discussed how to form a Community Land Trust, a specific type of Land Trust.  Today, we'll see how Community Land Trusts are being implemented in various parts of the country.  We'll also discuss some resources for support and information once the trust has been formed.

Land Trusts in Action

Maryland

There are several Community Land Trusts in Baltimore, MD.  The Charm City Land Trust, Inc. formed around the turn of the Century, has been buying up vacant lots for years. The Northeast Land Initiative and New Park Heights Community Development Corp. have similar goals.  The three are non-profit groups that develop and oversee affordable housing, as well as community assets such as playgrounds and gardens.  All three groups sell property with ground leases.  There are income eligibility requirements for purchase, and specific guidelines and caps for resale of any property held in the trust.  Baltimore is using the Land Trusts to try to reduce the stock of vacant, crumbling buildings, to fight the housing shortage for middle-income workers, and to promote true, mixed-income type of neighborhoods.  

Nearby Frederick County is the home of Maryland's first successful community Land Trust. Baltimore is looking to their successes and issues in implementing their models. To qualify, Frederick residents have to earn less than 80% of the county's median income, which is currently about $107,000 per year.  In Frederick, any resale profit is split between the buyer and the trust, with the trust receiving 60%. The Frederick Trust is a subsidiary of Habitat for Humanity.

(Source: Community Land Trusts Make their Pitch: www.baltimoresun.com/business/real-estate/wonk/bs-bz-community-land-trust-20151130-story.html)

Oregon State

Oregon's largest trust, the Southern Oregon Land Conservancy, was formed in 1978. By the turn of the century, there were over 20 active Land Trusts in Oregon.  

The Three Rivers Land Conservancy is one of these trusts.  Its purpose is to try to conserve open land and access to natural resources in a rapidly growing, urban area.  They focus on the Southern part of the Portland Metropolitan Area, one of the few parts of the district that still has open space to preserve.  Created in 1991, they are building a system of green-spaces and trails to give residents access to natural settings within the urban environment.  Rather than focusing on large parcels, this trust has dozens of smaller properties. totaling over 160 acres.  Most of their land remains undeveloped.  They also make use of conservation easements to expand the areas they protect.

(source: The Oregon Story: http://www.opb.org/programs/oregonstory/land_trusts/index.html)

Pennsylvania

Pennsylvania has The Pensylvania Land Trust Association, also known as PALTA.  According to their website: "The Pennsylvania Land Trust Association was created by land trust volunteers and staff who recognized the need for an association that can focus on the broad needs of the conservation movement—to take on activities that no one organization could effectively handle or wish to handle on its own."  PALTA started as an informal network in 1991.  They incorporated as a non-profit in 1995, and today, they have more than 100,000 Pennsylvanians as members and contributors.

PALTA not only works to preserve land; they also work to foster conservation policy throughout the state.  PALTA also sponsors educational programs and offers support through webinars.

(Source: Pennsylvania Land Trust Association: http://conserveland.org/)

Florida

Florida has over 10 Community Land Trusts, including ones in both Palm Beach County and Broward County.  Palm Beach County is both one of Florida's richest counties and one of the poorest. Broward County, home to the Miami Metropolitan Area, has a similar socio-economic spread. 

The Community Land Trust of Palm Beach County focuses on affordable housing.  Those who qualify sign 99 year land leases, and the trust retains title to the underlying property.  The trust focuses on helping people build equity, qualify for mortgages, and learn about all the benefits of homeownership, while capping the equity participants build.  Participants are looking to build equity and stability, rather than seeing a return on an investment.

TheSouth Florida Community Land Trust in  Broward County operates similarly.  Putting participants in a trust-owned home with a mortgage generally saves them about $500 to $800 a month in rent. Initial purchase prices are about a third of the price of buying a similar home NOT owned by the trust.  

Both programs allow people to buy homes at below-market values. To qualify, residents must not make more than 120 percent of the area median income. They must also have steady employment and good credit.  These trusts tend to focus on workforce housing.  They want to help people stay in Florida, rather than flee the state for a place with a lower cost of living.  

(Source: The Sun Sentinel :http://www.sun-sentinel.com/business/realestate/fl-land-trust-affordable-housing-20150710-story.html)

Connecticut

Connecticut has the third most Land Trusts of any state in the country, significant especially because Connecticut is one of the country's smallest states.  There are over 130 conservation trusts alone.  Many of these smaller trusts are affiliated with the Connecticut Land Conservation Council (CLCC). Created in 2006, CLCC represents the merger of two previous organizations, one which focused on advocacy and the other that provided technical support to conservation trusts.    According to their website, "CLCC's mission is to advocate for land preservation, stewardship and funding, and ensure the long-term strength and viability of the land conservation community. The intent of CLCC is to enable our conservation community to better learn from each other and to even more effectively advocate for critical issues at the State Capitol."  CLCC holds an annual conference.  They also provide grants and assist Connecticut-based trusts to obtain funding.

A list of Connecticut Land Trusts can be found here:  http://www.ctconservation.org/findalandtrust

(source: CLCC: http://www.ctconservation.org/)

Connecticut also has several Community Land Trusts that focus on housing.  In fact, the State itself sponsors a Land Trust/Land Bank through the Department of Housing.  P.A. 87-441 "provides eligible applicants with grants, loans and deferred loans for the costs of acquiring land or interest in land and the costs of holding and managing land to be developed as housing for low and moderate-income families."  DOH has an open application process, meaning applications are accepted any time.  Funding is available to organizations to acquire  "real property for the purpose of providing for existing and future housing needs of very low, low and moderate income families."

(Source: Connecticut State Government: http://www.ct.gov/doh/cwp/view.asp?a=4513&q=530484)

Litchfield has provided affordable housing through a trust for over 25 years.  Since 1989, this trust has developed over 48 homes.  According to their website "The Litchfield Housing Trust was created to strengthen our community by advocating, facilitating, and developing housing so that Litchfield could once again become affordable families of all income levels."  They offer rentals as well.  To qualify,  the applicant must have a gross family income below 80 percent of area Median Family Income.  If they are interested in ownership, they must be able to qualify for a mortgage.  This trust builds up its inventory both through purchases and donations.

(Source: Litchfield Housing Trust :http://litchfieldhousingtrust.org/)

In 2005, inspired by Litchfield, a group of citizens in Sharon decided to organize their own housing trust.  They formed a group, looked aat similar programs in Salisbury and Cornwall, then modeled themselves after the Litchfield Trust.  The mission of the Sharon Housing Trust, Inc. is "to provide permanently affordable home ownership to low and moderate-income households members of the Sharon community."  

Thus far, the trust has only developed one property.  In 2005, they received a donated parcel, and were able to sell it by 2007.  They have identified a site for their second home, and are now screening potential buyers.  The Sharon Housing Trust will require sweat equity from participants.  

The Sharon trust cobbled together its initial funding through donations, matching donations, and State grants.  They received  a $100,000 grant through the DOH program described earlier.

(Source: Sharon Housing Trust: http://www.sharonhousingtrust.org/)

Land Trust Resources

There are a number of non-profit organizations with the sole purpose of providing support to Community Land Trusts.  Three of the most well known are the Land Trust Alliance, National Community Land Trust Network, and Community Wealth.

Community Wealth: www.community-wealth.org

According to their website, "Community-wealth.org houses an extensive collection of resources focused on Community Land Trusts and their role in community wealth building. "  Here you can find a wealth of resources.  They have a policy section, a best practices section, a toolbox, and a wealth of articles and stories about how trust princiiples are being implemented.  They also have a lot of facts, figures, and statistics that may be helpful in developing your own trust's pitch.  They also have a large section on funding resources.

The National Community Land Trust Network: www.cltnetwork.org

CLT Network is another resource powerhouse.  Their primary goal is to develop resources for folks developing or wanting to start a community trust.  They also have a wealth of information on their website.  They offer training, advocacy, networking, and funding information.  They also sponsor an active forum so that members can learn from each other and "do not have to reinvent the wheel."  They offer newsletters to keep folks up to date with all the developments happening across the nation.  They also offer technical assistance and help people develop all the things that go along with building a Community Trust.

The Land Trust Alliance: http://www.landtrustalliance.org/

The Land Trust Alliance offers resources for conservation trusts.  According to their website:

The Alliance brings its more than 1,100 member land trusts together — and increases each one’s success.  We advocate for the policies and incentives that it takes to save millions of acres every year. We’re the go-to source for training for people who work in conservation — so land trusts get more done. We back up land trusts when the places they promise to protect are threatened. And we support land trusts in connecting more people to the land.

They also offer an extensive "learning center," filled with everything you'd ever want to know about setting up or maintaining a conservation trust.    They also sponsor trainings and publish a newsletter.

Summary

This week we continued exploring Community Land Trusts.  We looked at how these types of trusts are being implemented in several states, including Connecticut, Oregon, Pennsylvania, and Connecticut.  We also learned about some National Non-profits who aim to support all types of community and conservation Land Trusts.  

The next couple of posts will wrap up everything you need to know about Land Trusts.  Then we'll take a couple of weeks off to compile our course into an e-book, for even easier reading. Watch this blog space for information about the book.

Being Connecticut residents ourselves, here at The Law Offices of Heath D Harte, we are very proud of Connecticut's trusts.  We have all types here: investment Land Trusts, Conservation Land Trusts, Housing Trusts, Regional Trusts, and local Trusts.  Our own State Government believes in using Land Trusts as a solution, as is evidenced by their open application process for state funds.  Like Palm Beach County, we have a wide range of socio-economic status in Connecticut, and we'd like to keep our own talent in-state.   We have seen the utility of ALL types of trusts, and we believe investors can benefit from participation in all of these types.  It is why we've spent so much of our energy developing our Real Estate Law practice.  We also believe successful investors can reduce their tax obligations through donating to non-investment trusts, while also significantly improving their own communities.  And as always, we look forward to assisting you with all your Real Estate Law needs, including setting up Land Trusts.

Part II: The Community Land Trust

Part II: The Community Land Trust
Setting Up a Community Land Trust

Last week, we started learning about Community and Conservation Land Trusts, and how these types of trusts are preserving communities.  This week, we'll talk about how one goes about starting a Community Land Trust.  Future posts will talk about how these types of trusts are being used across the country.

How To Set Up a Community Land Trust

Step One: Determine Your Goals

So you want to start a Community trust.  Why?  What types of goals do you hope to accomplish?  Are you looking to preserve affordable housing?  Preserve open space for recreation?  Do you wish to provide amenities not easily found in the area?  Who are you hoping to serve? Low income individuals?  Middle class? Service workers? First-time homeowners?  Nature lovers?  Boaters?

As with anything, your first step involves delineating your plans.  This will help guide you through the rest of the list of things you need to do.  Remember, these types of trusts always have one thing in common: they serve some sort of public benefit. Beyond that, your trust may have a very narrow focus, or it may have broader goals.

Many community trusts focus on housing.  However, others choose to focus on Day Care, recreation, or building parks and playgrounds.  Waterfront areas may develop trusts for community docks, swim areas, or fishing access.  Some trusts focus on preserving hiking or biking trails.  Historic districts may use trusts to preserve their "character."  Community trusts are not just limited to providing affordable housing.

People less experienced with building trusts may want to begin with a  more narrow focus.  Starting smaller may help lead to greater initial success.  

Step Two: Recruit an Organizing Committee

Most Community Land Trusts are non-profit organizations.  Many communities already have established groups that might be interested in sponsoring the trust. Once you have the goals outlined, the next step is to either find an established group to work with or to form your own, brand-new group.  Whichever option you choose, you'll want a committee to help.

When forming this organizing committee, keep your overall goals in mind, and try to invite people with skills and resources in those areas to join your group.  If you decide to form a new, non-profit, try to invite someone with expertise in this area to join your group.  If you are partnering with an existing group, your steering committee will consist of your people, plus a few from that established group.

In addition to forming the 501(c)3, your steering committee will need to raise the initial funds to get your trust off the ground.  This means you'll need at least one person with fundraising experience.  Funds may come from a variety of sources, including government grants, foundation grants, fundraisers, and good old donations. It is always helpful to have a philanthropist on your initial Board.  Real Estate personnel, builders, developers, and other people familiar with local regulations are also helpful.  If you cannot recruit such individuals for your steering committee, do not give up. Many National Non-profits began as small, grassroots clubs.  As you grow your trust, you can continue to try to recruit people to join your Board.

Step Three: Refine Your Goals and Beneficiaries

Now you have a committee together, it's time to refine your goals further.  Who exactly will the Trust serve?  And in what geographical area(s) will you provide services?  Will there be  income requirements or residency requirements for beneficiaries?  Again, this relates back to the purpose of your trust.  

If you are focusing on housing, you will need to define your terms concretely.  If you are targeting "service workers," exactly who qualifies? Teachers? Fire Fighters? Police? Bus Drivers?  If you are targeting "the middle class," what exactly does that mean in your area?  If you are trying to preserve housing, must a potential beneficiary already live in a certain neighborhood, or will you accept people looking to move there?  If you are providing work force housing, must they be employed within a certain mile radius? And what happens if they lose that job?  Do they lose the housing too?  

If you are focusing on recreation, similar questions apply.  Are you providing trails for anyone, or for just the town residents?  Will someone need a membership card to use a trust-owned dock?  If so, who qualifies for membership?  Are there financial considerations, residential considerations, or both?  

If you decide to partner with an existing group, they may already have criteria for membership.  You may have to adapt your initial goals to be more in line with those of the organization.  Steering committee members may have ideas for funding sources, to which you'll need to bend your initial goals.  

Step 4: Organize and Formalize

You've made a plan, recruited an organizing committee, and refined that plan.  Now it's time to organize.  It's time to elect a Board of Directors, designate staff roles, and start filing the paperwork.

If you are working with an established group, you may not need a separate Board of Directors.  But you will still need to determine positions and roles.  If you will have any paid staff, you will need to write job descriptions and determine the chain of command.  Even with an all-volunteer group, you'll need to delineate roles and responsibilities, as well as who reports to whom.  You may need to break into committees and sub-committees and appoint committee chairs.

You'll also need to decide the structure for beneficiaries.  Will this be a "membership" group?  If so, what are the criteria for membership?  Are there dues to join?  Or will you require "sweat equity." Will they need to apply for membership? Is the membership limited in number, or is it unlimited? Will you have wait lists?

If you are establishing your own non-profit, you'll need to complete your 501(c)3 application.  It's best to do this BEFORE you start fundraising so that donations are tax deductible.  And of course, you'll need to name your trust, as well as figure out where your group will be physically located.  You may need to look for donated space, at first, until you've raised enough money to get your own.  This is also the time to recruit volunteers to help you develop your outreach materials.  Business located in your service area that may benefit from your activities are a good source for donations.  Businesses can donate either goods, like paper for flyers, or actual services, like a designer to help with flyers.

Step Five: Solicit Donations and Funding

Now you have the basics of your trust together, you need some actual land.  And to get land, you will need to raise funds.  Funding can come from a variety of sources. These include Federal and Local Government grants, tax credit programs, corporate donations, individual donations, matching grant programs, private land donations, Foundation grants, sales, galas, and special events.  

Many organizations like to plan a public initial fundraiser in the form of a local event. This can be something as lush as a black tie dinner or something as small as a car wash at the local High School. The purpose here is to market the new organization and to solicit volunteers as much as it is to raise funds.  A public fundraiser markets your group's goals and purposes, and helps the group find both donors and beneficiaries.  It can also help to expand the pool of volunteers.  

Again, soliciting entities in the community that may benefit from the trust's goals is key during this phase.  You must sell your organization at the same time you are raising funds to make it a reality. This is probably the most important phase of starting your trust, as well as the most frustrating.  But it is this phase that will ultimately mean success or failure.  

Step Six: Acquire Assets

Now you have yourself formally established, and you've raised some funds, it's time to start meeting your goals.  A Land Trust must consist of real property.  Now is the time to start acquiring that land.

Of course, the assets you acquire will depend on the goals of your trust.  If you are building playgrounds, you'll need to find some empty lots in a suitable area.  If you are focused on housing, now is the time to acquire land for housing units, and maybe even a few blighted buildings.  If you're developing community gardens, it's time to find spots to put them. Once you've acquired the property, it is time to develop or redevelop that property.

But the real property is not the only asset you need to acquire.  With a Community Land Trust, your beneficiaries are one of your greatest assets.  While you are obtaining land, you need to be recruiting members as well.  And depending on your model. these members may be key in helping you to redevelop that land so that it meets the goals of your trust.

And of course, all the information we reviewed about setting up a Land Trust applies here.  Once your organization acquires the Real Property, the parcels are all put into a Land Trust.  The basic steps for setting up a Land Trust all apply here.

Step Seven: Keep Repeating Steps Three, Five, and Six

A successful Community Land Trust needs to be self-sustaining.  Your group will need to keep fundraising to keep it alive.  And as the Community Land Trust matures, you'll need to keep reassessing your goals, service areas, and beneficiaries.  And hopefully, you will be successful enough to keep building your assets.  Whether that means you start with a quarter acre lot and 4 garden plots, and grow that to 6 acres and 2 dozen plots, or you start with 2 apartments and grow that into an entire building, a successful trust will expand to meet the community's needs.  You may start with a neighborhood and expand to serve an entire city.  

Likewise, you should always be looking to expand your stable of volunteers.  Your volunteer needs may change as you peak and plateau.  Your membership requirements will likewise change.  You may find your trust requires more "sweat equity" from beneficiaries than you initially thought.  

Your group may want to broaden their focus as your trust grows.  Committee and sub-committee needs will change.  Building your trust will be an ongoing cycle of building, recruiting, fundraising, and assessing.  That is just par for the course.

Summary

This week  we reviewed the steps needed to set up a Community Land Trust.  The steps for setting up a Conservation Land Trust are virtually the same, the only difference really is the trust's goals.  A Conservation Trust is really just a specific sort of Community Land Trust.  And a Community Land Trust is a specific type of Land Trust, with the beneficiaries serving some sort of public interest.

Our own offices are located in Stamford Connecticut and White Plains, New York.  Both are cities with a wide range of diversity.  We have the very rich, the very poor, and all income levels in between.    Both areas are Urban-Suburban areas, just a hop, skip, and a jump from more rural-suburban locales.  Our area is ripe for all sorts of Community and Conservation trusts, especially as public recreation areas are being lost to in-fill developments.

We truly believe that Community Land Trusts can improve the quality of life for people across the spectrum in our area.  In fact, it is becoming harder for the middle class here, as there is more housing available at either end of the spectrum than there is in the middle.  We are seeing more trusts being developed every year.  And each and every one is an asset to the area.On the lower end of the scale, people are organizing to try to stay in the area their family has lived for generations.  On the upper end, we see more people taking advantage of the tax benefits participating in community trusts can bring.

We hope you are enjoying this series, thus far.  As always, we welcome your feedback.  Questions can be submitted here or on our website at HarteLawOffice.com Or you may reach us through Facebook, Twitter, or Google+.

Whether you are an investor or a philanthropist, Land Trusts of all kinds can help you reach your goals, and we are here to help.  We can even help you locate properties for any type of Land Trust.  Please contact us today.  We'd love to help you with your Land Trust.

The Community Land Trust

The Community Land Trust

Thus far, we have been discussing the traditional Land Trust, built on the Illinois model.  However, there is a second type of Land Trust, and any discussion of Land Trusts would be remiss without a mention.  Today, we'll be looking at the Community Land Trust.

What is a Community Land Trust?

A community Land Trust is is a non-profit organization that focuses on preserving community amenities for the locals.  Some Community Land Trusts focus on conserving land, open space, or other natural resources, while others focus on maintaining and developing community assets like affordable housing, gardens, parks, or playgrounds.  Other trusts focus on preserving farm land, and protecting it from being converted to housing developments.  The trust acquires land on behalf of the community and retains it, in trust, for perpetuity.  It then can lease the land, develop the land, or protect the land from ever being developed in any way.

In 1992, the US Federal Government codified the Community Land Trust in The Housing and Community Development Act.  (https://en.wikisource.org/wiki/Housing_and_Community_Development_Act_of_1992/Title_II#Sec._213._Housing_Education_and_Organizational_Support_for_Community_Land_Trusts.) This Act says “The term ``community land trust´´ means a community housing development organization that is not sponsored by a for-profit organization; that: acquires parcels of land, held in perpetuity, primarily for conveyance under long-term ground leases; transfers ownership of any structural improvements located on such leased parcels to the lessees; and retains a preemptive option to purchase any such structural improvement at a price determined by formula that is designed to ensure that the improvement remains affordable to low- and moderate-income families in perpetuity.”

In 2011, there were approximately 242 Community Land Trusts, containing over 10,000 housing units.  82% of their residents had incomes over 50% below the local average.  (http://community-wealth.org/strategies/panel/clts/index.html)

What is a Conservation Land Trust?

A conservation Land Trust operates similarly to a Community Land Trust, but it's sole purpose is to protect land in its natural state, to protect land from development and urbanization, and to protect natural resources.  These may be small, local organizations or huge, International conglomerates. 

Perhaps the best known Conservation Land Trust is The Nature Conservancy. Often times, Conservation Trusts acquire land through donation.  The land owner will deed the land to the Conservation Trust in exchange for a large tax break.  In some jurisdictions, developers may donate land to a Conservation Trust in order to receive “credits” that allow them to develop other land in the same locality.

How Do These Trusts Benefit a Land Owner?

There are many reasons a land owner may choose to participate in a Community Land Trust.  Some of these are outlined below.

Financial Incentives

Many people choose to join these types of trusts for financial reasons.  First, there are huge tax incentives that come with donating land to a trust.  Second, there may be financial reasons to sell part of ones land to a trust.  Often, that serves the purpose of buffering ones land from development while still being able to enjoy the use of ones land.  This is especially true of farm land in rapidly urbanizing areas.

Sometimes, land is purchased with the intent of rezoning.  If the rezoning fails, especially if it fails due to public uproar, selling the land to a Community or Conservation Trust allows an investor to recoup the money outlaid.  It is often the best way to avoid having a perceived “useless property” in ones portfolio.  

Many times, a Trust will make an offer on a property just to protect its future use. In these cases, the Trust may pay above what one could get for the parcel on “the open market.”

Many localities are now offering developer incentives for donating land to trusts.  In many locales, a developer may receive incentives in another area for donating a parcel to a trust.  The developer may donate parcel A in order to receive concessions on Parcel B.  In some areas, that may mean increased density.  In others, developers receive permission to clear land for conserving different land.  

Finally, donating part of ones land to a trust may result in lower property taxes for years to come. Your donation may include an agreement that allows you to still “use” the land.  However, since you no longer own it, you will no longer be taxed on that portion of the land.  

Protection of Future Land Use

Many land owners choose to protect their land through a conservation easement. This is a legal agreement between the owner and a Land Trust that permanently limits uses of the land in order to protect its conservation values.  In most cases, the owner retains his ability to own, use, and sell this land, as well as pass it down to heirs.  

The terms of each conservation easement are individually negotiated.  However, they must include some sort of public benefit.   Benefits are simple, and include such things as preserving views, preserving access to waterfront, protecting wild life and/or its habitat, historic preservation, or even something as simple as protecting public space.  

Conservation easements can include provisions for future use.  For example, you may negotiate the future right to subdivide the parcel, or even to convert a portion to housing.  However, if you want to ensure your future heirs don't cut down all the trees on the Southwest corner, you can protect the future life of those trees with a conservation easement.  You can use a Conservation Easement to prevent your heirs from paving paradise to put up a parking lot.

Protect a Community

Many people are lamenting the affluenza epidemic that is attacking America.  Cities are rapidly gentrifying, and the middle class is rapidly being squeezed out of many places.  Many of our service workers can no longer afford to live in the areas they serve.  A lot of folks want to protect their communities from over-gentrification. The Community Land Trust is a fantastic way to do so. Community members can form trusts to buy up land and prevent it from being sold to the highest bidder.  

Habitat for Humanity is one of the largest organizations built on this model. However, Local Community Trusts are being established across the country every day.  These trusts benefit the community in many ways.  They offer opportunities for first time home-buyers, and allow young people to establish themselves in communities they could not otherwise afford.  In addition to protecting areas, trusts can help revitalize them.  Trusts often buy up properties in blighted neighborhoods with the goal of making that area vital again.  They provide housing for teachers, firefighters, and veterans.  And in many cases, they allow people to stay in the area in which they grew up.

Philanthropy

Many people like leaving some sort of legacy.  Establishing a community trust is one of the more affordable ways to do so.  While an individual might not be able to afford to have their name on the wing of a hospital, they may be able to leave the community a park.  While the Carnegies may have left a legacy of libraries, Mr. Jones may choose to donate a small pocket park to his community. Future generations will remember him when they play under the trees in Jones Park.  And though the donation may be made for vanity purposes, the donor will still reap a myriad of financial benefits from the donation.

Summary

This week, we learned about Community and Conservation Land Trusts.  These are a specific type of Land Trust, set up to promote the public good.  But although charitable in nature, these types of trusts still financially benefit the donors in many ways.

Next week, we'll continue to examine the Community Land Trust.  Future posts will talk about how these land trusts are being used across the US, and about how you go about setting up or contributing to one.

Here at the Law Offices of Heath D Harte, we truly believe in building communities.  Real estate is an important component of community building and revitalization.  Effective real estate investors know how to build their own net worth while investing in the local community.  We believe ALL types of Land Trusts can help an individual become successful with Real Estate.  As your portfolio grows, you will need to balance your tax liabilities.  Using Community Land Trusts, you may increase your own bottom line while growing your community.  

Many Land Trust courses only focus on using the Illinois Model to grow your own net worth. However, the judicious use of Land Trusts can balance your investment properties with investments in the community itself.  That, in turn, will help your other community investments to grow in value. One type of Land Trust can grow your investment in another.  This is why it is important to be aware of both types.

As always, we invite your comments, questions, and general feedback.  Please use the comment form below, or connect with us on Facebook, Twitter, and Google+ using the links in the sidebar.  And as always, we are here to help you with all of your Land Trust  and Real Estate Law needs.  Please visit us at HarteRealEstateLaw.com or HarteLawOffice.com, or contact us and let us know how we can help.