WCB, A Brief Overview
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Frequently Asked Questions
What is the purpose and intent of the Natural Heritage Preservation Tax Credit Act?
The program is designed to protect and conserve open space, agricultural land, rangelands, wildlife habitat, state and local parks and archaeological resources.
How much tax credit is available and how is the credit calculated?$100 million in tax credits are available until December 30, 2005. Qualified donors will receive a tax credit worth 55% of the approved, appraised fair market value of the donation.
Is there an annual limit on the amount of tax credits that will be approved?No, the Act allows the Board to approve $100 million in tax credits until all credits have been awarded or until December 30, 2005, whichever comes first.
What happens when the entire $100 million in tax credits are awarded?Unless additional tax credits are authorized, there will be no more tax credits awarded pursuant to the provisions of this program.
What constitutes a qualified donation?In order to qualify, the donation must result in the protection, in perpetuity, (fee or conservation easement) of agricultural lands, rangelands, open space, wildlife habitat, oak woodlands, wetlands, waterfowl habitat, wildlife corridors, archaeological resources, and/or the lands used for park purposes. In addition, water or water rights may be donated that will help improve the recovery of threatened or endangered species of plants and animals.
Are all donations of land to the state eligible for the tax credit?No, the approval of the Wildlife Conservation Board (WCB) is necessary for any donation to be finalized and eligible for the credit. The Board is required to review and approve an application, and determine that the donation meets the standards and criteria established for the program. Donations that are finalized prior to Board's approval may not qualify for the tax credit. As such, donors and donees are cautioned not to finalize any donation until such time as the Board has determined the donation qualifies and is eligible for the tax credit.
Who decides if a property is eligible?The WCB is responsible for evaluating all donations and determining eligibility based upon the criteria specified in the Act. In addition, the selection guidelines outlined in the application package will be used to further evaluate and select qualified donations.
How often does the WCB meet?The WCB generally meets on a quarterly basis. Typically the Board meets in February, May, August and November.
Who is eligible to donate land, water or water rights?Any landowner can donate, however, the ideal donor is one who has a state tax liability of sufficient magnitude to benefit from a state tax credit. The credit is in lieu of any other State credit or deduction which the taxpayer may otherwise claim with respect to the donated property.
Who is eligible to accept a donation?Any state department or conservancy within the purview of Resources Agency. Further, any city, county, city and county, a special district or any joint powers authority made up of those entities and/or a state department. In addition, a designated nonprofit organization is eligible to receive donations.
What is a "designated nonprofit organization?"A designated nonprofit organization must qualify under section 501 (c) (3) of Title 26 of the United States Code, and must have land protection and conservation as one of their primary goals and mission. In addition, the nonprofit organization must be designated by a local government, special district or state department (i.e., an eligible donee) to accept property in lieu of the local government, special district or state department.
How can a nonprofit organization assist donees?A nonprofit organization can facilitate the successful completion of a donation and serve as a neutral party between a potential donor and governmental donee. Private landowners may find it convenient to donate directly to a designated nonprofit organization who would then transfer the land to a governmental entity or special district.
Who is responsible for completing the application package?The donee or entity accepting title to the donation is responsible for completing and submitting the application package to the WCB for final review and consideration. However, to expedite the process, the donor may be requested to assist with the completion of the application.
Is there an application fee or other charges?No, there is no application fee, however, a donee may request from the donor, financial assistance to prepare the necessary documents, i.e., an appraisal, that must be included in the application.
Whom should a landowner contact if they are interested in donating land, water or water rights?A landowner interested in a donation could contact a department or conservancy within the Resources Agency. In the application package, Appendix B identifies departments and conservancies that may be interested in a potential donation. Landowners could also contact a local governmental entity or special district that may be interested in accepting the donation, or the landowners could contact the WCB.
Is public access required for all donations?No, public access is not required. The decision to allow public access is the responsibility of the donee who will be responsible for the maintenance of the donation. Depending on the nature of the donation, public access may not be appropriate or desirable.
Is public access required on lands with a donated easement?No, the landowner may retain all rights associated with access if they decide to do so.
Does the donation need to comply with the provisions of CEQA?Donations of qualified lands would be categorically exempt from the provisions of CEQA because the lands would be accepted for the purpose of preserving fish and wildlife habitat or to preserve the land in its natural condition.
If there is a CEQA or other mitigation requirement, can a tax credit still be obtained?No! If there is any requirement on the part of the landowner to mitigate in response to a CEQA or other mitigating circumstance, the donation is not eligible to receive a tax credit.
Are public hearings required for all donations and who is responsible for conducting the public hearing?Public hearings are required for all donations! If the donee is a state department within Resources Agency, or a local governmental entity, the state or governmental entity is responsible for conducting the public hearing. If, however, the donee is a nonprofit organization, the Wildlife Conservation Board is responsible for conducting the public hearing. Existing forums such as a city council or County Supervisors meeting can serve that purpose.
How are the rights of neighbors, rural farming and ranching operations protected?Before any application can be submitted to the WCB, a public hearing must be held in the county from which the donation is made. Notification of the hearing must be made at least 10-days in advance of the hearing and adjacent landowners must be notified. In addition, if public access is allowed, the donee must prepare a plan. The plan must identify measures designed to minimize the impact of public access on adjacent landowners and avoid infringement on the customary husbandry practices on adjacent or nearby agricultural or timber operations.
Further, a donee accepting property is required to own and maintain a setback or buffer to avoid infringement on adjacent or nearby agricultural or timber operations. The exact size and dimensions of the setback or buffer would be tailored to meet the unique needs of the area surrounding the donation.
Does the IRS have to approve the donation before it is made?No, however, the donation must meet the requirements of Section 170 of Title 26 of the United States Code.
If the donor cannot use the entire tax credit in one year, can the excess be carried forward?Yes, if the tax credit exceeds the net tax, the excess may be carried forward to reduce the net tax in the following year and the succeeding seven years, if necessary, for a total of eight years.
Can a donor participate in this program and donate land of which a portion is being developed and the remainder is not going to be developed? If so, how would the undeveloped land be valued or appraised?Assuming the undeveloped land is not associated with any mitigation requirement, in general, the remaining land would be valued as a single parcel in its "as is" condition. For example, if local zoning allowed only five acres to be developed on a ten-acre parcel, the remaining five acres would be appraised.
If only a portion of an ownership were purchased, could the remaining portion qualify as a donation for purposes of the tax credit program? If so, how would the non-purchased portion be valued or appraised?Yes, assuming the remaining portion qualified and an appraisal was obtained that determined the approved fair market value.
If a conservation easement is donated as opposed to fee title, what property rights will the program restrict?Generally, the easement will be designed to prevent further development of the property and require that the property be left in a natural condition. For donations of easements to protect agricultural lands, the typical easement purchases the development rights and restricts future development. All other property rights remain with the landowner.
How is an easement valued or appraised?Most easements are appraised following a before and after valuation. Specifically, the value of the land is determined before the easement restrictions are in place. Then the value is determined with the easement restrictions in place. The difference between the before and after condition is the value of the easement donation.
Are partial donations, such as a bargain sale, eligible for the tax credit program?Yes, if a landowner and qualifying agency or organization agree to a sale of property for less than its appraised fair market value. The donation value is the difference between the appraised fair market value and the sale price. The tax benefit to the donor would be 55 percent of that donated value. The property must, of course, meet all other criteria to qualify for the program.
Contact: Terri Muzik (916) 445-1716