A conservation easement is a legally binding agreement that prevents most development on a parcel of land. For instance, a landowner might place a conservation easement on their undeveloped waterfront property, requiring that the property is never developed for commercial purposes. The easement is a tool that has long been an important part of environmental protection, but it does have its downside: typically a property is taxed based on its highest possible use, not on its actual use. A swath of land on the outskirts of a city center, for example, has enormous value as a commercial development. The land may be undeveloped and producing no income, but the owner must still pay taxes for the high commercial value. This tax liability incentivizes development because landowners need to pay taxes one way or another.
In 2008 the Santa Fe Conservation Trust in New Mexico was faced with this very problem. The Trust became the new owners of a pristine parcel of land in the Pecos River Canyon in San Miguel County and their ownership included a conservation easement requiring them to hold and maintain the property for conservation purposes. The tax department wanted to assess taxes on the land, but the Trust pointed out that New Mexico’s constitution has a unique provision which states that “all property used for… charitable purposes… shall be exempt from taxation.”
On January 11, 2013 a court in New Mexico agreed with the Santa Fe Conservation Trust that environmental conservation is a charitable use, which provides a substantial benefit to the public. As such, the Trust is not required to pay any property taxes on this property.
This particular rule—that land held for conservation purposes may be exempt from all property tax—is unique to New Mexico, but the way in which it incentivizes conservation should still be good news to environmentalists. The way in which it further reduces taxation should be good news to tax-averse conservatives.