Conservation Development
Case Study: Conservation Model Scenarios
Problem Addressed:
Approximate 73-acre land tract. Landowner/developer wanted to determine the best and highest use of the land blending a conservation element with residential development.
We developed (6) possible scenarios for consideration based on the landowner’s desires. Approximately 85% of the acreage had a growth of timber which would reach a mature timber harvest date within 10-years. The tract had been approved for high-density development of 136-single-family lots but would have required clearcutting the timber to achieve and destroying the natural habit of the property. It was determined the property had the elements necessary to establish a Conservation Purpose thus creating a conservation tax credit basis.
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Scenario #1: Maximum Timber with minimal buffers and conservation easements.
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Scenario #2 & 3: Maximum Residential with minimal buffers and conservation easements.
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Scenario #4: Maximum Conservation with no development.
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Scenario #5: Hybrid blend of Conservation and Residential development.
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Scenario #6: Hybrid blend of Conservation and Timber.
Result: Scenario #5 proved to be the best option for meeting the land owner’s goals. Developing a minimal number of residential lots helped create a value basis for evaluating the remaining acreage. The undeveloped land was designated conservation property in perpetuity which does also allow a timber harvesting program.
The landowner was able to derive profits from the residential development portion, future income from timber harvesting as well as realize substantial tax credits which were able to be absorbed against taxable income.
*Tax credits can be used to reduce up to 50% of adjusted gross taxable income in the tax year incurred. If unable to use all the tax credit, in the given tax year, the credit can be carried forward up to an additional 15-years or until the tax credit is exhausted whichever comes first.
**Consult your accountant or tax authority to verify your personal capable use of a tax credit.
Conservation Model Scenario 2:
Urban Land Conservation
Using ECO-MAX®️ Modeling with this project we were able to create tax incentives valued at (7) times the raw land value of the property. The landowner will be able to use these tax deductions applied against his adjusted gross taxable income until the deductions are exhausted up to (16) tax years.
These pages show the extensive research and modeling that goes into each Real Estate Equity Solutions project.