Land tax credits reviewed
State tax department lowers valuation on New Kent tract, which may not bode well for Silver Cos. in ongoing tax-credits review
Date published: 1/27/2006
By RUSTY DENNEN
The impact of a state challenge in New Kent County of the appraisals used to justify millions of dollars in conservation land tax credits could be felt across the state, including the Fredericksburg area.
The Silver Cos.--Fredericksburg's largest developer--placed 437 acres in conservation easements valued at nearly $56 million and then sold tax credits on the easements at its Celebrate Virginia project.
Because the program affects state revenues, the Virginia Department of Taxation is analyzing appraisals on a number of large-acre parcels placed in easements, which prevent future development of the land.
Easement donors are eligible to take up to $100,000 tax credit annually, and since 2002 they have been allowed to sell unused credits to others.
Meanwhile, the popularity of the program has several Virginia lawmakers looking at imposing caps on tax breaks.
That effort is drawing concern from conservation groups who say such caps will have a chilling effect on preserving important private land through easements.
Last year, the state tax department questioned the appraisal on the New Kent County tract and sent independent appraisers to re-crunch the numbers. New Kent County is southeast of Richmond, bordered by the Chickahominy, York and Pamunkey rivers.
"In New Kent, we proposed a reduction in the amount of credits claimed by 89 percent," said Larry Durbin, the tax department's assistant commissioner for customer service.
"They had a fair market value on their easement around $18 million, and we reduced that" based on three independent appraisals, he said.
The re-appraisals dropped the value from $18 million to about $2 million.
The property is Ware Creek Preserve, an undeveloped tract owned by Ware Creek Preserve LLC. The easement holder is Wetlands American, which works with Ducks Unlimited. The company in May filed suit disputing the lower assessment. A pretrial hearing is scheduled in February.
Durbin said that any entity that donates land for a conservation easement or transfers tax credits has to notify the department and provide information about the easement, its fair-market value, where it's located and a copy of the appraisal.
Of the New Kent property and other parcels under review, "We look at them from a number of perspectives--especially some of the early ones and ones with the largest credit values, and ones where there was some significant issue," Durbin said.
Date published: 1/27/2006
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