Tax Break Credited In Saving Va. Land

Sunny Bank Farm, near Middleburg, has been placed under a conservation easement. It probably could have brought $20 million if sold to a developer.
Sunny Bank Farm, near Middleburg, has been placed under a conservation easement. It probably could have brought $20 million if sold to a developer. (Photos By Tracy A. Woodward -- The Washington Post)

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By Amy Gardner
Washington Post Staff Writer
Tuesday, May 16, 2006

As growth spreads west from Washington along the Piedmont, record numbers of property owners are protecting their land from development by using a little-known state tax credit that has transformed Virginia into a national leader of private land conservation.

In the six years since the General Assembly enacted a tax credit for landowners who place their property under conservation easements, the number of such easements has skyrocketed. In 1995, landowners donated fewer than 6,000 acres; last year, the figure exceeded 35,000, according to the Virginia Outdoors Foundation.

Dorothy A. Smithwick was responsible for 1,076 of them.

Along the northern property line of Smithwick's horse and cattle farm in southwestern Loudoun County runs Goose Creek, through which the horses and hounds of the Middleburg Hunt have splashed for generations. In the swale below the house stands a barn that stabled Traveller, Robert E. Lee's iron-gray gelding.

The history is rich at Sunny Bank Farm. Smithwick is not -- a condition that undoubtedly would have prompted other owners in her situation to sell. With land enough for at least 250 homes, Sunny Bank Farm, on the outskirts of fashionable Middleburg, probably would have fetched $20 million or more.

Instead, Smithwick chose to place her property under conservation easement -- a legal way to restrict development and preserve her land permanently. She gets to keep the land, because the easements restrict property use but do not remove ownership.

"It's terrible -- little houses everywhere," muttered Smithwick, a crusty woman in her 70s who prefers worn turtlenecks and the company of the horses she trains to the cocktail circuit of Middleburg.

The tax credit helped, too. Conceived by two Northern Virginia tax lawyers and championed by House Speaker William J. Howell (R-Stafford), the program rewards landowners with a credit worth 50 percent of the value of the easement.

"I'd just like to keep the farm going," said Smithwick, who rises at 5 a.m. each day to tend to her cattle and hayfields and the 30 or so horses she boards and trains. "It's been in the family a long time."

The credit can be claimed over six years, and, as of 2002, it is transferable, meaning people can sell it if their income isn't sufficient to claim its full value.

Few other states allow the credit to be sold -- and that probably explains the explosion of easements in Virginia, conservation officials say. The Maryland Environmental Trust, by comparison, accepted slightly more than 2,000 acres in donations last year.

"There was a huge increase as soon as those credits became transferable," said Nicholas Williams, director of the Maryland Environmental Trust, one of several state agencies in Maryland that accepts donated easements. "That meant people could buy them and sell them and make money."

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