Can the Virginia Outdoors Foundation use Open-Space Lands Preservation Trust Fund grants to pay for baseline documentation reports and land surveys?

Plain-English summary

The Virginia Outdoors Foundation ("VOF") administers the Open-Space Lands Preservation Trust Fund. Under § 10.1-1801.1(D), grants from the Fund are meant to aid persons conveying conservation or open-space easements with "the costs associated with the conveyance of the easements, which may include legal costs, appraisal costs or all or part of the value of the easement." VOF's executive director asked whether two specific cost categories, baseline documentation reports ("BDRs") and land surveys, could be covered by grants from the Fund.

The AG concluded that both were eligible. The phrase "may include" in the statute was nonexclusive, so costs not explicitly listed could still qualify so long as they were "associated with the conveyance." BDRs were the foundational record of property condition at the time of conveyance and were essential to enforcement, federal tax-deduction eligibility, and Virginia Land Conservation Incentives Act tax credits. Land surveys, when necessary or prudent to identify easement boundaries with the clarity Virginia law required, similarly qualified.

Currency note

This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The conservation tax-credit and federal qualified-conservation-contribution rules have evolved since 2016. Anyone planning a donation should verify both the current Virginia framework around § 10.1-1801.1 and the current federal regulations under I.R.C. § 170(h).

Background and statutory framework

The Virginia Outdoors Foundation is a body politic established under § 10.1-1800 to promote preservation of open-space lands and encourage private gifts of money, securities, or land for that purpose. The Open-Space Lands Preservation Trust Fund's purpose is to facilitate the donation or sale of open-space or conservation easements to VOF. With VOF's consent, easements may be co-held by a locality and still qualify for Fund grants.

Section 10.1-1801.1(D) authorized grants to aid persons conveying easements with "the costs associated with the conveyance," with a nonexclusive list that included legal costs, appraisal costs, and all or part of the value of the easement itself. The AG anchored the analysis in standard canons: statutes should be construed to give effect to legislative intent, with reference to the subject matter, the object sought to be attained, and the legislative purpose (Commonwealth v. Amerson, 281 Va. 414 (2011); Esteban v. Commonwealth, 266 Va. 605 (2003)).

On BDRs, the AG identified four reasons why they were "costs associated with the conveyance":

• BDRs document the condition of the property at conveyance, providing the measurement baseline for compliance over time.
• They protect the landowner by recording pre-existing conditions, man-made improvements, and historical damage.
• They are required by 26 C.F.R. § 1.170A-14(g)(5)(i) for a donor to take a federal income-tax deduction as a "qualified conservation contribution" under I.R.C. § 170(h).
• They are likewise required for Virginia Land Conservation Incentives Act credits under § 58.1-512(C)(2), which cross-references the federal qualified-conservation-contribution standard.

On land surveys, the AG noted that an easement is a written conveyance of an interest in real property, and Virginia law requires the description of the burdened land to be precise enough to locate it with reasonable certainty (Town of Vinton v. City of Roanoke, 195 Va. 881, 892-93 (1954)). Where no prior survey existed, or an existing survey contained antique, inaccurate, or disputed legal descriptions, obtaining a new survey was necessary to meet that standard and consistent with Land Trust Alliance Standards and Practices.

Common questions

Q: What is a baseline documentation report?
A: A detailed record, typically including maps, photographs, and other documents, of the property's condition at the time the easement is conveyed. It is the reference point the easement holder uses to measure ongoing compliance with the easement.

Q: Did the opinion limit the kinds of "costs associated with the conveyance" the Fund could cover?
A: The opinion answered only about BDRs and land surveys. It did not provide a global list of eligible costs. Other categories would need to be evaluated under the same standard, whether they are "associated with the conveyance," with conservation grants then awarded in VOF's sound discretion.

Q: Did the opinion require VOF to pay these costs?
A: No. The opinion said only that these costs were eligible for Fund grants. VOF retained discretion to award or decline grants in any particular case.

Q: What about cost reimbursement when a third party prepared the BDR?
A: The opinion's footnote 12 noted the conclusion applied both to VOF's own costs of preparing a BDR and to VOF's costs of reviewing a BDR prepared by a third-party contractor hired by the landowner.

Citations and references

Statutes and regulations:

• Va. Code Ann. § 10.1-1800 (VOF, body politic)
• Va. Code Ann. § 10.1-1801.1(D) (Open-Space Lands Preservation Trust Fund)
• Va. Code Ann. § 58.1-512(C)(2) (Land Conservation Incentives Act credit)
• Va. Code Ann. § 2.2-505 (AG advisory opinion authority)
• 26 C.F.R. § 1.170A-14(g)(5)(i) (baseline documentation for qualified conservation contribution)
• I.R.C. § 170(h) (qualified conservation contribution)

Cases:

• Gray v. Powell, 314 U.S. 402 (1941)
• Commonwealth v. Amerson, 281 Va. 414 (2011)
• Conger v. Barrett, 280 Va. 627 (2010)
• Esteban v. Commonwealth, 266 Va. 605 (2003)
• Stanley v. Tomlin, 143 Va. 187 (1925)
• Town of Vinton v. City of Roanoke, 195 Va. 881 (1954)
• Glass v. Carnes, 398 S.E.2d 7 (Ga. 1990)
• Machado v. Ryan, 280 P.3d 715 (Idaho 2012)
• Highway Props., Ltd. P'ship v. Dollar Savs. Bank, 431 S.E.2d 95 (W. Va. 1993)
• Bosque Canyon Ranch LP v. Comm'r, 110 T.C.M. (CCH) 48 (2015)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2016/15-058_Glymph.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

February 19, 2016

Ms. Brett C. Glymph
Executive Director
Virginia Outdoors Foundation
39 Garrett Street, Suite 200
Warrenton, Virginia 20186

Dear Ms. Glymph:

I am responding to your request for an official advisory Opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the Virginia Outdoors Foundation may award grants from the Open-Space Lands Preservation Trust Fund to cover the costs of baseline documentation reports and land surveys associated with the conveyance of open-space or conservation easements to the Foundation.

Applicable Law and Discussion

The Virginia Outdoors Foundation ("VOF") is a body politic "established to promote the preservation of open-space lands and to encourage private gifts of money, securities, land or other property to preserve the natural, scenic, historic, scientific, open-space and recreational areas of the Commonwealth."[1] As part of its mission, VOF administers the Open-Space Lands Preservation Trust Fund (the "Fund"). The purpose of the Fund is to facilitate the donation or sale of open-space or conservation easements to VOF.[2]

With respect to the use of monies in the Fund, § 10.1-1801.1(D) provides that "[t]he purpose of grants made from the Fund shall be to aid . . . persons conveying conservation or open-space easements with the costs associated with the conveyance of the easements, which may include legal costs, appraisal costs or all or part of the value of the easement."[3] Although the statute contains a list of items that clearly qualify as permitted costs, the inclusion of the phrase "may include" indicates the list is nonexclusive.[4] Thus, an item may be a permitted cost even if it does not constitute strictly legal costs (e.g., the costs of drafting a conveyance and recording it), appraisal costs, or all or part of the value of the easement. The precise issue you present is whether the costs of baseline documentation reports and land surveys should be considered "costs associated with the conveyance of [an] easement" that are eligible for funding through grants made from the Fund.

In answering your inquiry, I first note that the chief object of statutory interpretation is "to ascertain and give effect to legislative intent."[5] Thus, "[a] statute must be construed with reference to its subject matter, the object sought to be attained, and the legislative purpose in enacting it; the provisions should receive a construction that will render it harmonious with that purpose . . . ."[6] In keeping with this principle, the language of the statute governing use of the Fund must be interpreted consistently with the legislature's purpose of promoting conservation by facilitating easement conveyances. Therefore, costs that are necessary or appropriate to facilitate a conveyance should generally be considered permissible.

As you relate, the preparation of a baseline documentation report ("BDR") is considered essential for a land trust to accept the conveyance of an easement.[7] A BDR is a detailed report of the condition of the property at the time the easement is conveyed. Generally, it includes maps, photographs, and other documents that are necessary to establish the existing status of all natural, scenic or historic resources sought to be protected by the easement. By documenting the condition of the property at the time of conveyance, the BDR provides a basis by which to measure a landowner's compliance with the easement over time. This allows the holder of the easement to bring judicial proceedings, if necessary, to enforce the terms of the easement and to protect the conservation interests associated with the property.[8]

At the same time, preparation of a BDR also protects the interests of the landowner by documenting the conditions that predate the agreement to conserve the property, including the presence of any man-made improvements, existing damage to historic sites, or prior depletion of natural resources. Thus, in keeping with established best practices for land trusts, VOF historically has required preparation of a BDR prior to accepting any conveyance of an easement.[9]

Additionally, I note that preparation of a BDR typically is required for a person donating an easement to receive certain tax benefits designed to promote land conservation. For example, where a donor has retained any right in the property that may impair a protected conservation interest, a BDR is required prior to the conveyance for the donor to be eligible for a federal income tax deduction for a "qualified conservation contribution,"[10] as well as for tax credits under the Virginia Land Conservation Incentives Act.[11]

Based on the foregoing, it is my opinion that the cost of a BDR should be considered a "cost associated with the conveyance of an easement" and therefore eligible for funding through grants made from the Fund.[12]

Second, with respect to land surveys, you indicate it is sometimes necessary, or prudent, for VOF to obtain a new survey prior to acceptance of an easement. This ensures that the boundaries of the easement are properly identified prior to conveyance. Often, an existing survey will suffice for purposes of identification. As you relate, however, obtaining a new survey is important in certain cases, such as those where no previous survey exists, or where an existing survey may contain antique, inaccurate, or disputed legal descriptions.[13]

As a written conveyance of an interest in real property, every written conveyance of an easement must contain a description of the land that is to be subjected to the easement with sufficient clarity to locate it with reasonable certainty.[14] By obtaining new surveys when necessary or prudent, VOF ensures that all conveyances of easements conform to this legal standard. The practice also is in keeping with established best practices for land trusts, which direct that a land trust obtain a new survey in certain circumstances to ensure that each transaction is "legally, ethically and technically sound."[15] Based on the foregoing, it is my opinion that the cost of obtaining a survey, when necessary or prudent to do so, qualifies as a "cost associated with the conveyance of an easement" that is eligible for funding through grants made from the Fund.

Conclusion

Accordingly, it is my opinion that VOF may, in its sound discretion, award grants from the Open-Space Lands Preservation Trust Fund to cover the costs of baseline documentation reports and (where appropriate) surveys associated with the conveyance of open-space or conservation easements to the Foundation.

With kindest regards, I am

Very truly yours,

Mark R. Herring
Attorney General

[1] VA. CODE ANN. § 10.1-1800 (2012).

[2] See § 10.1-1801.1(D) (2012). If VOF consents, however, an easement may be conveyed to both VOF and a local co-holder, while still remaining eligible for grants from the Fund. See id. (setting forth the conditions under which a conveyance is eligible for grants from the Fund).

[3] Section 10.1-1801.1(D). The aid is also available for "localities acquiring open-space easements" as co-holders with VOF. Id.

[4] See Gray v. Powell, 314 U.S. 402, 416 (1941).

[5] Commonwealth v. Amerson, 281 Va. 414, 418-19 (2011) (quoting Conger v. Barrett, 280 Va. 627, 630 (2010)).

[6] Esteban v. Commonwealth, 266 Va. 605, 609 (2003) (citing Stanley v. Tomlin, 143 Va. 187, 195 (1925)).

[7] See, e.g., JANE ELLEN HAMILTON, CONSERVATION EASEMENT DRAFTING AND DOCUMENTATION 207 (Land Trust Alliance ed., 2008).

[8] See, e.g., James L. Olmsted, Climate Surfing: A Conceptual Guide to Drafting Conservation Easements in the Age of Global Warming, 23 ST. JOHN'S J. C.R. & ECON. DEV. 765, 836 ("[A]dequate baseline documentation is a critical component of any easement holder's stewardship program. In the absence of baseline documentation, the easement holder is legally hamstrung in the event of violation of the easement's terms because there is no documentary or physical evidence to support the testimony of the parties as to the condition at the time the easement was created.").

[9] See HAMILTON, supra note 7, at 207. Generally, VOF assumes the task of preparing a BDR; however, qualified third-party contractors are sometimes used. For example, a landowner may opt to hire a qualified outside contractor to prepare the BDR.

[10] See 26 C.F.R. § 1.170A-14(g)(5)(i) (providing, in relevant part, that "when [a] donor reserves rights the exercise of which may impair the conservation interests associated with the property, for a deduction to be allowable . . . the donor must make available to the donee, prior to the time the donation is made, documentation sufficient to establish the condition of the property at the time of the gift"); see also Bosque Canyon Ranch LP v. Comm'r, 110 T.C.M. (CCH) 48 (2015) (applying the baseline documentation requirements of 26 C.F.R. § 1.170A-14(g)(5)(i)).

[11] See VA. CODE ANN. § 58.1-512(C)(2) (Supp. 2015). The statute provides that a donation must meet the federal requirements for a "qualified conservation contribution" under I.R.C. § 170(h), and, by extension, all its implementing tax regulations, in order to qualify for the tax credits. Because the federal regulations implementing I.R.C. § 170(h) require preparation of a BDR (see 26 C.F.R. § 1.170A-14(g)(5)(i)), preparation of one also is necessary to receive state tax credits. However, in keeping with established best practices for land trusts, VOF requires preparation of a BDR for all easement conveyances, regardless of whether they are donations intended to qualify for federal or state tax benefits. See HAMILTON, supra note 7, at 218.

[12] This conclusion applies to the costs of VOF preparing a BDR, or, in the event one has been prepared by a third-party, VOF's costs of reviewing the document. See supra, note 9.

[13] See LAND TRUST ALLIANCE, LAND TRUST STANDARDS AND PRACTICES, Standard 9, Practice 9D: Determining Property Boundaries (rev. 2004).

[14] See Town of Vinton v. City of Roanoke, 195 Va. 881, 892-93 (1954); see also Glass v. Carnes, 398 S.E.2d 7, 11 (Ga. 1990); Machado v. Ryan, 280 P.3d 715, 721 (Idaho 2012); Highway Props., Ltd. P'ship v. Dollar Savs. Bank, 431 S.E.2d 95, 98-99 (W. Va. 1993).

[15] LAND TRUST ALLIANCE, LAND TRUST STANDARDS AND PRACTICES, Standard 9 (rev. 2004).