Strategies

The affordable housing crisis in the United States is at a tipping point.  High housing cost burdens were driven by persistently high housing costs relative to income. In 2019, the median sales price of existing single-family homes rose faster than median household income for an eighth straight year.  Harvard University’s State of the Nation’s Housing 2020 report, sponsored by Habitat for Humanity, outlines four key findings:

1. persistent unaffordability
2. growing racial disparities
3. widespread housing insecurity
4. major barriers to homeownership

The National Association of Home Builders stated, “The Low Income Housing Tax Credit is the most successful affordable rental housing production program in U.S. history. Since its inception, the program has produced and financed more than two million affordable apartments The LIHTC serves households making 60% or less of the area median income, with rents restricted so that households with this income pay 30% or less of their income towards rent.  

Here in our home state of Georgia, the Housing Credit is the state’s main tool to create affordable housing for households that need it most – working families, veterans, people with special needs, seniors, teachers, nurses, firefighters and police. Nearly all affordable apartments built each year are financed through the Housing Credit. In Georgia, the Housing Credit has financed the development of over 150,000 homes, supported over 170,000 jobs, and generated over $16.4 billion in local income and $6.4 billion in tax revenues. By year 2020, affordable units to DCA’s affordable housing inventory, will bring the total inventory of units to over 100,000 units.

Our collective goal with our clients is to help fund affordable housing developments by providing tax equity capital. These projects benefit communities in and around the area, creating jobs, preventing crime, and significantly contributing to better health of low-income families resulting from an increase in disposable income.

What is Conservation of Land?

Conservation of land is a voluntary and legally binding agreement between a landowner and a land trust or government agency.

When a landowner donates the property to a land trust or public agency, he or she is giving away some of the rights associated with the land. The easement permanently limits uses of the donated parcel in order to protect its conservation values, as specified in the Internal Revenue Code (IRC) 170(h).

Conservation of property offer private landowners flexibility in protecting their land. For example, a donating landowner can retain the right to grow crops on a parcel while, at the same time, relinquishing the right to build additional structures on the parcel.

The land trust is responsible for making sure that a landowner adheres to the conservation terms of the easement. An easement may apply to all or a portion of the property and may or may not allow for public access to the property. A landowner who has donated a conservation easement can sell the land or pass it on to heirs, and future owners of the property are bound by the terms of the easement.

According to The Land Trust Alliance, a national land conservation organization working to save the places people love by strengthening land conservation across America, today released a comprehensive report showing land trusts across the nation have conserved a staggering 56 million acres, an area of protected land that is double the size of all the land in national parks across the lower 48 states. The permanent conservation easement tax incentive enacted by Congress in 2015 with enhanced federal tax incentives has been the most significant factor in conserving land in the United States.

Conservation Tax Deduction

Donating conserved easement provides the following federal tax benefits, as set forth in 26 U.S. Code § 170:

• The value of the donation of a conservation easement is considered a charitable deduction for income tax purposes. The deduction is up to 50% of the donor’s charitable contribution base (adjusted gross income, less net operating loss carryback) for the taxable year. Any excess amount may be carried over for up to 15 years, subject to the same AGI limitation.
• If the donor is in the business of farming and ranching, they may deduct up to 100% of their charitable contribution base.
• Deductions may be utilized by individuals and members of qualifying pass-through entities, including S-corporations, partnerships and LLCs. They are not, however, available to publicly traded companies.

Will Donors Who Use This Provision Be Audited by the IRS?

The IRS has been very active in auditing abusive partnerships within this space. All donors should note that the IRS does pay attention to donations of property that are high in value, including donations of a conservation easement.

This makes it important for donors and their advisors to know and follow the law and conduct thorough due-diligence, utilize a reputable, professional, and licensed appraiser who has experience in the appraisal of conservation easements and donates to a well-established, reputable land trust conservancy that has adopted and implemented Land Trust Standards and Practices. InVia’s due-diligence in this area is like no other ensuring sustainability and protection of the land and the intent of our clients.

In the future, modern and sustainable societies with increased prosperity will continue to demand, produce and purchase metals and minerals. They will be needed for example in infrastructure, communication equipment and sustainable energy systems (solar cells, wind turbines, batteries etc.). However, extraction of metals and mining of industrial minerals must be done sustainably. This means giving consideration to people, the environment and the economy.

Human aspects include health, social and cultural elements. Environment considerations must be given to emissions, waste management, post-extraction remediation, nature conservation, energy use and climate. Economic aspects include social development, prosperity, competitiveness, resource management and the circular economy. The mining and mineral industries affect all three dimensions of sustainability, both positively and negatively, but without the industry’s contribution, not least to supply materials for a necessary technological transformation of global energy systems, for example, climate change becomes difficult to solve. 

InVia’s goal is to invest in mining projects that consider sustainability action plans in their operational strategy. All of us at InVia agree that due-diligence has to include a moral and economic ethos to meet the expectations of future investors.