Ad Valorem Taxation of Conservation Easements

NOTE: The Idaho law in this article was current as of the date of its publication in 2007.


Idaho Code section 55-2109 mandates ad valorem county taxation on conservation easements gifted or sold to charitable organizations.  This article discusses the legality of that statute, which appears to abridge Idaho’s Constitution on uniform taxation and unjustly mandates taxation of what is no longer owned.


Idahoans are challenged by population growth.  Private property owners facing land use changes may be reluctant to sell their land to developers, but feel they have no choice. Forty-one states balance pressures of real estate development using conservation easements.[1]  However, Idaho’s conservation easement statute undercuts attempts to channel or restrict development pressures by taxing parcels encumbered by conservation easements as if the easements do not exist.[2]  This is in violation of the Idaho Constitution and appraisal practices county assessors are required to follow.[3]  It is time to change Idaho Code section 55-2109 in light of reasoned constitutional analysis and common sense.

What is an Easement and How is it Conveyed?

The word easement is a real estate term and there are two types.  An affirmative easement is the right one person has to use someone else’s property in a specific way.[4]   Conversely, a negative easement is the right one person has to prevent a use of another person’s land.[5]  For example, if a road does not border Smith’s property, he may buy a driveway-sized affirmative easement from Jones, so that Smith may cross over Jones’ land.  Jones still owns fee title, but Smith has the right to cross over it in perpetuity for ingress and egress to Smith’s property.  Smith is called the dominant tenement or dominant estate,[6]because Smith dominates the land’s use.  Jones is the servient tenement or servient estate,[7] because Jones’ land serves Smith’s land.

In Idaho, “[r]eal property includes ‘that which is appurtenant to the land.’”[8]“It includes all easements attached to the land.”[9]  Thus, an easement is an interest in real property in Idaho.  Pursuant to federal law relating to tax benefits from donations of conservation easements, “[t]he term ‘qualified real property interest’ means any of the following interests in real property: (A) the entire interest of the donor other than a qualified mineral interest, (B) a remainder interest, and (C) a restriction (granted in perpetuity) on the use which may be made of the real property.”[10]

“Any person . . . may take, hold or dispose of property” in Idaho.[11] A conveyance of an interest in real property must be in writing, “subscribed by the party disposing of the same, . . . .”[12]  “Dispos[ing] of property is an act “transfer[ring] to the control of another,” get[ting] rid of,” or “deal[ing] with conclusively.”[13] A conveyance in the form of a grant of real property is presumed to grant “fee simple title . . . unless it appears from the grant that a lesser estate was intended.”[14] Thus, a written grant of a conservation easement by sale is the disposing of and dealing “conclusively” with an interest in real property.[15]Likewise, a charitable gift deed conveyance disposes of the same interest.[16]

Conservation Easements and Idaho Law

A conservation easement is a non-possessory easement.[17]  The easement holder[18] has no right to possession of the property, but may contractually prevent or require defined uses of the land with the agreement of the property owner.  Conservation easements may be perpetual or for a term of years.[19]  Idaho conservation easements must accomplish certain purposes, such as “retaining or protecting natural, scenic, or open-space values of real property, assuring its availability for agricultural, forest, recreational, or open-space use, protecting natural resources, maintaining or enhancing air or water quality, or preserving the historical, architectural, archaeological, or cultural aspects of real property.”[20]

Market Valuation of Real Property Interests

A property interest, such as a right to develop[21] or the obligation to maintain an historic building[22] can be defined separately from a parcel of land, appraised using standard valuation practices, and donated in perpetuity to a non-fee owner through a Grant Deed.  Some conservation easement holders will purchase the easement, but there is no federal tax benefit for an easement sale, so usually it is donated as a charitable contribution in perpetuity.  The value of the donated property interest qualifies for a federal tax benefit to the title owner as a charitable contribution,[23] and such benefits are being addressed in Idaho.[24]  Under federal law, “the fair market value of a perpetual conservation restriction is equal to the difference between the fair market value of the property it encumbers before the granting of the restriction and the fair market value of the encumbered property after the granting of the restriction.”[25]

Current County Assessment Practices

Pursuant to Idaho Code section 63-301, a county “shall determine, according to recognized appraisal methods and techniques, the market value for assessment purposes of real and personal property.” The definition of “real property” in Idaho’s Revenue and Taxation Code includes “land . . . and all other property which the law defines, or the courts may interpret, declare and hold to be real property under the letter, spirit, intent and meaning of the law.”[26]  This accords with the definition of real property discussed above in Idaho Code section 55-101.  Appraisal methods and techniques must assess the market value, which is “the amount of United States dollars or equivalent for which, in all probability, a property would exchange hands between a willing seller, under no compulsion to sell, and an informed, capable buyer, with a reasonable time allowed to consummate the sale, substantiated by a reasonable down or full cash payment.”[27] Following standard real estate practices, an informed, capable buyer would procure a title report showing all easements of record, including a conservation easement restricting development rights, and such buyer would submit his market-priced offer reflecting the diminished value lost due to conveyance of the easement to the holder in perpetuity.

Even with these statutes and practices, Idaho Code section 55-2109 states: “The granting of a conservation easement across a piece of property shall not have an effect on the market value of property for ad valorem tax purposes and when the property is assessed for ad valorem tax purposes, the market value shall be computed as if the conservation easement did not exist.”

How can Idaho mandate a county’s ad valorem taxation be applied as if the easement interest was never conveyed in perpetuity?  First, the statute appears to abridge the Idaho Constitution regarding uniform taxation.  Second, it does not recognize the charitable donative effect of the easement having been conveyed forever, and which property interest is thus no longer even owned by the fee title owner.  How can Idaho mandate a tax payment from someone who does not own the property assessed?

State Constitution Mandates Uniform Taxation

The Idaho Constitution at Article VII, section five, in pertinent part, states, “[a]ll taxes shall be uniform upon the same class of subjects within the territorial limits, of the authority levying the tax, and shall . . . secure a just valuation for taxation . . ..”[28] That section mandates uniform taxation upon all real property when imposed by a County jurisdiction empowered pursuant to Article VII, section six.[29]  Arguably, this means that easements must either be recognized or ignored when ad valorem assessment is completed, because the property interest called an easement is within “the same [real property] class” of topical subjects constitutionally and statutorily.[30]

Non-uniformity of County Ad Valorem Taxation

Idaho Code section 55-2109 separates conservation easements from other types of easements, thus the class of real property interests including easements is treated in a non-uniform manner.  “The requirement of uniformity is violated . . . when the tax is levied unevenly within the same class of subjects . . ..”[31]  The mandate to tax property as if a conservation easement does not exist violates uniform taxation, because appraisal practices applicable to all real property interests account for easement valuation during the County assessment process on all other parcels.  Further, payment of taxes must be “in proportion to the value of his, her, or its property,”[32] and an easement conveyed as a charitable donation does not belong to the title owning taxpayer of the parcel following delivery of the conveyance deed.[33]  Finally, Article VII, section five mandates “just valuation,” and it is unjust to tax a title owner for an easement interest that is not owned by that title owner.

Assessors Valuate Existing Non-Conservation Easements

Appraised prices for real property,[34] whether by licensed appraisers[35] or through a real estate broker’s price opinion[36] include a market valuation of the effect of easements on the value of the entire parcel.[37]  A parcel becomes more valuable if it is accessible by an ingress-egress easement and is not landlocked.  A parcel becomes less valuable when a conservation easement blocks all development thereon.  Thus, ad valorem taxation already provides for recognition of the effects of easements on a property’s value because an assessed value necessarily reflects the market value of the entire parcel, including value or lack of value attributable to an easement.[38]  This means all non-conservation-type easements are taxed uniformly by County ad valorem taxation, because the appraised market values used for assessing real property reflect the decrease or increase in value attributable to easements.  However, Idaho Code section 55-2109 requires “the market value [of the entire parcel] shall be computed as if the conservation easement did not exist.”  Thus, Idaho Code section 55-2109 requires non-uniformity of ad valorem taxation of conservation easements in violation of Idaho Constitution Article VII, section five.

Idaho’s Recognition of Development Rights

Idaho statutes recognize valid transfers of development rights from one parcel to another within the same county, if that county has passed an ordinance authorizing such transfers.[39]  Most conservation easements include partial or complete restrictions on development,[40] and Idaho Code section 67-6515A states that an “unexercised development right shall not be taxed as real or personal property.”  It would appear that if a conservation easement transfers all development rights appurtenant to a parcel to a non-profit charitable organization for the express purpose of barring such development to save natural land values, that real property taxation would be barred pursuant to section 67-6515A.  The only difference between the two scenarios is that while section 67-6515A requires identification of a “sending area” parcel and a “receiving area” parcel after enactment of a county ordinance, a conservation easement transfers development rights from parcel A but there exists no parcel B.  Thus, if under the statutory scheme of section 67-6515A a county recognizes unexercised development rights as untaxable, it cannot claim it is uniformly applying ad valorem taxation when development rights locked up in a conservation easement must be taxed.  Even if a county has yet to enact an ordinance following section 67-6515A, the Idaho legislature has violated the Idaho Constitution by enacting unconstitutional statutes granting counties non-uniform taxing power through sections 55-2109 and 67-6515A.[41]

Title Ownership in Easement Interest has been Conveyed

Is Idaho Code section 55-2109 legally defendable, when the entire development right or the right to alter the building or the right to engage in activities that encroach on sensitive ecological areas has been granted by deed to another party in perpetuity?  The answer must be no.  Idaho Constitution Article VII, section 2 mandates Idahoans pay taxes “in proportion to the value of his, her, or its property,” and a validly conveyed perpetual easement interest is no longer owned by the title owner,[42] thus that owner no longer owns and cannot be taxed on that interest.  And even though there is no federal or state case law on Idaho Code section 55-2109, it should not be left to courts to reform statutes where there is a clear Constitutional violation that the legislature can cure.

Non-Uniform Taxation of “Lands Actively Devoted to Agriculture

Idaho Code section 63-602C allows exemption from real property taxation to certain charitable organizations.  If the criteria are met for being recognized as a charitable organization,[43] section 63-605(1) states a special tax status for property “owned and used for wildlife habitat by [a] corporation [ ] dedicated to the conservation of wildlife or wildlife habitat.” (emphasis added.) In section 63-605(2), lands managed for conservation of wildlife or wildlife habitat that formerly qualified as “land actively devoted to agriculture” are afforded this special tax status, including tax exemption.  However, a conservation easement qualifying pursuant to section 63-605(1), if section 63-605 is read as a whole, “shall be eligible for appraisal, assessment and taxation as agricultural property, dry grazing land, or waste pursuant to rule.”  If a conservation easement has been validly conveyed to a non-profit corporation, that corporation owns that property interest and section 63-605(1) should afford that property interest special tax status.

Why would Idaho Code section 55-2109 specifically mandate taxation “as if the conservation easement did not exist,”[44] where section 63-605 specifically mandates appraisal, assessment and taxation as agricultural property, dry grazing land, or waste?   This is neither just nor uniform taxation.

Agricultural Development Rights v. Other Development Rights

Idaho Code section 63-602K provides a tax exemption for “that portion of the value of agricultural land which represents the excess over the actual use value of such land established by comparable sales data compared to value established by capitalization of economic rent or long-term average crop rental at a [certain] capitalization rate . . ..”  This language describes a development right, except it refers to the speculative value of agricultural crop development instead of the speculative value of residential or commercial building development.  These rights are directly analogous, because both involve property interests that are defined as unexercised development rights beyond the actual use value of such land, and are property interests capable of valuation for tax purposes.

Thus, unexercised residential and commercial development rights can be tax exempt pursuant to Idaho Code section 67-6515A, agricultural crop development rights are exempt pursuant to Idaho Code section 63-602K, but conservation easements that in similar fashion curtail or eliminate residential and commercial development rights “shall be computed as if the conservation easement did not exist.”[45]  Since Idaho Constitution Article VII, section five requires uniform taxation “upon the same class of subjects within the territorial limits, of the authority levying the tax,” and development rights appear to be within the same real property class of subjects,[46] Idaho counties should be legislatively directed to levy ad valorem taxes as if conservation easements exist, and remove county authority to tax title owners for that which is no longer owned.


Idaho has made laudable efforts to make the transition from primarily an extractive-based economy to a diverse multi-industry commercial environment.  We know the current construction explosion will end.  As growth continues, the conservation easement option can form a protective shield over lands, buildings, and views that are worth preserving.  If your client is a landowner whose property has conservation values worth saving for future generations, a conservation easement may provide a legacy of benefits to all citizens. The Idaho legislature can correct inequity, non-uniform taxation, and sweeten the incentive to preserve Idaho’s valued resources by amending section 55-2109 to require ad valorem taxation reflect the diminished parcel value attributable to a conservation easement.

— END —


[1]All statutes 2007 unless otherwise noted: Alaska Stat. § 29.45.62; Ariz. Rev. Stat. § 33-271; Cal. Civ. Code § 815; Colo. Rev. Stat. § 38-30.5-109; Conn. Gen. Stat. § 47-42a and § 12-129r; D.C. Code Ann. § 42-202 (2001); Fla. Stat. Ann. § 704-06; Ga. Code Ann. § 44-10-3(a); Haw. Rev. Stat. § 198-1; Idaho Code § 55-2101; Ill. Comp. Stat. § 765 120/1; Ind. Code § 32-23-5-8; Kan. Stat. Ann. § 58-3810; Ky. Rev. Stat. Ann. § 382.800; Me. Rev. Stat. Ann. tit. 33, § 476 (2006); Md. Code Ann., Property § 2-118; Mass. Gen. Laws ch. 184, § 31; Mich. Comp. Laws § 324.2140; Minn. Stat. § 84C.01(1) (2006); Miss. Code Ann. § 89-19-1 (1972); Mont. Code Ann. § 76-6-208; Neb. Rev. Stat. Ann. 76-2,111(1) (1981); Nev. Rev. Stat. § 111.390; N.H. Rev. Stat. Ann. § 477:45(I) and § 79-B:3 (1990); N.J. Stat. Ann. § 13:8B-2(b); N.M. Stat. Ann. § 47-12-2(B); N.Y. Real Prop. § 49-0303(1); N.C. Gen. Stat. § 121-34 and § 121-40; Ohio Rev. Code Ann. § 5301.67(A); Okla. Stat. tit. 60, 49.2(1) (1999); Or. Rev. Stat. § 271-715(1) (2005); R.I. Gen. Laws § 34-39-2(a); S.C. Code Ann. § 27-8-70; S.D. Codified Laws § 1-19B-56(1); Tenn. Code Ann. § 66-9-303(1)(B); Utah Code Ann. § 57-18-2(1); Vt. Stat. Ann. tit. 24 § 4423(a)(5); Va. Code Ann. § 10.1-1009; Wash. Rev. Code § 64.04.130 (1987); W.Va. Code § §20-12-3(a); Wis. Stat. § 700.40(1)(a); Wyo. Stat. Ann. § 34-1-201(b)(i).








[2]Idaho Code § 55-2109 (2007).








[3]Idaho Code § 63-301. (2007).








[4]Black’s Law Dictionary 548 (8th Ed. 2004).








[5]Id., at 550.








[6]Id., at 589.
















[8]Idaho Code § 55-101(3) (2007); see Hughes v. State (1958) 80 Idaho 286, 293 (Access to business over public sidewalk construed as easement appurtenant to real property requiring just compensation if taken by municipality).








[9]Idaho Code § 55-603 (2007); see Note at 8.








[10]26 U.S.C. § 170(h)(2) (2006); 26 C.F.R. § 1.170A–14(1) and (2) (2003).








[11]Idaho Code § 55-103 (2007).








[12]Idaho Code § 55-601 (2007), (emphasis added).








[13]Merriam-Webster Dictionary 208 (New Ed. 2004).








[14]Idaho Code § 55-604 (2007).








[15]Idaho Code §§ 55-505 (2007) (written deed) and 55-606 (2007) (conclusiveness) (“Every grant or conveyance of an estate in real property is conclusive against the grantor . . ..” (emphasis added), see Hill v. Sligar (1996) 128 Idaho 858, 860 (“Valid delivery of a deed occurs when there is a delivery of the instrument itself to the grantee coupled with an intent by the grantor to pass immediate and present title to the property.,” citing Hartley v. Stibor (1974) 96 Idaho 157, 160.)








[16]Idaho Code § 55-2102(1) (2007).








[17]Idaho Code § 55-2101(1) (2007).








[18]Idaho Code § 55-2101(2) (2007); see Housing Southwest, Inc. v. Washington County (1996) 128 Idaho 335, 338 (qualifications under Idaho law for status as charitable organization); see 26 U.S.C. § 170(h)(3) (2006).








[19]Idaho Code § 55-2102(3) (2007); see 26 C.F.R. § 1.170A–14(g) (2006).








[20]Idaho Code § 55-2101(1) (2007); see 26 U.S.C. § 170(h)(4) (2006) (conservation easement purposes pursuant to federal law); see 26 C.F.R. § 1.170A–14(d) (2003) (applicable Treasury regulations).

[21]Idaho Code § 67-6515A (2007).








[22]26 C.F.R. § 1.170A–14(d)(5) (2003).








[23]26 U.S.C. § 170(h) (2006); see 26 C.F.R. § 1.170A–14(h)(2) (2003) (requiring fair market value be computed).








[24]H.B. 262, 59th Leg., 1st Regular Sess. (Idaho 2007).








[25]26 C.F.R. § 1.170A-14(h)(3)(i) and (ii) (2003).








[26]Idaho Code § 63-201(18) (2007).








[27]Idaho Code § 63-201(10) (2007).








[28]Idaho Const, art. VII § 5.








[29]Idaho County v. Fenn Hwy. Dist. (1926) 43 Idaho 233, 240 (“[I]f a tax is to be levied by a county, it shall be uniform upon the same class of subjects within the county.”); see Scandrett v. Shoshone (1941) 63 Idaho 46.








[30]Idaho Const., art. VII § 3; Idaho Telephone Co. v. Baird (1967) 91 Idaho 425, 413 (“[a]rt. VII, § 3 . . .affirms the power of the state legislature to make reasonable classifications of property for certain purposes. However, the exercise of that power is bounded by the constitutional requirement of uniformity embodied in [a]rt. VII, § 2”); see Idaho Code § 63-204 (2007) (Three classes of property: 1) real property, 2) personal property, and 3) operating property).








[31]County of Ada v. Red Steer Drive-Ins of Nevada, Inc. (1980) 101 Idaho 94, 97-98.








[32]Idaho Const. art. VII § 2.








[33]Crenshaw v. Crenshaw (1948) 68 Idaho 470, 475 (“Before a deed can operate as a valid transfer of title, there must be a delivery of the instrument and it must be effected during the life of the grantor.”)








[34]Idaho Code § 54-4104(11) (2007).








[35]Idaho Code § 54-4104(12) (2007).








[36]Idaho Code § 54-4104(5) (2007).








[37]Idaho Code § 54-4104(1) (2007).








[38]Idaho Code § 63-314(1) and (5) (2007).








[39]Idaho Code § 67-6515A (2007).

[40]See note 15 citing state and federal statutes on the purposes of conservation easements.








[41]Idaho Telephone Co. v. Baird (1967) 91 Idaho 425, 428 (“[T]he Constitution of the State of Idaho is not a delegation of power to the legislature but is a limitation on the power it may exercise, and that the legislature has plenary power in all matters for legislation except those prohibited by the constitution.”).








[42]Idaho Code § 63-307 (2007).








[43]Housing Southwest, Inc. v. Washington County (1996) 128 Idaho 335, 338 (qualifications under Idaho law for status as charitable organization).








[44]Idaho Code § 55-2109 (2007).
















[46]See note 29.

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