Property Tax Post: Keep An Open Mind About Open Space Property Tax Exemptions

What is the value of preserved open space?  That is the question addressed in an article featured in the New York State Bar Association Journal this month, written by David Wilkes, a partner at Huff Wilkes LLP, and Glenn Hoagland, Executive Director of the Mohonk Preserve, a conservation area in the Appalachian Mountains north of New York City.

Specifically, Wilkes and Hoagland address this “esoteric” question through the lens of property tax exemptions for conservation land. How much are communities and local governments willing to shift the burden of raising revenue to homeowners and other property owners to ensure that conservation land can be exempt from taxes?

While the authors acknowledge that there is no reliable method for formulaically determining the value of preserved open space, such land has enough intangible value for society to outweigh any lost tax revenue, they argue. Open space land provides natural ecological functions, such as storing carbon, filtering air pollution, purifying water, and absorbing storm runoff.  It also serves recreational purposes for the community, helps preserve historic landscapes, and allows people to enjoy scenic views—all things that are hard to quantify or value.

And further, estimates of the amount of revenue lost to open space property is often exaggerated because of the fact that it is typically lumped in with all other exempt property, such as government and nonprofit-owned property, the authors argue. For example, of all exempt property in New York state, 49 percent of it is government property, the authors note, citing New York Department of Taxation and Finance data.

And despite any lost revenue, people generally support exemptions for open space property, even if it means they have to shoulder an increasing property tax burden. The authors point to a survey conducted in the village of New Paltz, New York, near Mohonk Preserve, that found that 67 percent of respondents favored a tax increase to support open space protection. Of that subset of respondents who supported an increase, a sizable portion were willing to take on up to $300 per year in increased property tax bills to ensure the continued protection of open space property.

At a time when states, most notably Maine, are looking to scale back exemptions for nonprofits, it is wise to keep in perspective the important, but hard to quantify, purposes that organizations that own exempt property provide in the larger context.

Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Is it good tax policy to exempt open space land from property taxes to encourage conservation, or does this shift too much of the burden to residential homeowners and other businesses?

Sign up for a free trial of the Bloomberg BNA Premier State Tax Library and see a detailed discussion on state property taxes.