The Effect Of Conservation Easements On Real Property Market Value

Q. How is property appraised for property tax purposes?

A. The Assessor is required to annually appraise all property to fair market value. Market value is viewed as the amount of money that a willing and unobligated buyer is willing to pay a willing and unobligated seller.

Q. What factors influence market value?

A. Unless provided otherwise by state statute, all real property must be appraised for property assessment purposes on its highest and best use. Highest and best use is typically defined as the most profitable and likely use of the property.

When valuing property, the assessor takes into consideration any unique attributes associated with the property that might add or detract from value. For instance, attributes that might detract from value are the presence of wetlands, steep terrain, limited accessibility, or an unbuildable lot. Conversely, attributes that might add to value are views, waterfront, and location.

Q. What is a conservation easement?

A. A conservation easement is a legal agreement between a landowner and a land trust; it may permanently limit use of the land in order to protect its conservation values. It allows the property owner to continue to own, and perhaps to occupy and use the land, including the ability to sell or pass it on to heirs.

Q. Do conservation easements have an impact on the fair market value of a property?

A. Conservation easements may or may not impact the fair market value of individual properties. Conservation easement agreements specifically define the restrictions or limitation that will be attached to the property. Consequently, each agreement must be analyzed separately to determine (1) the extent of the use restriction and (2) whether the market place would provide for a loss in value if the property were sold in an arm’s-length transaction. Easements with limits that are less restrictive than the property’s existing use probably will not result in any measurable lost value.

Q. For example, how might a property’s Fair Market Value be impacted when it has a conservation easement.

A. For a residential property that would normally qualify as a building site for a single family residence: We believe there would be an impact on the fair market value of the property if a conservation easement was established that relinquished the right to build.

An alternative example is a 20 acre parcel where a home site is located on the front part of the property and wetlands are located on the back of the property. A conservation easement was established that allows visitation by local schools one day a year to observe the wetlands. In this instance, the property may not undergo any measurable loss in value associated with the conservation easement since the property owner would retain the rights to replace the building structure and occupy and enjoy the property into perpetuity. The impact of wetlands would have been considered in the normal assessment process for determining the property’s fair market value.

Q. If I have other questions, what agency should I contact for assistance?

A. For information related to setting up conservation agreements, please contact:

Capitol Land Trust
David Winter, Executive Director
4405 7th Ave SE Suite 306
Lacey, WA 98503
(360) 943-3012

For information regarding Thurston County land use regulations and conservation policies, please contact:

Community Planning & Economic Development
Long Range Planning
Building 1
2000 Lakeridge Drive SW
Olympia, WA
(360) 754-3355 ext. 7010
FAX: 754-2939

For information related to property assessments, please contact:

Thurston County Assessor’s Office
Building 1
2000 Lakeridge Drive SW
Olympia, WA
(360) 867-2200