Scenario 1: Conservation Easement

What is a conservation easement?

It is an agreement between a private landholder and an easement holder whereby the landowner gives up certain rights associated with his or her property (e.g. development rights). The landowner retains ownership, but depending on the nature of the easement, they may receive certain favorable tax status due to the arrangement.

What are some examples of the benefits?

A landowner may apply for state conservation tax credits, receiving up to 25% of the value of the donated interest in the land to reduce their income taxes and may be employed for up to five years. Likewise, the landowner can claim the donated land on federal tax returns for up to six years.

Is this feasible for stone circles?

As the stone circles property already enjoys a favorable situation with its taxes, a conservation easement may not be the most appropriate course to pursue at the present. While an easement would be in keeping with the stone circles commitment to land stewardship and conservation, it may unduly restrict certain activities at a time when the organization and the stone circles property are facing an uncertain monetary future. Additionally, onsite staff have indicated a reluctance to purchase an easement on the stone circles property at present by organizations that typically purchase them.

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Scenario 2: Wetland Mitigation Bank

What is a wetland mitigation bank?

A wetland mitigation bank is a wetland area that has been restored, established, enhanced, or preserved to provide compensation for wetland conversion that results from development activities. The Clean Water Act prohibits the discharge of dredged or fill material into the waters of the United States unless a permit is issued and such a discharge is approved by the Army Corps of Engineers or an approved state under Section 404 of the Act .  For those discharges that are approved, all adverse impacts to aquatic resources must be avoided and minimized, or at last resort, compensated for.  Where wetlands are adversely impacted, compensatory mitigation (restoration, establishment, enhancement, or preservation) is required to replace the loss of wetland functioning in the watershed.  The value of a mitigation bank is determined by an ecological assessment and is defined in terms of “compensatory mitigation credits,” which can be purchased by permit-holders.  They are an attractive option for permit-holders, because they can simply purchase credits and are not liable or responsible for the design, construction, monitoring, ecological success, and long-term protection of the site.

What is the organization responsible for wetland mitigation banking in North Carolina?

The Ecosystem Enhancement Program (EEP) is North Carolina’s wetland mitigation program.  It accepts compensatory funds and provides the projects for watershed improvement and protection (including wetlands).  The program is also involved in watershed planning and project implementation.  Landowner participation in the Ecosystem Enhancement Program can occur in one of three ways: donation or sale of a permanent conservation easement, donation of property in fee simple, or sale property in fee simple.

What are the criteria required to qualify as a wetland mitigation bank under EEP?

  1. Proposed site is preferably located within an EEP Local Watershed Planning Area or Targeted Local Watershed
  2. Must have a permanent conservation easement on the proposed site at a minimum
  3. Must have permanent access to the proposed site for construction and long term monitoring and stewardship
  4. Hydric soils present (might be relic)
  5. Original wetland hydrology altered by ditching, tile drains or other means caused by human influences or naturally occurring events
  6. Lack of appropriate wetland vegetation, Characteristics which may be observed:
    • Ditches / canals present
    • Tile drainage
    • Adjacent stream is incised
    • Dams or other water control structures
    • NRCS designated Prior-Converted (PC) land
    • Adjacent land use has affected hydrology
    • Vegetation removed or encroaching upland vegetation; evidence of wetland vegetation
  7. Preference is given to sites greater than 5 acres, with a minimal number of landowners, and with minimal constraints (roads, etc) and utilities

What are some examples of the benefits?

The financial benefits to landowners of using land for wetland mitigation are federal, state, and county tax deductions and reductions.  Benefits are similar to those of conventional conservation easements.

Is this feasible for stone circles?

Based on the above information, wetland mitigation banking is not a feasible option for stone circles.  The Stone House does not have the hydric soils necessary for the establishment of a wetland.  Soils onsite include Georgeville silt loam and Henderson silt loam, ranging from 2-10% slopes.  These soils are suited to agriculture and pasture, but do not have the characteristics of hydric soils that are formed under conditions long periods of saturation, flooding or ponding that are necessary for a wetland.

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Scenario 3: Solar Farm

What is a solar farm?

Solar farms are constructed on small parcels like the stone circles’ by solar farm developers. They farm itself generates photovoltaic energy that can be sold to the local electrical grid.

What are some examples of the benefits?

For stone circles the predominant benefit of an onsite solar farm would be the money obtained by the developer for leasing or purchasing the land. In a broader sense, the construction of a solar farm would be in keeping with the organizations’ mission of sustainability, especially if they were to purchase some of the power generated onsite for their own uses.

Is this feasible for stone circles?

Developing a solar farm at The Stone House is not currently a financially viable option.  North Carolina and the federal government offer tax incentives for solar projects, but they are unavailable to non-profit organizations.  Although stone circles could sell the power generated by the solar farm back into the grid, there is currently no market for Renewable Energy Certificates (REC) from ground mounted systems in North Carolina.  A Renewable Energy Certificate is proof that 1 megawatt-hour (MWh) of electricity was generated from a renewable source.  It represents the attributes and benefits of the renewable quality of the electricity production and can be sold separately from the electricity itself.  The lack of tax incentives and REC market suggests that it would take over 50 years for stone circles to recoup the initial investment required to install a solar farm.

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Scenario 4: Leasing Land for Residential Use

What does leasing the land for residential use entail?

Buildings at the stone circles property are currently used for retreat-goers and housing for some onsite staff. It would be possible to rent one or a number of these buildings as long-term residences for interested parties.

What are the possible financial gains?

Rental rates in the Mebane area range from approximately $250-$350 per room in a house or cabin with access to a bathroom and kitchen.  Much of the value of a bedroom in one of stone circles’ cabins would depend on the tenant’s access to the land, garden, and kitchen, heating, cooling, and who pays the utilities.  Assuming stone circles allowed its renter access to the community kitchen, the organization could expect to make approximately $3000-$4200 per year by renting one of the cabin bedrooms.

Is this feasible for stone circles?

Yes, this is a feasible alternative and will yield an immediate return on investment. However, renting out the rooms would mean taking them out of circulation for the retreats that the organization hosts of its land – which may end up balancing out to about the same total monetary gain in the long-run.

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Scenario 5: Leasing the Land for Agriculture

What does leasing the land for agriculture entail?

Food security occupies a substantial portion of the educational programming at stone circles. The organization actively tends its orchard and garden, raises chickens, and uses these food sources to prepare meals for guests.  The property is also surrounded by agricultural land uses and was formerly used as a farm.  Converting the field back into agricultural use is therefore consistent with stone circles’ mission and values.  Expanding farm operations to the entire 35 acres of the back field would be a serious undertaking for the small stone circles staff. One option that would allow expanded food production to take place on that land without substantial effort and expense by stone circles is to lease the back field to another farmer for cropland or pasture.

What are the benefits for leasing the land as cropland?

In Orange County, rental rates for non-irrigated cropland ranged from $25-49.99 per acre per year in 2009.  This would amount to a maximum of $1750 in income per year for stone circles.

What are the benefits for leasing the land as pasture?

Pasture land in Orange County is leased for slightly less than cropland. Average rents of pasture in Orange County ranged from $20-29.99 per acre in 2010. The price of pasture land is dependent on a number of things. Livestock facilities, the quality of the pasture, availability of water, and fencing all influence the price that can be charged. The lack of fencing, water availability, and livestock facilities in the field at The Stone House suggest that without any additional investment, the land could be leased on the lower end of this scale. At $20 per acre, stone circles could expect to take in $700 per year.

Is this feasible for stone circles?

While feasible, as with leasing the land for residential use, this option may not provide the hoped-for monetary return on investment. Leasing the land for agriculture would provide a better return of the two options, though, and require the least amount of effort for stone circles to establish to obtain the greater monetary benefit.

Rental rates in the Mebane area range from approximately $250-$350 per room in a house or cabin with access to a bathroom and kitchen (2011 e-mail from G. Phillips to M. McHugh; unreferenced). Much of the value of a bedroom in one of stone circles’ cabins would depend on the tenant’s access to the land, garden, and kitchen, heating, cooling, and who pays the utilities. Assuming stone circles allowed its renter access to the community kitchen, the organization could expect to make approximately $3000-$4200 per year by renting one of the cabin bedrooms.

Food security occupies a substantial portion of the educational programming at stone circles. As described above, the organization actively tends its orchard and garden, raises chickens, and uses these food sources to prepare meals for guests. The property is also surrounded by agricultural land uses and was formerly used as a farm. Converting the field back into agricultural use is therefore consistent with stone circles’ mission and values. Expanding farm operations to the entire 35 acres of the back field would be a serious undertaking for the small stone circles staff. One option that would allow expanded food production to take place on that land without substantial effort and expense by stone circles is to lease the back field to another farmer for cropland or pasture.