When a Virginia landowner puts a conservation easement on property, must it meet the local minimum-acreage rule, and what if the easement allows lot splits later?

Plain-English summary

Albemarle County's county attorney asked the AG three connected questions about how the county should tax land under perpetual conservation easements. Albemarle has set 20 acres as the minimum parcel size for open-space land-use assessment under its local ordinance. Conservation easements often permit some limited subdivision; once a landowner exercises that subdivision right, the resulting parcels may fall below 20 acres. The county wanted to know:

1. Do conservation easement parcels have to meet the 20-acre minimum at the time the easement is dedicated?
2. Do they have to keep meeting it year after year?
3. If a parcel later fails the criteria, must the assessor impose back taxes and roll-back taxes?

The AG sliced the answers cleanly.

First, yes. The phrase "if the land otherwise qualifies for such assessment at the time the easement is dedicated" in § 10.1-1011(C) refers to the minimum acreage rule of § 58.1-3233. To give the phrase any meaning, it has to point somewhere outside § 10.1-1011 itself, and the only other operative requirement is the acreage minimum. So acreage matters at dedication. The opinion preserved a narrow exception: if the easement was already in existence when the locality adopted its land-use assessment program, the easement qualifies despite acreage.

Second, no continuing acreage test applies. The statute's "at the time the easement is dedicated" is fixed-point language. Once the land qualifies and the easement is recorded, the land continues to qualify "so long as the locality has land use assessment." Permitted later splits, even if they create sub-minimum parcels, don't disqualify the land. The easement holder, when accepting the easement, has already determined that the reserved subdivision rights are consistent with the easement's conservation purpose, and that's enough to keep the use-value tax.

Third, no automatic back taxes or roll-back taxes if unpermitted use or development occurs. Section 58.1-3237 imposes roll-back taxes when the qualifying use "changes to a nonqualifying use." But § 10.1-1011 does not subject perpetual conservation easements to "the same application, revalidation, roll-back and other administrative requirements" as run-of-the-mill use-value land. The AG concluded that the only mechanism for changing the tax status is enforcement action by a party with standing under the Conservation Easement Act or Open-Space Land Act. Until that party acts (typically the public-body easement holder), the use-value taxation continues. A prior opinion of this Office mentioned that "lack of enforcement of [an] easement ultimately would return the property to full fair market value assessment" but didn't say how. This 2013 opinion fills that gap: through proceedings initiated under the easement and the relevant statutes, not unilaterally by the tax assessor.

This opinion is the kind that loosens a county's grip on its open-space program in a couple of subtle but important ways. The county can demand acreage compliance up front, but it cannot reach back later to roll back taxes for what looks like a noncompliant use. The opinion's incentive is to keep enforcement responsibility on the easement holder, which is consistent with conservation policy generally (avoid making the tax assessor a hidden enforcer of conservation rules).

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is "use-value" or "land-use" assessment?
A local property tax discount mechanism. Instead of taxing land at its fair-market value (often inflated by development potential), the locality taxes the land at its value when limited to agricultural, horticultural, forest, or open-space use. The result is a much lower tax bill for working land or preserved land. Conservation easements often qualify their underlying property for open-space use-value.

What is a roll-back tax?
When use-value-assessed land changes to a nonqualifying use (a farm becomes a subdivision, say), § 58.1-3237 lets the locality "roll back" the property tax by recovering the difference between use-value tax and fair-market-value tax for the prior years (typically the year of change plus five preceding years). This 2013 opinion says roll-back doesn't automatically attach to conservation easement land that drifts out of compliance; an enforcement action by an authorized party has to do that work first.

What's the difference between a "conservation easement" and an "open-space easement"?
A conservation easement is one granted under the Virginia Conservation Easement Act. An open-space easement is one granted under the Open-Space Land Act (§ 10.1-1700 et seq.). Both qualify under § 10.1-1011(C) if they meet that section's requirements; the AG opinion treats them interchangeably.

Why does dedication date matter so much?
Because § 10.1-1011(C) anchors the qualifying analysis to "the time the easement is dedicated." Whatever the land looked like at dedication, that's what qualifies (or doesn't qualify) it. Later changes that the easement allows don't disturb the original qualification. Later violations of the easement don't automatically disturb it either, but they can be made to disturb it through proper enforcement.

What does "lack of enforcement" mean in this context?
If a landowner does something inconsistent with the easement (puts up a building, opens a quarry), and the easement holder does nothing, the property might look like it has lost its open-space character. The 2013 AG opinion says the appearance of non-conformance isn't enough; the easement has to actually be terminated or amended through the legal mechanisms in the Conservation Easement Act or Open-Space Land Act before the use-value tax can be revoked. Until then, "[u]ntil such time as the holder of the easement takes action to terminate the easement in accordance with the law . . . the clear mandate of the law would not allow a change in the taxable status of the property."

Who can enforce these easements?
Both the Conservation Easement Act and the Open-Space Land Act specify which parties have enforcement standing. Typically, the easement holder (a public body or qualified land trust) has primary enforcement responsibility. The Attorney General also has standing in certain easement matters.

Background and statutory framework

The opinion's analysis runs through three Virginia provisions:

• Va. Code § 10.1-1011(C) (Virginia Conservation Easement Act): says that conservation-easement land "subject to a perpetual conservation easement" and "devoted to open-space use as defined in § 58.1-3230" in a locality with a land-use program "shall be assessed and taxed at the use value for open space, if the land otherwise qualifies for such assessment at the time the easement is dedicated." It adds that easements predating local land-use programs qualify automatically, and that "[o]nce the land with the easement qualifies for land use assessment, it shall continue to qualify so long as the locality has land use assessment."
• Va. Code § 58.1-3233: lists the factual determinations a tax assessor must make before granting land-use assessment, including that the property fits an open-space classification, that it consists of "a minimum of five acres or such greater minimum acreage as may be prescribed by local ordinance," and (for open-space) that it is subject to a "recorded perpetual easement that is held by a public body."
• Va. Code § 58.1-3237: makes use-value-assessed land "subject to roll-back taxes" when its use "changes to a nonqualifying use," with liability attaching "when [the] change in use occurs."

Statutory-construction canons the AG used: plain meaning controls absent absurdity; statutes can't be read to render any phrase superfluous; statutes on closely connected subjects must be harmonized; where a general statute and a specific statute conflict, the specific prevails. The AG distinguished an earlier opinion of this Office which had read "otherwise qualifies" in § 10.1-1011(C) to refer to "open space as defined in § 58.1-3230." The 2013 opinion clarified that the phrase reaches further, to the acreage minimums of § 58.1-3233.

Citations

• Va. Code § 10.1-1011(C)
• Va. Code § 10.1-1700 (Open-Space Land Act)
• Va. Code § 58.1-3230 (definition of open-space use)
• Va. Code § 58.1-3231 (local ordinance authority)
• Va. Code § 58.1-3233 (qualification determinations)
• Va. Code § 58.1-3237 (roll-back tax)
• Va. Code §§ 58.1-3980, 58.1-3981 (correction of erroneous assessment)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2013/12-099_Davis.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

September 20, 2013

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991

Virginia Relay Services
800-828-1120
7-1-1

Larry W. Davis, Esquire
County Attorney for the County of Albemarle
401 McIntire Road, Suite 325
Charlottesville, Virginia 22902-4596

Dear Mr. Davis:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented

You ask three questions regarding the land use assessment and taxation of land that is subject to a perpetual conservation easement. Specifically, you ask whether perpetual conservation easements must satisfy the minimum acreage requirements of § 58.1-3233 in order to qualify for land use assessment and taxation under § 10.1-1011. You also ask whether land under a conservation easement must continue to meet the minimum acreage standards of § 58.1-3233 in order to annually qualify for land use assessment and taxation. Finally, you ask whether back taxes and roll-back taxes are required to be imposed to correct any erroneous under-assessment of non-qualifying property.

Response

It is my opinion that, under § 10.1-1011, conservation easement land covered by the provisions of the statute must meet the minimum acreage requirement of § 58.1-3233 at the time the easement is dedicated, unless the easement was placed on the property before the local land use assessment ordinance was adopted. It is further my opinion that subsequent changes in acreage or use that are permitted under the conservation easement would not affect the continuing eligibility of the land for use assessment under § 10.1-1011(C). In addition, it is my opinion that no back taxes, including the roll-back tax, may be imposed when conservation easement land, through apparent unpermitted use or development, no longer appears to qualify for use assessment under § 10.1-1011(C). Finally, however, it is my opinion that upon the initiation of appropriate proceedings and the making of factual findings respecting the land and easement in question, such subsequent violations of the conservation easement could render the land ineligible for use assessment under § 10.1-1011(C).

Background

You relate that, pursuant to § 58.1-3231, Albemarle County has adopted an ordinance to provide for the use assessment and taxation of "real estate devoted to open-space use," as that phrase is defined in § 58.1-3230. Under that ordinance, Albemarle County has set the minimum acreage requirement for real estate devoted to open-space at twenty (20) acres. You also relate that it is common for conservation easements to allow for limited subdivision of lots and that, once that right is exercised, the newly-created parcels often will not meet the minimum lot size for land use assessment and taxation under the Albemarle County ordinance.

Based on your reading of applicable law, it is your opinion that land under a perpetual conservation easement must meet the minimum acreage requirements of the Albemarle County ordinance at the time the easement is dedicated and in the years thereafter. It is also your opinion that the Finance Director of Albemarle County is required to correct any under-assessment of non-qualifying real estate pursuant to §§ 58.1-3980 and 58.1-3981.

Applicable Law and Discussion

Your inquiry involves the application of and interplay among several statutory provisions relating to the special taxation of land for conservation purposes. Several basic principles of statutory construction apply to interpretation of those statutes with respect to the questions you pose. First, the plain meaning of the language used in a statute determines legislative intent unless a literal construction would lead to a manifest absurdity. Virginia courts "determine [legislative] intent from the words contained in the statute" and are not free to add or ignore language contained therein. Because statutes are "not to be construed by singling out a particular phrase," but must be construed as a whole, they must be construed to give meaning to all of the words enacted by the legislature, and interpretations that render statutory language superfluous are to be avoided. Additionally, when two statutes relate to the same or closely connected subjects they "must be considered together in construing their various material provisions," and "in cases of apparent conflict, they should be construed, if reasonably possible, in such manner that both may stand together." Accordingly, "when one statute speaks to a subject in a general way and another deals with a part of the same subject in a more specific manner, the two should be harmonized, if possible, and where they conflict, the latter prevails."

The statutory provisions implicated by your inquiry are those contained in Chapter 32, Article 4 and Chapter 32, Article 5 of Subtitle III of Title 58.1, which generally govern special assessments of real estate for land preservation, and § 10.1-1011 in Chapter 10.1, the "Virginia Conservation Easement Act," of Title 10.1, which more specifically relates to taxation of land subject to a perpetual conservation easement. Pursuant to § 58.1-3231, any local government that has adopted a land use plan may adopt an ordinance to provide for a special land use assessment of land that has been designated as agricultural, horticultural, forest, or open-space. Prior to assessing any parcel of real estate under a land use ordinance, the local taxing official is required to make several factual determinations. Specifically, § 58.1-3233 requires the tax assessor to

1. Determine that the real estate meets the criteria set forth in § 58.1-3230 [i.e., agricultural, horticultural, forest and open-space] and the standards prescribed thereunder to qualify for one of the classifications set forth therein . . . .

2. Determine further that real estate devoted solely to . . . (iii) open-space use consists of a minimum of five acres or such greater minimum acreage as may be prescribed by local ordinance . . . .

3. Determine further that real estate devoted to open-space use is . . . (ii) subject to a recorded perpetual easement that is held by a public body, and promotes the open-space use classification, as defined in § 58.1-3230 . . . .

With respect to the taxation of land under perpetual easement for open-space preservation, § 10.1-1011(C) provides:

[L]and which is (i) subject to a perpetual conservation easement held pursuant to this chapter [the Virginia Conservation Easement Act] or the Open-Space Land Act (§ 10.1-1700 et seq.), (ii) devoted to open-space use as defined in § 58.1-3230, and (iii) in any county, city or town which has provided for land use assessment and taxation of any class of land within its jurisdiction pursuant to § 58.1-3231 or § 58.1-3232, shall be assessed and taxed at the use value for open space, if the land otherwise qualifies for such assessment at the time the easement is dedicated. If an easement is in existence at the time the locality enacts land use assessment, the easement shall qualify for such assessment. Once the land with the easement qualifies for land use assessment, it shall continue to qualify so long as the locality has land use assessment.

First, you specifically seek the proper construction of the phrase "if the land otherwise qualifies" as used in § 10.1-1011(C). You suggest that this language requires land under perpetual conservation easement to meet the minimum acreage requirements of § 58.1-3233. In support of this conclusion, you cite § 58.1-3233(2), which sets out minimum acreage standards for the open-space use classification, and § 10.1-1011(C), which provides that land under perpetual conservation easement is eligible for land use assessment if it is "devoted to open-space use as defined in § 58.1-3230" and "if the land otherwise qualifies for such assessment at the time the easement is dedicated" (emphasis added). You conclude that the phrase "otherwise qualifies for such assessment" must be construed to refer to the minimum acreage requirements of § 58.1-3233, this being the only potential object of the phrase "otherwise qualifies." I agree with such reasoning and that specific conclusion.

In order to give meaning to the phrase "otherwise qualifies" and thereby avoid rendering it superfluous, the phrase must refer to criteria outside of § 10.1-1011(C). Furthermore, because both § 10.1-1011(C) and § 58.1-3233 relate to a closely connected subject, qualification for use assessment of open-space land, it is appropriate to consider them together. Accordingly, the phrase "otherwise qualifies" in § 10.1-1011(C) must be understood as a reference to other provisions relating to the same or closely connected subjects but found elsewhere in the Code. In this case, those related provisions are found in § 58.1-3233; however, because the minimum acreage requirement of § 58.1-3233 stands alone as the only requirement supplemental to those already provided for and contained in § 10.1011(C), it is the only possible object of the referential phrase "otherwise qualifies."

With respect to the issue of changes in use or acreage authorized by the easement, I understand the phrase "at the time the easement is dedicated" in § 10.1-1011(C) to be clear, unambiguous and susceptible of only one interpretation. It operates to fix the time of qualification for use assessment to the time at which the easement is dedicated. I note that in the case of a perpetual conservation easement meeting the requirements of § 10.1-1011(C), the purpose of such an easement includes the "retaining or protecting the natural or open-space values of real property, assuring its availability for agricultural, forestal, recreational, or open-space use." As a general matter, to achieve such conservation purposes in perpetuity, the landowner is required permanently to give up the right to use or develop the land in a manner that would be inconsistent with the conservation purposes and values of the easement.

Consequently, it may fairly be concluded that any rights of the grantor reserved at dedication have been determined by the easement holder to be consistent with the conservation purposes and values of the easement. Later changes in use or development that are permitted under the easement already have been determined to be consistent with the conservation purposes of the easement and would not affect the land's continuing eligibility for land use assessment under § 10.1-1011(C). It follows, therefore, that subsequent changes in acreage, if they result from a division permitted by the easement, would not affect the land's continuing eligibility for land use assessment.

Furthermore, § 10.1-1011(C) provides that once the land with the easement is qualified, that qualification shall continue so long as the locality has land use assessment. This sentence in the statute is also clear, unambiguous and susceptible of only one interpretation. So long as a locality has a land use assessment program, property under an open space easement will qualify for that program. The plain meaning of the statutory language controls. That meaning cannot be expanded to add a post-dedication requirement of continuing qualification.

This conclusion finds support in an earlier Opinion of this Office that considered the relationship between temporary land use assessments and permanent open space easements:

By its plain language, § 10.1-1011 now requires lands permanently reserved as open space, under conservation or open-space easements meeting the requirements of § 58.1-3230, to be assessed and taxed in the same way as lands that are being so used temporarily under a local use value assessment program . . . . Such a permanent easement affects the value of the ownership interest retained by the landowner, and the local tax assessing officer must take into account the effect of that change, as required by § 10.1-1011.

Turning to your final question, § 58.1-3237 provides that real estate qualifying for land use becomes subject to roll-back taxes when the use qualifying the subject real estate "changes to a nonqualifying use," and liability for such taxes attaches "when [the] change in use occurs." Nonetheless, as a previous Opinion of this Office noted,

Section 10.1-1011 does not subject such perpetual conservation or open-space easements to the same application, revalidation, roll-back and other administrative requirements that apply to other property under a local use value assessment program.

In the case of a perpetual conservation easement, such land qualifies for land use assessment under § 10.1-1011 based on the easement being perpetual and in furtherance of open-space preservation. If unpermitted use or development were to occur and the land owner fails to cure the violation after a reasonable amount of time, this could constitute a violation of the easement. Both the Conservation Easement Act and the Open-Space Land Act specify which parties have the right to enforce the easements entered into pursuant to those laws and how such easements may be terminated. Those parties have the authority to challenge whether the property under easement is being managed appropriately. That issue is not left open for ancillary challenges through other mechanisms, such as the land use assessment program. This provides clarity and certainty to those who participate in the easement programs and is consistent with the previously stated principle that specific statutes take priority over more general statutes. Until such time as the holder of the easement takes action to terminate the easement in accordance with the law or the express terms of the easement, or otherwise seeks a remedy pursuant to an enforcement action that would authorize a result to the contrary, the clear mandate of the law would not allow a change in the taxable status of the property.

A prior Opinion of the Attorney General stated that, "lack of enforcement of [an] easement ultimately would return the property to full fair market value assessment." That Opinion, however, did not address the mechanism by which such a return to fair market value would be effected. It is my opinion that such a transition ordinarily could not occur absent appropriate action by one authorized under the easement or the statutes to enforce the terms of the easement. What form such an action might take would depend on the specific law under which the easement was granted, the specific terms of the easement and the particular facts in the case. Such determinations are questions of fact and would have to be made by the authorized taxing official or trier of fact, if contested or litigated, based on all the relevant facts.

Conclusion

Accordingly, it is my opinion that, under § 10.1-1011, conservation easement land covered by the provisions of the statute must meet the minimum acreage requirement of § 58.1-3233 at the time the easement is dedicated, unless the easement was placed on the property before the local land use assessment ordinance was adopted. It is further my opinion that subsequent changes in acreage or use that are permitted under the conservation easement would not affect the continuing eligibility of the land for use assessment under § 10.1-1011(C). In addition, it is my opinion that no back taxes, including the roll-back tax, may be imposed when conservation easement land, through apparent unpermitted use or development, no longer appears to qualify for use assessment under § 10.1-1011(C). Finally, however, it is my opinion that upon the initiation of appropriate proceedings and the making of factual findings respecting the land and easement in question, such subsequent violations of the conservation easement could render the land ineligible for use assessment under § 10.1-1011(C).

With kindest regards, I am,

Kenneth T. Cuccinelli, II
Attorney General