This past year has shown us the power of the mighty Missouri River and the consequences of owning land near it and its tributaries. If you own property that has been the subject of flooding in recent years, you may be entitled to recovery options through the federal Natural Resource Conservation Service (NRCS) of the United States Department of Agriculture (USDA). Congress established the Emergency Watershed Protection (EWP) Program to assist communities and residents suffering from natural disasters. One of the options currently available in Iowa, South Dakota, and Nebraska is the Floodplain Easement (FPE).
If you own property that has been damaged by flooding at least once in the previous calendar year (or twice in the previous ten years), you may qualify for participation in the FPE program. This is a voluntary program that allows property owners the opportunity to sell a permanent conservation easement to the United States through the NRCS. The purpose of the program is to restore the property, as much as is practicable, to its natural condition. This includes restoring the property's natural values such as fish and wildlife habitat, water quality, flood water retention, and ground water recharge. The NRCS pays 100% of the restoration costs.
Any structures located on the easement must be demolished or relocated. If demolished, the NRCS will pay up to 100% of the structure's value and, if relocated, the NRCS will pay up to 100% of the relocation costs. For land, the NRCS will pay the lowest of 1) the fair market value of the land; 2) the geographic area rate cap (GARC); or 3) a voluntary written offer by the landowner.
Anyone interested in selling a permanent easement for all or a portion of their property must file an application by October 18, 2019. (A property owner may opt out of the application process should they change their mind). After filing an application, information that is necessary to allow the program administrators to rank the applications must be provided by December 13, 2019. In Iowa, ranking priority will be given as follows:
- worst damaged lands
- majority of acreage in “rowcrop” (the higher % in row crop acres the higher the priority)
- size of application in acres (the more acres the higher the priority)
- building large complexes (group application) where the NRCS can remove infrastructure and restore some of the floodplain
- frequency and duration of flooding (higher the frequency the higher the priority)
- landowners willing to accept a 5% reduction in easement payment
- beginning or historically underserved farmers
If a property owner's application is approved, they will then enter into an Agreement to Purchase a Conservation Easement with the NRCS.
Persons interested in the FPE program should consult an attorney or tax preparer to discuss any potential tax consequences to the transaction, opportunities to utilize a section 1031 tax exchange, and/or the legal effect of the easement to the property owner.0