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Knowles-Nelson Stewardship Program GrantsFinancing nonprofit conservation organizations acquisition projects

As you seek funding sources for conservation land acquisition, you need to be familiar with what Stewardship grants can and cannot fund, how land value must be determined to satisfy Stewardship laws and what sources of match can be used. The DNR recommends discussing project financing with your regional grant contact as early in the process as possible.

Property values

Calculating the value of the property

State statutes dictate how land and easements are to be valued for the purpose of calculating Stewardship grant amounts. For instance, the date the property was acquired by the seller may influence valuation. If a transaction will depend on Stewardship funding, grant staff urge applicants to be familiar with the rules about appraisals before negotiating any purchase agreement with sellers. Applicants should discuss the appraisal problem with grant staff as early as possible and before hiring an appraiser.

  • Appraisals must meet Real Estate Contract and Appraisal Guidelines [PDF]
    PUB-LF-048 2007.
  • Many projects require two appraisals. If the property value (not the anticipated grant request) is over $350,000, the Stewardship program requires two appraisals. The NCO must pay for the first, the DNR the second. If a third appraisal is needed, each will pay 50 percent of the cost.
  • All appraisals are reviewed by the DNR and one is identified by our reviewers as a "certified" value. The grant award is calculated based on that confirmed land value. For a detailed explanation of which value the DNR will use to calculate awards, see Calculating Grant Awards for NCO Stewardship Acquisitions [PDF].

Sponsor match

Eligible sources of sponsor match

Sponsor match is that portion of the acquisition costs not funded by the state. The sponsor must provide at least 50% of project costs from non-state sources. Eligible sources of sponsor match include:

  • cash from the sponsor and/or third party contributors such as a businesses, foundations or individual donors
  • funds from a local government or the federal government
  • property value donated by the seller - a "bargain sale"
  • the value of a property donated to the sponsor, if the donation is made within three years of the date of the Stewardship application (see note below about using land value as match)
  • the value of a property acquired with non-state funds if that acquisition was no earlier than three years before the application date (see note below about using land value as match)

Some cautions about sponsor match

  • Funds from other state funding sources cannot be used as sponsor match. If the source of your match is non-state money administered by the state (as several federal grants are), confirm with your funding source or the DNR's Federal Aid Coordinator that those funds are not legally characterized as state money.
  • The total amount of funding from all government sources and restricted to the same acquisition costs cannot exceed 100% of those acquisition costs. If funding from other government sources exceeds 50% of those costs, then Stewardship funding will be reduced accordingly. It is important to confirm contributions from all government sources before Stewardship grants are awarded if possible: rectifying overpayment of public funds can be challenging.
  • All sources of sponsor match must be fully disclosed. Sponsors are required to submit a detailed accounting of project funding sources at the time of contract. After a grant has been awarded, if it is found that a sponsor has received more than 100% of the cash needed from public sources restricted to the same acquisition costs, the DNR will seek an appropriate remedy.

Using other property as sponsor match. Stewardship rules allow grant sponsors to offer property they own - land or conservation easements donated to them or purchased with non-state funds - as their match. When property is used as match, up to 50% of the fair market value of that land may be used to cover the sponsor's share of acquisition costs. The sponsor retains title to the property used as match, but the property becomes part of the Stewardship program and is subject to the obligations, terms and conditions of the Stewardship grant contract.

Stewardship program rules about land used as match differ from those of other public grant programs like NAWCA. Sponsors considering using land as their match need to consider:

  1. Eligibility - not all property is eligible for Stewardship funding; property offered as match will be evaluated in the same manner as property to be purchased and may not be accepted as Stewardship land.
  2. Public access - property offered as match must be open to the public for nature-based recreation; property that does not provide opportunities for public hunting and trapping is unlikely to be accepted as match.
  3. Timing of the acquisition - land offered as match must have been acquired within three years of the date of application.
  4. Existing conservation restrictions - land that is legally encumbered by permanent conservation restrictions may not be eligible as match. Similarly, land subject to regulations that require it be managed as open space, conservation and/or public outdoor recreation may not be eligible: lands obtained through a subdivision parkland dedication ordinance are not eligible.
  5. Appraisal - the value of donated property must be determined by an appraisal approved by DNR for grant purposes. Please note that appraisal of property to be used as match must account for any encumbrances on title at the time it will be incorporated into the Stewardship program. The valuation date cannot be prior to the sponsor's acquisition of the property.
  6. Grant calculation - sponsors cannot receive more in grant funds than the amount needed to cover actual eligible costs. If 50% of the value of match land is more than the amount needed, that excess value will not yield cash back to the sponsor. For NCO sponsors, in cases where match property value exceeds the amount needed and the match property was donated to the sponsor, the DNR may approve any residual value to be "banked" for 36 months and used as match for future applications.

Here is an example.

A sponsor wishes to buy Parcel A with a fair market value of $14,000, but a purchase price of only $10,000. Parcel B, with fair market value of $20,000, has been donated to the sponsor. Assuming Parcel B is eligible as Stewardship land, the sponsor may use 50% of the value of Parcel B as their match to the grant awarded for the purchase of Parcel A.

When the DNR awards the Stewardship grant, both Parcels A and B become part of the Stewardship program and are subject to the terms of the grant contract.

The total value of both parcels is $14,000 + $20,000 = $34,000. A grant cannot not exceed 50% of the total project costs, or 50% x $34,000 = $17,000.

However, because it only cost the sponsor $10,000 to purchase Parcel A, a grant award of $17,000 would result in profit for the sponsor. Therefore, the grant award can only be $10,000.

Because the match property was donated to the sponsor, the remaining $7,000 in value may be held as residual credit and offered as match for a subsequent application. The DNR must approve both match land and the use of residual credit; by rule, any residual credit must be used within 36 months.

Eligible expenses

Other grant-eligible expenses

Stewardship grants cover up to 50 percent of property value and 50 percent of eligible acquisition costs. Eligible acquisition costs are listed below.

  • Land surveys.
  • Appraisals. If the property is over $350,000, two appraisals are needed. The NCO must pay for the first, the DNR the second. If a third appraisal is needed, each will pay 50 percent of the cost.
  • Relocation payments if required.
  • Title evidence.
  • Recording fees.
  • Phase 1 Environmental Assessment Reports (environmental inspections completed by NCO staff or volunteers are not eligible expenses).
  • Historic and cultural assessments if required by the DNR.
  • Legal fees up to $1,000 per grant.
  • Signage. The DNR will reimburse 50 percent of the cost of signs required by law on Stewardship lands up to $1,000.

Expenses not covered by the grant include environmental clean-up costs, brokerage fees paid by the buyer, demolition of buildings, real estate transfer taxes and other costs not identified above.

Last revised: Thursday December 11 2014