have our cake and eat it too?
There is no doubt that U.S. Agriculture is facing perhaps the roughest time of its existence. The global economy and increased production are wreaking havoc on American farm commodity prices. As if this were not enough, our rural landscape provides an inviting incentive for frustrated urban dwellers wishing to slow down their pace and enjoy our beautiful land. Can we survive and pass our legacy on to the next generation? Are Conservation Easements the new panacea to reach our goals?
Arguments in favor of conservation easements allege that farmland must be saved from urban encroachment. Is it really the urban folks who are at fault or is it a loss of revenue tied to the rising production costs and lower prices received for our commodities that are forcing the sale of ag lands? Today, the farmer and rancher must bear additional costs of ever climbing fuel prices along with expensive environmental regulations. Common sense dictates that if farming were good, farmers would buy farmland. Save huge corporations, not many farmers and ranchers are buying land these days.
This simple fact has captured the furtive minds and watchful eyes of environmentalists, state and local planners in addition to the remaining farmers and ranchers who worry about who their newest neighbors may be. Too many farmers and ranchers have experienced the negative side of having urbanites for neighbors when complaints file in over their cultural practices. Having seen the pastoral side of agriculture when looking at their new home sites, urban folks are often horrified to learn that a lot of "noisy" work is done at night, and that dust is as much a part of farming as is the spring bloom. The sound of weaning calves and their reluctant moms
invades the newcomer's peace at five in the morning and the results can be upsetting when the local sheriff comes by to see who is disturbing "the peace".
Farmers know that the "Right to Farm Clause", which is written into many deeds and intended to alert new land buyers to the ag community, have not been held up in court in some parts of the country. With this kind of threat looming over them, it is no wonder they seek refuge. View-sheds are now a commodity that local planners consider valuable. If you raise cattle, chances are you are providing a view-shed for your county, and it is something that the general public has learned to take for granted.
Before jumping on to the Conservation Easement bandwagon, it would be wise to consider the downside of these deed restrictions. Are you convinced that you know right now, the needs and values of future generations? If so, are you willing to have your heirs pay for your decision to preserve your land? Are you simply a philanthropist who is willing to cede your rights and the
rights of your heirs so that the rest of humanity can benefit from your benevolence?
By granting a conservation easement, the landowner not only restricts the future use of his property, he is actually conveying an interest in the property to an environmental land trust, governmental agency or some other entity. The conveyance of that interest results in a dramatic loss of property value. More often than not, a conservation easement will not "save" your cultural practices; it will simply keep the land "open" for preservation- period.
Perhaps you are considering "gifting" an easement for the purpose of receiving a tax deduction. Before rushing off to sign a conservation easement, you will need an experienced attorney, for there is a multitude of criteria that must be met to qualify. One of many of the critical factors
required by the Internal Revenue Service [§1.170A-14(g) (2), Regs} is that the mortgagee must subordinate its rights to the holder of the conservation easement. Note that few lenders are willing to agree to an action that will reduce the value of their collateral.
The IRS requires for your tax deduction that the conservation easement must give the holder the right to inspect the property for compliance (in perpetuity) as well as a means of legal reinforcement, including, but not limited to, the right to require the restoration of the property to its original condition at the time the easement was made. It is easy to see than an inadvertent violation could be costly, enough in fact to conceivably cause a need to sell the land with the easement at a reduced price. The question then becomes, who would buy it?
Is a conservation easement a road paved with gold? One of the biggest drawbacks to conservation easements is that inflexible decisions made today could inversely impact and most likely defeat the right of the landowner or his heirs to make critical decisions concerning their needs in the future. Few farming operations are void of financing, and one of the most often used
forms of collateral is the property. Be prepared for a reduced loan value in proportion to residual fair market value of the land after the conveyance of a conservation easement. If for some reason, you or your heirs cannot continue farming, the easement may render title to your property either
unmarketable or greatly reduced in value to the private sector.
Conservation easements' targets can be very different between farmland and rangeland. Rangeland is inherently closer to it's natural state due to the low impact use, i.e. no tilling, fertilizing etc. Farmland, on the other hand is far from its natural state making the eventual object of the conservation easement for the land to return to its natural state. This sets the stage for preservation of natural habitats so coveted by many environmental organizations.
Before considering granting of a conservation easement, the landowner must carefully consider the far-reaching consequences and burdens that they, their heirs or future owners will endure. Farmers and ranchers are among the staunchest supporters of private property rights and free markets. In the long run conservation easements are not likely to retain land in private hands, this in itself, could be a travesty.