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Conservation Easements

Rescuing Private Property Or The Ruination Of Future Generations?

"Follow the Money"

Part 4 in a series of six articles

By J. Zane Walley

Article and research funded by a grant from the Paragon Foundation.

 

The Concept of Development Rights and Conservation Easements

Full (fee simple) ownership of real property consists of a "bundle" of rights, such as the right to farm, to construct buildings, to subdivide the land, to extract minerals or to restrict access. These rights are only limited by previous legal restrictions and governmental regulations applicable to the property. Some rights in the "bundle" can be transferred to others while retaining the remaining rights of ownership. The right to build on real property is known as the development right. When development rights are transferred to a conservation organization or land trust, the specific restrictions regarding the amount and type of development that are given up are set forth in a legal document called a conservation easement, which is recorded on the title to the property.

The concept of conservation easements was created by .the 1976 Tax Reform Act that officially recognized easements as tax deductible donations. At that time there was mild interest in the concept, but in recent years it has exploded into a multi-billion dollar real estate industry.

The incentive for this tremendous growth is perhaps best explained in the book, "Doing Deals: A Guide to Buying Land for Conservation" published by the Land Trust Association. This book touts, "Know what developers know after you read this insightful book about buying real estate for conservation. It includes information on working with landowners, surveys, appraisals, working with government agencies and negotiating."

The title "Doing Deals," is a very accurate description of why so many land trusts are being formed. The federal and environmental foundations spigots are wide open and there are hundreds of millions, if not billions of dollars to be made in "doing deals" on conservation easements. Money flows through so many federal agencies and green organizations that it is impossible to list them all in this short article or even a lengthy book.

Four very small land trusts are provided as examples of the financial success of recently established organizations. Information in this report is derived from IRS Form 990 or IRS Form 990EZ, an annual report filed by nonprofit organizations.

Malpai Borderlands Group, Inc., Douglas AZ.

Fiscal Year1998

$298,668: Total contributions, gifts and grants.

$860,295: Net assets or fund balances.

$1, 393,856: Total contributions, gifts, and grants 1994 through 1997.

Colorado Cattlemen's Agricultural Land Trust, Arvada, CO

Fiscal Year1998

$148,607: Assets

$135,010: Income

Land Trust Alliance, Inc. Washington, DC

Fiscal Year 1998

$2,683,999: Income

$1,447,189: Assets

Martinez Regional Land Trust, Martinez, CA

Fiscal Year: 1997

$362,147: Assets

$244,705: Income

McDowell Sonoran Land Conservancy, Scottsdale, AZ

Fiscal Year: 1997

$483,674: Assets

$247,564: Income

So where does all this money come from? Selected examples are indicative of how the money flows. The Colorado Cattlemen's Agricultural Land Trust receives part of their funding from U.S. Fish and Wildlife Foundation, a quasi-governmental organization funded with tax dollars and a director appointed by Secretary of the Interior Bruce Babbit.

According to officials at the huge American Farmland Trust, they receive about thirty-three percent of their monies from various federal programs, an additional third from foundations such as Turner and the Pew Charitable Trust and the remainder from public donations.

The California Farmland Conservancy Program (CFCP) receives staggering sums from the U.S. Department of Agriculture through the Federal Farmland Protection Program. (Presently CFCP has unallocated funding of $8,800,000.)

The Malpai Borderlands Group (MBG) relies heavily on funding from the Nature Conservancy. The 1998 IRS form 990 identifies the Executive Director of MBG as John Cook, The Nature Conservancy, Providence Rhode Island. MBG also receives funding from a hodgepodge of other large foundations and federal grants.

The President's Lands Legacy initiative throws serious money at the taking of property rights by conservation easement, outright acquisition and imminent domain condemnations. The Legacy provides $588 million to state and local governments, private land trusts, and other nonprofit groups. The Lands Legacy would provide $50 to $58 million in matching grants to states, communities, tribes and land trusts for the purchase of permanent conservation easements on farmland.

The Farmland Protection Program administered by Agriculture Department's Natural Resources Conservation Service through mid-1998 leveraged an estimated $230 million in easements, using $35 million in federal funding. Another federal program "Better America Bonds" would provide state and local governments and land trusts up to $9.5 billion over five years to acquire property and conservation easements.

The consultant for Stewards of the Range, former United States Attorney Fred Kelly Grant, warns that massive monies provided through H.R. 701 (CARA,). would allow the allow federal agencies to push through acquisitions, including conservation easements without the necessity of securing concurrence from the owner of the land. Mr. Grants notes in his research paper, An analysis of the Conservation and Reinvestment Act of 1999 as passed by the House Resources Committee that, "The Bill does not really define a "willing seller" as that term is traditionally used in the real estate market and in courts which determine condemnation cases. It calls any seller who says "ok" to the acquisition a "willing" seller, even if he says "ok" after being told that all the land adjoining his is going to be acquired in a manner which will severely restrict the use and value of his land. Those who have studied the growth of conservation and scenic easements in this country are familiar with the scenario in which an owner sells in desperation because of the threats of regulatory restrictions which will otherwise be placed on his property. In short, the Bill does not require that all acquisitions by the federal government be from a "willing seller."

Land trusts are simplistically just "New Age" realtors wrapped in the warm, fuzzy, euphemistic cloak of "Saving The Earth," Saving Farmland," "Saving Rangeland, " and so on. If you are considering a conservation easement on your property, it is important to investigate where the funds originate and what strings are attached. Conservation easements may be sold, transferred, and otherwise assigned. The federal agency or gigantic environmental foundation that provided the funding to purchase your conservation easement may very well inevitably end up owning it. Demand full disclosure in a formal document!

In the next article in this series, the land acquisition tactics and finances of the giant land trust, The Nature Conservancy will be spotlighted.

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Paragon is a Constitutional rights foundation headquartered in Alamogordo, New Mexico. Visit the Paragon Foundation Website at http://www.paragonpowerhouse.org. To receive the free monthly Paragon Foundation Newsletter, or the entire series of conservation easement articles, call toll free 1-877-847-3443. Speakers on the pitfalls of conservation easements are also available (at no charge) to address your organization.