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From Philanthropy Magazine - August 2001

The Problem with Easements
Some conservation easements come with a nasty surprise

By Mary Jo Joyce

Tax-favored treatment of conservation easements, beginning with the Tax Reform Act of 1976, has fueled tremendous growth in private land trust organizations. A 1998 National Land Trust census conducted by the Land Trust Alliance, a Washington, D.C.-based organization, reported large increases in the number of land trusts operating in the United States. Over a ten-year period, the number of land trust organizations increased by 63 percent.

Many newer land trusts have embraced the practice of conserving land through easements-legal documents restricting future development on private properties in perpetuity, at the bequest of current property owners. The amount of acreage protected by easements is up even more dramatically-almost quadrupling during the same ten-year period.

Most states have adopted statutes that specifically recognize conservation easements, and the Land Trust Alliance has encouraged organizations utilizing them to adopt uniform standards and practices. But there's a
problem: no guidelines or handbook can generate the resources necessary to carry out the long-term commitment easements demand. Ultimately, the sturdiness of a given conservation easement depends on the talent of its drafters and the diligence of its defenders.

"Easements are difficult to properly execute, and should require a hefty balance in stewardship or legal defense funds," explains Geoff Maclay, president and founder of the Cedar Lakes Conservation Foundation, active in Wisconsin since 1974.

Information obtained by the Land Trust Alliance from self-selecting nonprofits indicates that few easements have been challenged and fewer have been litigated. But recently-established conservation easements affect
properties that have yet to be transferred to new owners.

"Most easements were gifts made by landowners who were motivated by a deep love for the land. When original owners die or sell property, easements may be interpreted in ways that favor economic values rather than conservation," explains attorney William P. O'Connor of Wheeler, Van Sickle & Anderson in Madison, Wisconsin.

The Costs of Enforcement

It is far from certain that most land trusts are prepared to withstand the costs and energy associated with future, possibly multiple, challenges. Few organizations would have had the stamina and resources necessary to endure the legal tribulations of Pennsylvania's French and Pickering Creeks Conservation Trust, which incurred more than $100,000 in court costs and legal fees over a nine-year period litigating a violated easement. (That case was finally settled in 1998, when a court judge gave the land trust permission to demolish a house built on easement-protected property.)

Landowners concerned about the long-term problems easements present may want to consider alternative methods of land preservation, such as donating land (or selling it at a reduced price) to a nonprofit conservation organization. Both approaches offer permanent protection of natural areas, and the tax
advantages of an outright gift can exceed those of a conservation easement.

Such gifts generally do not come about overnight. "Earning respect, proving integrity, and establishing the long-term relationships with individuals necessary to show property owners how donating or selling land can be in their financial best interest, takes time," explains Geoff Maclay. "This work often begins in backyards or at kitchen tables, where friendships and trust are developed before documents are drafted."

Many property owners are drawn to easements because the preservation method allows them to retain ownership. The relatively low cost of purchasing or accepting initial responsibility for easements may be similarly attractive to nonprofits. But costs associated with monitoring and defending conservation easements in perpetuity may be substantial and must be provided for if the donor's intent is to be enforced.

Another way to make the same point is that acres protected by ownership are clearly assets, while those protected by easements come with liabilities attached-in the form of the aforementioned legal challenges.

It is exhilarating to imagine a future in which large chunks of open space are protected by a network of easements, providing everlasting countryside at less than the cost of private ownership. And indeed, private land trusts across the country have made remarkable contributions toward improving, protecting, and preserving natural resources. But unless they are carefully planned, conservation easements can also be expected to fatten file cabinets and inflate transaction costs.

Mary Jo Joyce is an associate of the Cedar Lakes Conservation Foundation. Statistical information cited in this article was obtained from studies conducted and published by the Land Trust Alliance.