web space | free website | Business Web Hosting | Free Website Submission | shopping cart | php hosting

Rescuing Private Property Or The Ruination Of Future Generations?

Part 1.

Conservation Easements

Rescuing Private Property Or The Ruination Of Future Generations?

By J. Zane Walley

Article and research funded by a grant from the Paragon Foundation

There is no question that this series of articles will brew a storm of controversy. Hopefully, they will spark debate on this murky and potentially risky property option. Conservation easements (CEs) are viewed as a saving grace by many private property owners and as an irreparable mistake by others. Most property owners are still scratching their heads trying to figure out inherent pros and cons, but practically all agree that the long term actuality of selling or giving a CE will not be known for generations.

The major contention is that a CE could save family land from the taxman upon the demise of the owners, but would, through inevitable economic conditions, force heirs to sell the property at greatly discounted prices to the organization holding the easement. The pro-easement camp believes that the financial and tax advantages are sufficient to guarantee family land can remain with kin perpetually instead of being subdivided to pay taxes.

There are no simplistic explanations on the pros and cons of conservation easements because they are infinitely complex. In these articles, Ill present hard facts, findings, examples, and interview property owners subscribing to both schools of thought. Additionally, I solicit your observations by email and letter for possible inclusion in the series. This column series will run in six monthly installments. When completed, the entire article will be available from the Paragon Foundation.

WHAT IS A CONSERVATION EASEMENT?

Researcher Gina Brosig, in an analysis for the American Farm Bureau Federation used the Texas Natural Resources Code (TNRC) as an example. TNRC defines a CE as "a non-possessory interest of a holder in real property that imposes limitations or affirmative obligations." Black's Law Dictionary defines an easement as a "right of use over the property of another."

Ms. Brosig abridged the CE concept writing that; "Conservation easements are more like restrictive covenants than easements. A grantor who enters into a CE agrees to dedicate the portion of his property encumbered by the easement to a specified use (or non-use as the case may be) or agrees to adhere to specified practices thereon-in perpetuity. Common law dictates that the original parties must intend for the restrictive covenant to run with the land and the covenant must bind the parties and their assigns. In other words, a landowner who enters into such an agreement not only signs away his right to change the use of the land, but also gives away the rights of any future owner to change the use of the land."

To understand CEs, view your property as a bundle of distinct rights that can be separated. Examples are mineral rights, water rights. Your development rights prevalently constitute the most valuable portion of your entire property rights package. Commonly, when you sell or give a conservation easement, that is what you, your heirs and all future owners lose. The right to develop the property, and in numerous cases the right to use portions of your land and its resources.

CEs HIGHLY COVETED BY U.S. REGULATORY AGENCIES

Is a CE valuable? The Feds sure want them. An example lies in recent federal agency taking-actions. They have devised a method to take conservation easements without paying a dime. Brent Mitchell, Director of the Atlantic Center for the Environment, Massachusetts, notes that an agricultural landowner is soon to be assessed a monetary fine by the Environmental Protection Agency (EPA) and the U.S. Fish and Wild Service for violation of the Endangered Species and Clean Water Acts. The agencies are interested in offering a settlement package in lieu of the fine to include the "donation" by the landowner, of riparian easements on the property which was disturbed. Brent Mitchell was distressed by this action. Not over the right or wrong of federal agencies seizing private property under the auspices of their regulations, but rather how it would be viewed by the public.

Mr. Mitchell stated "Several questions have arisen. Who should hold the easements? A local land trust holding the easement presents the appearance of the federal government coming into an agricultural valley, condemning land and handing it over to a private non-profit. The state or a federal agency might be the most palatable entity to hold the easement."

Tim Howell, an U.S. Government environmental attorney, states that federal agencies can take conservation easements in lieu, or as a part of the penalty process. He noted, "This option falls under the EPA's supplemental environmental project (SEP) policy. A SEP is an environmentally beneficial project which a violator voluntarily agrees to perform as part of a settlement of an enforcement action. In return, EPA agrees to reduce the monetary penalty that would otherwise apply as a result of the violation(s)." Attorney Howell also noted that "Some federal agencies may hold such easements."

Bluntly stated, it seems that EPA and other regulatory agencies can issue an ultimatum. "Give us the most valuable portion of your property rights or well take your money!" Furthermore, the responsible federal agency can assign those rights and the power to enforce the restrictive covenants to an environmental organization such as the Sierra Club or The Nature Conservancy.

At present some commercial lenders take a dim view of loaning monies on properties that have lost the most valuable asset, the potential for future development and change. The con-forces contend that because of the vastly diminished value of the land, any Ag operation will eventually fail, because as any farmer and rancher knows, his best business ally is his banker. The pro-easement side contends that land with existing CEs are becoming a highly sought after asset which increases the loan value.

In the next column, I will interview a cross section of bankers and lenders for their views on the influence of CEs on loan value. .

To contact the author with your opinions on CEs, email me at frc@pvtnetworks or write, J. Zane Walley, P. O., 161, Lincoln, NM 88338.

Visit the Paragon Foundation Website at http://www.paragonpowerhouse.org. To receive the free monthly Paragon Foundation Newsletter call toll free 1-877-847-3443.