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May/June 2007
Volume I; Issue 2
Special Report:
Conservation Easements

Land Trusts: Partner or Predator

By David Howard

You can’t talk about Conservation Easements (CEs) without a discussion about land trusts. The meteoric rise of these property partners was necessitated by the expansion of the use of easements to lock up property and prohibit development and/or resource production.

Land trusts are generally, if not exclusively, non-profit organizations and, as such, are exempt from nearly all taxation. Although some easements are held directly by government entities, the majority of them are owned and controlled by the trusts.

The largest of these is The Nature Conservancy, a national organization with substantial ties to the mega-environmental groups whose legislative and grassroots policy of locking up land provides the impetus for the easements in the first place.

“Trust,” in the legal sense, is defined by Webster’s as “a legal title to property held by one party for the benefit of another.” The trustee is the land trust and the beneficiary is, most generally, the government. As taxes increase in rural areas, the appeal of these easements are touted by the trusts in an almost carnival atmosphere. “Save on taxes, and save the environment too!” Today it seems we almost have a reverse land rush to give it all away so we can “save” it.

Land trusts are generally perceived as being some sort of white knight riding to the rescue of the poor bedraggled landowner. Full of noble purpose, they advertise a way to save the farm, noting their non-profit status and implying that they are performing a donated civic service.

Indeed the numbers are astounding; the last few years have witnessed a huge increase not only in land trust formation, but also in the amount of land that has been subjected to easements (see table). Additions to a number of pieces of federal legislation will serve to exponentially increase even these totals.
Provisions of the Pension Protection Act of 2006 have greatly enhanced the incentives to restrict property with Conservation Easements. Offsets of income subject to taxation are huge. Prior to this, individual taxpayers were only allowed to carry forward the value of a conservation contribution that exceeded 30% of adjusted gross income(AGI) for up to five years; under this legislation, the contribution can be in excess of 50% of AGI for up to 15 years and 100% if you are a bona fide farmer or rancher. The beneficiaries of this largess will be the land trusts and ultimately government land ownership.

The “game” is played as follows: The federal and state governments force programs on local municipalities that they don’t want and can’t afford. Taxes increase exponentially. Landowners are squeezed and can’t afford the taxes. The Federal government passes a Pension Act, or some other legislative vehicle and the land trusts are there to “help” you through the hard times with a tax break CE. Voila, another couple of hundred thousand acres of land is out of production.

A similar scheme is reasonably evident in the federal legislation S 700, the Endangered Species Recovery Act, where the trigger is endangered species habitat. Under the bill, the government can designate your land as habitat for anything they consider endangered and the value of your land plummets. You could sell it for pennies on the dollar (assuming you would want to), but who wants that kind of loss? So, what do you do?

Here comes that white knight again; “Hi I’m from the government (more than likely a land trust acting as real estate broker for the government) and I’m here to help you!” Under their scheme, they will pay the landowner to restore or create habitat, but they must put together a 30-year plan of action to save the critters called a Qualified Perpetual Habitat Protection Agreement. In return, the landowner gets a recovery credit on their taxes for five years and the Secretary of Agriculture, and/or State and/or Defense gets to be their land partner forever!

It has long been believed that the majority of land trusts exist primarily to execute government land acquisition programs. The land trusts offer easements in specific target areas, purchasing outright pivotal sections, all the while shrinking the tax base. This inevitably results in higher taxes, which in turn force more landowners into the easement trap and on and on.

As the purchases proliferate, the problem worsens until the remaining properties restricted by easements become impossible to sell on the open market, leaving the land trust as the only buyer even remotely interested. Seeing the handwriting on the wall, the landowner cuts his losses and accepts whatever the trust will pay just to get out from under the burden, usually at a fraction of its original value.

An interesting and disturbing fact concerning these easements and the ultimate outright purchase by the trusts, is the joining of the split estate. When an easement is granted, part of the bundle of rights that exist in property are split between two parties. The rights to develop or log or graze, whatever is stipulated, now belong to the trust; the remainder belongs to you. However, when the trust that held the easement buys the land, the split estate is now joined and the result is to extinguish the easement!

The trust is now able to do whatever they please with the land without any restriction. Land that could not be logged or developed can now be, in theory, used to build a 20-story hotel. There have been cases where shoreline property, which was once restricted by easements, was developed in this fashion.

There are always two sides to the story, but the white paint on this knight’s horse is mere watercolor running off in the rain, as more and more land is restricted. The result is a further erosion of our resource production capabilities, making us more and more dependent upon other countries for the very natural resources that we have in abundance.