Recommendation No. 14
The State should eliminate the use of non-government entities such as land trusts in financial transactions and government functions for land acquisition and other purposes, at least until:
In addition, all monopoly aspects of the use of land trusts should be eliminated or opened to competition.
In the alternative, the Administration (or Legislature) should establish a land-acquisition arm within the Administration separate from DEC to take over the functions of such third parties.
The use of land trusts by the State government has enormous negative regulatory impact and other negative impact on private property owners.
Land trusts operate as a tax-exempt arm of government, acquiring land and performing other functions exempt from public scrutiny, and receive many government benefits. While secretly acquiring vast tracts of land for government, they at times engage in heavy-handed or unethical tactics.
DEC deliberately conceals from the public the role of land trusts as its land acquisition agent and at times misleads the public about this to such an extent about the real role of land trusts as to amount to falsification.
Certain land transactions result in DEC paying exorbitant prices to land trusts. The monopoly which land trusts have as an insider group in relationship to DEC prohibits ordinary licensed real estate brokers and other land investors from participating in the returns involved in the government land acquisition sector.
The other functions which land trusts perform for DEC on a non-competitive insider basis include performing the Natural Heritage program, and managing land for DEC and OPRHP. Elsewhere in the country and perhaps in New York, the land trusts provide "mitigation" lands for subjects of enforcement and permit applicants. It is possible that because of DEC and the APA, the land trusts may receive extorted donations and land transactions from subjects of enforcement and permit applicants. (The APA claims to have discontinued the compulsory donation practice.) The land trusts receive consulting business from the permit office of these agencies when subjects of enforcement or permit applicants are recommended to the land trusts on a compulsory or implied compulsory basis. In addition, DEC and/or OPRHP manage and provide capital improvements and services for the land trusts on their private parks.
The use of land trusts to acquire property and hold it for subsequent acquisition by DEC and OPRHP amounts to unauthorized, unsupervised borrowing by the Administration. Neither the Legislature nor the Comptroller have approved the use of land trusts as lending agents. Realizing the problem of committing non-existent or unauthorized State funds, the Administration has skillfully worded the letters "authorizing" these purchases but these are really pledges of the State Treasury.
DEC exempts the functions of the land trusts from SEQRA and even segments projects that would bring in SEQRA review if viewed as a whole. While the land trusts receive a favored public status, they do not adhere to a code of ethics.
Land trusts acquire an excessive portion of land in certain towns, eroding the tax base on account of their real estate tax exemption, for which the locality receives no concrete benefit.
The wealthy land trusts operating in New York State are The Nature Conservancy, the Trust for Public Land, the Conservation Fund, Open Space Institute, Scenic Hudson and Hudson Highlands. Smaller land trusts of significance, such as the Battenkill Land Conservancy, Mohonk Preserve, Friends of the Shawangunks and Adirondack Land Trust, operate in certain localities and at times some of them serve as the corporate veil for groups like Open Space Institute and The Nature Conservancy.
For brevity, included are only minimal demonstrative examples of each of the main facets of the secret insider relationships and the favored status which the land trusts enjoy with State agencies and the tax law, and the inconsistencies and abuses by land trusts of the public trust inherent in their non-profit status.
1. Exempt from Public Scrutiny
There are two aspects of the fact that the land trusts are not subject to public scrutiny even though they routinely perform government functions. The first is the government's and the non-profit's concealment of the use of land trusts by government and the second is their exemption from Freedom of Information Law (FOIL).
a. DEC conceals from the public and deceives the public about the involvement of land trusts in the acquisition of land for government.
The land trusts are not widely known to be acquisition agents for DEC partly because DEC takes care that this is not publicly stated. Furthermore, DEC deliberately misleads the public about the role of land trusts. An example of DEC specifically disguising the role of land trusts in one of its publications is found in DEC's 1996 definitive Local Open Space Planning Guide. A section on land trusts apparently written with the idea to persuade planners to work with them to develop land use plans, states:
"A land trust is a private, tax exempt, non-profit organization whose primary purpose is to conserve important open land, usually by acquiring it in fee or by conservation easement and ensuring that it is effectively managed for conservation purposes."
The publication, which was prepared with the help of the Adirondack Nature Conservancy and numerous regional, State and Federal environmental agencies who would be knowledgeable of the paramount role of the land trust to buy land on a pre-arrangement to flip the property to government makes no mention of this primary purpose, a distortion by omission so extreme as to be a falsification.
Helene Goldberger, a DEC administrative law judge in a position to be well-informed about the function of land trusts to flip land to government, wrote deceptively in an article on land trusts in New York Environmental Law Report,
"For most land trusts, there are two basic methods of land preservation: fee ownership and conservation easements."
She gave no hint of the big DEC money passing hands to land trusts in New York for their role in acquiring lands for the agency.
It should be noted that the situation of the evasion of public scrutiny by the land trusts applies to the real DEC land acquisition plans. DEC and the land trusts maintain secret land acquisition maps which they use to keep tabs on the stages of acquisitions and their real goals, as opposed to the ludicrously long-term or unrealistic descriptions spread throughout the published DEC Open Space Conservation Plan. Since the secret maps are indicative of how regulatory applicants will be treated by DEC, it is of paramount importance that DEC be forever required to make them public.
I have copies of the secret maps for the Putnam County region, which are perhaps kept in that regional DEC office. They are planning devices and progress keeping sheets, whereby each stage of acquisition by whatever entity, including land trusts and DEC, are crosshatched according to a legend.
A number of years ago I became aware of a carefully guarded secret land acquisition map in the DEC headquarters covering at a minimum the entire Adirondack Park and made a FOIL request to see it. General Counsel Marc Gerstman denied the request but admitted the map was there. I obtained a small portion of this map later. Subsequently DEC denied the map ever existed.
b. Exempt from more than cursory financial scrutiny by the Comptroller's Office and largely unnoticed by the Legislature
The Comptroller's and DEC's scrutiny of the costs submitted for "reimbursement" by land trusts is non-critical in accepting of questionable and unsubstantiated charges.
For instance, when the DEC appraisal of a parcel known as "Canoe Carry East" on Long Lake in Hamilton County was lower than the amount sought by the land trust, The Nature Conservancy negotiated the signature of an earlier landholder (at no charge) to drop an encumbrance restricting development. The earlier landowner undoubtedly knew the land was being conveyed to the State, which would make it fall under the Constitution's "Forever Wild" clause, anyway. By getting the owner's signature for this meaningless dropping of an encumbrance, which would not have happened on the open market, the land trust was able to provide "documentation" for a jump of $200,000 in the price of the parcel and sell it to the State for $760,000 as the land trust desired.
In another aspect of this sale, I sought to know whether $31,049.71 of interest and overhead charges claimed by the land trust were real charges or merely imputed charges. No documentation was required by DEC for the overhead except that two multipliers were applied to parts of the purchase price. Interest charges appeared to be imputed charges related to TNC's own funds.(1)
The Natural Heritage program involves the sharing of DEC facilities in Latham, with The Nature Conservancy working on the DEC premises. Off-budget compensation by allowing the use of office facilities has the disadvantage to the public of hiding a contractual expense as overhead.
c. Records and meetings of land trusts in their role as land acquisition agents for government are not accessible under Freedom of Information Law.
Only those relatively few land trust documents that are on file at government agencies can be accessed under Freedom of Information Law.
But even these documents are denied if the State asserts the argument that deals for land are involved which have not been completely consummated.
The purpose of the exemption from FOIL was to prevent land speculation that would drive up the price of land to the State. In my view this exemption was applicable for purposes of protecting the government from paying exorbitant prices for land to be acquired by eminent domain for highway and other public works construction, but no such anti-inflationary concern exists with the environmental acquisitions. In addition, the land trusts themselves can be major culprits in respect to such inflation.
A lawsuit is currently being appealed from Rockland County Supreme Court where Justice William E. Sherwood dismissed an attempt by Ramon Lugo, Jr., to open the files of Scenic Hudson and Scenic Hudson Land Trust under State Freedom of Information Law on the basis that they perform government functions.
A FOIL lawsuit was won in 1995 by the Town of Putnam in Washington County, forcing DEC to open five years of documents in a $2.6 million Lake George land acquisition involving The Nature Conservancy and its Adirondack affiliate.
d. The Natural Heritage Program is exempt from FOIL
This joint DEC/TNC program is exempt from Freedom of Information Law by statute,(2) which TNC requires in every state where it conducts this program. TNC claims that it will provide any landowner with whatever data there is on the landowner's property, but this is an informal guarantee. Furthermore, a prospective buyer has no access to data that amounts to an encumbrance, often more powerful than any filed lien, on the use of land he might buy. The APA uses the listing of Natural Heritage sites to evaluate whether permits are granted.
2. Monopoly, Non-competitive Relationship to Government
Other non-competitive, monopolistic sectors, most notably utilities, are subject to intense government regulation and public scrutiny. Land trust contracts with government are determined on a non-competitive basis, whereby a small, wealthy insider group has a monopoly on the services offered, yet there is no government regulation of their services and they are exempt from public scrutiny.
The most notable government services(3) or functions they perform most exclusively are land acquisition, biological land management and the Natural Heritage program. (This is not to deny that any other entities may to a minor or insignificant extent participate in the providing of these services.)
Part of a broad research program that presents a threat to private property owners, the State's Natural Heritage Program includes contracts to appraise biological resources on certain State-owned land. In one of these Natural Heritage survey contracts with TNC, a resolution asserts that the contract is awarded without competition because of the unique expertise of TNC. But elsewhere in the contract documents that statement is contradicted by a list of a substantial number of outside contractors TNC could draw from to execute the contract.
With respect to the State's use of land trusts as intermediaries to acquire land for the State, all evidence and information points to there being no competitive shopping, openness or competition for these intermediary services. Not only are no valid reasons advanced for this insider dispensation of land acquisition contracts, but inadequate explanation exists for the State's failure to publicly bid (at least for many of its acquisitions, which are often indiscriminate) the direct purchase of land from property owners without an intermediary.
Fire Management Monopoly Safety Questions Raised
For one of the areas of land management, for instance, TNC, I understand, has an exclusive on fire management, known as controlled burns, of pine barrens, whether in Suffolk County, Long Island, or the Albany Pine Barrens. It is unknowable why the State cannot draw up specifications for fire management and competitively bid this work. In fact, two recent indications of the mentality of certain elements in TNC indicate that the State should be hesitant in contracting with this land trust for fire management. One instance is a strange remark of TNC's fire ecologist Andy Windsich quoted in a travel magazine (Subaru Drive, Summer 1997 p.12) where he appears to advocate that the use of wildfire should be substituted for the use of controlled burns in New Jersey's Pinelands. Another concern is TNC's burn plan for the Clintonville Pine Barrens in Essex County. Howard Aubin, a neighboring property owner, has raised questions about the potentially inadequate 6 to 9 ft. wide fire break, primitive fire fighting equipment, the inappropriate meteorological criteria for burn days and other concerns.
3. Excessive Prices Paid for Land
Since the exorbitant price paid by the Cuomo Administration to The Nature Conservancy/Adirondack Land Trust for the Morgan Property on Lake George was defended with full vigor by the Pataki Administration when we brought a taxpayer action in 1995(4), this extensively studied sale is a suitable example for the purpose of this report.
When TNC/Adirondack Land Trust bought the property in 1990 to flip it to DEC, expecting that the Environmental Bond Act would pass, it paid $2.5 million, which was, according to DEC documents, "double our appraised value." However, in the closing days of the Cuomo Administration in December 1994, DEC paid TNC/Adirondack Land Trust $2.6 million for the 176 acres of steeply sloping land. To rationalize this price, DEC/TNC had taken additional appraisals during the intervening years which did, indeed, show continually increasing value, even though these values occurred in a declining market. The Comptroller's office did not question such strong gains in this situation.
One of our observations while studying this transaction was that the State allowed an extremely high percentage compensation for land trust expenses over and above the value DEC finally attributed to the property. The State allowed the land value of $1,925,000, and accepted $675,000 as expenses to be reimbursed. The State had no real monetary guideline controlling percentage increase that could be added to the State's valuation to pay for the land trust's expenses. An example in a guide used by DEC calculated to a percentage of between 10 and 15 percent, which seemed justifiable in many circumstances, but in view of the DEC's announced 1990 policy to the land trust that it would not pick up long-term holding costs, the 35 percent compensation above DEC's appraisal was excessive. We think the State overpaid by $1 million, and that the TNC/ALT purchase for $2.5 million before the Bond Act passed was arrogance that did not deserve a bailout.
The Canoe Carry East purchase was, as noted above, another example of a bloated price.
Because of these inflated prices and others not cited here, an audit of all third party DEC/OPRHP land acquisition is needed.
4. Evasion of SEQRA (State Environmental Quality Review Act)
a. Development projects involving state agencies
While others are dragged through every imaginable costly administrative hoop that DEC can hold up, the land trusts working with State agencies escape SEQRA costs entirely. For example, in their 1995 lawsuit against the State Office of Parks, Recreation and Historic Preservation, Robert Ray and Sour Mountain Realty contended that DEC illegally "segmented" a project to improve as a park and manage Scenic Hudson's land because it neglected to include the second stage of the plan, which was to transfer the land to the State.
b. Evasion of SEQRA during land acquisition
DEC does not perform an environmental impact analysis of land acquisition projects, nor require the land trusts as its agents, to perform one. DEC has only the generic statement for the entire Open Space Conservation Plan, which is little better than useless, a mockery of SEQRA.
Notably missing from DEC's process of land acquisition is the analysis of economic impact on the local community and a study of the short and long-term land acquisition domains of which each parcel acquired by a land trust is a portion. The requirement for such study of the short and long-term land acquisition domains for towns, counties and regions follows from the law against segmentation of the environmental impact analysis.
5. Multitude of Government Functions Provided by Land Trusts
The land trusts provide a number of important, questionable government functions which are not subject to competition, arranged on an "insider" basis. These government functions present troublesome aspects, discussed here and elsewhere.
a. Land acquisition agent (see above)
Information is not available to reveal the full financial extent of the land trusts' involvement in acquisition of land for the State government. One of the areas where they are most active is the lower Hudson/Hudson Highlands, where their behind-the-scenes activities and acquisitions and their nebulous status stimulate insecurity on the part of landowners.
One of the conflicts of interest DEC and OPRHP allow of Scenic Hudson is that the agencies have appointed Scenic Hudson to sit on the DEC Region 3 Land Acquisition Advisory Committee where the official plans are advanced for land acquisition while Scenic Hudson is a vendor of such lands. Scenic Hudson does not recuse itself from discussions related to land sales it could transact.
b. Natural Heritage Program (see above)
The joint TNC/DEC Natural Heritage Program raises Fourth Amendment landowner privacy issues involved in those facets of the program that involve wildlife inventories on private land, as well as simple practical concerns for the economic well-being of landowners when regulatory data is accumulated, especially on a GIS computer database (see "GIS" in Recommendation No. 20) that can restrict the use of private land without compensation. There is also a public interest issue of TNC retaining proprietary rights to jointly funded research. (TNC has a Natural Heritage program tied to state universities in each state. Finally, there is the secrecy issue discussed above, since the Natural Heritage data bank has been exempted from FOIL.
c. Managing government lands for wildlife
The New York City Watershed agreement which the Pataki Administration negotiated provides for the land trusts to receive and manage the land the City buys under the 10-year, 355,000-acre acquisition plan. TNC performs land management for other state and federal government agencies but it is unknown at this writing whether the land trusts are involved in directly managing any New York State-owned land for wildlife purposes. At the present time, however, TNC is receiving habitat management easements on 1,000 acres of land in the Dead Creek Flow of Raquette River which Niagara Mohawk Power Corporation is deeding to DEC.
d. Fire management of State lands
Because the species dominating pine barrens are considered fire-dependent, TNC is involved in maintenance of such barrens by use of controlled burns. In New York, TNC does fire management at the Albany Pine Barrens, the Long Island Pine Barrens central core area and on State land at the tip of Long Island's South Fork. (See discussion above.)
e. Providing "mitigation" lands required of permit applicants
We lack New York examples but understand that TNC and other land trusts are involved in almost every state providing "mitigation" lands which permit applicants are required to purchase from them to offset impacts on wetlands of their own which they'd like to develop.
6. State Government Benefits Bestowed on Land Trusts
In addition to their real estate and other tax-exempt status, the land trusts enjoy more unusual government benefits.
a. State government management of private parks
(1) In 1995 Robert Ray and Sour Mountain Realty sued the State Office of Parks, Recreation and Historic Preservation because it entered into a contract with Scenic Hudson to manage Scenic Hudson's private Fishkill Ridge land for free, which is an unconstitutional gift of state funds. The management included both upkeep and capital improvements.
(2) DEC manages lands owned by Scenic Hudson in the Towns of Esopus and Windsor.
b. Coerced cash donations by permit applicants and subjects of enforcement
Until a top-level directive to the staff in the Summer of 1997, the Adirondack Park Agency was requiring cash donations to environmental non-profits by permit applicants and subjects of enforcement.
This practice is widespread nationally, where land trusts are often the non-profits selected for this highly objectionable benefit. I do not know whether DEC practices this extortion in New York or whether the APA staff has discontinued the practice.
c. Permit applicants required to use consulting services
The Adirondack Park Agency recently advised a property owner who inquired about agency jurisdiction that he was free of agency jurisdiction but should work with The Nature Conservancy in developing his property in an environmentally sound manner, according to Howard Aubin.
On a grander scale, TNC came into the denouement of the Whitneys' application to develop the great camps on 15,000 acres of their Adirondack property. TNC was involved as the third party acquisition agent and in the crafting of the conservation easement to be imposed on the rest of the Whitney land, which the Whitneys ultimately rejected.
d. Bounty hunting awards
The Open Space Institute was created to be a repository for the generous settlements garnered in bounty hunting pollution control lawsuits by the Natural Resources Defense Council. Both the land trust and environmental litigator are located in Manhattan. I do not know to what extent, if any, settlements of citizen environmental lawsuits related to corporations affected by New York State law have generated bounty awards to OSI or other land trusts in New York.(5) Judging by the procedure at the APA of attaching donations as stipulations to permits and enforcements, this is a potential area of concern.
e. Favored status as developers
Like TNC, Scenic Hudson is now expanding its role to that of a developer. The land trust is doing a waterfront project in the City of Beacon which includes a marina, park, residential and business development. In Ossining, Scenic Hudson is a "partner" with the municipality in waterfront development. It is understood that Scenic Hudson has favored regulatory consideration for its Hudson waterfront development, which with less favored developers could otherwise face insurmountable regulatory barriers. A similar benefit is said to apply to Open Space Institute. Considering the stranglehold DEC and the land trusts exert on other property owners, the future possibility exists that ultimately OSI and Scenic Hudson combined could become the largest developer in the Hudson Valley.
f. Government grants
Land trusts receive numerous government grants. In 1997 Scenic Hudson sought a $25,000 grant from NYS Council on the Arts for which "key projects" included "a lawsuit and citizen information campaign to mitigate visual impacts of expanded mining proposed at Thalle Quarry and Sour Mountain Mining..." (application NYS Council on the Arts, 1997/98, p.7)
7. Real Estate Tax Exemption
The land trusts receive a real estate tax exemption without conferring a benefit on the local community assuming the financial burden for the unpaid taxes. The exemption thereby has a net negative financial impact on the community.
a. Tax exemption broadly construed
In the case of Town of Putnam v. the Adirondack Land Trust, the Appellate Division Third Department even rejected the Washington County town's argument that the land had to be accessible to the public to at least walk on it to meet the corporate purpose of conferring a public benefit. The land trust successfully argued that just being able to canoe beside the steep property created visual access.
b. Growing financial impact on towns
Land trusts remove substantial property from the tax base. For example, the assessor in Governor Pataki's hometown of Philipstown issued a 1995 report that Open Space Institute had acquired 8.7% of the land and was on the way to acquiring 10%, all tax-exempt.
In certain instances, land trusts with deep pockets pay higher than historic market value for lands such as Hudson River shorefront, driving up assessments on nearby property.
c. Payments in lieu of taxes
(1) The land trusts often claim they assume their share of the tax burden even though their properties are tax-exempt by making payments in lieu of taxes. But this is hit-or-miss, possibly depending on the political pressures the land trust feels. In another state, land trusts have fought hard in the Legislature to retain the exemption. DEC has the bargaining power to exact commitments to PILOT's by land trusts, just as it willingly uses its clout to exact illegal permit conditions and settlements from private property owners.
(2) Scenic Hudson has such a tight relationship with OPRHP that it asked the agency to make payments in lieu of taxes to the local municipality on a Scenic Hudson property in the Hudson Highlands.
d. Impact of DEC use of land trusts
The DEC practice of using third party intermediaries exacerbates the impact of the land trust tax exemption on local communities.(6)
If for forest preserve lands, DEC purchased the property directly instead of through a land trust, the land would be immediately subject to real estate taxes. Holding periods can be several years.
8. Heavy-Handed and Unscrupulous Tactics by Land Trusts
The State agencies which deal with the land trusts on an insider basis seem to be unconcerned about the heavy-handedness of the organizations in dealing with property owners. In fact, the land trusts and State regulatory agencies appear to deliberately team up against private property owners to deny their private property rights.
a. Scenic Hudson
In addition to facing an open, expensive debate with DEC and Scenic Hudson over the environmental issues involved in his application to expand his Fishkill mine, Jay Montfort faced two quite heavy-handed tactics of Scenic Hudson. Scenic Hudson sued the town zoning board to try to force Fishkill to rescind the industrial zoning Montfort enjoyed. The property would have a lower selling price if Scenic Hudson won. When Montfort's application was under consideration by DEC, the agency and Scenic Hudson met secretly and DEC accepted a list of Scenic Hudson requirements for Montfort's application.
b. Friend of Shawangunks, Mohonk Preserve and Open Space Institute
According to investigative reporter Eric Francis Coppolino in the Woodstock Times, the three land trusts worked in concert to create the appearance that the Friends of the Shawangunks owned the land belonging to Michael Fink and Karen Pardini in High Falls in Ulster County, then went to court to obtain title. State Supreme Court Judge Vincent G. Bradley rebuked the small local land trust in December 1997 by writing that the owners of the land "clearly have the standing to assert a fraud claim" against the land trust. Coppolino categorizes the behavior of the wealthier Open Space Institute and Mohonk Preserve as one of using the tiny local group as its "corporate veil." He wrote, "Virtually all property acquired by the Friends of the Shawangunks eventually ends up either managed or controlled by Mohonk Preserve." He observed, "One advantage of this arm's length arrangement is that it can shield Mohonk Preserve from direct legal liability if a land acquisition project should backfire." ("By Any Means" Woodstock Times, Dec. 4, 1997 and speech, Third Annual New York Conference on Private Property Rights, PRFA, Albany, Jan. 17, 1998)
c. Conflict of interest at APA
A staff member at the APA who is married to a staff member at the Adirondack Nature Conservancy is the subject of reports over the years that applicants were pressured to deal with Adirondack Nature Conservancy.
d. Road closings
A Long Island Pine Barrens property owner reports that TNC is installing locked gates on driveways leading to lands of a number of other private property owners without permission and issuing them keys.
To order the complete booklet, The Property Owner's Experience (56pp. 8½ x 11"), © 1998 Property Rights Foundation of America ®, please see Publications Order Form.
The full report, Acquisition of Whitney Park Canoe Carry East
for the Adirondack Park, Report #96-1, 7pp., is available
from the Property Rights Foundation of America, Inc.
(2) The rationale for the exemption of locations of endangered, threatened and rare species and critical habitats from FOIL is that making public the locations would make the species and habitats vulnerable to poachers.
(3) The term "services" is used for want of a better term; e.g., it would make for clumsy writing to state "disservices to the public interest, in my opinion" each time the need arose to insert a short noun in a larger context of this report.
(4) The 1995 taxpayer action of LaGrasse and Salvador v. DEC in Albany County Supreme Court was dismissed for lack of evidence because we failed to present a certified appraisal. We had unwittingly expected that the court would consider our analysis of the State's appraisals.
(5) In 1996 the Pataki Administration had supported, then dropped support for, a bill proposed by Assemblyman Richard Brodsky to allow so-called "citizen suits" to enforce virtually all the State's environmental laws. Opposed by farm and industry groups, the bill failed.
(6) The intent in the Town of Putnam lawsuit had been to challenge the tax-exempt status of the land trust also on the basis that it wasn't holding the land for a corporate purpose but merely holding it for a flip to government. But DEC refused access to its files and this intent was apparent only later after the successful Putnam FOIL lawsuit. The possible outcome of this potential challenge is unknown.