Op Ed Published in Agri News, Billings, Montana
January 19, 2001
The land trusts present conservation easements as beneficial to ranchers and the community at large, but they fail to reveal the benefits that accrue to the land trusts from these transactions and mislead private property owners and the general public about the downside of conservation easements.
A regional land trust's letter to the Agri News contains important distortions that help to promote the rush to conservation easements by tax-harried land owners. While I cannot speak to the specific practices of the land trust represented by the letter's author, my research here in New York State and elsewhere with many land trusts, especially the New York and national giants, displays a quite different picture than that painted by her.
It is hard to imagine a more misleading statement. The truth is that the land trusts acquire land mainly with the specific purpose of reselling it to the government, rather than holding the title themselves to keep the land as a private preserve. They often make fabulous profits when the land is rolled over to the government.
Technically, a real estate broker works somewhat differently: The broker does not take title as an intermediary, but simply collects a commission, which is regulated in each state. But, when you consider that the land trust does not generally hold unto the land and that when it is rolled over to the government the land trust may take a big markup, the result could certainly be described as being, in effect, that of acting as a real estate broker. The difference is that the practice of a real estate broker is highly regulated and that of the land trust is basically unscrutinized.
An example of the type of profit-taking by a land trust can be seen in New York State. At a press conference in November about our lawsuit challenging the State's largest acquisition ever, of 139,000 acres of land (in a mixture of conservation easements and full title) from Champion International Corp., through the giant Conservation Fund, our attorney made a startling announcement. He had studied the many sale documents involved in the 1999 transaction and discovered that the $24.9 million purchase went to the State for $30 million! That's a $5 million markup for a fast turnover of the property. Most real estate brokers would be pleased to receive a risk-free 20 percent commission.
I cannot speak for the Mr. Walley's documentation, but can attest to the research by our organization, the Property Rights Foundation of America, here in New York. Taking a lower profile case as an example, PRFA analyzed 13 federal government acquisitions from a land trust intermediary, the Trust for Public Land (TPL) for the Finger Lakes National Forest between 1992 and 1995. For eight transactions, there were quick markups, one insignificant, but the other seven varying from 22 to 165 percent. The data from which these percentages were calculated were compiled directly from transactions filed at the county record office.
New York State's acquisition of the Morgan Property on Lake George in New York is an illustration of the fact that, indeed, the State approaches the land trusts, and then stands by them no matter what the land trusts do. After being solicited with a formal letter from the State, even though the State warned the conservancy that it could not pay inordinate expenses if the State's purchase were delayed, The Nature Conservancy and its Adirondack affiliate immediately purchased the 176-acre parcel for $2.5 million.
An internal file records a state official's scrawled reaction that the acquisition was for "double our appraisal value"! No matter, when funds were finally available in 1994, the State paid The Nature Conservancy/Adirondack Land Trust $2.6 million for the parcel, imputing much of the price to "holding" costs.
It is apparent that the land trusts have an insider relationship with government. In fact, Robert Bendick, Jr., New York's former deputy environmental commissioner who was in charge of land acquisition, and who later went to work for The Nature Conservancy, proudly wrote in 1992, "The Nature Conservancy and the Trust for Public Land have systematized their relationships with state government."
The state and federal governments have no guidelines or regulations of substance, no competitive bidding, and audits in name only of the monopoly transactions that land trusts enjoy with government, whether in the form of full title conveyances or conservation easements.
If the land trusts did not engage in perpetually encumbering the property with a split title, as in the conservation easements the land trusts accomplish, the rancher would not be permanently divested of much of his equity and would not leave his legacy subject to eternal litigation to determine the uses permitted on the land.
If the land trusts would devote some of their multi-billion dollar resources to the elimination of real estate taxes paid by private owners on open land for non-used services and to the abolition of estate taxes, this would grant the rancher the same tax status as the non-profit land trusts, who supposedly do exactly the same thing with the land as the rancher. But land trusts are strangely silent in the federal estate tax debate. Land trusts benefit by the tax pressures imposed on ranchers, and they have built impressive financial negotiating skills around explaining how the rancher can benefit in the current repressive tax structure by divesting the equity in his propertyand transferring it to the land trust and/or the government.
If the land trust would provide the rancher with an informed consent contract providing for the reversion of 100 percent of title to the rancher if protective easement terms, such as non-perpetuity and non-conveyance of any part of the title to the government, are violated, it could possibly be said that the land trust is really concerned with protecting and being "available for those ranchers." But the only informed consent checklist for conservation easements of which I am aware is that designed by PRFA.
The truth is that Jay Walley is helpful irrespective of the absence of any potential profit to him from those with whom he works. He consistently conveys his reverence for the way of life of ranchers. The land trusts, however, are burdened by elitism and organizational self-interest in their work with landowners. The total financial resources of all the giants in the land trust world, plus over a thousand offshoot land trusts, has not been compiled, but The Nature Conservancy alone has assets of $l.92 billion and annual income of over $493 million. This multi-billion cadre works ceaselessly to remove land from the private sector to the government, or to government's halfway house, the land trusts. Moreover, their tactics are sometimes disrespectful of land owners, high pressured, and dishonest.
Conservation easements permanently sully the title to property,
reduce the equity of the rancher, and provide fodder for litigation
that will feed lawyers richly during future years. The tax advantages
enjoyed by land trusts should be extended to all other open-space
land holders and all tax advantages and legislation promoting
conservation easements eliminated. Ranchers should sound the alarm
about this procedure of corrupting the title to land.
Carol W. LaGrasse
Property Rights Foundation of America
P. O. Box 75
Stony Creek, NY 12878