Property Rights Foundation of America®
Founded 1994

The Environmental Trust Bankruptcy

According to a May 3, 2005 article found in The Seattle Post-Intelligence Reporter by Robert McClure, a San Diego based conservation organization called The Environmental Trust (TET) filed for Chapter 11 Bankruptcy for "unperformed obligations" with a debt exceeding $13 million.

TET was organized as a California non-profit public corporation on October 15, 1990, exclusively for charitable, scientific and educational purposes. Specifically TET was created for the purpose of acquiring environmentally threatened and sensitive real property and engaging in maintenance, monitoring and management (MMM) of that land. These lands including mitigation lands, conservation easements, habitat conservation plans and lands within the Multiple Species Conservation Plan (MSCP) that are considered to be "critical habitat" for "endangered species" listed under conditions of the federal Endangered Species Act (ESA) that have been adopted and encouraged by local agencies.

TET entered into agreements with "permittees" requiring TET to record conservation easements and deposit 100% of all "endowment funds" collected from permittees into permanent endowment accounts for management, monitoring and maintenance of all properties in "perpetuity."

The terms of management of the properties included weed abatement, re-vegetation, restoration, fencing, patrolling and elimination of exotic (invasive) species. At its height, TET was managing about 4600 acres, amounting to over 90 individual parcels and had 12 employees.

According to information disclosed in bankruptcy proceedings (case# 05-0232l-LAl-l), TET failed to record many of these conservation easements and generally only deposited 80% of the endowment funds instead of the required 100% into the endowment account. The debtor who stated "basically, we are protectionists who wanted to grab land and save it," now laments that the organization "did not receive enough moneys to fund the obligations that it assumed and the services it agreed to provide." This was due in large part to "underfunding its services, poor planning, inefficiency in executing of its tasks, poor investment decision making and the general decline of the U.S. equity markets."

In December 2002, Don "Doc" Hunsaker II, and all TET board members, except Brad Thornburgh and Tom Hahn resigned. Frederick "Bubba" Sandford was hired in 2003 as General Manager to assess the overall health of TET.

After finding out that the corporation's books were in disarray and without funds and most of the debtor's real properties could not be sold, and that wildlife agencies would not renegotiate TET's obligations, and that neither the county of San Diego or other similar non-profits would accept TET's responsibility, TET and Mr. Sandford mutually agreed upon his resignation in light of the lack of further need for his services.

According to proceedings to wind up the Environmental Trust, it appears they will offer the fee title properties back to the original owners, including a portion of the endowment fee. All obligations and encumbrances would remain with the land.

If the original owners don't want to take the property back it would be offered to the local agency with the same conditions. If the local agencies aren't interested, it would be offered to the wildlife agencies, then to similar non-profits and finally to the State of California.

The properties were scheduled to be "disposed of on September 8, 2005. Perhaps by the time this newsletter is distributed this story will be picked up by a local newspaper and an explanation made by the local agencies (county or city).

I believe that the average person has no idea about the details or importance of the story behind the bankruptcy of TET, but I will try to lay it out and show how extreme and impossible environmental regulations and the Utopian desires of local agencies to grab land and turn San Diego County into a massive park have created this unmanaged and unfunded nightmare.

I first learned about this environmental land extortion scheme about 1988-90 after I had been elected to the local Ramona Community Planning Group and was introduced to land planning tactics known as the Resource Protection Ordinance, recently adopted by the County of San Diego Department of Planning and Land Use.

I began hearing about the taking of open space easements from building permit applicants and requirements called "mitigation for unavoidable impacts," and learned that developers and ordinary home builders were being required to either surrender land onsite or purchase land offsite to "mitigate" for habitat (private property) allegedly destroyed (during legal use) by the owner in exchange for the right to use his or her land. I not only thought this was wrong but it didn't make any sense.

Then I found out about the existence of the federal Endangered Species Act (ESA). I learned that if endangered species such as rats, insects, bugs, slugs or otherwise happened to either reside or "show up" on your land, you were in big trouble. I began to see that any attempt by the land owner to make use of his or her land would open the door to an intolerable invasion of government regulators, investigators, biologists and whistle blowers along with their books of arbitrary rules and regulations who would demand that the citizen and taxpayer who was merely trying to exercise the American Dream, would now be required to replace habitat allegedly destroyed so it would satisfy the "taking" of the precious endangered species.

Then I began hearing from the higher powers that we needed to fight "urban sprawl" by creating "smart growth." I learned that this idea was tied to the 2020 General Plan update which was intended to downzone (reduce density) in the backcountry and rural areas, while up-zoning (increase density) the urban areas. All of this Utopian plan was intertwined with a huge habitat land grab called the Multiple Species Conservation Plan (MSCP) which meant that a lot of people who had kept their land pristine for many years would be "wipeouts" while those who just happened to plan correctly and whose land was located correctly would become recipients of the great financial "windfall."

But it wasn't enough harassment against the citizen to demand free land (mitigation), the government agencies also required the "developer" to pay into an "endowment fund" in order to manage, maintain and monitor the stolen land in "perpetuity." Then adding insult to injury, the stolen land and endowment funds were turned over to irresponsible habitat protection outfits like TET to manage and who are now bankrupt.

Many of us believed that the taking of private property without just compensation was unconstitutional and that the local governments were abusing their powers, especially with regards to environmental protection (as interpreted by them) and as enforced by the powerful and oppressive federal Endangered Species Act. Due to our concerns about the residual and detrimental effects to property rights, CPPR was organized in 1994 as a means to educate, inform and assist the people concerning government abuses of power and the consequent loss of individual rights.

Back to:
Land Trusts Conservation Easements PRFA Home Page

© 2005 Property Rights Foundation of America ®
All rights reserved. This material may not be broadcast, published, rewritten or redistributed without written permission.