Conservation Easements:Conservation Easements:an environmental strategy for an environmental strategy for natural resource preservation natural resource preservation

and conservationand conservation

NTRES431: Environmental StrategiesOctober 26, 2004

Jim Goetz, Maryann Nowak, Meghan Manion, Sarah Manley, Tracey Qi Tian

OverviewOverview

IntroductionIntroduction-- What are conservation What are conservation easements?easements?MotivationsMotivations-- Why do people decide Why do people decide to donate a CE?to donate a CE?Assessments and Tax BenefitsAssessments and Tax BenefitsCase studiesCase studies-- examples both local, examples both local, regional and internationalregional and internationalFutureFuture-- What is going to happen to What is going to happen to CECE’’s in the future?s in the future?

http://www.sierraclub.org/sprawl/report04_highwayhealth/

The nature of sprawlThe nature of sprawl

2.1 million acres/year2.1 million acres/year

““therethere’’s no there s no there therethere”” -- G. SteinG. Stein

The cost of sprawlThe cost of sprawl2.1 million acres of open space have been 2.1 million acres of open space have been converted each year to urban, residential, converted each year to urban, residential, commercial or industrial uses. commercial or industrial uses. Increased commuting distance and traffic Increased commuting distance and traffic congestion, air pollution.congestion, air pollution.US miles driven doubled from 1960US miles driven doubled from 1960--1990, 1990, despite a population increase of only 40%. despite a population increase of only 40%. Time and fuel costs = millions of dollars Time and fuel costs = millions of dollars annually.annually.

Land conservation in the USLand conservation in the USUS DOI budget = $14 billion.US DOI budget = $14 billion.507 million acres = 1/5 of US landmass. 507 million acres = 1/5 of US landmass. 104 million acres of wilderness = 1/25 of US.104 million acres of wilderness = 1/25 of US.Broad mission of the DOI can result in conflicts: Broad mission of the DOI can result in conflicts: must protect >1800 endangered/threatened must protect >1800 endangered/threatened species.species.Must ensure an Must ensure an ““adequate and affordable supply adequate and affordable supply of energyof energy””Is currently the source of 28% of US energy Is currently the source of 28% of US energy production.production.

Conservation EasementsConservation Easements

Hybrid of private initiative and govHybrid of private initiative and gov’’t incentives.t incentives.““Bundle of rightsBundle of rights”” concept of land ownership.concept of land ownership.Voluntary legal contract between a landowner Voluntary legal contract between a landowner and a NGO or govand a NGO or gov’’t agency.t agency.Limits uses of the land to protect conservation Limits uses of the land to protect conservation values values -- usually permanently.usually permanently.Allows the owner to and use, sell, lease, etc. Allows the owner to and use, sell, lease, etc. land. land. Easement holder ensures restrictions are Easement holder ensures restrictions are enforced.enforced.

Advantages of CEAdvantages of CE’’ss

VoluntaryVoluntaryIncentive basedIncentive based““Bottom upBottom up””NonNon--confrontational confrontational –– no losers because there is no battle.no losers because there is no battle.–– if wellif well--planned, always winplanned, always win--winwin

NonNon--partisanpartisanFlexibleFlexible

http://www.lta.org/newsroom/census_charts.htmhttp://www.lta.org/newsroom/census_charts.htm

Distribution of Land Trusts in the US

Source: J.A. Gustanski (1998)

http://www.lta.org/newsroom/census_charts.htmhttp://www.lta.org/newsroom/census_charts.htm

MotivationsMotivations

Land owner specificLand owner specificTwo general categoriesTwo general categories–– Long term: personal convictionLong term: personal conviction

Protect land for future useProtect land for future useAvailable for future generationsAvailable for future generationsStop sprawl and commercial expansionStop sprawl and commercial expansion

–– Short term: monetary needShort term: monetary needQuick cash for debt paymentQuick cash for debt paymentReinvestment on or off farmReinvestment on or off farm

PostPost--easement sentimentseasement sentiments

PositivePositive–– land protected forever, no fear of land protected forever, no fear of

developmentdevelopment–– monetary issue resolvedmonetary issue resolvedNegativeNegative–– 33rdrd party monitoring, loss of total controlparty monitoring, loss of total control–– restrictions on land userestrictions on land use–– lower real estate valuelower real estate value

Termination of CETermination of CE

Abandonment by easement Abandonment by easement holderholder–– violation of restrictions, poor monitoringviolation of restrictions, poor monitoringEminent domainEminent domainArbitration / judicial interventionArbitration / judicial intervention

LegislationLegislation19761976-- first federal statue recognizing CE and first federal statue recognizing CE and establishing tax deductionsestablishing tax deductions19861986-- requirements for valuation and appraisals requirements for valuation and appraisals of CE, further tax benefit schemesof CE, further tax benefit schemes19811981-- Uniform Conservation Easement Act Uniform Conservation Easement Act (UCEA)(UCEA)–– established framework for states to address common established framework for states to address common

law landlaw land--use problem, use problem, –– CE established as legally enduring land management CE established as legally enduring land management

tooltool–– allowed restrictions to be assigned to the landallowed restrictions to be assigned to the land–– accepted by 22 statesaccepted by 22 states

Legislation Legislation ConCon’’tt

TAX INCENTIVESTAX INCENTIVES

Sways people who are land rich and Sways people who are land rich and money poormoney poorFair Market ValuationFair Market Valuation““HIGHEST AND BESTHIGHEST AND BEST”” USE OF LANDUSE OF LANDProperty value is determined by a Property value is determined by a property assessor/appraiserproperty assessor/appraiserGovernment IncentiveGovernment Incentive

Different approaches assessors Different approaches assessors use to valuate propertyuse to valuate property

Sales ApproachSales ApproachCost ApproachCost ApproachIncome ApproachIncome Approach

Taxes affected by CETaxes affected by CE’’ss

Income TaxIncome Tax–– Gift DeductionsGift DeductionsEstate TaxEstate TaxProperty TaxProperty Tax–– Varies from State to State (i.e. NY)Varies from State to State (i.e. NY)–– Cohesive method??Cohesive method??

Case study of CE as an economic Case study of CE as an economic incentive for water quality protection: incentive for water quality protection:

NYS Watershed Conservation NYS Watershed Conservation Easement ProgramEasement Program

Procedure for Watershed CE Procedure for Watershed CE

Voluntary programVoluntary programIndependent, licensed AppraisersIndependent, licensed AppraisersNYC Priority list of land purchaseNYC Priority list of land purchaseValuation made by individual Valuation made by individual propertyproperty

Monitoring and EnforcementMonitoring and Enforcement

DEPDEP’’ss responsibilityresponsibilityVisit each property once a yearVisit each property once a yearRequirement for restoring to prior Requirement for restoring to prior conditionconditionMaintain good relations with Maintain good relations with landownerslandowners

Motivations and IncentivesMotivations and Incentives

New York City:New York City:-- Win development Win development

rights of riparian rights of riparian landslands

-- Avoid further Avoid further pollution to water pollution to water sourcessources

-- Gain the Filtration Gain the Filtration avoidance from avoidance from USEPAUSEPA

-- Pay less

Landowners:Landowners:-- Cash for easementCash for easement-- Deduction of taxes Deduction of taxes

*60% reduction of*60% reduction ofproperty taxproperty tax

*80% reduction of the*80% reduction of theremaining 40% ofremaining 40% ofproperty taxproperty tax

$3000 $240$3000 $240

Pay less

Potential problemsPotential problems

Ineffective acquisition of land Ineffective acquisition of land Waste of moneyWaste of moneyLoss of interest to sell easements Loss of interest to sell easements due to the restrictions of land due to the restrictions of land development in perpetuitydevelopment in perpetuity

Local Case Study

www.fllt.orgwww.fllt.org

47 Conservation Easements(and 1500 members)

RECENT ADDITIONS:RECENT ADDITIONS:10/04/04 Canandaigua (38 acres)

9/21/04 Synder Hill (95 acres)

7/13/04 Yates (84 acres)

6/29/04 Tioga (160 acres)

CohousingCohousing, Organic , Organic Agriculture...but most Agriculture...but most

importantly...importantly...A Conservation Easement!A Conservation Easement!

(Possibly) Coming soon.....(Possibly) Coming soon.....A Non Toxic Cemetery!A Non Toxic Cemetery!

Unique Conservation Easements:Unique Conservation Easements:CAVESCAVES

Environmentally and Socially ImportantEnvironmentally and Socially Important–– HistoryHistory–– RecreationRecreation–– EcologyEcology

Why Is It Important To Conserve Why Is It Important To Conserve Caves?Caves?

A. ItA. It’’s not. Theys not. They’’re underground. re underground. B. All bears live in them.B. All bears live in them.C. Phone a friend who knows from C. Phone a friend who knows from

the south. (240) 446 4001the south. (240) 446 4001

West Virginia Cave West Virginia Cave ConservancyConservancy

Goals:Goals:–– preserve/gain access to caves in usepreserve/gain access to caves in use–– protect sensitive cave resourcesprotect sensitive cave resources–– provide education to landowners/local provide education to landowners/local

governmentsgovernments–– organize conservation projectsorganize conservation projects–– solicit funding for abovesolicit funding for above

MaxweltonMaxwelton CaveCave(Common Name: Cow (Common Name: Cow ShSh**t Pit)**t Pit)

Conservation EasementConservation EasementReturned to Public UseReturned to Public UseLiability Removed from OwnerLiability Removed from Owner

INTERNATIONALINTERNATIONALNature Conservancy!Nature Conservancy!

CANADA MEXICO

AUSTRALIA

LATIN AMERICA

Future of Conservation Future of Conservation EasementsEasements

Shift from acquisition to stewardship, Shift from acquisition to stewardship, education.education.Close cooperation with municipalities Close cooperation with municipalities to plan growth together.to plan growth together.–– avoid duplicated efforts.avoid duplicated efforts.–– gain support of local govgain support of local gov’’t.t.–– minimize minimize eminent domaineminent domain challenges to challenges to

easements.easements.

Criticisms of CECriticisms of CE’’ssPotential for abuse (e.g. TNC in Potential for abuse (e.g. TNC in 2003).2003).Perpetuity clause or Perpetuity clause or ““dead hand dead hand controlcontrol””–– changes/limitations on land are less changes/limitations on land are less

severe than most types of development severe than most types of development or extraction.or extraction.

–– always amendable by eminent domainalways amendable by eminent domain–– actually preserve far more options for actually preserve far more options for

future.future.

Patchwork protectionPatchwork protection–– illusion of protection?illusion of protection?

CE discussion pointsCE discussion pointsCan of CECan of CE’’s foster a shift from s foster a shift from rightsrights--orientedoriented view of private property view of private property ownership to ownership to responsibilitiesresponsibilities--oriented oriented view?view?Is sprawl bad?Is sprawl bad?What happens when all land is locked up/ What happens when all land is locked up/ built out?built out?Is it fair for private individuals and Is it fair for private individuals and organizations to decide land use for organizations to decide land use for perpetuity? Or is it the governmentperpetuity? Or is it the government’’s job?s job?Are there unintended consequences?Are there unintended consequences?

ThanksThanks

Andy Andy ZeppZepp, Finger Lakes Land Trust, Finger Lakes Land TrustAlex Alex SproulSproul, West Virginia Cave , West Virginia Cave ConservancyConservancyDean Dean HeberlingHeberling, Attorney at law, , Attorney at law, Syracuse, NYSyracuse, NY