Conservation Easements

Mary Byrd Davis

As of 1993 conservation easements protected to one degree or another at least 2 million acres of land in the United States. The figure must be considerably larger now, because conservation easements are used increasingly by both governmental agencies and conservation organizations. In some cases the easements are striking successes. In others, alternative means of protection might have been preferable. Here I shall briefly discuss what conservation easements are, then talk about conservation easements as applied to working forests, and finally list some pros and cons, and say a few words about alternatives.

What is a conservation easement? A conservation easement is a legal agreement between a property owner and a government agency or nonprofit organization according to which the property owner limits the activities that can take place on the property. Terms of an easement are usually tailored to suit the particular piece of property and the interests of the owner. The easement is recorded with the deed for the property and is perpetual. Thus it binds future buyers of the land as well as the owner who entered into the agreement. Conservation easements are voluntary agreements. Property owners retain title to their land, they can sell it when they wish to do so, and they do not give up any rights that they wish to keep.

Easements may carry financial benefits for the property owners. If the donor gives the easement or sells it for less than fair market value to a public agency or preservation organization that qualifies as a public charity, the donor may be able to claim a tax deduction. The difference between fair market value of the property before granting the easement and fair market value afterwards can represent a charitable contribution. Furthermore, local annual property taxes may be reduced, because the easement means that the value of the land has dropped. In an area slated for development, an owner's giving up the right to develop can mean a difference of thousands or even millions of dollars in the value of the property. Reduction of the official value of the property also reduces any estate taxes.

Not every tract of land qualifies for a conservation easement, however. The IRS is somewhat picky about the donations that are tax deductible. The easement must be donated "exclusively for conservation purposes" as well as being perpetual. Internal Revenue Code 179(h) generally defines "conservation purposes" to include (and I quote from a publication of the Land Trust Alliance):

Above and beyond IRS requirements, the organization that accepts the easement must be convinced that the land is worth saving, because easements represent a heavy commitment. The recipient is responsible for monitoring the easement to see that whoever owns the land adheres to the terms of the easement, and, if the easement is not being honored, for bringing the owners into compliance, if necessary by going to court. Administering easements requires a lasting commitment of time and money on the part of the organization.

If your land is not special in such a way as harboring rare species or serving as a link between two already protected properties, organizations may not be interested in negotiating an easement with you. Furthermore, even if an organization can accept an easement on your property, it may have to charge you for doing so. The organizations usually set up endowment or stewardship funds, the interest on which will, they hope, meet the expenses of administering the easements. An owner giving an easement is likely to have to cover the actual costs of setting up the easements--notably fees paid to a lawyer and appraiser--and to contribute to the endowment fund.

Easements today come in a wide variety of forms and may be mixed and matched with other conservation tools. To give you a couple of examples, one involving purchase and the other property taxes:

The largest area of old-growth or ancient forest in New Hampshire is 8000 acres of high-elevation spruce-fir. It is part of the 40,000-acre Nash Stream Forest acquired through a joint effort in which the state of New Hampshire, the federal government, and the Trust for New Hampshire Lands participated. The state now owns Nash Stream Forest and the state's Bureau of Forestry manages it; but the US government holds a conservation easement, which the White Mountain National Forest administers. In other words, in return for putting federal money into the project, the federal government obtained the right to make sure that the state preserves the land.

In Peninsula Township, Michigan, residents voted last year to increase their property taxes to protect farmland in the area and a rural way of life. With the money generated by the tax increase--at least $2.6 million over the next fifteen years--the township will offer farmers cash for the development rights to their land. The farmers that accept the offer will be able to continue farming and will receive in cash over a fifteen year period the difference between the value of their land if sold to developers and its value as farmland.

Although each of these cases involved a mixture of conservation tools, the terms of the conservation easements can be assumed to be straightforward. Commercial logging of the Nash Stream Forest is not envisaged. Therefore no prescriptions for logging would have been written; the purchase of development rights to the farms in Michigan does not mean that the farmers need be told how to farm.

Trickier are easements on what may be called working forests--forests from which the owners plan to cut wood either for their own needs or for sale. Here is an actual example of an easement on a working forest. The Nature Conservancy recently announced that it has acquired a conservation easement to 20,000 acres of bottomland hardwoods along the Roanoke River in North Carolina. The land is owned by Georgia Pacific, a timber company. The Conservancy will work with Georgia Pacific in developing a management plan for the 20,000 acres. The highest-quality 6000 acres, which includes patches of old growth, will not be logged; but logging will take place on the remaining 14,000 acres.

What terms can be used in an easement to ensure that a forest will be logged only in ways that will keep it healthy?

At the fall 1994 National Rally of the Land Trust Alliance, representatives of three land trusts that negotiate conservation easements on working forests described their approaches.

The Society for the Protection of New Hampshire Forests, which holds 200 easements totaling 40,000 acres, established an easement program around 1971 primarily to counter the threat of development. Concerns about forest practices were secondary. The Society has a simple, standard easement, which requires the owner to manage the forest in accordance with a management plan--the plan need not be written--and also in accordance with practices accepted by the US Cooperative Extension Service or another public or private body. The Society monitors compliance annually from the air, with followup ground checks where necessary.

Interested in modifying its policy on easements, the Society has studied the various approaches to easements in New England without finding any one best approach. As of the fall of 1994, it was compiling a guidebook of forest management for each of various ecosystem types in New Hampshire, with the thought of stating in future easements that landholders would abide by the terms of the guidebooks. Such easements would be more prescriptive than the Society's present easements but would allow for flexibility, as the guidebook could be updated over the years with the help of input from landowners.

In contrast to the venerable Society for New Hampshire Forests, founded in 1901, the Pacific Forest Trust, which has only been in existence for two or three years, has designed an easement program for working forests based on the concept of forest stewardship. It emphasizes a holistic approach--taking into consideration a full range of forest values, not just timber. Easements are individually tailored, and, in designing an easement, it considers the following questions: what forest values are to be protected?, what are the landowner's goals?, what are the goals of the trust?, what is the natural composition of the area?, what structure and functions are wanted? what practices must be prohibited (go for the major possible problems like roading and large openings)? what uses are compatible with desired goals? The easement, the trust feels, should answer these questions.

The basic steps in writing the easement are 1) establishing management goals, 2) setting up a few simple prescriptions that can easily be monitored, and 3) requiring a long-term forest management plan, with which any logging plan must be consistent. The trust must approve both the management plan and any logging plans, and the management plan must be updated at least every ten years. The prescriptions include such considerations as basal area, stream zones, forest openings, and percent of parcel in roads and landings. As its charge for the easement, the trust asks for a downpayment and then perhaps 1% of the profits from the timber logged on the property. The Society for the Protection of New Hampshire Forests asks for only $1,000 per property. The custom approach to easements costs more, in other words.

The Red Hills Program at Tall Timbers deals with estates that are typically 7000 acres in size. The owners pay a substantial sum for their easements. The goals of the easement program are to help preserve the longleaf pine ecosystem of the area and in doing so to enhance habitat for native species. It uses a management plan approach. Before the plan is set up, biological and cultural resource surveys are carried out to determine what practices are appropriate where. Clearcutting is allowed in portions of the estate that can sustain it, as in old fields. Natural areas, off bounds to loggers, may be designated. Although Tall Timbers is a long established research center, the conservation easement program has only been in existence for about three years. At the present time Red Hills is particularly interested in establishing a climate of trust. It has written model conservation easements, but actual easements vary somewhat in their strictness, according to the attitudes of the landowners.

This brings us to an important point about conservation easements--a conservation easement is only as strong as the terms set forth in the easement. The phrase "protected by a conservation easement" is common. To find out the meaning of "protected" you must learn the terms of the easement. Some conservation easements on working forests do little more than protect the land from development. A case in point, around 1992, James River Corporation sold 450 acres of shoreline on Lake Umbagog in Maine and granted a conservation easement on an adjacent 2250 acres to New Hampshire's quasi-governmental Land Conservation Investment Program for $2 million. The easement explicitly allows among other things construction of roads and dams--any disagreement about the placement of these improvements will be resolved in favor of forest management--whole tree logging and clearcutting, and application of herbicides and pesticides. Conservationists question whether the $2 million was well spent.

What are some of the pros and cons of conservation easements?

In regard to finances:

Pros:

If the donors are required to pay costs of setting up and monitoring, easements may cost the organization obtaining them nothing.

The community in which the land is located can continue to collect some property tax, although less than if there were no easement.

The person giving the easement gains tax benefits. Also, he can still sell his land.

Con:

Easements, as in the case of the James River Corporation, are sometimes purchased. In those cases conservationists should make sure that the cost of the easement is not close to what the purchase price for the land itself would be. If so, an easement may not be the way to go.

In terms of protection:

Pros:

As a general rule, easements allow government entitites and land conservation organizations to determine the future of far more land than they can afford to buy.

Easements are generally an effective means of protecting land from development. This much can be said about the James Bay Corporation easement.

Easements may be stronger than protection by law, because laws can be changed. A case in point--proposals to sell some of our national parks.

Cons:

Easements are only effective over the long term if the entity holding them remains capable of monitoring and enforcing them. They are, in other words, only as strong as the entity that holds them. Easements cannot adequately protect sensitive, rare, threatened or endangered species or ecosystems.

People who buy land with a conservation easement already on it may not be as zealous in honoring the terms of the easement as the original owners, and monitoring is generally not frequent enough to stop violations before the damage is done.

Two alternatives to conservation easements are land-uses zoning and direct purchase.

Land-use zoning to protect natural areas can be carried out by municipalities, counties, and entire states. The entity that establishes the zoning plan must, of course, have forests within its boundaries. Current use zoning (ie requiring land that remain in its current use) is being widely considered for the forests of northern New England. Even timber companies may support this means of preventing development. A major drawback is that zoning plans can be changed. As an area grows in population, plans are more than likely to be altered to meet "current needs."

Acquisition of land by a government entity or a land conservation organization is a surer means, and purchase, at least in some localities, may be more possible than is immediately apparent.

At the present time we cannot expect much from the federal government. Congress set up a small Forest Legacy Program to fund the purchase of land and conservation easements, but funding for the program has either been ended or is in doubt; and no new initiatives along these lines can be anticipated in the next couple of years.

But how about the states? Some states have strong land acquisition programs. In a purchase program that will extend to the year 2000, Florida is buying an outstanding array of state parks, reserves, preserves, and management areas, such as the Waccasasssa Bay State Preserve, protecting 27 miles of essentially old-growth coastal hammock along the Gulf. Kentucky is in the process of establishing regulations for a Kentucky Heritage Land Conservation Fund for the purchase of land for natural areas by various government agencies. The Fund will receive an estimated $5 million a year from the sale of special license plates, the unmined minerals tax, and fines for infraction of environmental laws. If Kentucky can put through such a program in the nineties how about other states?

Active alongside the states, and often helping them, are individual land trusts and national organizations like The Nature Conservancy and the Trust for Public Land, both busy here in Kentucky. The Trust for Public Land is presently helping the US Forest Service to add land to the Daniel Boone National Forest.

An often overlooked means of acquisition for conservation purposes is individual conservationists who would like to buy land to preserve habitat. The potential here is realized only in certain parts of the country, where some land trusts have established conservation buyer programs.

These programs attempt to match purchasers who wish to make an environmental commitment, and land in need of saving that the trust cannot afford to buy. One trust began its program simply by putting an extra box on its membership form to be checked by people who are interested in purchasing land and wish to be contacted on the possibilities. They were amazed at how many responses they received. They screened would-be purchasers--the tricky part of the process--through one or more personal interviews. An organization with a conservation buyer program normally maintains a list of buyers and a list of properties. It may rely on real estate dealers to a certain extent for information on buyers and on land, but, of course, does not enter into any financial relationship with the real estate firms. Some programs help several buyers pool their resources to purchase a single property.

Land trusts that run conservation buyer programs try to maintain relationships with buyers whom they have helped, and the programs hope that the land the buyers purchase will at some point come under the trust's influence, perhaps first through a conservation easement and later through a bequest. Conservation easements are not usually given until several years after a purchase, however. Ways of making sure that the landowner will eventually give the easement include obtaining a buyer's pledge to do so or an option on an easement with a bargain purchase of the easement required if the easement is not offered by a given date.

But setting up Conservation Buyer Programs need not be restricted to land trusts. Another type of nonprofit or even a concerned individual could start networking to bring together buyers and land. Conservationists should use their imagination and their intelligence to select the best available tool or combination of tools to protect a given site. 



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