Monday, March 10, 2014
There has long been debate fluttering around about whether conservation easements are charitable trusts. A recent opinion from Wyoming has me thinking about charitable trusts and conservation easements from a different viewpoint.
In Davis Foundation v. Colorado State University Research Foundation, the Supreme Court of Wyoming examined a transfer of property from the Davis Foundation and family jointly to CSU and University of Wyoming. The working ranchland was donated to the school as a way to provide a living laboratory for students to learn ranching and to provide revenue for the programs (through ranching revenues). In the process of conveying the land, the Davis Foundation also conveyed a conservation easement over the property to The Nature Conservancy. The conservation easement purports to protect the scenic and historical resources of the property and restricts possible property uses to ranching, farming, and education.
Putting aside whether the conservation easement itself was a charitable trust (and without information about whether it was sold or donated to TNC I am not gonna make a call on that one), the court found the existence of the conservation easement integral in its analysis of whether the Davis Foundation created a trust when donating the property to the educational institutions. Basically, the schools now want to sell the land (subject to the conservation easement). If the donation was a gift to the schools, they have the ability to do with the land as they see fit (within their limits as state organizations or non-profits) BUT if it is a charitable trust, the schools actions with respect to the land are more limited. The Wyoming Supreme Court held that no trust was created. It reached that conclusion in part because of the existence of the conservation easements. The court explained that the conservation easement limited what the land would be used for, not the gift to the schools. Structures of donations like this are not unusual. We see examples in many states of landowners donating fee to one entity and a conservation easement to another. This may be particularly common where the fee is donated to a government entity. This case indicates that the presence of the conservation easement may serve as evidence that the donation did not create a trust. Of course, there are no blanket rules here and one would have to look at each conveyance to determine whether a trust was intended. I find this fascinating. If you donate parkland to a city but also put a conservation easement on the land because you don't totally trust the city, you may have made the donation look more like a gift than a trust (which may not have been your intention!).