Friday, September 20, 2013
A new paper on conservation development provides oodles of information about conservation development in the western United States while pinpointing shortfalls with current ordinances. Conservation development for the uninitiated is well... pretty much exactly what it sounds like. It is a land-se planning strategy that requires conservation measures for new development. It can take the form of conservation easements, cluster development, conservation-oriented planned development, etc. A common feature is setting aside some portion of land for conservation in a residential development project. Many counties and local governments have laws promoting conservation development (often pledging faster project review or bestowing density bonuses).
Although not yet available in print, you can get an early view of an article in the upcoming issue of Conservation Biology by Sarah Reed, Jodi Hilty, and David Theobald that examines conservation development ordinances in 11 western states. The authors did an impressive job of reviewing ordinance for 402 counties (97% response rate-- wowzers). As conservation biologists, the authors were interested to see if the county ordinances promoted sound ecological principles. A few interesting things coming out of the study:
- over 30% of the counties actually had conservation development ordinances
- most required protection in perpetuity, but not all
- most required conservation of some portion of the land, but set no minimum sizes on protected area, rarely required connection with other protected lands or even other lands within the site
- very few ordinances required ecological analysis
- only 8% required some type of consultation with an ecologist or conservation biologist
- few required management plans
These are just a few of the points that they make, and I recommend getting the full article to learn more. This is a good article for lawyers and planners to read because it highlights some of the problems we have communicating with each other. One thing they don't answer but I wondered about is how many conservation biologists were consulted when the counties actually wrote the ordinance.
Here is the full title and abstract:
Guidelines and Incentives for Conservation Development in Local Land-Use RegulationsSARAH E. REED, JODI A. HILTY, & DAVID M. THEOBALD
Article first published online: 3 SEP 2013
Effective conservation of biological diversity on private lands will require changes in land-use policy and development practice. Conservation development (CD) is an alternative form of residential development in which homes are built on smaller lots and clustered together and the remainder of the property is permanently protected for conservation purposes. We assessed the degree to which CD is permitted and encouraged by local land-use regulations in 414 counties in the western United States. Thirty-two percent of local planning jurisdictions have adopted CD ordinances, mostly within the past 10 years. CD ordinances were adopted in counties with human population densities that were 3.0 times greater and in counties with 2.5 times more land use at urban, suburban, and exurban densities than counties without CD ordinances. Despite strong economic incentives for CD (e.g., density bonuses, which allow for a mean of 66% more homes to be built per subdivision area), several issues may limit the effectiveness of CD for biological diversity conservation. Although most CD ordinances required a greater proportion of the site area be protected than in a typical residential development, just 13% (n = 17) of the ordinances required an ecological site analysis to identify and map features that should be protected. Few CD ordinances provided guidelines regarding the design and configuration of the protected lands, including specifying a minimum size for protected land parcels or encouraging contiguity with other protected lands within or near to the site. Eight percent (n =11) of CD ordinances encouraged consultation with a biological expert or compliance with a conservation plan. We recommend that conservation scientists help to improve the effectiveness of CD by educating planning staff and government officials regarding biological diversity conservation, volunteering for their local planning boards, or consulting on development reviews.
- Jessie Owley
Wednesday, September 18, 2013
One of the tricky things about conservation easements is that most of purport to protect land in perpetuity but the original parties to conservations easements are probably not going to have thought of every possible future circumstance or land use. Fracking is a great example. Many conservation easements cover property that now appears desirable for fracking. The potential for fracking on these properties may not have been contemplated by the folks who drafted the conservation easements just a few short years ago. An example of this appears in the recent case of Stockport Mountain Corp. v. Norcross Wildlife Foundation, 2013 WL 4538822 (M.D. Penn. Aug 27, 2013) (Munley, J.)
A 2002 conservation easement burdens some property in Pennsylvania that now appears quite attractive for shale gas development. Although the parties involved in crafting the conservation easement discussed it over the course of several years and went through multiple drafts, no one mentioned the words shale, natural gas, or fracking. After being approached by two different companies seeking natural gas leases, the landowner sought a declaratory judgment that the conservation easement permitted fracking because ... er... because it doesn't expressly prohibit it....
Court said no go in this case based on a provision prohibiting commercial and industrial uses on the property (except for those specifically permitted). Good news for the many conservation easement holders that commonly include such language in their agreements. One interesting thing is that the CE did allow some quarrying, which the court seemed to view as even more environmentally destructive than fracking... but the court prohibited the fracking because it wasn't mentioned in the savings clause of the commercial prohibition. What the court did not reach is whether fracking would have been at odds with the conservation values of the property. That might have been a trickier one.
This is a nice example of cases we should continue to see with conservation easements as landowners seek to engage in uncontemplated activities like erecting windmills and cell phone towers.. oh yeah and probably more fracking.
Wednesday, August 21, 2013
This summer, many of us conservation easement research types received emails from the Law Commission for England and Wales. The Law Commission is similar to the Uniform Law Commission here in the US in mission (researches potential legal reform and presents suggested statutory texts), but the British version is a body established by Parliament and the US version is a non-profit organization.
When considering changes to the law, the COmmission staff assemble consultation papers. The papers present research on the legal topic at issue, suggest statutory parameters and language, and solicit comments from "consultees." Anyone who visits the website and submits the form can comment, but the Commission also contacts specific people and organizations to solicit their views. There is even a form with specific questions on the issue to complete. I thought this was a very informative and interesting approach.
As you should have already gleaned from the title of this approach, the Law Commission is examining the case for introducing "conservation covenants" into the law of England and Wales. Now, while I read the consultation paper carefully and made lots of notes (several exclamation marks in the margins of this one), I just couldn't get my act together to submit comments by the June 21st deadline. While this is just a proposal and not yet even a proposed bill, there are lots of interesting things going on in this british version of conservation easements. I thought I would highlight a few of them for you here:
(1) Specific choice not to use the word easement.
(2) No tax breaks associated with donating conservation covenants.
(3) All transactions must be voluntary, so presumably that means no exactions or eminent domain-like creations. However, the Commission contemplates widespread use for offsetting schemes.
(4) Conservation covenants are much easier to terminate or modify. With holders having power to unilaterally discharge obligations. Also suggests a judicial proceeding with specific factors that the tribunal should consider in modifying or terminating the covenants
(5) leaseholders with long leases can enter into conservation covenants for the term of their lease
Plus oh so much more.The differences between the proposed law and the US laws is significant.
I'd be really interested to hear both what consultees said in response to this paper and what you would change here in the US if we were to rewrite our conservation easement laws. (I have my own little wishlist of course).
- Jessica Owley
Tuesday, August 6, 2013
In summer, I like to put aside an hour or so each work day to read various articles and books that I have stumbled across during the busy semester but lacked time to review. Today, the top of my stacks were an article from The New American and a book by Glenn Beck. It was really just coincidence that these two hit the top of my piles today, but it has made for a surreal afternoon.
First up is an article from The New American (the publication of the John Birch Society) by Tom DeWeese, entitled Conservation Easements and the Urge to Rule. You know an article is gonna be good when the first sentence mentions the Green Mafia. DeWeese's piece argues that conservation easements are the biggest threat to small family farmers out there. I don't want to spend too much time on his article, because it is just so chock full of problems and errors that it would take too long. He conflates conservation easements and zoning law and seems to rest everything on one case study whose facts are unclear in his piece. My favorite line though is where he compares land trusts to commodity traders buying and selling conservation easements at a significant profit. That sentence on page 2 is where he really lost any credibility he might have had with me. While not an adherent of the John BIrch Society, I have been a vocal critic of the uses of conservation easements. It is always surprising to me when I see them attacked from the right. In many ways, they embody fundamental conservative ideals of promoting and protecting private property rights. Instead of saying landowners can freely enter into any contract regarding their land that they like (a clear libertarian approach), DeWeese seems to be suggesting that any limitation on property rights (even voluntary ones) should not be permitted. Without giving too much credence to DeWeese's writing on this, I am just generally befuddled by the lack of consistency in the property rights movement.
I wish I could also share an interview with Becky Norton Dunlop of the Heritage Foundation on Fox News from February 2010 where she amusingly asserts conservation easements are akin to eminent domain, but the clip no longer appears available.
After zooming through that little article, I picked up Agenda 21 by Glenn Beck. Wow is this a crazy book. Now I don't have cable tv (and would unlikely be tuning into FoxNews if I did), so I have a general understanding of who Glenn Beck is but haven't really seen much more than clips. This may explain why I had no idea what I was in for. I was looking for a book to give me the conservative take on Agenda 21 conspiracy. I gave a talk at the Western New York Land Conservancy earlier this summer, and the Conservancy chose not to advertise the talk in the Buffalo News for fear of Agenda 21 protesters. I am super a bit embarrassed to admit that I was unfamiliar with the conservative Agenda 21 battle cry. My take on Agenda 21 thus far is that it is pretty toothless. Lots of big ideas with little action. So I was pretty surprised to hear that some radical right groups appear afraid of it. Clearly they must fear what it symbolizes rather than what it actually does. Enter Glenn Beck. Someone told me that Glenn Beck wrote a book about Agenda 21 and it is a fast read. What that person failed to mention is that it is a 1984-esque sci fi novel set in a future where Agenda 21 has led to a dystopia. Wanna hear my secret? I kinda love it. It is completely ridiculous, of course, but a great beach read ... if you were willing to let people see you reading it in public.
Tuesday, July 23, 2013
I am not sure how many of you are readers of High Country News, but it is of course the go to source for news about the West (especially if you are interested in land use, conservation, or rural peoples). I get it in hard copy because even though you can get it electronically, it is hard to beat seeing their large format magazine with awesome images. An article by Ray Ring from the June 10th issue caught my eye and I thought might be interesting to some of you.
In Paradise at a Price, Ring examines how conservation goals collide with affordable housing. He uses Jackson, Wyoming to tell his tale but it is a story we have seen in many towns. Jackson has some special challenges because of its high percentage of publicly owned land, but we see similar patterns in several resort communities. The story is a simple one. Beautiful areas attract people. Beautiful areas with recreation opportunities in particular end up with communties dominated by fancy vacation homes and amenities for tourists. Real estate prices are high. But all those tourists and Californians with second homes still need goods and services. The problem is that employees of the stores, the ski resorts, the hotels, and the grocery stores can't afford to live in Jackson. This means we need afforable housing projects. Unfortunately, in areas like Jackson the affordable housing projects compete not only with other private residential development but also with conservation efforts.
This article was not about conservation easements, but its description of conservation easements in Jackson illuminated two somewhat conflicting concerns with conservation easements. I'll give you the facts and then explain my concerns.
- More than 97% of Teton County's land is public (owned by federal, state, or local government)
- This leaves only 78,000 acres of private land for development
- Much of this private land is covered by vacation homes for the wealthy
- 1964 local planning laws established overlay districts, protecting wildlife habitat and scenic views. This restricts development on 48,000 acres (leaving only 30,000 unrestricted acres).
- Conservation easements prevent development on 22,000 acres. Most (but not all) of the conservation easements are within the overlay districts
- 20,000 acres are too steep to build on (I think this may leave 10,000 unrestricted developable acres but I am not exactly sure what category these 20,000 acres fall into)
- Restrictions throughout the county limit things like building height (usually nothing over 2 stores) and include specific rules limiting construction near things like spawning areas and swan nests
Okay, so now my concerns. Note, there are many concerns here about affordable housing which are obviously just from looking at the facts above and are well explained in Ring's article, so let me just look to the conservation easement issue.
- Conservation easements are part of the problem on the affordable housing front. The restrictions on development puts up obstacles for people trying to build needed housing. Depending on your goals, you may be okay with that outcome but most of these conservation easements are ways for wealthy people to protect their views and open space (often with receiving attractive tax breaks). I know protecting these beautiful areas is important, but when we let private individuals make all the decisions about what to protect ... it makes me nervous.
- Conservation easements may not get you a lot of bang for your buck. The article states that most of the conservation easements in the community are in areas already protected by overlay districts. This makes me really curious about what type of compensation or development permit the landowners got in exchange for the conservation easements. What are they worth if land use was restricted without them. Admittedly, the conservation easements may have additional restrictions and will remain even if the County changes the contours and rules for the overlay districts. I don't have information about these individual conservation easements, and I am sure the Jackson Hole Land Trust would be pissed at perturbed by my claims but I have seen several examples from conservation easements I have dealt with directly where the landowner receives a large benefit for agreeing not to do something she never intended to do.
Just some food for thought
Tuesday, July 9, 2013
This month's ABA Real Property "Professors' Corner" teleconference will focus on Koontz, the end-of-Term exactions that is one of the most significant Supreme Court property-rights cases in recent years. (Jessie Owley has discussed it here, and Tim Mulvaney and others have weighed in around the net). This Professor's Corner session should be a good one with several leading scholars participating. Here's the announcement:
Professors’ Corner: Wednesday, July 10, 2013: Koontz v. St. John’s River Water Management District: A Significant Victory for Property Rights?
Professors’ Corner is a monthly free teleconference sponsored by the ABA Real Property, Trust and Estate Law Section's Legal Education and Uniform Laws Group. Each month’s call features a panel of law professors who discuss recent cases or issues of interest to real estate practitioners and scholars. Members of the AALS Property Section are invited to participate in the call (as well as to join and become involved in the ABA Real Property, Trust and Estate Law Section).
Wednesday, July 10, 2013
12:30 p.m. Eastern time (11:30 a.m. Central, 9:30 a.m. Pacific). Call is ONE HOUR in length.
Call-in number: 866-646-6488
This program will feature a roundtable discussion breaking down the Supreme Court’s important June 25 decision in Koontz v. St. John’s River Water Management District. If “monetary exactions” have always seemed a little untamed to you, you’re not alone. The 5-4 decision in Koontz leaves a lot of room for analysis, and this month’s panel is prepared to guide you through it by parsing the decision and the dissent. Our distinguished panel will include Professor Jonathan H. Adler, who is the Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation at Case Western Reserve University School of Law; John D. Echeverria, Professor of Law at Vermont Law School; and David L. Callies, who is the Benjamin A. Kudo Professor of Law at the University of Hawai’i.
For those that haven’t already seen it, here’s a link to the opinion:
Please join us Wednesday for this great program!
July 9, 2013 in Caselaw, Conferences, Conservation Easements, Constitutional Law, Environmental Law, Federal Government, Property Rights, Scholarship, Supreme Court, Sustainability, Takings, Wetlands | Permalink | Comments (0) | TrackBack (0)
Monday, July 1, 2013
The past few weeks have been exciting ones for Supreme Court opinions. Busily finishing a book chapter, I did not have time to read Koontz carefully until Friday and of course by that time, I also had a stack of blog postings and news articles to peruse as well by then (Note to self: Post earlier next time so I don't have to read everyone else's posts first and try to avoid repeating them). As so much has already been said (and said better than I could), I am going to highlight the way the case could affect New York law (particularly conservation easements in NY). I get giddy anytime we here the Supreme Court mention conservation easements even when well they aren't really talking about conservation easements.
As we all know by now, there are two intriguing topics in Koontz.
(1) Timing. I like to think of this as when does a takings become a takings even if that is a bit inartfully said. On this point, I think both the majority and the dissent get it right. In thinking about the life of a permit and associated takings case, we generally see a landowner trying to get a permit to build on her property. In exchange for the permit, the permit-issuing agency requires something of the applicant. For example, let's say you want to build on your 10-acre property that is mostly wetlands. The local governement may allow you to build on 2 acres as long as you restrict building on the rest of the property with a conservation easement. Nollan tells us that the government's demand must have a significant nexus with the harm. For example, where the landowner converts wetlands, the exaction should be aboout protecting wetlands or the ecosystem services provided by wetlands. Dolan tells is that the government demand must be roughly proportional to the harm caused. If the property owner is converting 2-acres of wetland to dry land, you need to make sure the exaction compensates for those 2-acres -- requiring creation of a 100-acre wetland park would likely be considered disporportionate (unless you could show that those were some amazing super wetlands that were being destroyed). Okay, so far so good. This has been the established analysis for takings in the exaction context for some years now. This case now says, what if the governement tells the landowner that in return for developing 2-acres, she needs to protect 8 acres and the landowner thinks that is not proportional (i.e., violative of Dolan's rough proportionality rule).
Could our hypothetical landowner challenge this as a takings? Note, nothing has actually been taken at this point. She had not actually given over the 8 acres.
I actually think that Justice Alito gets it right (not sure I have ever written that phrase before) here when he says, yes. It simply doesn't make sense to go forward with the project and then seek compensation for the 8 acres. This is especially true in the context of exacted conservation easements because they are perpetual. What would we do afterward if a court held that the exaction was too much? It would be pretty hard to change the perpetual conservation easement at that point and compensation can be challenging to calculate. Although I agree with Alito on this principle though, I think Justice Kagan has a better read on the facts in Koontz. Here, it looked like the Water District (the permit agency) and the landowner were in negotiations over what type of exaction might be appropriate. Koontz made an offer. The Water District made a counteroffer, but said it was interested in further negotiations. Instead of more back and forth though, Koontz jumped straight to the lawsuit. I am not sure how to figure out at what point we would say that we have the final word from the agancy and its decision is ripe for review, but it doesn't seem like this should be it. The agency was still in discussions.
It also seems that Alito and Kagan both agree that Koontz doesn't get compensation here, as again nothing was actually taken. Does he get his permit issued though? That doesn't seem quite right to me either. It seems like we should go back to the agency to get another round of negotiations and a chance to impose a proper exaction.
(2) Definitional. Now, this is a question that has been intriguing me particularly since I moved to New York. What constistutes an exaction and therefore requires Nollan/Dolan analysis versus just run-o-the mill Penn Central style inquiry. I have had severeal conversations during my brief academic career on what constitutes an exaction (with Tim Mulvaney almost convincing me that requirements to paint your house a certain color should qualify). Logically, it makes sense that anything we are demanding of the landowner in exchange for a permit is an exaction. Thus, anything that is not the permit application fee or something already required by another law should qualify. Some courts and commentaters assert however that exactions are only interests in land. This has been an interesting issue in New York because of a case called Smith v. Town of Mendon from New York's highest court. In that case, the court confusingly held that a conservation restriction was not an exaction because it there was no public access but because it was bound by precedent the court acknowledged that you could have monetary exactions. In a short piece written between oral argument and the issuance of the opinion in Koontz (for the Environmental Law Section of the NY Bar Association), I discuss the meaning of exactions in New York and ponder the potential implications of Koontz on New York's rules. It seems hard to swallow New York's definition excluding conservation easements in light of this opinion, which seems to read exactions so broadly.
Overall, it is hard not to agree with commenters who believe this decision just makes things messier for courts and complicates land use planning. Tim Mulvaney has a great summary of course, with links to others chiming in.
Wednesday, April 24, 2013
It's been a whirlwind of conferences for me this month. Two weeks ago I was at GW. Last week, we had a conference at Buffalo. Now, I am sitting in sunny but snowy Minnesota attending the 2013 Consortium Annual Conference, entitled "Legal & Policy Pathways for Energy Innovation."
My co-author Amy Morris (of Aspen Environmental) and I presented one of our current works-in-progress (yes we have three). This one we are currently calling Mitigating the Impacts of the Renewable Energy Gold Rush. In this paper, we take a close look at the mitigation being done in association with the large-scale solar projects in the California Desert. One of the challenges has been just to untangle all of the agencies and laws at play. We have been particularly concerned with the mitigation projects and methods. Projects are approved (and indeed construction often begins) before mitigation projects are finalized or land identified. And of course, the use of exacted conservation easements is prevalent throughout... something that always makes me nervous.
Most of the mitigation projects are about endangered species protection and our paper focuses on that aspect. Thus, we were not too surprised when we were placed on a panel about endangred species and renewable energy (with Kalyani Robbins and Jeff Thaler). It was one of the more contentious academic (they've got nothing on the land trust folks) panel presentations I have been a part of. It was a lively discussion about whether it makes sense to protect endangered species if the protection will in any way hamper development of renewable energy projects. Most folks agreed that climate change is likely to have bigger impacts on endangred species and ecosystem health than renewable energy development is. This raises big questions about tradeoffs with renewable energy projects and even introduced proposals to amend the Endangered Species Act!
And things are only getting started. Conference organizer extraordinare Hari Osofsky tells us that the recordings and videos of the conference will be available. You should contact her to learn more.
The Legal & Policy Pathways for Energy Innovation conference will bring together leading scholars, practitioners, policymakers, and business people to address current energy law and policy challenges, particularly at the intersection of environmental law and policy. The panels will focus on four primary topics: (1) clean energy infrastructure; (2) environmental and energy governance; (3) climate, energy, and environmental justice; (4) sustainable regions and communities.
Tuesday, February 12, 2013
This Friday afternoon the University of Utah College of Law will host a conference on perpetual conservation easements, organized by Prof. Nancy McLaughlin, whose work on the subject we have featured here on the blog. [Note--Jessie posted this previously, but here is an update:] If you can't book a last-minute ticket to Salt Lake City, the good news is--you can watch it live on the Internet!! Here's the info:
Perpetual Conservation Easements:
What Have We Learned and
Where Should We Go From Here?
Friday, February 15, 2013
12:00 - 5:00 p.m. MST
The public is investing billions of dollars in conservation easements, which now protect more than 18 million acres throughout the United States. But uncertainties in the law and abusive practices threaten to undermine public confidence in and the effectiveness of conservation easements as land protection tools. This conference will explore these issues, with the goal of minimizing abuse and helping to ensure that conservation easements actually provide the promised conservation benefits to the public over the long term. Leaders in their respective fields will address (i) the federal tax incentives offered with respect to easements donated as charitable gifts to certain qualified holders, (ii) the state conservation easement enabling statutes, (iii) federal and state oversight of charities, and (iv) the role of state attorney general offices in the charitable sector and in the protection of charitable assets on behalf of the public. Read More >>.
The full conference agenda is available on the website. An abbreviated version is listed below.
12:00-12:20 p.m. - Introduction
12:20-1:20 p.m. - Federal Tax Incentives
1:20-2:20 p.m. - State Enabling Statutes
2:45-3:45 p.m. - Charity Oversight
3:45-4:45 p.m. - Working with State Attorney General Offices
4:45-5:00 p.m. - Closing remarks
For more information call 801-585-3440 or send an email to firstname.lastname@example.org.
Thursday, January 24, 2013
I am bummed I can't make it out to Salt Lake City for what looks to be a fascinating half-day symposium on conservation easements. But organizer Nancy McLaughlin tells me that we can watch remotely. Right now, Utah will enable folks to watch the conference while it is happening. If they can get the presenters to agree, they will also record the presentations and make them available. Details below:
February 15, 2013, 12:00-5:00 p.m. MST
University of Utah S.J. Quinney College of Law
The public is investing billions of dollars in conservation easements, which now protect more than 18 million acres throughout the United States. But uncertainties in the law and abusive practices threaten to undermine public confidence in and the effectiveness of conservation easements as land protection tools. This conference will explore these issues, with the goal of minimizing abuse and helping to ensure that conservation easements actually provide the promised conservation benefits to the public over the long term. Leaders in their respective fields will address (i) the federal tax incentives offered with respect to easements donated as charitable gifts to certain qualified holders, (ii) the state conservation easement enabling statutes, (iii) federal and state oversight of charities, and (iv) the role of state attorney general offices in the charitable sector and in the protection of charitable assets on behalf of the public.
Nancy A. McLaughlin, Robert W.
Swenson Professor of Law,
University of Utah S.J. Quinney College of Law
Federal Tax Incentives
- History - Theodore S. Sims, Professor of Law, Boston University School of Law; Formerly with the Treasury Department
- IRS Response to Abuses - Karin Gross, Supervisory Attorney, IRS Office of Chief Counsel
- Proposed Reforms - Roger Colinvaux, Associate Professor of Law, The Catholic University of America, Columbus School of Law; Former Counsel to the Joint Committee on Taxation
State Enabling Statutes
- History - K. King Burnett, Uniform Law Commissioner, Member of Uniform Conservation Easement Drafting Committee
- Unintended Consequences of “Easement” Terminology - Michael Allan Wolf, Professor of Law and Richard E. Nelson Chair in Local Government Law, University of Florida Levin College of Law, University of Florida Levin College of Law; Editor of Powell on Real Property
- Reforms - Jeffrey Pidot, Former Chief of the Natural Resources Division of the Maine Attorney General’s Office (retired); Originator of Maine’s Enabling Statute Reforms
- Cases and Controversies - Nancy A. McLaughlin, Robert W. Swenson Professor of Law, University of Utah S.J. Quinney College of Law
- History - Marion R. Fremont-Smith, Senior Research Fellow, Hauser Center for Nonprofit Organizations, Harvard University
- Limits of Self-Regulation - Melanie B. Leslie, Professor of Law, Cardozo Law School
Working With State Attorney General Offices
- Overview of Attorney General’s Role in Charitable Sector - Mark A. Pacella, Chief Deputy Attorney General, Charitable Trusts and Organizations Section, Pennsylvania Office of the Attorney General
- Working With the Attorney General’s Office in New Hampshire - Terry M. Knowles, Assistant Director, Charitable Trusts Unit, Department of Attorney General of New Hampshire
- Working With the Attorney General’s Office in California - Darla Guenzler, Executive Director, California Council of Land Trusts
Concluding Remarks—Taking The Long View
Wendy Fisher, Executive Director, Utah Open Lands Conservation Association
Wednesday, January 23, 2013
When it comes to conservation easements, there are a lot of tax issues that arise. Yesterday, I referred to charitable tax deductions associated with donated conservation easements. Many conservation easements also result in reduced property taxes for landowners. This varies by state law and only occurs where the conservation easement reduces the property value. Generally, however, lands encumbered with conservation easements are still taxed. In fact, the fact that the land stays on the tax rolls has been touted as a benefit of conservation easements (when compared to government acquisition of the land). That is, tax revenue generated by the land may be reduced, but the landowner is still contributing to local services. A new case from a New Mexico Appeals Court holds that for some conserved property, no property taxes will be owed.
The court held that property owned by a conservation organization, subject to a conservation easement prohibiting all construction, for the purpose of open space conservation constitutes a “charitable use” that is exempt from property taxes under the New Mexico Constitution. The state Constitution provides that “all property used for educational or charitable purposes [among various other uses]… shall be exempt from taxation.”
The local government argued that it conservation should not be considered a charitable “use” because the “land that is idle, unimproved and not in actual use” and there “is no direct and immediate charitable use, and for which the claimed environmental benefit—even if construed to be a charitable purpose—is, at best, remote and consequential.” The court disagreed, explaining that “conservation benefits the public … through maintaining the Property for the public’s benefit in its natural, pristine state without any particular human activities or construction.” The court emphasized that not all conserved parcels would meet the charitable use criteria and a case-by-case analysis will be necessary. This will likely be a hard standard to meet for most conservation easements and it is not clear how important the identity of the underlying landowner was.
Tuesday, January 22, 2013
For those of you interested in conservation easements (particularly historic façade easements), you may have been following the Scheidelman saga.The next installment is now out.
In Scheidelman v. Comissioner, T.C. Memo. 2010-151 [Scheidelman I], the landowner sought a deduction for a façade easement burdening her Brooklyn brownstone. The Tax Court disqualified an appraisal because it viewed the method of calculating the easement’s value inadequate. Appraisals must include the method of valuation used as well as the specific basis for the valuation. The appraiser applied a percentage to the fair market value of the property before conveyance of the conservation easement. The Tax Court found that the appraiser had insufficiently explained the method (i.e., the percentage approach) and basis of the valuation (i.e., the specific data used).
The landowner appealed to the Second Circuit. The Second Circuit [Scheidelman II, 682 F.3d 189 (2d Cir. 2012)] reversed the Tax Court, saying that the shortcomings of the approach should not disqualify the appraisal.
On remand [Scheidelman III, T.C. Memo. 2013-18 ], the Tax Court accepted the Second Circuit's assessment that the appraisal was “qualified” but still thought it was crappy was not credible. You can check out the case if you want to delve into the nitty gritty of appraisal methods. The most problematic issue appeared to be the fact that the appraisal just picked a number between 10 and 12% of the fair market value of the home when trying to determine the value of the conservation easement. The appraiser's reasoned that those are the numbers that courts and the IRS seem to like instead of actually looking at the property and making an assessment.
I am enamored of this case though because in the end the Tax Court said no tax deduction is warranted. The evidence demonstrates that façade easements actually increase the value of homes in this area. Additionally, the landowner herself admitted that she was seeking a tax deduction for something she would have done anyway. Here is my favorite quote from the landowner:
"Well, I was primarily interested in preserving my house itself in light of the dramatic development that was occurring in and around Fort Greene during those years and still is. I was also intrigued by the tax benefit of preserving the facade which I had intended to do anyway. …I also wanted to benefit tax wise. I didn't know how much I would benefit, but I wanted to benefit from what I was already intended to be committed to doing."
I have been disturbed fascinated by conservation easement tax deductions that pay owners not to do things they never planned on doing. In understand that there can be some value to the conservation easements becuase perhaps future landowners would have other desires, but it is hard for me to reconcile that worth with the high value of tax deductions current landowners receive. I am glad to see the IRS and Tax Court calling these landowners out. Maybe if a landowner seeks to claim a tax decuction for a conservation easement and we see that the conservation easement increased the value of their land, they should have to pay that difference to the treasury.
Tuesday, October 30, 2012
James S. Burling (Pacific Legal Foundation) has posted The Uses and Abuses of Property Rights in Saving the Environment, 1 Brigham-Kanner Property Rights Conference Journal 373 (2012). The abstract:
While freedom and property may be inseparable, the temptation to sacrifice one or the other to seemingly more critical societal goals is ever present. In the past century, the environmental-related limitations on property have progressed from zoning to advance the social welfare, to utilitarian conservation to preserve the human environment, and more lately to the preservation of the environment for its own sake. With each step, property rights have been impacted further. From the imposition of zoning, to regulatory restrictions on the use of property, and to the mechanism of conservation easements, the control of property by the owners of property has diminished. If freedom and property are truly interrelated, there may be troubling implications on the future of freedom.
Wednesday, October 10, 2012
Some of the most questionable conservation easements are those covering golf courses. A recent summary judgment ruling from the Tax Court highlights the concerns that arise. RP Golf LLC owns 277 acres in Platte County, Missouri where it has two private golf courses. It placed a conservation easement over the golf courses and claimed a $16,400,000 tax deduction (yep that’s $16.4 million to agree not to subdivide its golf courses).
To qualify for tax deductions, conservation easements must have a qualified “conservation purpose” as defined in § 170(h)(4)(A) of the Internal Revenue Code. RP Golf claims that its conservation easements meet two different purpose requirements: (1) open space and (2) natural habitat.
Deductions are allowed for conservation easements that protect open space where such preservation is pursuant to a clearly delineated Federal, State, or local governmental conservation policy. I.R.C. § 170(h)(4)(A)(iii)(II). Missouri does have a general policy to promote open space, but the policy enables counties and the state park board to acquire property rights to protect open space in counties where the population exceeds 200,000. Mo. Ann. Stat. § 67.870. As Platte County has fewer than 100,000 residents, the court concluded the golf course conservation easements were not acquired pursuant to a conservation policy.
Deductions are also permissible where conservation easements protect relatively natural habitat of fish, wildlife or plants. Perhaps somewhat audaciously, RP Golf contends that its conservation easements protect “relatively natural habitat.” It is always a challenge to determine what is “natural” these days and the court found that there disputed material facts on this issue (thus making it inappropriate for summary judgment).
This little cases raises a lot of issues regarding what we protect for whom along with what we consider natural in our increasingly developed world.
- Jessie Owley
Tuesday, October 9, 2012
As regular readers know, I am obsessed with fascinated by conservation easements. Lately, I have been particularly intrigued by valuation concerns. Where a landowner donates a conservation easement on her property, she can receive some favorable tax benefits at the local, state, and federal levels. On federal taxes, landowners can deduct the value of the conservation easement from their taxes in the same way they make deductions for other charitable contributions. This, of course, leads to valuation problems. Without an active conservation easement market, it is hard to figure out what their worth should be. Landowners want high appraisals because it increases the tax deductions. The IRS, however, has been increasingly skeptical of these deductions (especially following some 2003 Washington Post exposes about The Nature Conservancy).
This issue seems particularly salient where conservation easements (including historic facade easement) appear simply to replicate existing land use laws. In such cases, there is a strong argument that the value of the conservation easement should be zero and the landowner should not receive a tax break. Indeed, the landowner does not seem to have lost anything in the transaction. She does not change her behavior and property sales may not even be affected. The Tax Court seemed to agree with this reasoning in the recent Foster Case, where the IRS denied a tax deduction for a historic facade easement. The Tax Court upheld the IRS' finding because, inter alia, the restrictions on the property mirrored those already embodied in local law.
It is not uncommon for conservation easements to replicate or even to conflict with local zoning and land use laws. Proponents of conservation easements point out that conservation easements protect against future actions -- futures where land use codes or other laws could change but the restrictions would still remain in place. While I see there point, something still rubs me the wrong way when we pay people to do things they were going to do anyway. How can we figure out the best way to quantify the public benefit here?
- Jessie Owley
Friday, August 17, 2012
Martin D. Heintzelman (Clarkson--Business), Patrick J. Walsh, and Dustin J. Grzeskowiak (Clarkson--Business) have posted Explaining the Appearance and Success of Open Space Referenda. The abstract:
To guard against urban sprawl, many communities in the United States have begun enacting policies to preserve open space, often through local voter referenda. New Jersey sponsors such municipal action through the Green Acres Program by providing funding and low interest loans to towns that choose, through a referendum, to increase property taxes and spend the money raised on open space preservation for the purposes of conservation and/or recreation. Understanding which factors contribute to the appearance and success of these measures is important for policy makers and conservation advocates, not only in New Jersey, but across the United States. Although previous literature has examined this issue, this is the first study to account for spatial dependence/spatial autocorrelation and to explore dynamic issues through survival analysis. The traditional two stage model from the literature is extended by incorporating a Bayesian spatial probit for the first stage and a maximum-likelihood spatial error model in the second stage. A Cox – proportional hazard model is used to examine the timing of referenda appearance. Spatial dependence is found in the second stage of the analysis, indicating future studies should account for its influence. There is not strong evidence for spatial dependence or correlation in the first stage. The survival model is found to be a useful complement to the traditional probit analysis of the first stage.
Friday, July 13, 2012
Gerald Korngold has posted a new article on SSRN. Governmental Conservation Easements: A Means to Advance Efficiency, Freedom from Coercion, Flexibility, and Democracy. It already looks to be an important piece for conservation easement junkies like me. Korngold explores conservation easements held by government entities. Depending on the jurisdiction, (1) government entities, (2) land trusts, and (3) tribes can hold conservation easements. I agree with Korngold that the character of the agreements and the concerns surrounding them vary by holder. Most writing on conservation easement has focused on holder (2) – and largely considering donated conservation easements. I have been working this summer on a project examining holder (3) and this article examining holder (1) provides lots of food for thought in framing that work and in considering where and when conservation easements are a good idea. Korngold’s abstract is below:
Over the past twenty-five years, courts and commentators have recognized and upheld conservation easements as an important vehicle to preserve natural and ecologically sensitive land, focusing primarily on easements held by nonprofit organizations (NPOs). During the same period, courts and commentators have supported property rights of owners against governmental land use regulation. This paper maintains that these two independent developments militate for the increased use of consensual conservation easements by governmental entities to achieve public land preservation goals. Governmental conservation easements can realize the benefits of efficiency, consent and free choice, and conservation, while avoiding the coercion implicit in public land use regulation. Moreover, governmental conservation easements have advantages over private easements in some situations: governmental easements may be more easily modified or even terminated to address future changes in conservation values and community needs; as with public land use regulation, governmental easements must be transparent and are subject to democratic, participatory processes that NPOs do not have to follow; and properly functioning governmental ownership may be best able to discern and represent the public interest when making acquisition, modification, and termination decisions about conservation easements. I suggest that both NPO-held conservation easement activities and legitimate public land use regulation are valuable and should continue, but argue that increased use of governmental conservation easements can bring significant benefits as well.
Thursday, June 21, 2012
the mortgage wins. Because I am a conservation easement nerd savvy academic, I have Westlaw alert me every time a case mentions the term "conservation easement." For years, this yielded very few cases and I only received alerts once a month or so. Lately, I have been getting them daily. Many of these cases come from the tax court and have to do with valuation issues, one line of cases however explores mortgage subordination.
Conservation easements are nonpossessory interests in land that restrict a landowner's use of her property with a goal of yielding a conservation benefit. Many landowners donate conservation easements (i.e. voluntarily restrict the use of their property). Such donations can yield significant federal tax deductions. For a conservation easement (or historic preservation easement) to qualify for a charitable tax break, the restriction must be perpetual. The IRS, Tax Court, and others have acknowledged that it is well nigh impossible to ensure perpetuity of these things. Instead, the IRS has explained that it will consider a restriction to be perpetual if when the restriction is terminated, the beneficiary gets the proceeds. Basically, when a conservation easement is terminated (for any variety of reasons/methods), the holder of the conservation easement will get cash for its porportionate value. Ideally, the holder then uses that money to protect other lands. If your conservation easement doesn't have a provision detailing this procedure, the IRS (in theory) will disallow your deduction. To ensure that the holder will be able to get the proceeds from a land sale, the conservation easement holder must have primary rights to the proceeds. That is, other restrictions on the land must be subordinated (everyone else gets in line behind the conservation easement holder when proceeds from the sale are passed out). This is why the IRS requires any mortgages on the land to be subordinate to the conservation easement.
There have been a few cases from the tax court exploring this issue and most of them seem to involve historic facade easements. In Kaufman v. Commissioner (134 T.C. 182 Apr. 2010), the Tax Court concluded that a facade easement did not qualify for a tax deduction because it wasn't really perpetual because there was a non-subordinated mortgage encumbering the property. The landowners argued that the lack of subordination did not necessarily mean that the holder would not get its proceeds, but the court didn't care. There was a possibility that the facade easement holder would not be able to receive the proportionate share.
Last week in Wall v. Commissioner (T.C. Memo. 2012-169, June 2012), the Tax Court reached a similar result even though the conservation easement (again a facade preservation easement) declared that it all exisiting mortgages were subordinate. The court did not take the conservation easement at its word and instead looked at the text of the mortgage subordination. The two banks involved executed documents appearing to subordinate the mortgages (based on the title and opening provisions of the documents), but a closer reading revealed that the banks still were claiming that they had "prior claims" in the event of any foreclosures or eminent domain proceedings. The presumption that the mortgages get first dibs at the moola stems mostly from the fact that they encumbered the land prior to the facade easement.
However, I think the main lesson here is that there is almost a presumption against the restrictions being perpetual and any possibility that the proportionate proceeds won't get paid to the conservation easement holder mean no tax deduction.
Thursday, May 24, 2012
John R. Nolon (Pace) has posted Regulatory Takings and Property Rights Confront Sea Level Rise: How Do They Roll. The abstract:
Under the Beach and Shore Preservation Act, the State of Florida is authorized to conduct extraordinarily expensive beach renourishment projects to restore damaged coastal properties. The statute advances the State’s interest in repairing the damage to the coastal ecosystem and economy caused by hurricanes, high winds, and storm surges. The effect of a renourishment project conducted under the statute is to fix the legal boundary of the littoral property owner at an Erosion Control Line. Plaintiffs in Walton County v. Stop the Beach Renourishment, Inc. claimed that the statute took their common law property rights to their boundary, which would, but for the Act, move gradually landward or seaward, maintaining contact with the water. The Florida Supreme Court disagreed and the U.S. Supreme Court granted certiorari in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection to determine whether the state court reinterpreted Florida’s common law as a pretext for upholding the statute against the plaintiffs’ taking claim and, if so, whether that reinterpretation constituted a “judicial taking.” The Court ultimately decided that the Florida court’s interpretation was correct and that there was no regulatory taking. A majority of the Court could not agree as to whether a state court’s interpretation of state common law could constitute a “judicial taking.”
This article discusses greenhouse gas emissions, global warming, sea level rise, and the ferocity of coastal storms associated with climate change. It explores the tension between these movements in nature and the policy of the State of Florida to fix property boundaries, which under common law would move landward as sea level rises. The property rights and title to land of littoral landowners are described and the effect of the Beach and Shore Preservation Act on them discussed. The article contrasts the Florida coastal policy regarding beach and shore protection with the policies and programs of federal, state, and local governments that use other approaches such as accommodating rolling easements, prohibiting shoreline armoring, requiring removal of buildings, purchasing development rights or the land itself, and imposing moratoria on rebuilding after storm events. These may be less expensive and more realistic approaches to long-term coastal erosion and avulsive events and the inevitability of sea level rise as the climate warms and worsens. The article concludes with a recommendation that the framework for federal, state, and local cooperation in coastal management be revisited and strengthened so that the critical resources and knowledge are brought to bear on this critical issue. It suggests that strengthening those ties, rather than radically restructuring the relationship between state and federal courts, is a more productive method of meeting the needs of a changing society.
This is the latest in a series of articles by Prof. Nolon addressing how local land use law can be used to manage climate change, including The Land Use Stabilization Wedge Strategy: Shifting Ground to Mitigate Climate Change; Land Use for Energy Conservation: A Local Strategy for Climate Change Mitigation; and Managing Climate Change through Biological Sequestration: Open Space Law Redux. The article also discusses Stop the Beach and our favorite Texas Open Beaches Act "rolling easement" case Severance v. Patterson, and offers some solutions toward an integrated federal-state-local framework for coastal management.
May 24, 2012 in Beaches, Caselaw, Climate, Coastal Regulation, Conservation Easements, Constitutional Law, Environmental Law, Environmentalism, Federal Government, History, Judicial Review, Local Government, Property Rights, Scholarship, State Government, Supreme Court, Sustainability, Takings, Texas, Water | Permalink | Comments (0) | TrackBack (0)
Friday, May 18, 2012
We are absolutely thrilled to welcome Professor Jessica Owley to the Land Use Prof Blog. She's a law professor at the State University of New York's law school at Buffalo, and with her Ph.D. in environmental science and policy, she is involved in lots of interdisciplinary programs and activities. Many of you already know her for her cutting-edge scholarship on conservation easements and other topics, or for her helpful involvement in various professional service activities. She did some outstanding guest-blogging for us last year, but for those of you who may not be familiar with her blogging or her copius scholarship, here's her faculty bio:
Jessica Owley is an Associate Professor at the University at Buffalo Law School where she teaches environmental law, property, and land conservation. She joined the UB Law faculty after serving as assistant professor at Pace Law School from August 2009 to July 2010. She received her PhD in Environmental Science, Policy, and Management from the University of California-Berkeley in 2005, shortly after completing her JD at Berkeley Law in 2004.
Before entering academia, Owley practiced in the Land Use and Environment Law group at Morrison & Foerster in San Francisco. Prior to private practice, Owley clerked for the Honorable Harry Pregerson of the Ninth Circuit Court of Appeals and the Honorable Dean D. Pregerson of the Central District of California. Owley is a member of the California bar and admitted to practice in the Northern, Southern, and Eastern Districts of California and the Ninth Circuit.
Professor Owley's teaching interests are in the areas of property, environmental law, administrative law, and Indian law. While her general research is on land conservation and property rights, her current scholarship focuses on using property tools for conservation in the context of climate change.
The reference in the title is to Jessie's important guest post last year acknowledging that she really is a land use prof. That epiphany speaks to a larger truth about our field, which is that property, land use, environmental law, and local government law are all part of the same web of related issues for legal analysis, study, and policy conversations. We're delighted to welcome Prof. Owley on board, and we're looking forward to providing you with an even better forum to keep you interested in the broad array of important issues that constitutes land use.