Wednesday, April 16, 2014
Adena Rissman (Ecology-Wisconsin), (our very own) Jessie Owley (SUNY-Buffalo), Buzz Thompson (Stanford) and Rebecca Shaw (Env. Defense Fund) have posted Adapting Conservation Easements to Climate Change, Conservation Letters (2014). Here's the abstract:
Perpetual conservation easements (CEs) are popular for restricting development and land use, but their fixed terms create challenges for adaptation to climate change. The increasing pace of environmental and social change demands adaptive conservation instruments. To examine the adaptive potential of CEs, we surveyed 269 CEs and interviewed 73 conservation organization employees. While only 2% of CEs mentioned climate change, the majority of employees were concerned about climate change impacts. CEs share the fixed-boundary limits typical of protected areas with additional adaptation constraints due to permanent, partial property rights. CEs often have multiple, potentially conflicting purposes that protect against termination but complicate decisions about principled, conservation-oriented adaptation. Monitoring is critical for shaping adaptive responses, but only 35% of CEs allowed organizations to conduct ecological monitoring. Additionally, CEs provided few requirements or incentives for active stewardship of private lands. We found four primary options for changing land use restrictions: CE amendment, management plan revisions, approval of changes through discretionary consent, and updating laws or policies codified in the CE. Conservation organizations, funders, and the IRS should promote processes for principled adaptation in CE terms, provide more active stewardship of CE lands, and consider alternatives to the CE tool.
Tuesday, April 8, 2014
Nancy McLaughlin (Utah) has posted Perpetual Conservation Easements in the 21st Century: What Have We Learned and Where Should We Go from Here?, 2013 Utah L. Rev. 687. Here's the abstract:
April 8, 2014 in Agriculture, Conservation Easements, Environmental Law, Environmentalism, Federal Government, Historic Preservation, Scholarship, Servitudes | Permalink | Comments (0) | TrackBack (0)
Wednesday, April 2, 2014
Potential tax deductions are one of the driving forces behind creation of conservation easements. The exact contours of the tax deduction (how much can you deduct and over how many years can you stretch your donation) has varied over the years. For the past several years, the deductions have been particularly generous.
Under standard law, individuals can deduct the value of the donated property up to 30 percent of their adjusted gross income, and any excess value can be carried forward for 5 years. But in 2006, Congress passed the enhanced landowner incentive. It allows deductions up 50 percent of donors’ adjusted gross income and over a 15-year carry-forward period. That incentive ended this past December. The consistent support of this tax deduction by Congress led many to people the enhanced version would be extended without struggle.
Perhaps not. The most recent tax-extension proposal from the Senate Finance Committee does not extend the enhanced tax deduction for conservation easements. Russ Shay at the Land Trust Alliance has hypothesized that the bill drafters may want to change the nature of the deduction, but are still likely to keep the enhanced deduction available to some extent. In particular, this might appear an attractive opportunity to remove deductions for conservation easements over golf courses, something both parties (and the IRS) have indicated their support for. Others suggest that a better approach would be to craft legislation making the enhanced deduction permanent so it does not require periodic extensions.
Some conservation easements in Michigan have been the subject of dispute for over 20 years. In 1992 and 1993, the Glasses donated conservation easements to the Little Traverse Conversancy to protect the shore of Lake Michigan. Charles and Susan Glass then sought a tax deduction for these donations. The IRS was skeptical. These were two conservation easements over a 10-acre parcel and the real conservation value of them seemed seems questionable.
The IRS challenged the Glass’ contention that the conservation easements should qualify for a deduction under § 170(h)(1). Specifically, the IRS felt that the conservation easements did not meet the requirement of being “exclusively for conservation purposes.” The Tax Court disagreed with the IRS holding that the conservation easements qualified because they protected a relatively natural habitat or plant or wildlife (§ 170(h)(4)(A)(ii)) and because the Conservancy had to hold the conservation easements exclusively for conservation purposes (§ 170(h)(5). [Yes there are days when I wish I had taken Tax.] The 6th Circuit upheld the tax court's ruling.
Despite these rulings of the Tax Court and the 6th Circuit, the conservation easements in this case appear to be of questionable value. One of the conservation easements (from 1990) is for a greenbelt along a state scenic highway. The other two conservation easements prohibit development along the lakefront. The parcels they encumber are small, the area would be hard to develop, and development would likely be undesirable. These are plots with vacation homes along the shore of Lake Michigan that are bordered by a bluff. Some parcels in the area however have larger homes and the Conservancy saw a need to seek out and protect shoreline parcels. The proceedings regarding the conservation value of these conservation easements illuminated some inconsistencies in the deeds and questionable appraisals of the value of the conservation easements. The litigation described above indicated that the appraised value of the conservation easements ($340,800) was too high, but it didn't resolve what the value should have been set at.
The Glasses ultimately acknowledged that the value had been assessed incorrectly and that therefore the Glasses had underpaid their federal income taxes. This left the Glasses with substantial tax debt and they looked for a way to make some money. Thus, the Glasses sought to sell the southern portion of their property to their neighbors (the Van Lokerens). Once the neighbors saw an accurate survey detailing the property lines and any servitudes, they decided they were no longer interested in purchasing just the southern portion but indicated that they might consider buying the entire 10 acres. The Glasses then listed just the southern parcel for sale.
The Van Lokerens then reached out to the Conservancy to complain that the proposed sale of just the southern parcel appeared to violate the conservation easements in place. The Glasses were then forced to withdraw the listing. Next, the Glasses developed a plan to subdivide the parcel into condos but keep the conservation easement areas in place to serve as common area. Again, the Van Lokerens complained to the Conservancy (notably Mary Ann Van Lokeren was a member of the Conservancy's Board). After attempts at amicable settlement with the Glasses, the Conservancy ended up suing the Glasses and seek reform of the conservation easements based on the theory that there had been a mutual mistake in the earlier conservation easement description. The Glasses counterclaimed arguing that the Conservancy (and the Van Lokerens) had engaged in some shady practices including “threatening meritless litigation.”
In unpublished decision, the Michigan Appellate Court found against the Glasses, explaining that the Conservancy was not out of line in seeking to ensure its conservation easement was complied with.
As the Glasses were foreclosed on and the parcel is now in other hands, it seems likely possible that we have reached the end of this saga.
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!).
Tuesday, January 28, 2014
Like many nerds tech-savvy people, I have an alert set up with WestLaw to send me any new law review article or case that even mentions the phrase "conservation easement." It sends me a lot of fluff, but every now and then I find a gem that seems to have eluded the 5,000 SSRN lists I get. When I saw an article entitled "Environmental Preservation and the Fifth Amendment: The Use and Limits of Conservation Easements by Regulatory Takings and Eminent Domain," I just couldn't resist dropping everything and reading it immediately.
I was surprised that I didn't know the author (Beckett Cantley of Atlanta's John Marshall Law School) because well the conservation easement crew is a small one. Turns out that Cantley is an interesting combination of a tax law prof who also teaches property. As the title suggests, the article focus on standard 5th Amendment takings analysis. Unsurprisingly, this involves a large focus on exacted conservation easements. As I am sure all none of you know, my 2005 dissertation was entitled Exacted Conservation Easements, and I have a small obsession with the phenomenon.
Cantley has an interesting take on the issue.
First, he asks whether there is a market for conservation easements. He contends that a landowner's ability to voluntarily sell a conservation easement constitutes an "economic use for regulated land that could help avoid a regulatory taking by lessening the economic impact of environmental and land use regulations." I assume the argument goes this way: The government entity enacts a land-use law that restricts development. The landowner argues that this violates the 5th amendment under a Lucas-style total deprivation of value argument. The government entity says no we haven't totally deprived you of value because you could still donate or sell a conservation easement on your land. Of course, it would be pretty tricky to find a willing buyer for such a conservation easement but probably not impossible to find someone willing to accept the donation (depending on the features of that parcel). But what would be the value of the donation? Would it be zero? Well the current regulations do not allow development, but conservation easements can extend regulations (making them more stringent, giving them certainty, extending the restriction in perpetuity). So the value of the conservation easement while low, is probably not zero. Cantley suggests that such a conservation easement market would be so speculative that it would not be enough to defeat a Lucas-style takings claim.
Second, Cantley analyzes the ability of a government agency to create a conservation easement with eminent domain. This is a tricky issue. As a threshold, it would only work where the government entity had eminent domain power. Some states prohibit creation of CEs via eminent domain explicitly. In other places, it is just politically sensitive (not to mention potentially hard to calculate). The best example of this phenomenon was when the Highway Commission in Wisconsin exercised eminent domain over holdouts for scenic easements along the Great River Road. One of the confusing points for me here has to do with the fact that when a parcel encumbered by CE is condemned, most jurisdictions acknowledge the CE is compensable and they pay the CE holder for their lost property interest when they pay the underlying landowner just compensation for her property interest. Do such payment policies mean that the jurisdictions recognize CEs as something one could take via eminent domain without taking the fee title? Just an interesting way to do parcel by parcel regulation? Spot zoning with compensation? Something several folks have speculated about but few governments seem interested in pursuing just to amuse us academics.
Now, on the exacted CE front, Cantley notes that generally Nollan and Dolan analysis apply but in some places there is a bit of trickiness with what constitutes an "exaction" meriting Nollan/Dolan analysis (i.e., nexus + rough proportionality) versus just a regulatory act with the less demanding Penn Central balancing test. I have written about this weirdness before in New York where the case of Smith v. Town of Mendon held that conservation easements are not actually "exactions" even where they are er... exacted. As I speculated in a recent piece for the Environmental Section of the New York Bar Association, I think the broad definition of exaction in Koontz overrules Smith v. Town of Mendon and makes it pretty hard to argue that you can't exact conservation easements. One bone I have to pick with Cantley is his description of exacted conservation easements as being required donations. I think we really need to remove the donation language from our talk about such CEs. Landowners are sometime surprised that they can't (or well at least they shouldn't) get tax benefits from these exactions because they associate all CEs with tax breaks. It also looks to me like Cantley must have written his article pre-Koontz (unsurprising considering the pace of law review publication). I think that case may change his assessment that failed exactions are not cognizable takings... or maybe it depends on how/when we assess failure.
Interesting stuff! The artcle doesn't appear to be available for free on SSRN or elsewhere, but those of you with access to various legal databases can find it at
Beckett G. Cantley, Environmental Preservation and the Fifth Amendment: The Use and Limits of Conservation Easmeents by Regulatory Taking and Eminent Domain, 20 Hastings W.-N.W. J. Envtl. L. & Pol'y 215 (2014).
Saturday, January 25, 2014
The Land Trust Alliance's annual conference (I love that they call it a Rally) will be September 18-20 in Providence. The call for papers went out recently and they usually have a wide variety of seminars and workshops. Proposals are due February 24th. More info about the call and the presentations and the conference itself available here. And let me know if you plan to go. I'll be there!
Friday, January 24, 2014
I just finished reading a new article by Jess Phelps in the latest issue of Environmental Law. In Preserving Perpetuity?: Exploring the Challenges of Perpetual Preservation in an Ever-Changing World, Phelps tackles some issues closely related to questions I research: what do we do about perpetual permanent restrictions in a world of constant change? Phelps takes a narrower tack than my articles though, looking just at historic preservation easements. If you think that perpetual land conservation sound challenging, try fooling yourself into thinking that buildings are going to last forever. Well, okay we all know that perpetual restrictions have their usefulness even when we know that a perpetual building is not possible. What I like about Phelps' piece is that he cites me he takes a practical approach, providing specific plans for how to respond when natural disasters damage or destroy structures protected by historic preservation easements. It is a helpful read for land trusts or drafters of conservation easements thinking proactively about climate change impacts.
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.