Beware of Conservation Easements

 

John D’Aloia Jr.

 

John D’Aloia Jr. is a retired navy captain and a submarine commander. He is a columnist for several newspapers in Kansas.

The Great Flint Hills Wind Turbine debate continues. The Topeka Capital-Journal recently reported that Governor Sebelius is expected to compile a master plan to allow for the rapid development of wind energy in Kansas. The article summarized the position of the opposing participants: the protection of private property rights, the right of a land owner to make profitable use of his land, versus those who would prevent any development that jeopardizes what is called the last stand of tall grass prairie in the world. One landowner opponent to the Governor’s “Heart of the Flint Hills” plan was quoted as characterizing the plan as a “roundabout way of confiscation without compensation.”

The landowner is on target. The Topeka Capital-Journal reported that instead of outright banning wind turbines in the area that people want to protect, the Governor’s plan calls for the state buying conservation easements and wind energy development rights in sensitive areas. Given the nature of conservation easements, it boils down to the Governor proposing that tax dollars be used to enable the state to obtain control of private property.

Over-the-top with characterizing it as a tax-subsidized land grab? I think not. The legal wording of conservation easement contracts ties the rights of a landowner into Gordian knots.

When a land-owner is approached by a smiling advocate of the beautiful outdoors with an offer to purchase a conservation easement to protect whatever--grass, birds, bees, bunnies, or the vista into the next county--the land-owner must steel himself to ignore the blue-sky pitch and reach to the back of his personality locker, donning the robes of a skeptic. Why? You are dealing with a snake-oil salesman, straight from a carnival midway. It would be best to ensure that no pen or pencil is available--if the salesman offers one, recoil from it as Dracula recoils from the Cross. Keep firmly in mind that the devil is in the fine print--take not the salesman’s word, or references he cites, that the contract is benign, a standard document that is a mere formality, used time and again for the betterment of mankind.

If any part of your psyche is toying with the idea of signing a conservation easement contract, take a deep breath and proceed posthaste to a trusted attorney and an accountant familiar with easement law and tax effects for an explanation of the implications and consequences of all the words in the document. In weighing the pros and cons, keep in front of you two guide stars. First, the words “in perpetuity” mean “forever,” lasting, in the hands of environmentalists or a subservient government agency, until the Second Coming. Second, Henry Hazlitt’s prime economic lesson applies:

[When analyzing an economic proposal, one] must trace not merely the immediate results but the results in the long run, not merely the primary consequences but the secondary consequences, and not merely the effects on some special group but the effects on everyone.

Members of The Landowners Association of North Dakota (www.ndland.org) have had experience with the private property disasters created by conservation easements; the organization is doing what it can to publicize the pitfalls that lie in the path of those who blindly sign conservation easements for the immediate gratification of a few dollars in the pocket. LAND has published “Myths About Conservation Easements: What every landowner should consider before signing any type of conservation easement.” The document contains 16 myths, too many to describe herein, but here are some nutshell samples. Myth Three--conservation easements will save me money in taxes. Not really. You pay income tax on the easement sale price and your basis for tax purposes is lowered by the amount of the sale, a fact that will hit home if and when you sell the land, if you can. Myth Seven--selling property with a conservation easement will be easy. Wrong. The title will be split between you and the easement holder, lessening the value to many people, and banks. Ask yourself--who would really want to share property rights and share title with environmentalists or a government agency? Myth 12--I can still use my property just as I always have. Wrong. Easement contract conditions curtail your use--and the easement holder will be looking over your shoulder to make sure your management of the land crosses every contract “t”--as interpreted by the easement holder.

Caveat venditor!     *

“Prosperity is only an instrument to be used, not a deity to be worshipped.” –Calvin Coolidge