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Developers
Find Payoff in Preservation --
Land
Trusts Help Provide Tax Breaks
(Note: The writers of this story have been careful to avoid stepping
on any of the high-rolling land trusts' toes by questioning
conservation easements too much. Instead, they use the language
deception terms/phrases like "protect,"
"preserve," "safeguard" and many more, making the
reader think that land trusts value these innocuous sounding things
more than controlling them. Managing something is like 'protecting' it
-- it is control. Ask yourself why land trusts would rather 'manage,'
'protect' or 'safeguard' millions of acres rather than owning it
outright. "...deductions generated by easement donations
increasingly are attracting the attention of affluent families seeking
tax shelters." Could this have something to do with it?)
December 20, 2003
By Joe Stephens and David B. Ottaway
The Washington Post Washington, D.C. To submit a Letter to the Editor: letters@washpost.com
"You make virtually risk-free easy money,"
Kahn's Web site says. He explained in one Internet posting how an
investor paid $2.4 million for a golf course and reaped $4.8 million
"in pure tax savings." Kahn will not identify the buyer
but describes him as one of many who made big money -- and got to
keep the golf course as well.
Luxury-home builders in North Carolina paid $10 million for a tract in the mountains, developed a third of the land, then claimed a $20 million deduction. Such tax bonanzas have become a little-noticed byproduct of the maturing environmental movement, which increasingly entwines preservation of land with preservation of wealth. Easements have helped safeguard fragile ecosystems, critical watersheds, land bordering national parks and some of the nation's most stunning vistas. The committee's investigation followed a Washington Post series that revealed the Conservancy had repeatedly bought scenic properties, added development restrictions, then resold the land at reduced prices to Conservancy trustees and supporters. The buyers, some of whom retained the right to build houses on the land, in turn gave the Conservancy cash donations that supplied them with hefty tax write-offs. After the series, the Conservancy board banned such sales. "Lawyers and accountants and promoters and investors are giving them bad information, telling them they can do this or that and claim a big deduction, and there aren't enough people out there telling them they can't." [Note: The land trusts themselves never give bad information to potential donors and/or their heirs?] Today, easements are held by a host of government agencies, national environmental groups such as the Conservancy and about 1,260 local land trusts -- nonprofit corporations devoted to conservation. The benefits often go to the wealthy, and routinely to board members and staff at the land trusts. And although the development restrictions are publicly described as lasting "in perpetuity," conservationists privately fret over whether this is true, partly because easements continue to face court challenges. Many easements explicitly allow additional development if the land trust approves. In the past two fiscal years, an IRS program aimed at identifying inflated deductions taken for easements and other non-cash gifts to charities produced thousands of leads but, because of competing priorities at the agency, did not produce a single audit, according to the General Accounting Office. Echeverria, who now directs the Georgetown Environmental Law and Policy Institute, instead favors preserving land through more time-tested processes, such as restrictive zoning and the issuance of building permits. Easements, he says, have "the potential to undermine the cause of environmental protection itself." Fearful of damaging the land-trust movement, many conservationists are reluctant to broadcast the flaws in easements. They ruminate instead on easement shortcomings -- the dry text of academic studies and legal journals. A third study concluded bluntly: "There are serious threats to the use of easements."
The owner then finds a nonprofit land trust or a government agency willing to take the easement as a gift. That allows the donor to seek federal income tax deductions and, in some cases, reductions in federal estate taxes and local property taxes. In many communities, the land trust becomes the sole entity responsible for monitoring the site and suing if violations are uncovered. That value is generally established by appraisers hired by the donor. Propelled by such savings, conservation easements held by the local land trusts have grown more than fivefold nationwide since 1990, to an estimated 12,000 today. Local land trusts hold easements totaling 2.6 million acres, more than double the land they own outright. But legislation to expand allowable deductions that passed the Senate this year would sacrifice more than $1 billion in additional tax revenue over the next decade, according to the Senate Finance Committee. But some of the biggest and best-known easements have been linked to major corporations and some of the nation's richest individuals, from Ted Turner and David Letterman to the Rockefellers and DuPonts. "It provides upper-income donors with disproportionately greater tax savings than middle and lower-income donors," she wrote. To be sure, McLaughlin and many other environmentalists -- including those pushing for reform -- support easements and say they have done much good. While acknowledging a small but significant number of abuses and legal uncertainties, the proponents say most easements have never been violated. They add that although easements occasionally are amended, the environment rarely has been harmed and that amendments often increase conservation values. Most donors give out of a desire to protect land they cherish, and most ultimately lose money on the transactions, proponents say.
Real estate ads sometimes tout easements as a selling point. The authors described that possibility as "troubling, to say the least, given the involvement of public funds in financing their original transactions." In the case of Brandon Park, the personal retreat of Wilhelmina duPont Ross, New York state officials and federal officials came to different conclusions. Ross died in 2000. Her lawyer, H. Dean Heberlig, Jr., explained that, unlike New York officials, federal authorities factor in a property's potential future value when establishing tax breaks. The IRS initially challenged the deduction, he said, but ultimately agreed that $1 million "was an appropriate deduction." The IRS said it could not comment publicly on an individual tax case. A Conservancy spokesman said his group strongly believes easement donors give up "real value."
The North Branch Land Trust of Trucksville, Pennsylvania, is in charge of enforcing easements on farms owned by its president and its board secretary, who say they received tax deductions exceeding $300,000.
One California environmental group, Defense of Place, used data from the study to estimate that easement violations nationwide exceed 2,700. The group's director, Jason Kibbey, warned: "If you just let conservation easements unravel over the next 20 years, the movement is over." Government agencies, which also hold thousands of easements, have their own problems. Conservationist Edmund Stiles found that his home of Hopewell Township, N.J., holds more than 400 easements, 103 of them stuffed into a box in the township hall basement. He visited a few dozen and found that 80 percent of the easements had been violated. Most were minor, he said, but in one case, a bridge had been built on the protected land. Of 18 organizations participating, 11 admitted to having amended one or more easements already on file at the courthouse. Many of the easements reviewed during the survey were poorly written, making them difficult or impossible to defend in court, the report said. The 115 "major" violations included 32 cases of surface alteration, 28 of vegetation cutting and 18 of logging. In 25 cases, "prohibited/unauthorized" structures were built. Ecologists may one day determine that farmers do more damage than housing developments, they argue, or decide that conservation efforts would be more effective elsewhere.
He has been busy building. Only after the plan was complete, Hellings said, did his lawyers hit on a way to capitalize on a leftover flood plain and some steep hillsides, a scattered jumble of land that Hellings describes as 131 "unusable acres." Then they placed a second easement directly on 220 acres of the golf course, including the fairways, bunkers and putting greens. A Brandywine spokesman said the easements helped to protect sensitive natural resources, including water quality, and ensured that the golf course would remain "permanent open space, forever." The open space boosts land prices, Hellings said, and has become a valuable sales tool. http://www.washingtonpost.com/wp-dyn/articles/A17384-2003Dec20.html More about "Defense of Place" ("...California environmental group"): Defense of Place 'Goal': "Goal is to create a principle in the minds of Americans that our protected lands will be protected forever. The need comes from an uncomfortable trend to violate preserved landscapes. Universities, churches, Boy Scout groups, and even environmental organizations are increasingly tempted to sell places they accepted with the promise that they would be saved forever. Years after the donors are long dead, land values go up, and the temptation to cash in takes over. We believe protecting these lands and honoring the promises to do that are more valuable than money." http://www.bapd.org/gdeoce-1.html http://www.saveBAREC.org BAREC - Bay Area Research and Extension Center (notice at this website where/who the donations are to be sent to -- yep, 'Defense of Place') http://defenseofplace.rri.org/resources/ The Case for Defense of Place January/February 2004 By Huey D. Johnson [lawyer in Cosa Mesa, CA] The Loma Prietan (looks like a newspaper, but is really a chapter of the Sierra Club) http://www.sierraclub.org/chapters/lomaprieta/index.html Note the Loma Prietan's editor's email address: loma.prietan.editor@sierraclub.org Forty years ago, when I became the eighth employee of the young Nature Conservancy, we had to seek gifts of land because the Conservancy didn't have any money for purchases of land. Over a dozen times I looked elderly donors in the eye and promised them that if they would give their beloved parcel of land or sell it at a bargain, The Nature Conservancy would expend every last breath and every last dollar to assure its permanence forever. The donors weren't always elderly. Our first Colorado land parcel came only a day after I talked with a young woman there about the donation of her beloved wild place. She asked me if we would save it after her death and I said yes. The next day she committed suicide on the site. Which is to say I care deeply about the commitment we make to permanence. It can be wilderness on public lands, wild rivers, parks, or my favorite -- those places given by donors to be saved forever. I have been watching a terrible growing trend regarding such places in the United States -- that of selling them after enough time has passed so the donor and most passionate advocates have died, the board of the receiving organization has changed several times over, and the land has increased in value. If no one questions such a proposed decision, then a sale is easy money for a new wing on the University law library, a church, or even to buy new computers for an environmental group. The National Wildlife Federation sold a gift of land a few years ago that was on an island in the Potomac River near the Capital. The donor was still alive in that case and even though he was 90 years old, he fought them in court and out, and at least some of it was preserved in the end. The Federation has changed since then and I doubt would do that now. Nonetheless, when you add enough time to the commitment to honor a preservation pledge, strange things do happen. Federal Lands are a huge temptation. The New York Times carried a front-page story recently about how the Army Corps of Engineers leases waterfront land for a dollar a year. A political lobbyist had just secured the development rights to one of those parcels. Translated, that means the lobbyist, by forgetting a huge fiscal favor from the Corps, would campaign at budget time to be sure the Corps got its typically extravagant funding for further malevolence on the land. The Loma Prieta Chapter [of the Sierra Club] knows the story all too well with the recent possibility of flooding in Henry Coe State Park. While the threat from the water district may be reduced for the moment, the tracks for California's high-speed trains may be coming around the corner soon. The track is planned to run through many of the state parks that run the length of California, destroying habitats, wildlife, recreation space and historical sites, even though the law says parks can't be developed. That any development of these spaces is even considered is outrageous. The shocking fact is that over 200 proposals for various development projects in state parks are currently in the works. Of course what is often behind such development is the disgraceful business of political campaign contributions. The point of this is that only the actions of citizen environmentalists can stop this outrage. Organizations from the level of the Sierra Club to local land trusts to community activist groups have the power to challenge such actions and to defend the land. I have started an organization to focus on such defense, called Defense of Place. It is a guard dog, a junkyard guard dog, if necessary, and a powerful guide to assist people in preserving sites forever. It is an effective way to inform and organize volunteers to become guards themselves over defenseless properties. One of the tools we're building is an Internet database that will be an exhaustive list of America's preserved places. We need your help. We need help finding lost places that were meant to be preserved forever, and we need to hear about places that have been saved by successful independent citizen action. Take a look at places you know, places where you live and places you remember -- the open spaces and the wild spaces, places that might have been left with the promise of protection. Contact us at Defense of Place, Fort Mason Center, Pier One, Building D, San Francisco, CA 94123; 415-928-3774; e-mail info@rri.org; or visit our website at http://defenseofplace.rri.org and tell us about them. We'll put your information to good use. We all have an obligation to deliver what has been passed on to us to future generations. Huey Johnson is the founder of Defense of Place. He was the first Western Regional Director of the Nature Conservancy, the Founder of the Trust for Public Land, the Secretary of Resources for California under Jerry Brown and is currently the President of the Resource Renewal Institute. http://lomaprieta.sierraclub.org/lp0401_DefenseOfPlace.html Here's another carefully crafted article that is anything BUT what it seems on first read: http://hdj.rri.org/archives/2002lahills.html Mr. Johnson's bio: "I was the Western Regional Director of the Nature Conservancy; I later founded and served as President of the Trust for Public Land. I was the California Secretary for Resources from 1978 to 1982. After that, I founded the Resource Renewal Institute. In 2001, I was awarded the United Nations Sasakawa Environment Prize. I'm currently heading the Resource Renewal Institute and working on its newest project, Defense of Place." http://hdj.rri.org/bio/index.html The Water Heritage Trust (another of RRI's projects): http://www.rri.org/projects/water.html http://www.unep.org/Documents/Default.asp?DocumentID=225&ArticleID=2954 The UN Sasakawa Environment Prize: The UNEP Sasakawa Environment Prize is one of the most prestigious environmental awards in the world. The establishment of an international environment prize was recommended at the United Nations Conference on the Human Environment held in Stockholm in 1972. This prize, then known as the Pahlavi Prize, was first awarded in 1976. In 1982, the UNEP Governing Council accepted an endowment of US$1 million from the Japan Shipbuilding Industry Foundation to finance the Sasakawa International Environment Prize, which would be administered by UNEP. Now known as the UNEP Sasakawa Environment Prize, it is awarded annually to leading environmentalists and recognizes the work of these individuals at the global level. Since its inception, interest in the award has increased significantly as attested by the growing number of nominations. After serious deliberations and in the light of the kind of nominations received over the years, the Selection Committee recommended that all nominations be considered on an annual basis and that the Prize be awarded solely to "individuals who have made outstanding global contributions to the management and protection of the environment". The Prize aims to encourage environmental achievement in any field of the environment. The annual award of $50,000 was increased to $200,000 in 1990, making it one of the world's most valuable environmental prizes. http://www.unep.org/sasakawa2/brief.asp Notice this 'connect the dots' link: http://www.cmsindia.org/cmsenvisnode/resources/environ_sustainabledevelop.html Here's a part of the tangled web: The Yuba Goldfields Access Coalition http://www.bradleydesign.com/access/images/gate.jpg Twelve miles east of Marysville, California, along one of the most important ate rivers in the American West, lie the Yuba Goldfields, a source of both great wealth and great controversy. Owned by the public, it is controlled by a giant corporate conglomerate based in Dallas, Texas. Capable of producing great recreational opportunities for all residents and visitors of Northern California, it is virtually closed to all but commercial hunting and fishing that caters to big stars like baseball's Will Clark and country music's Roy Clark. Valued in excess of $15 billion for its aggregate supplies alone, the Yuba Goldfields provide very little benefit to the county in which they are located: Yuba County, one of the oldest and poorest counties in California. In November of 1996, the Yuba Goldfields Access Coalition was formed to convince local, state and federal leaders to force the removal of a locked gate across Hammonton County Road, the only road through the public lands in the Yuba Goldfields. For three years, the Yuba Goldfields Access Coalition has battled with county supervisors, negotiated with the Bureau of Land Management, informed on mining companies which have been stealing public resources and polluting the Yuba River, and developed coalitions of concerned citizens and groups to bring pressure down on the government and Centex Corp. of Dallas, Texas. In March of 1999, the Yuba Goldfields Access Coalition was recognized in a full page ad in the New York Times by Defense of Place of San Francisco, CA, for its efforts in fighting Centex Corp. in an attempt to improve the economy of Yuba County through resource renewal. This web site is devoted to the Yuba Goldfields and is an attempt to educate the public about the Access Coalition's efforts. Move your mouse arrow across any of the "gates" on the left to unlock them and enter the Yuba Goldfields, California's most exclusive gated community. http://www.bradleydesign.com/access/ More about Defense of Place: In March of 1999, by way of a full page ad in the New York Times, Defense of Place announced that its 1998 Annual Award For Exemplary Protection of Endangered Species and Public Trust went to the Yuba Goldfields Access Coalition. Defense of Place noted that the under-funded, seemingly outgunned Yuba Goldfields Access Coalition had managed to keep Centex Corp., a Dallas-based conglomerate with annual sales of new homes in excess of $4 billion, from expanding its monopoly operations in the Goldfields and was becoming increasingly more successful in bringing the destruction of the Goldfields and the last remaining spring run of threatened Chinook Salmon to the attention of the public. What is Defense of Place?The San Francisco-based Defense of Place exists to create in America an improved sense of commitment to the permanence of landscapes preserved as part of our heritage. Defense of Place exists
as a watchdog to guard important places with integrity, challenging
and publicizing actions of those who would wreck them.
as a consultant to people wishing to donate land that will remain
preserved permanently.
as a clearinghouse on the Internet listing places that have been
saved and need vigilant protection.
Defense of Place believes the Yuba Goldfields is one such place, as its public value and potential revenue stand to benefit Yuba County communities, communities in surrounding counties, and all of California. That's why Defense of Place took steps to promote its vision for restoration of the entire 10,000 acres to the people of Yuba County and the United States. The Defense of Place VisionThe fight in the Yuba Goldfields presents an opportunity for a remedy in the creation of the Carla Bard Salmon Sanctuary, a vision for recovery and utilization of the entire 10,000 acres for the public and for the endangered Salmon. The plan includes:
Defense of Place can be reached via snail mail at: or by phone at: 415-928-3774 http://www.bradleydesign.com/access/defense/index.html Notice the alignment of 'partners' with Defense of Place: http://www.earthisland.org/takeaction/connections.html (this is NOT a 'local' group; it's a "Think Global, Act Local" tentacle of a global organizational octopus) ----- The INNW Fund/Susan Lang ("...California preservation foundation"), Menlo Park, CA: INNW - If Not Now, When? November 2001: With success of his money management firm, Value Monitoring, Inc., assured, Peninsula resident Robert H. Levenson turned his attention to the question, "What do you do once you win?" The result was the founding, along with his wife Susan Lang, of The INNW Fund, a nonprofit foundation. Appropriately, INNW is an acronym for "If not now, when?" With an enduring commitment to environmental education and land stewardship, these innovative thinkers began to ponder new models of strategic philanthropy some 10 years ago. Levenson and Lang, along with Board member Howard Smith and Foundation Vice President Joan Libman, have crafted a quiet and powerful local foundation that provides problem-solving, mentoring, and money to help nonprofits in challenging times. Backers of The INNW Fund seek ways to leverage their investments by providing technical assistance and building organizational capacity. Unlike community foundations, The INNW Fund does not solicit or review grant proposals; rather, The Fund seeks out organizations with programs of regional significance, a history of success, and committed board and staff members. The [Green Foothills] Committee was first approached by The Fund with an offer of technical assistance in 1999. At that time, the Committee's infrastructure hadn't kept up with the organization's tremendous growth. We had survived years of shoestring budgets and protracted David and Goliath land-use battles. Our (almost entirely) volunteer-run organization was exhausted. Our Board of Directors and single staff person, Denice Dade, were ready to make a serious commitment of time and energy to strengthen the Committee for future years. (Long-time CGF members may recall that Denice was then working half-time as our office coordinator and half-time as Santa Clara County Legislative Advocate.) ...our relationship with The INNW Fund has been that they provide funding, expertise, and guidance; the Committee makes the decisions and does the work. From the beginning, the goal of The Fund has been to build new expertise into the Committee's board and staff so that ultimately we become self-sufficient at a higher level of capacity. INNW does not seek seats on boards of directors of organizations they assist; rather they are committed to helping organizations be accountable to themselves and their supporters. The Committee for Green Foothills is profoundly grateful to The INNW Fund for their open-hearted, wise, and generous support of our work and our organization. They have offered their assistance in the spirit of partnership and with an ethic of trust and respect for the uniqueness of our organization. The model of philanthropy manifested by The INNW Fund is all about long-term investment. By building additional capacity into organizations devoted to regional environmental education and land stewardship, The INNW Fund is able to maximize their investment in an irreplaceable environmental legacy: the San Francisco Peninsula. ...Joan Libman ... is The INNW Fund's Vice President and chief management consultant. ...The mission of The INNW Fund is to foster environmental awareness, through grants supporting education and land conservation. Organizations they have helped include: Hidden Villa, Environmental Volunteers, Peninsula Open Space Trust, East Bay Depot for Creative Reuse, Center for Investigative Reporting. The INNW Fund also founded the Friends of Huddart and Wunderlich Parks. http://www.greenfoothills.org/news/2001/11-2001_INNW.html The INNW Fund has no apparent website of its own, but seems to use: http://www.greenfoothills.org Here's a 26-page report commissioned by the INNW Fund: ftp://cnlm.org/pub/stewardship.pdf |