Essay by Ed Quillen
Land Use – June 2002 – Colorado Central Magazine
WHEN HALF A DOZEN PEOPLE strung across our state tell me I really ought to attend something, even if that something is 50 miles away on a weeknight, eventually I run out of excuses. That’s the best way to explain a trip to the standing-room-only meeting room in Westcliffe’s new bowling alley on the night of April 25, just to watch a forum on conservation easements.
I knew one of the presenters, Paul Snyder, who practices law in Custer County, and has done some work for the San Isabel Foundation, which manages some conservation easements in the Wet Mountain Valley. I didn’t know anything about another, Jay Fetcher, a rancher in Routt County whose land is in a conservation easement. And I’d heard of the other two: J. Zane Walley of the Paragon Foundation, who was accompanied by a colleague, Ric Frost of the New Mexico State University Extension service.
I’d heard of Walley because he spoke in Monte Vista on June 24, 2000, and because several people who knew of the scheduled meeting thought it might be of interest to our readers, I talked Marcia Darnell into going. Marcia wrote about her adventures (August, 2000, edition), and also informed me that I’d have to pay her at least triple the usual rate if she ever had to listen to Walley again — if she could be persuaded at all.
Before we get to Walley and Frost, though, some explanation of the topic is in order. In other words, what’s a Conservation Easement?
Let’s start with the easement, a legal term for an agreement that provides a right to the use of property in a specified way by someone who doesn’t own that property.
For instance, suppose some telecommunications company wanted to run an underground fiber-optic cable across your property. The company doesn’t need to own your land; it just needs to run some cables under it. But the company doesn’t want you to build anything substantial over the cable, since it might need to maintain or replace its line someday, and your house or barn might be in the way.
So, you negotiate an easement. You give up certain rights to your property, like building on some portions of it, and you get paid for that. In return for its money, the company gets an easement — the right to install and maintain its cable.
Easements are often used for power lines and the like, as well as utilities like water and sewer, and on occasion for access to a parcel of land that would otherwise be blocked.
Now that we’re clear on easements, which generally involve building something like a power line or water main or driveway, we get to the conservation part — an easement to keep things from being built. Instead of selling the right to put a cable in a trench, you sell or donate the right to build on part of your property, and the buyer is a non-profit organization dedicated to preserving undeveloped property.
THAT, IN ESSENCE, is the conservation easement. It’s a non-profit group acquiring an easement for conservation purposes — open space, agricultural land preservation, wildlife habitat, view maintenance, historical significance, etc. The landowner sells or donates certain rights he once enjoyed on his property, and the easement buyer gets an enforceable perpetual contract — if the owner were to build in an easement zone or otherwise violate the contract, the easement holder could take him to court and might emerge as the outright owner of the property, rather than just the owner of the conservation easement.
That’s the gist of it, although the specific arrangement can vary a great deal. It depends on what the seller wants — like a provision that the land must never be sold to the federal government, or that the land must always stay in one parcel, or that at most one house of no more than 2,500 square feet can be built and then only on a specified acre to be reached by an unpaved road.
And it depends on what the buyer — a non-profit corporation generically known as a Land Trust — is prepared to do. Some land trusts will want an accounting for every tree and blade of grass, with strict limits on livestock and a prohibition on all tree-cutting. Other land trusts, like the one set up by the Colorado Cattlemen’s Association, just want to keep the land in agricultural production, and how you irrigate it and graze it is pretty much up to you.
Why would a landowner want to sell a conservation easement? One common reason is to keep a family ranch intact and working as a ranch — and to convert the development potential of the ranch into cash that can pay off debts or be invested in income-producing assets.
Presume there’s a 10,000-acre ranch, worth about $200 an acre for cow-calf operations in a good year, and worth about $5,000 an acre to a developer. The Conservation Easement would be worth $4,800 an acre, or about $48 million for this ranch.
The family might sell the easement to a well-heeled Land Trust for $1,000 an acre, or $10 million in this example, and get a tax break for donating the other $3,800 an acre. The $10 million cash goes into mutual funds and apartment houses. The family has an income, the property stays in one piece, and it remains a working ranch.
There are a lot of rural landowners besides ranchers who sell conservation easements, of course, and they have their own reasons, ranging from tax reduction and estate planning to improving wildlife habitat or insuring that their trophy home on 160 acres will never have nearby neighbors.
But basically, I see willing buyers and willing sellers, and we have a market economy. Further, this seems to advance goals that are popular — preserving open space, maintaining family farms and ranches, improving wildlife habitat, etc. And it does so in the private sector without much governmental involvement.
SO WHY ARE Conservation Easements even controversial? After all, have you heard any candidate denouncing the market economy lately? Or coming out against saving open space, preserving family farms and ranches, or improving wildlife habitat?
I didn’t think so. Even J. Zane Walley, who rails against conservation easements from his position at the Paragon Foundation (which describes itself as a property-rights organization), said the easements would be a good thing if they worked — except they don’t.
But when asked for examples, he didn’t have any from Colorado. He talked about some farmers in the Cuyohoga Valley of Ohio who had signed conservation easements with the National Park Service years ago, and found the restrictions so onerous that all but three soon sold out to the Park Service. He talked about a farmer in Virginia who had sold an easement, then built onto his house in such a way that it penetrated the conservation zone, and was forced to tear down the structure. He talked about how the Uniform Conservation Easement Law, in effect in 18 states, allows any third-party passerby to sue over an alleged violation of the easement, thereby making expensive litigation more than possible.
All that may well be true, but he didn’t have any examples from Colorado, and our state law, according to Paul Snyder, Westcliffe municipal attorney and attorney for the San Isabel Foundation which holds some Conservation Easements, is quite different from the Uniform Conservation Easement Law that many other states have adopted. So Walley was setting up a straw man and knocking it down, apparently hoping that the audience wouldn’t notice that his straw man was in Virginia or Ohio. Stage magicians have a term for this: “misdirection.”
But it was Walley’s colleague, Ric Frost, who labored longest to keep the audience away from the topic of Conservation Easements in Colorado. He spoke for about an hour, and the scattered applause he got afterward sounded more like relief than agreement.
Frost devoted a fair chunk of time to charts and graphs which showed how logging and related employment in New Mexico had declined as protection for the Mexican Spotted Owl had increased in the National Forests. He might have been right — but what’s that got to do with Conservation Easements on private land?
THAT TOPIC at least connected to another of his themes, local “custom and culture,” since various sawmill towns had of course had a custom and culture that revolved around turning timber into lumber.
But again, not much connection to Conservation Easements, and the whole argument — that local “custom and culture” is something the federal government is obligated to respect — is a bizarre effort to rewrite history. That’s not how the federal government has ever operated.
How much respect did Gen. William T. Sherman display to the custom and culture of Georgia when he marched through it in 1864? How much respect did the custom and culture of the Arapahoe and Cheyenne get from Chivington’s Colorado Volunteers that same year? Or from the Indian agents who later tried to turn a warrior culture into a farming culture?
How much respect should the local custom and culture get if lynching people of Asian ancestry is a local tradition, as it was in many Colorado mining camps? Or if allowing African-Americans or women to vote is against a community’s tradition?
Eventually, though, Frost got closer to the topic of Conservation Easements. Nobody would even be thinking about them, he observed, if they could make a good income from agriculture, but federal trade policies result in cheap food — and when only 2% of the population is in agriculture, that means 98% of the public likes a cheap-food policy.
Not much to argue with there, but if he’s got a problem with trade policies that work to the detriment of American farmers and ranchers, why didn’t he put in a good word for Ralph Nader? That was one of the major planks in his platform when he ran for president as the Green Party nominee two years ago, and Nader was the only candidate who addressed that issue.
Or why didn’t Frost encourage us all to join him in some hard-core street protest at the next World Trade Organization meeting?
After raising the trade issue without offering any suggestions for action, Frost observed that Conservation Easements can produce some tax breaks — income tax and inheritance tax (except he used the Republican dialect and called it the “death tax”), and that invites the attention of the Internal Revenue Service and thus creates a “federal nexus” concerning the ranch or farm that sells the Conservation Easement.
Any half-sensible person should be suspicious of federal involvement, but Frost didn’t address some obviously related questions. For instance, does an irrigator who signs a contract for water from the Bureau of Reclamation also create a “federal nexus?” Or the rancher who leases grazing rights from the Forest Service or Bureau of Land Management? Or the stockman who benefits from the Predator Control Agency? What, if anything, makes these different from the “federal nexus” that might come with a Conservation Easement?
Finally, though, Frost got to the heart of his objections to Conservation Easements. Start with a meeting in Switzerland of some Green extremists who can raise substantial sums of money. They have a map with their ideal arrangement of North America, with wilderness zones surrounded by buffer zones and linked by corridors.
THEY PURSUE THIS GOAL by working through various land trusts like the Nature Conservancy to buy Conservation Easements, written in such a way that it’s almost impossible for the landowner to stay on the land without violating some condition of the easement. Then they turn the land over to the Government.
Except, if the government wanted the land, presumably for some public purpose, why not just condemn it under the doctrine of eminent domain?
Why go through all this rigmarole? It can’t be to avoid embarrassment — there’s a municipal government in this state that condemned a carpet store so it could be replaced with a big box retailer that would pay more sales taxes, and that city council argued with a straight face that this taking of private property was to serve a legitimate public purpose. Property-rights advocates should be able to find plenty to worry about without constructing elaborate theories.
According to the Frost theory, though, the gullible landowner sells a Conservation Easement to the evil International Land Trust, which finds an excuse to kick him off and take over the land, which eventually ends up in government hands. Since I enjoy living in Chaffee County, which is more than 80% public land, that didn’t really sound all that horrible a fate, but I can see why a lot of people might have problems with that.
As best I could gather, that’s what Frost believes is behind Conservation Easements. They’re ravenous wolves (government land grab) in sheep’s clothing (preservation of open space and family agricultural operations).
The trouble with these international conspiracy theories is that they’re impossible to disprove. If you point out that the Colorado Cattlemen’s Association — one of the most consistently pro-property-rights lobbies known to Colorado statehouse history — would hardly be involved in a government land grab, you could get an answer like “that just shows how clever they are at covering their tracks.”
IT WOULD BE JUST AS EASY to argue that the opposition to Conservation Easements comes from the Evil Real-Estate Developers Conspiracy. The more Conservation Easements, the less rural land they have to cut up into 10-acre lots to the profit of all parties involved except the local taxpayers.
At least, that’s what one study determined in Custer County a few years ago; real estate developments burden taxpayers. For every dollar that the county government receives in taxes from agricultural land, it spends only 54¢ in services (roads, law enforcement, schools, etc.) For every dollar it receives in income from rural residential land, it spends $1.16.
To be sure, some people have taken issue with that study. I looked it over, and didn’t find any glaring omissions or bad math, but that’s hardly my field of expertise. A subscriber expressed astonishment at the results, so I sent the stuff to him, along with the email address of the fellow who led the study, and said I’d be glad to pay for and publish an article if he found flaws in the study. I haven’t heard from him about this since then, so I presume he hasn’t found any major holes, either.
SO AS BEST WE KNOW, Custer County taxpayers are ahead if ag land stays in agriculture, and that’s what Conservation Easements can do. These lands do pay property taxes (it’s the easement, not the land, that is owned by a non-taxable non-profit), but since they can be used only for agriculture, they are taxed at that rate, which is much lower than the rate for residential, commercial, or industrial property.
Of course, in the long run, a county might run out of land that could be converted from agricultural to other uses, and thus its property tax base would be limited by the Conservation Easements.
To move on, Walley and Frost raised two major objections to Conservation Easements. One is that the seller might give up more rights than he thought he was giving up, so that “you’d end up a tenant on your own property,” and the other was that the easement lowered the property’s borrowing potential, and since agricultural operations rely heavily on credit, the seller might be forced out of agriculture anyway because he couldn’t borrow enough money for his operations.
Snyder had some answers for those objections. “A Conservation Easement is like any other contract,” he said. “If you’re selling one, you should have a lawyer you trust, and you should be sure you understand the agreement and what you can and can’t do under the terms of the easement.”
As for borrowing potential, Snyder said he had checked with two agricultural production credit lenders, one in Greeley and one in Colorado Springs, and both said they loaned only against the agricultural production value of land, not against its value as a real-estate development, and so Conservation Easements made no difference in the borrowing potential of a property.
Frost and Walley also observed that selling an easement deprived future generations of potential income. That’s true, but so do many other transactions. If you mine the gold or coal on your land, your grandchildren won’t be able to. If you’re worried about the well-being of your heirs, you take the profits from the gold, or the easement sale, and invest it to their benefit. In this regard, there’s nothing special about Conservation Easements.
But does a Conservation Easement reduce the sale price of a property, since it can’t be subdivided and developed? It would seem logical that one would, but Snyder cited recent sales in Custer County where land sold for substantially more after it had a Conservation Easement.
For instance, a 911-acre parcel was purchased for $1.75 million a few years ago, and a Conservation Easement was applied to 805 of those acres. It sold in January for $3.95 million.
To which Frost and Walley had an objection — such high prices mean that normal people can’t afford to buy land for agriculture.
FROST AND WALLEY are sure hard to please. If Conservation Easements lower the selling price, that’s bad for the landowner. If they raise the selling price, that’s bad, too, since it reduces the number of potential farmers, and it brings in rich people who’ll support shops that sell exotic bagels and premium coffees and thereby change the custom and culture of the community.
I have a great deal of sympathy for the latter argument, since People of Money never seem satisfied with whatever drew them here in the first place; they always want some æsthetic improvements, like getting rid of the local riff-raff who drive old cars and don’t have trust funds.
But I don’t know what Conservation Trusts have to do with that. In other words, am I better off if a 1,280- acre ranch has only one house, however huge, with the rest forever devoted to agriculture? Or if it is cut up into 120 expensive 10-acre lots, all with 4,000-square-foot manors, inside a gated subdivision? The latter seems to pose more of a threat to the local custom and culture — after all, isn’t it easier to accommodate one multi-millionaire than a herd of them?
However, I do have a problem with Conservation Easements, in that they represent a modern arrogance — the notion that we know best how things should be done from now on out.
As Snyder explained, a Conservation Easement is “forever.” If the Land Trust holding the easement were to go out of business, then some other non-profit corporation would have to pick it up — that’s the law. The affected land can never be developed.
But there are some assumptions made here that bear looking at — like the presumption that the State of Colorado and the United States of America, along with their systems of land tenure, will endure eternally. History suggests otherwise. And geology also suggests otherwise, given that today’s mountains were once sea floor, and will probably get there again someday.
FURTHER, ANY CONTRACT that looks valid now might be voided in the future on the grounds that it’s contrary to public policy. For instance, a valid 1859 South Carolina contract for one plantation owner to lease some slaves to another for a period of years would become an invalid contract as a result of the Civil War. A 1929 contract calling for annual payments in gold became invalid after the federal government outlawed gold as money in 1933.
But even if we omit those considerations, and assume that it is possible to produce a Conservation Easement that is eternally enforceable, is there any way for us to know that agriculture or open space or the like is always going to be in the best interests of the landowner and the community?
My political beliefs are basically Jeffersonian, and Thomas Jefferson often observed that the earth belongs to the living, and that one generation should not bind the next — the world changes, and what works for one generation might be an impediment or worse to the next.
So I’d feel a lot more comfortable with the whole concept if the easements lasted only 25 or even 50 years, rather than “forever.” I don’t think we know enough to decide how any given parcel of land should be used for the rest of time.
But for the moment, Conservation Easements involve willing sellers and willing buyers, in a market economy. Just how anyone could oppose this in the name of “property rights” is beyond me.
— Ed Quillen
