Easements a popular preservation tool

By LAURA BEHENNA

Bigfork Eagle

Landowners who want to preserve their land as it is even after they’re gone have an increasingly popular option: a conservation easement.

Alice Brosten and her husband Arne Brosten placed a conservation easement on their family homestead in September 2006. The easement will preserve the land “in perpetuity” — that’s forever in legal language.

“It’s just great to live up here and we wanted to keep it that way,” Alice said. “We own one side of Mud Lake and it’s a natural corridor for wildlife.”

A conservation easement is a voluntary, legally binding agreement between a landowner and a nonprofit organization or government agency to place certain restrictions on the development, management or use of privately owned land. The easement permanently limits the property to uses that are compatible with conservation. The landowner retains the title to the land and may continue to use it productively according to the terms specified in the easement.

A land trust, such as Montana Land Reliance or the Nature Conservancy, oversees the easement and also takes responsibility for enforcing the easement’s restrictions.

Two kinds of land use are off-limits to land in conservation easement, according to Amy Royer, regional director of the Flathead office of Montana Land Reliance in Bigfork. One is the right to subdivide the land into home lots; the other is surface mining. The Internal Revenue Service doesn’t allow surface mining on land with conservation easements. Landowners may keep the right to mine for oil and gas underground, however.

The down side

Some critics say conservation easements threaten private property rights. Clarice Ryan of Bigfork charged that land trusts and conservation organizations remove land from productive use, such as timber harvesting, mining and development, and keep heirs and future owners of the land from using it as they wish.

For example, she said, a couple might put their farm under a conservation easement that permanently limits the use of that land to agriculture. When their children inherit the land, they cannot use it for any other purpose, whether they have any interest in farming or not. It’s not fair for one generation to restrict the property rights of future generations, Ryan said.

“Unfortunately, the sales pitch [for conservation easements] doesn’t include all the dangers that exist,” land-use attorney and property-rights advocate Fred Kelly Grant said. Like Ryan, he cautioned that “in perpetuity” restrictions may force heirs or later owners of the land to forego development opportunities. Conservation easements also may lower the land’s property value, which can have tax benefits for the owner, but also reduces the profit a current or later owner can make when he or she sells the land, he said.

Grant also said the conservation organization that enforces the easement becomes the legal “dominant tenant” of the land, with the right to dictate how the land is used and whether and how the terms of the easement can be changed. The dominant tenant may even have the right to sell the easement to another organization without the landowner’s agreement, Grant said. Read the fine print carefully, he advised.

Plenty of opportunities

Royer disputed these claims. The only rights a landowner would have to give up to have a conservation easement are the rights to subdivide or mine on the land surface, as in open-pit gravel or coal mining, she said. The landowner and future owners still have plenty of opportunities to use their land productively.

For example, she said, land restricted to agricultural use could be used for many different kinds of agriculture, from greenhouse production to raising specialty livestock, and owners can build as many structures as they need for their enterprise. And the permanence of a conservation easement “is a key element to keeping land available for whatever agriculture looks like in the future,” she said.

If heirs aren’t interested in the specified uses of their inheritance, they can sell the property, Royer said.

Land under easement can be used for timber harvest, recreational outfitting, oil and gas drilling or any other commercial use apart from subdivision or surface mining, Royer said. These opportunities retain economic growth in communities rather than reducing it, she asserted.

The land trust has no right to dictate how a property is used, although the organization is legally required to assure that the terms of the easement are followed, she continued.

“We don’t own the property; we don’t manage the property,” she said. “We don’t have any say in what they do with their property other than the subdivision right they’ve limited or restricted and how many homesites [may be built].”

If owners want to subdivide or mine on part of their land, that piece would simply not be included in the easement, Royer said.

In addition, Royer hasn’t seen conservation easements hurting property values substantially, although an easement limits the types of prospective buyers for a property. She and her husband recently sold a piece of property at its market value, she said.

People who criticize conserving land for open space may not understand what open space really means, Royer said. Open space is more than just pretty views; “it’s a productive landscape,” she said. “It’s not just open and nothing’s happening there.”

Open space can include agriculture, timber harvest, hunting, habitat production and watershed protection.

“Those lands are a link to making sure our rivers and our lakes stay clean,” Royer added.

The public is not allowed access to the land unless the landowner wants to allow that, she emphasized.

Attention to details

Hammering out a conservation easement is a careful process that can take several months to more than a year. For Montana Land Reliance, it starts with the landowners and land trust staff meeting to review the property and draft the terms of the easement. Each conservation easement is tailored to meet both conservation goals and the needs of the individual landowner, such as the need to build a house in the future or to earn income from the land through ranching. No two conservation easements are exactly alike.

Both parties revise the draft until both are satisfied. Montana Land Reliance arranges a title commitment and other necessary legal documentation. The property is professionally appraised and the county planning board must approve the draft easement. The final easement is signed by the landowners and a Montana Land Reliance representative, and the county records the easement. Once a year afterward, a land steward visits the property to see that the easement is being honored and to help the landowner resolve any problems.

Changes or amendments can be made to a conservation easement if the conservation values are maintained or enhanced and the landowner receives no financial benefit, she added. This is because the Internal Revenue Code strictly forbids private benefits from amendments to conservation easements. For example, a landowner could amend the easement to remove the right to build additional houses on his land but could not build more houses than the original easement allowed.

“It takes a lot of review, a lot of thought, a lot of discussion with family members, a lot of review with legal representatives,” Royer said. “They give a lot of thought to how they’re going to deal with their land. We’re not out there duping landowners. If it doesn’t work for them, we don’t want them signing this document. It’s their decision to do this.”

Alternative to easements

For landowners hesitant about a full-fledged conservation easement, Grant said, an alternative way to protect a parcel of land is to place a “deed covenant” or “deed restriction” on it. A landowner may write up and legalize his or her own deed restrictions, spelling out what the property can and can’t be used for in the future. This document is attached to the property title and passes from one owner to the next. It limits what future landowners can do but avoids any potential complications of getting an outside entity involved, Grant said.

Royer agreed that covenants are the right tool for landowners who want to keep the opportunity to make different decisions about their land in the future.

Alice Brosten said she and her husband chose a conservation easement rather than a deed covenant to avoid the inconvenience of having to enforce the restriction on their own. Montana Land Reliance has taken on that responsibility on their behalf.

“We’re very happy with the process,” landowner Sharon Schiltz said. She and her husband Don have two conservation easements on their property. Don Schiltz has gone on to become a land steward for Montana Land Reliance. “I was very pleased with how [Amy Royer] handled everything,” Sharon said.

“Our biggest concern was that at some point our land would be sold and subdivided,” she added. Although she and her husband understood that letting go of their right to subdivide would probably lower the land’s market value, she said she thinks property values will keep rising for lands in conservation easement.

A conservation easement doesn’t change an owner’s property taxes, but may reduce income or estate taxes, or both. Montana Land Reliance advises landowners to consult with an attorney and an accountant to find out more about tax incentives.

Code of ethics

Ryan claimed that conservation groups aren’t truly not-for-profit, but are turning around and selling land under conservation easement to government agencies, such as the U.S. Forest Service and the Montana Bureau of Land Management. Royer has heard that some people believe land trusts buy up properties devalued by conservation easements, strip off the easements, and sell the land for big profits.

“It’s not true,” Royer countered. “I would welcome some documentation on that.”

For one thing, land trusts don’t buy land in conservation easements; the landowners retain full ownership, she said. For another, land trusts survive mostly on donations from people who support their work. The majority of landowners donate the rights for their easements and pay most of the costs for establishing it, which generally range between $2,500 and $3,500, Royer said. A big part of her job is fundraising both in and outside of Montana. Montana Land Reliance receives no government funding, she added.

Also, government agencies don’t have wads of cash to spend on buying land, she said.

“I don’t know where this big pot of gold is,” she said. “I’d like to know where the money’s coming from. I wish we had as much money as obviously some think we can raise. It doesn’t happen.”

Approximately 2,000 individual land trusts operate in the U.S. and some are more successful than others, Royer said. Some have been less than ethical, tarnishing the image of land trusts in general. The Montana Association of Land Trusts has a code of ethics that 11 land trusts in Montana adhere to, she said.

“Montana Land Reliance is trying to set the best example possible,” she said.

Royer expressed admiration for landowners who decide to donate some of their land use rights for the benefit of the land and their community.

“It’s such as unselfish thing to do to protect a piece of land in perpetuity that provides opportunities for all of us,” she said. “The benefits are so far-reaching.”