Three landowners lost each of their entire federal tax deductions from the donation of preservation and conservation easements in Massachusetts, Alabama and Indiana in three separate cases decided at the end of March and early April due to various failures in technical compliance issues with the Tax Code and the Treasury Regulations.

Lender Agreements, Proceeds Priority and Stewardship Costs Affected by Kaufman Reconsideration 136 T.C. No. 13 (2011)

On April 4^th after reconsideration of its 2010 summary judgment decision (134 T.C. 182 (2010), “Kaufman I”), the US Tax Court affirmed its position that the holder of the easement must have an absolute guaranteed right to its proportional share of proceeds from a sale after extinguishment of the easement prior to the lender right to any remaining proceeds. If the lender has proceeds priority, Judge Halpern opined, then the preservation (or conservation) easement does not comply with the perpetuity requirement.  Lorna Kaufman granted a historic preservation façade easement to National Architectural Trust (NAT). NAT obtained a subordination of Kaufman’s mortgage to the easement conditioned on the lender priority to any casualty insurance or condemnation proceeds until the mortgage was paid.  Both Kaufman and the IRS asked the Tax Court for reconsideration, and many preservation organizations petitioned to be heard as amici, leading to the reconsideration decision, “Kaufman II”. The Court stated that it decided Kaufman I because NAT might not receive its proportional share of any future proceeds, the lender agreement failed to satisfy the extinguishment and perpetuity requirements. Kaufman had also argued that chance of an eminent domain taking or casualty loss were so negligible that whatever rights the lender had in proceeds from such events should come under the “so remote as to be negligible” exception.The Kaufman II Court held that exception does not apply to the extinguishment requirements because the easement must give the holder of the easement “an absolute right to compensation from the post-extinguishment proceeds for the restrictions judicially extinguished” to satisfy the extinguishment provision. “It is Lorna Kaufman’s failure to accord NAT an absolute right to a fixed share of the post-extinguishment proceeds that causes her gift to fail the extinguishment provision. It is not a question as to the degree of improbability of the changed conditions that would justify judicial extinguishment of the restrictions. Nor is it a question of the probability that, in the case of judicial extinguishment following an unexpected change in conditions, the proceeds of a condemnation or other sale would be adequate to pay both the bank and NAT.” Whatever you think of the Court’s decision, it appears to be thoughtful with an extensive discussion of common law starting at page 15 and followed by application of the Treasury Regulations to common law means of extinguishing easements through page 32.

The Kaufman court had better news for conservation on the stewardship contribution front than in Scheidelman. The Kaufman II Court’s decision about the deductibility of the stewardship contribution was fact dependent.  In December 2003 NAT told Kaufman they’d accept her easement subject to various conditions, including that an appraisal of the easement’s value be completed by February 2004 and that she make a contribution before the end of 2003 based on 8% percent of the anticipated appraised value (“the 2003 contribution”) with a second contribution to be given in 2004 based on the difference between the 2003 contribution and 10% of the actual appraised value of the easement (“the 2004 contribution”). The court reviewed all of the extensive correspondence between the parties as well as testimony and concluded that the 2004 contribution was not conditioned on receiving a charitable contribution deduction and was not ‘required’ by NAT since Kaufman received no benefit from the cash contribution. The Court also rejected the IRS claim of a quid pro quo between the parties for the 2004 contribution. The Kaufman II Court disallowed the 2003 contribution (as a conditional payment because the value of the easement might not be more than zero) but allowed the 2004 contribution.

The Court also noted starting on the bottom of page 49 that it had no obligation and no desire to consider valuation in the case, and that the Court should not be required to invest substantial time and effort to resolve difficult factual questions of intent and value presented by the IRS claims of taxpayer negligence. The Court then cited the ‘laborious’ undertaking of determining value illustrated by the recently decided Trout Ranch v Commissioner case (TC Memo. 2010-282).

Landowners Lose Entire Easement Deduction Due to Failure to Obtain Contemporaneous Written Substantiation

In a recent Tax Court case, Schrimsher v Commissioner, TC Memo 2011-71, the court granted summary judgment for the IRS disallowance of the entire land owner claimed deduction. The Court found the deduction invalid because the donor did not have a contemporary written acknowledgment of the donation that specifically stated that no goods or services were received in exchange for the donation. The donors’ attempts to claim substantial compliance were summarily rebuffed. Additionally this donor had a non-compliant Form 8283. It was not signed or dated by either the appraiser or the Alabama Historical Commission (as is required); and did not attach the appraisal to their tax return (required by law if the donation exceeds $500,000).

The donor argued that the easement was the contemporaneous written acknowledgement. The court said it did not clearly either deny that any goods or services were received in exchange, or estimate the value of those goods and services – both required by law to be part of a contemporaneous written acknowledgement by IRC sec. 170(f)(8). Conservation tax experts now routinely advise both land trusts and landowners that the IRS position has hardened on compliance with technical requirements. Karin Gross, an attorney in the IRS Chief Counsel Office, regularly states at Rally sessions that the IRS will strive to dispose of cases on the simplest grounds possible to avoid dealing with more difficult valuation issues. Learn more.

Entire Deduction Disallowed Due to Numerous Appraisal Failures

In Boltar v. Commissioner 136 T.C. No. 14 (2011) the Court excluded the developer partnership’s experts’ appraisal as unreliable and irrelevant.  The Court sustained the IRS allowance of only $42,400 out of $3,245,000 claimed as a charitable contribution deduction on the partnership return of Boltar, L.L.C. (Boltar) for a conservation easement on 8 land-locked acres in Indiana. Boltar’s experts failed to apply the correct legal standard by failing to determine the value of the donated easement by the before and after valuation method, failed to value contiguous parcels owned by a partnership, and assumed development that was not feasible on the subject property. The Court specifically stated that the appraiser qualifications were not in question. What motivated the Court to reject Boltar’s appraisals was the multiple failures and abuses in the appraisal methodology as well as significant factual errors affecting value. The Court stated, “The problem is created by their willingness to use their resumes and their skills to advocate the position of the party who employs them without regard to objective and relevant facts, contrary to their professional obligations.” And later, “…we need not blindly admit absurd expert opinions.” And finally, ” In addition, the cottage industry of experts who function primarily in the market for tax benefits should be discouraged.” At least from the context of the decision, the Court appears to be directing the last comment at those who enable abusive appraisals and tax schemes. Learn more by visiting http://taxtrials.com/, then click on Boltar. Note that this site has many tax opinions available.

Resources

View the Practical Pointers Factsheets to help you and your land owners avoid trouble with the IRS, or login to The Learning Center to browse the Conservation Defense Practical Pointer Collection, which includes help on Form 8283, Baselines to ‘Wow’ the IRS, Contemporaneous Written Substantiation, Lender Agreements and Kaufman, Stewardship Contributions and Appraisal Checklists and Rules.

The Coalition to Save Community Benefits was formed to oppose this effort and has been working with groups like yours to ensure that the FHFA understands the consequences of this Proposed Rule.  Your comments about this Rule are so important to the process.

We urge you to submit additional comments to the FHFA.  THE COMMENT PERIOD CLOSES ON APRIL 11, 2011. You can submit comments through our website at http://www.savecommunitybenefits.com/take-action.shtml for your convenience.

This article is an update to the original post dated October 20, 2010:

Fannie and Freddie Propose Ban on Charitable Transfer Fees

October 20, 2010 | Washington, D.C.

Thousands of organizations have protested the proposed elimination by the Federal Housing and Finance Agency (“FHFA”) of lending on any property that has a private transfer fee covenant. Many land trusts use such funds for stewardship, restoration and acquisition.  

Working with the Realtors Association, FHFA, the parent agency of Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks, has issued a proposed guidance document for public comment that would effectively eliminate the use of all Private Transfer Fees (“PTFs”).  If allowed to become effective, the rule removes a critical funding mechanism for conservation, affordable housing, and community infrastructure.  

Congresswoman Maxine Waters and Co-Sponsors Sherman, Sires, and Gwen Moore introduced the Homeowner Equity Protection Act of 2010 to ban all private transfer fees. It is being portrayed as consumer protection from predatory scheme that forces homeowners to pay for the right to sell their own properties. It does not address charitable transfer fees, but the coalition is working with Waters to insert such language.

Many land trusts use transfer fees to fund, and often times fully fund, conservation easement stewardship. Land trusts are now more aware than ever that the actual costs of stewardship and legal defense are significant. Granting landowners are limited in their ability to pay to fully fund all stewardship and legal defense expenses for a conservation easement of fee donation. More land trusts are exploring transfer fees as an additional tool to help close this funding gap.  

Many land trusts have been using a transfer fee for years, and therefore risk losing a potential long term source of stewardship and other funding. These fees properly used fund community programs and unique community benefits.

Realtors in several states have also been pursuing legislation to prohibit transfer fees at the state level. Such legislation has been successfully defeated (SC) or modified (NC, IL and CA). Other states have blanket prohibitions (TX, MO, FL and OR). Check your state law on this issue so you are not surprised in your state.

A coalition of concerned charitable organizations, government agencies and others is working on the issue. The Coalition is also working to insert exemptions for

• any 501(c)(3) or 501(c)(4) organization
• all transfer fees prior to January 1, 2011

View more information and a list of coalition members.The Alliance is working on this issue by informing its members, joining the coalition and calling supporters.

Developers and investors are securitizing transfer fees to generate long-term income streams for their private benefit. An example of this is Freehold Capital Partners of New York. This use of securitized PFTs angered home buyers and realtors.

The FHFA needs to hear from you. Request that the FHFA:

1. Insert an exception for tax-exempt organizations’ use of transfer fees;
2. Continue to support homes and homeowners with community-benefits fees;
3. Support reasonable Community-Benefits Fee Standards that distinguish between community-benefits fees (charitable purpose) and abusive fees that benefit only developers;
4. Allow communities to freely associate to support community services, schools, affordable housing, and conservation with no new taxes; and
5. At a minimum, extend the comment period through January 30, 2011, to allow for fully informed decision-making that fully considers the implications of the proposed harsh change.

Submit comments as follows:

Via E-mail: regcomments@fhfa.gov
Reference: “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” – include this in the subject line.

Via Mail/Hand Delivery:
Address: Alfred M. Pollard
General Counsel, Federal Housing Finance Agency
Fourth Floor
1700 G Street, NW
Washington, DC 20552
Reference: “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” – include this in the subject line.

Via Federal eRulemaking Portal:
Federal eRulemaking Portal: http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480b316f0

Ask your Members of Congress to write to FHFA to request both a comment extension and a charitable exemption.

Connect with your local affordable housing groups and government housing agencies. Ask them to write a letter to FHFA too.

Tell your land trust colleagues about this and share the talking points so everyone can take informed action.

Join the coalition. Click on the hotlink to submit your organization’s logo.  Then click on the ‘send a message’ link to send an email directly to FHFA. It is fast and easy.

The final reading for this proposal is the summer of 2011 so time is short to send comments.

1. Requires charities that file form 990 with the Internal Revenue Service to file a copy with the state attorney general, including land trusts as charities.
2. Includes conservation easements and preservation easements as charitable assets.
3. States broad powers of the attorney general to oversee charities to correct abuses without substituting judgment for the charity’s board or trustees, as well as protecting the donor’s “expressed intent” and holding the charity to “expressed purposes.”
4. Requires charities to register with state attorney general and authorizes fees. Some land trusts that conduct activities in multiple states may be required to register in multiple states depending on the nature of activities.
5. Requires advance notice to the attorney general for conservation easement amendments and any other modifications of easements or other charitable assets. Commentary on this section states that “if a charity intends to use the doctrines of cy pres or deviation, either under trust law or under UPMIFA, to modify a restriction, the charity will need court approval and notice” to the attorney general.
6. Provides for attorney general notice of and participation in a wide range of proceedings.
7. Affects how land trusts may have to report conservation easements on balance sheets, typically as liabilities or nominal value, but which a combination of various Uniform Acts may have the effect or requiring to be reported as assets.
8. UPMIFA affects financial reporting. The Uniform Prudent Management of Institutional Funds Act (UPMIFA), which has replaced UMIFA in all but five states as of June 2010. The definition of charitable purposes follows that 19 of UTC § 405, Restatement (Third) of Trusts § 28 (2003), and UPMIFA § 2(1) (2006).
9. See also Connecticut Yankee Council, Inc. v. Town of Ridgefield, 2010 Conn. Super. LEXIS 1496 (Sup. Ct. Conn., Jud. Dist. Danbury June 15, 2010)(Unpublished). The court held that UMIFA (now UPMIFA) only applies where the donor retains some interest in the gifted property.  UPMIFA, which has replaced UMIFA, contains similar language.

The drafting committee chair has asked conservationists to please send in comments and suggestions on this proposal to kburnett@webbnetlaw.com or you can write to the full committee at: kieran.marion@uniformlaws.org.  Please include the name of the committee (Charitable Assets) in the Subject line of your email.   

Each state has designated commissioners to the National Conference of Commissioners on Uniform State Laws that you can also contact. You can write to your commissioner at kieran.marion@uniformlaws.org. Please include the name of the committee (Charitable Assets) and your state in the Subject line of your email. View the state list of commissioners.

Nancy McLaughlin and Bill Weeks reviewed the interconnection of the various laws and proposals including the above and the Uniform Trust Code and common law doctrines for their Rally 2010 workshop on Administration of Charitable Assets. View links to various state versions of Uniform model laws see.

Be a Part of Passing the 18,000 Mark

Your land trust can still commit to this innovative and exciting conservation defense program. We are all in this together! The Alliance board approved raising the capital to fund the program. The Alliance will seek public comments on the next phase of the proposed Conservation Defense Insurance program: tax, legal, and governance structure. Only the committed land trusts will be asked for feedback on the proposed structure.

The Alliance and a work team of nationally respected attorneys have proposed a design for the tax and legal structure that allows foundations to give capital directly to the Program and insulates land trust members and the Alliance from legal or financial liability. The Alliance staff and board are reviewing the proposal in January.    

Land trusts formally committed to the proposed Program will also have two opportunities for public review and comment on national conference calls in March and May 2011. Details will follow closer to the calls. From February through May, the Alliance will also accept any written comments or phone comments to Leslie Ratley-Beach at lrbeach@lta.org or 802-262-6051.  The Alliance will release the draft recommendations in the February eNews Bulletin.

Preliminary Structure Outline

We propose a legal structure for insurance called a Risk Retention Group (RRG) which would be owned by the land trusts participants and would shield both the Alliance and its members from liability. The RRG would use a special section of the Internal Revenue Code (Section 501(n)) to gain tax exempt status. The Alliance would form and wholly own a limited liability corporation specifically for non-profit organizations (LLC) to serve as the day to day operator of the Program.   

The LLC formed by the Alliance would be responsible for managing the claims committee, providing loss prevention services and other duties. The Program would contract with an insurance management company to manage the collection of premiums, payment of claims, accounting and reporting to regulators.  

The proposed Program owners (the land trusts) are shielded from pass through liability by the RRG structure and by a separate LLC to house the proposed insurance program. The Program is non-assessable meaning that excess losses are not billed to the land trust members but must be absorbed by retained earnings and capital if necessary.

Ten Lessons Learned on Super Record Retention

1. Getting agreement or even better consensus before you start archiving is vital.
2. The most important decision you will have to make is what categories of documents to keep. People have strongly held opinions about this question. Be prepared to invest the time to reach consensus. You will find that some people want to keep every document. You’ll need to work to identify what should be destroyed and when.
3. Getting a representative list of all the types of documents you have will save rework later.  You may have to dig deep to discover all the obscure document types in your files.
4. You will need both project naming and document naming protocols.
5. Decide your electronic folder structure and pilot it with a few complex projects before finalizing.
6. Assign people to the project who understand what they are looking at.  Let them pace the project.  They deserve your gratitude!
7. Develop an easy method for pulling outdated documents that you intend to keep for a fixed period but later discard.
8. Keep track of your shredding “regrets,” you may wish to amend your retention protocols based on trends you discover.
9. One your backfill is complete assign responsibility (ideally to one person) for prospectively merging and purging both paper and electronic documents at closing. Be sure to have a back up for this person.
10. When deciding the naming, organization and retention of your documents it is also helpful to think about the naming, organization of your image library and your spatial database and connect all of your databases.

Chris Moore reflected on the VLT records systems and reviewed policies from other organizations recently such as the Colorado Open Lands data management policy. “I realized that VLT’s records policy doesn’t include mention of the GIS server or the databases. I consider those items as information more than records, but it might benefit us to include them in the future,” he said. The greatest super hero attribute may be the willingness to continually consider system refinements and to learn from others.

Additional Super Hero Strategies from Chris Moore

• Purging, sorting, scanning and naming for more than 3 months at a stretch would have been a bad idea.  There are only so many times that one can re-name the same document and use a staple-puller.  At the same time, doing it any less than full time would also have been a bad idea.  Working all day, every day for a short period of time allowed for greater consistency and quality control.
• Using staff familiar with the documents was a huge advantage.  We had considered hiring temps or interns or even contracting the work out to a document scanning company but because of the uniqueness of our work, we felt that quality control could be best assured by keeping the work in-house.
• One of the greatest anxieties at the start of this project was that some staff members felt that we should keep every single document ever created and that we would regret recycling certain documents. It was helpful to allow staff to review the master list and also allow for flexibility in changing the status of documents. For example, VLT project counsel presented a legitimate reason to keep appraisal summaries forever, so we’ve recently begun scanning those. With that in mind, we had to remind staff that we could not keep everything; the marginal benefit of doing so was outweighed by the cost. It is also important to note that with some exceptions, most VLT documents are available in other locations (Town land records, with the landowner, with a partner).  If something was inadvertently recycled, chances were good that we could find another copy.
• For projects going forward, VLT legal staff use the master document list and naming protocol, and documents are scanned immediately after closing.  For the first two years after the closing, the paper files are kept in our headquarters.  We discovered that if we ever needed to go back into those files, it was happening within the first two years.  After two years, we send the files to offsite storage.

Remember that you can adapt this process to any size organization.  While VLT is one of the largest land trusts in the country, the process it used is both simple and flexible. You can size it to fit your needs, so don’t let the numbers thwart you.

Disciplined Purging, Retention and Archive Process

• The first step is to determine what documents you have in your files.  Then decide if, how and where you want to keep those documents.
• VLT decided to scan to PDF any document that we wanted to keep.  In the years leading up to this project, we had established an individual electronic folder for each of our projects on one of our internal data servers.  Each folder was populated with an Archive folder into which we saved the scanned documents.  We also decided to compile all of the paper files that we wanted to save and house them in an off-site storage facility. View examples of folder structures.
• We pulled about two dozen files and went through each one, writing down everything that we found.  We then circulated this list amongst the staff asking for additions.
• Upon compiling a master list, VLT created three categories for each listing that related to how the document would be archived:

1. Should the original paper copy of the document be saved and for how long?
2. Should the document be scanned to PDF?
3. Should the original electronic version of the paper document be saved and for how long? (i.e. the MS Word version of a signed and recorded conservation easement)

• We gave this list to management and attorneys.  We asked them to rank each document.  If a document was determined worthy of keeping, it was assigned one of four lengths of time.  Some documents would be kept forever; some for 8 years (the statute of limitation plus one year), some for 2 years and some were immediately shredded.
• After the list was complete, VLT established a naming protocol for those documents that we wanted to scan to PDF.
• VLT implemented the archiving project over several years.  The reasons for this were several:

1. Our stewardship staff has downtime between January and March and we planned to take advantage of that availability for this project.
2. Our documents were in two locations in the State.  Files related to the stewardship of our conserved properties were housed in a field office and files generated pre-closing were housed in our headquarters.  Given the limited staff availability we wanted to complete one area before moving on to the next.
3. At the time we had 25 years (and counting) of project files (1700 conservation easements spread over Vermont’s 255 towns).  We knew this would be a daunting task.  Rather than risk burnout and apathy towards the project we decided to spread the work over several years.

• VLT had ten staff members working on this project and we divided them into 5 teams of two people each.  Because they are used several times daily, we decided to start with our stewardship files in our field office.  We purchased a large multifunction scanner and dedicated a desktop computer to the project.  The scanner was wired to send the document directly to the desktop computer, which was connected to our larger organization wide network and servers.
• The master list with the naming protocol was left at the scanning station and each team was also given a copy.  We also spent a day with each team explaining the process.
• Fortunately all of our stewardship files were organized in the same manner.  Monitoring reports on the inside cover, easement on the third tab, baseline documentation report attached to the rear cover, etc.  This made the scanning task easy and repetitive.
• Each team handled the scanning process slightly differently, but in general one person would open the file, remove and scan the document and the second person was seated at the computer and would re-name the file based on the scanning protocol and save it to the proper Archive folder on our network.
• The team was also responsible for taking all of the paper documents that we wished to keep and to insert them into a folder that would be sent to the off-site storage facility.  We recycled those documents that we had decided not to keep in any form.
• Surveys are a challenge. Our scanner could only handle documents up to 11”x17” in size and most of the surveys were larger.  As the teams went through the files, they were instructed to collect surveys separately from the rest of the documents.  We later purchased a large format scanner and are in the final stages of converting those to PDF files.
• VLT also had a master list of all of our projects.  At the end of the day, each team would cross off those that they had completed so that we could track our progress.  The next day’s team would simply pick up where the previous team had finished.
• The scanning process for our stewardship files took about 3 full months.  After it was complete the files destined for the off-site storage were brought to our headquarters so that they could be appended with the pre-closing documents.
• The following January we began scanning the pre-closing documents that had been housed in the headquarters.  The process was essentially a repeat of what had happened in the field office, only with different documents.

Time and Cost Estimates

Pre-project Planning Phase: Approximately 200 billable hours spent on project design and implementation, including staff training.

Time: approx. 200 work days of scanning over three years x 6 hrs per day = 1,200 hours x 2 person teams = 2,400 (does not include drive time to/from scanning location) to scan approximately 1,700 files.  So this was less than two person hours a file but did not include large format maps and surveys.  You could estimate 2 hours a file for scanning once you have all the files in one place, the teams assembled and trained, the technology in place and the systems and policies written and approved.

Personnel: Each scan day involved two people, so 2,400 billable hours.

Paper file size: We had approximately 1,700 separate landowner files.  Size varied greatly depending on age and complexity of project, but averaged approximately 15-20 individual documents per file, totaling 50-60 pages of scanned material.  Most files contained additional duplicate material that was recycled.

Electronic file size: Total file size of scanned documents average 15-20MB per project, increasing annually.

Technological:

• Dedicated multi function Canon copier/scanner/fax machine
• Large format scanner for digitizing easement maps and surveys
• Dedicated computer workstation connected to scanner
• Increased hard drive space for electronic storage
• Increased capacity for tape backup system for electronic files

Miscellaneous:

• Travel costs to field offices for scanning of Stewardship files
• Offsite storage rental fee for original paper documents
• Secure Shred contract for shredding sensitive paper files that were duplicates.
• One-time moving company cost for transporting all paper files to the off-site storage facility.

Ongoing:

• Continued need to increase hard drive storage space and offsite paper storage space as additional projects close and documents are created
• For every project that closes, approximately 45 minutes per project is spent scanning and archiving documents.

New Hampshire Super Heroes Do it Too!

The Monadnock Conservancy (NH) just completed a stewardship file cleanout and restructuring. They purged correspondence and documents that were not critical to easement defense and standardized their file structure. It took several weeks of staff time, but Emily Hague, Stewardship Manager, said “it was totally worth it!” A summary of the process reveals a simple but effective approach. Emily also is “happy to share more if that would be helpful.”  

A successful records system requires training and dedication. Land trusts must ensure that staff, volunteers and board members are all committed to maintaining the records system. Records maintenance is the manner of treating, handling and controlling records. No matter what stor¬age system you choose, your land trust will always have to update records while at the same time ensuring that its system is perpetually accessible, stable, safe and secure. Recordkeeping responsibilities must be assigned to appropriate land trust personnel, whether staff or volunteer, and the land trust’s records policy and procedures should reflect who in the organization is responsible for recordkeeping and record destruction.

For more information on the ultimate in records, read the following Land Trust Alliance curriculum books:

• Nonprofit Law and Recordkeeping for Land Trusts – Volume I: Complying with Federal, State and Local Law
• Nonprofit Law and Recordkeeping for Land Trusts – Volume II: Recordkeeping Essentials for Land Trusts
• Managing Conservation Easements in Perpetuity

Design Process

The Alliance and a work team of nationally respected attorneys are working on a design for the tax and legal structure for the proposed Program that would allow foundations to give capital directly to the Program and insulate land trust members and the Alliance from legal or financial liability. The attorney work team will recommend its design to the Alliance staff and board.

Land trusts formally committed to the proposed Program will also have two opportunities for public review and comment on national conference calls in March and May 2011. Details will follow closer to the calls. From February through May, the Alliance will also accept any written comments or phone comments to Leslie Ratley-Beach at lrbeach@lta.org or 802-262-6051. The Alliance will release the draft recommendations in the February eNews Bulletin. The Alliance board will vote on structure at its June 2011 meeting.

Preliminary Structure Outline

We propose a legal structure for insurance called a Risk Retention Group (RRG) which would be owned by the land trusts participants and would shield both the Alliance and its members from liability. The RRG would use a special section of the Internal Revenue Code (Section 501(n)) to gain tax exempt status. The Alliance would form and wholly own a limited liability corporation specifically for non-profit organizations (LLC) to serve as the day to day operator of the Program.   

The LLC formed by the Alliance would be responsible for managing the claims committee, providing loss prevention services and other duties. The Program would contract with an insurance management company to manage the collection of premiums, payment of claims, accounting and reporting to regulators.  

The proposed Program owners (the land trusts) are shielded from pass through liability by the RRG structure and by a separate LLC to house the proposed insurance program.  The Program is non-assessable meaning that excess losses are not billed to the land trust members but must be absorbed by retained earnings and capital if necessary.  

The attorney work team is still formulating recommendations on specific governance structure and addressing issues of roles, responsibilities and job descriptions. The Alliance will post more information on governance recommendations in the February eNews Bulletin. The Alliance board will vote on structure at its June 2011 meeting.  After the Alliance board vote, the insurance regulators in the state that will regulate the proposed program must also approve the entire structure.

Domicile

Thirty states now have captive enabling acts and could be the corporate home for the Risk Retention Group. The Alliance considered only those that its outside advisors felt were most experienced and stable. After comparing several common domiciles for captive insurance entities and RRGs, Vermont was selected as the domicile for ACI. The Vermont program is superior in almost all respects. A few states have a slightly lower premium tax or a slightly lower application fee. Vermont is the leading onshore captive insurance domicile with nearly 30 years of experience working with the captive insurance industry. With over 900 captives, Vermont has licensed more than 4 times the number of captives than any other domestic competitor. 42 of the Fortune 100 and 19 of the companies that make up the Dow 30 have their captive insurance companies located in Vermont.

While Vermont has some of the largest captive companies in the world, more than half of Vermont’s captive insurance industry writes less than $5 million annually in premiums. This makes Vermont one of the best places for smaller and mid-sized businesses to form captive insurance companies.

Vermont is fortunate to have unparalleled government support for the ongoing formation and future needs of captive operations. Vermont has a nearly 30-year track record of broad political support for the captive insurance industry, which is considered a strategic priority for the State. Vermont makes annual enhancements to its laws to keep Vermont as the jurisdiction of choice.

Vermont also has the largest group of experienced and knowledgeable captive insurance regulators of any domicile with a 30 year track record of firm and friendly oversight. Vermont enacted its captive law in 1981 to regulate members, a capable in-house veteran staff of 30+ with a 23 member examination staff. Captives have an assigned financial analyst and all audits are done internally. Vermont domicile approval generally facilitates the certifications for the RRG in other states. Vermont regulators have a powerful voice nationally in setting insurance accreditation rules through the National Association of Insurance Commissioners. Vermont also has a strong conservation reputation and depth of support in public and private sectors for land trusts.

Leading off in 1998, Dan Pike of Colorado Open Lands requested that Jessica Jay research options for Colorado Open Lands' individual and collective easement defense, which culminated in the seminal article: Land Trust Risk Management of Legal Defense and Enforcement of Conservation Easements: Potential Solutions, published in 1999.

The Bay Area Open Space Council sponsored Darla Guenzler, now the Executive Director of the California Council of Land Trusts, to undertake research on collective defense resulting in publication of Creating Collective Defense Resources in 2002, and



The Heart of the Rockies land trusts, led by Paul Sihler (left) and then Mike Whitfield (middle), retained Montana attorney Andy Dana (right) to analyze the conservation defense insurance idea.  

Credit is also due to former Alliance staff members Liz Bell, now with the Wilburforce Foundation, and John Bernstein, now with the Northern Sierra Partnership, for helping move the insurance effort onto the national stage.

Land trust leaders have talked about some form of collective defense for over twenty years, but it wasn’t until 2000 that viable national solutions appeared from the western efforts.  We owe these visionary leaders and thinkers a huge ‘thank you’.

It is inspiring to see 454 land trusts, so far, from 47 states join together to uphold conservation permanence.  Almost 70% of the conservation easements in America are committed to the proposed conservation defense insurance program with the exception of the easements held by the 10 largest self-insured land trusts. That collective action is a formidable defense to the numerous and increasing challenges to conservation.

Funders are impressed with this commitment and having even more land trusts join will make raising the necessary $4 million dollars to capitalize the program possible.  So if your land trust is looking at committing to the proposed program, you still have time to join your colleagues across the country.

Questions?  Need help talking with your board about this idea?  Call or write to:
Leslie Ratley-Beach
Conservation Defense Director
Land Trust Alliance
44 Deerfield Drive
Montpelier, VT  05602
802-262-6051 phone and fax
lrbeach@lta.org

Photo Credits
Dan Pike/Photo by Cecelia Thomas
Jessica Jay/Photo by Travis Clark
Darla Guenzler/Photo by Jean Cotton
Paul Sihler/Photo courtesy of Paul Sihler
Michael Whitfield/ Photo by Kisa Koenig Photography
Andy Dana/Photo courtesy of Andy Dana
John Bernstein/Photo courtesy of Northern Sierra Partnership
Liz Bell/Photo by Tim Greyhavens

Court Action

The Massachusetts Land Court dismissed a law suit against The Trustees of Reservations (MA) brought by a neighbor to enforce a conservation restriction (Massachusetts name for conservation easement). The Court entered a final judgment ruling that the neighbor had no standing to enforce the conservation restriction.  

“This case required a large investment in time by our staff and outside legal counsel,” explained Chris Rodstrom, Director of the Conservation Restriction Program at The Trustees of Reservations, “but by prevailing we’re now in a stronger position to deal with any other abutters to our 340 conservation restrictions that attempt to unduly influence our stewardship program.”

This decision has limited precedential value because it is a judgment in the Trial Court; nonetheless, it still is useful for any land trust dealing with a neighbor that is threatening a lawsuit. It may also have some value in other lower courts especially coupled with the Tallman decision to show how other courts have dealt with the issue.

Background

The owner of the conserved land granted the conservation restriction in 2008 to the Trustees. The restrictions provided for a building envelope, access and utilities on the 36 acre property in a spot where a home and barn had previously stood. A year later, the land owner proposed to dismantle an existing historic home it owned elsewhere in town and move it into the building envelope. The neighbors, Frank and Jean Granara, objected alleging that the access would have to be widened to accommodate moving the house and would disturb 978 feet of bordering vegetated wetlands. The access driveway abuts the rear boundary of the Granaras’ home on a small lot.

The Trustees had reviewed and approved the landowner plans as consistent with the purposes of the restrictions. The Granaras sued the landowner, Stetson Kindred of America, Inc. for violating the restrictions and the Trustees for failing to enforce the restritions. The Granaras claimed that they personally benefit from the restrictions on the Stetson property since it increases their property values and therefore they have the right to enforce the restrictions. The Trustees countered that the Granaras’ lacked standing to sue and to enforce the restrictions and that in any event the contemplated actions are consistent with the restrictions. On joint motion of the parties, the court considered two issues: whether Stetson’s activities violate the restrictions and whether the Granaras have standing to enforce the restrictions.

The court held for the Trustees on all counts finding that only named holders in the restrictions have any right to enforce them.

“It helped to have a good conservation restriction stewardship program in place,” added Chris Rodstrom, “since we could demonstrate to the judge that our approval of the building was carefully considered and well documented.”

Recent Related Case

Elizabeth Tallman filed a case, (Tallman v. Outhouse, et. al.) against her neighbors, Mr. and Mrs. Outhouse, the owners of abutting property partially protected by a conservation easement, the Rockingham County Conservation District (conservation easement grantee) and the Society for the Protection of New Hampshire Forests (executory interest holder in the conservation easement). Ms. Tallman claimed she had a third party right to enforce the easement, and that the Conservation District and the Forest Society were failing to enforce the terms. She also asserted a right of unfettered access to the protected property, which the Court rejected, upholding the landowners' right to post against and to control public access. Essentially, she sought a ruling that conservation easement prevented her neighbors from building their home on land not encumbered by the easement, and that the easement prevented access to the residence site. Elizabeth Tallman asked the Court to order that, among other things, the easement precluded the construction of the house and access to it, and that the conservation restrictions also extended to the excluded 1.23 acres as a result of an equitable servitude.

The neighbor’s legal positions required the easement holders to vigorously oppose the assertion that abutters have legal standing to interpret or enforce easements, or to restrict or utilize easement land for their personal goals.  There were other related disputes at issue in the lawsuit, but the critical matter for the Forest Society, and for the land conservation community as a whole, was the  whether abutters or other third parties can sue to enforce conservation easements granted to land trusts, municipalities and state agencies. The New Hampshire statute that authorizes conservation easements does not include an express statement that only the holders of a conservation easement have legal standing or a right to sue to enforce the easement.

This was essentially a dispute between neighbors that escalated to include both easement holders. One of the neighbors had very nice land subject to an existing conservation easement. The complaining abutter tried to use the easement as a sword for her personal purposes against the wishes, interpretation, and authority of the easement holders.  Voluntary settlement attempts proved fruitless. The court ruled explicitly that New Hampshire recognizes no third party right of enforcement, and further that the Outhouses’ plan to build a house on the unrestricted portion of their land cannot be viewed in any way as a violation of the easement. The court also acknowledged that the Outhouse’s use of the historic access route that crossed a small potion of the easement land was not a violation of the easement.  

The Court found for the defendants on all counts and also held that the easement did not require open access to the general public. This is what the Conservation District and Forest Society sought from the court and is a very good result for the NH land trust community.

Read testimonals from our land trust community about the proposed program.

Call or write to:
Leslie Ratley-Beach
Conservation Defense Director
Land Trust Alliance
44 Deerfield Drive
Montpelier, VT  05602
Phone and fax: 802-262-6051
E-mail: lrbeach@lta.org

• any 501(c)(3) or 501(c)(4) organization
• all transfer fees prior to January 1, 2011

View more information and a list of coalition members.The Alliance is working on this issue by informing its members, joining the coalition and calling supporters.

Developers and investors are securitizing transfer fees to generate long-term income streams for their private benefit. An example of this is Freehold Capital Partners of New York. This use of securitized PFTs angered home buyers and realtors.

The FHFA needs to hear from you. Request that the FHFA:

1. Insert an exception for tax-exempt organizations’ use of transfer fees;
2. Continue to support homes and homeowners with community-benefits fees;
3. Support reasonable Community-Benefits Fee Standards that distinguish between community-benefits fees (charitable purpose) and abusive fees that benefit only developers;
4. Allow communities to freely associate to support community services, schools, affordable housing, and conservation with no new taxes; and
5. At a minimum, extend the comment period through January 30, 2011, to allow for fully informed decision-making that fully considers the implications of the proposed harsh change.

Submit comments as follows:

Via E-mail: regcomments@fhfa.gov
Reference: “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” – include this in the subject line.

Via Mail/Hand Delivery:
Address: Alfred M. Pollard
General Counsel, Federal Housing Finance Agency
Fourth Floor
1700 G Street, NW
Washington, DC 20552
Reference: “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” – include this in the subject line.

Via Federal eRulemaking Portal:
Federal eRulemaking Portal: http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480b316f0

Ask your Members of Congress to write to FHFA to request both a comment extension and a charitable exemption.

Connect with your local affordable housing groups and government housing agencies. Ask them to write a letter to FHFA too.

Tell your land trust colleagues about this and share the talking points so everyone can take informed action.

Join the coalition. Click on the hotlink to submit your organization’s logo.  Then click on the ‘send a message’ link to send an email directly to FHFA. It is fast and easy.

1. Encroached hostilely (i.e. without getting permission) for 20 years,
2. Encroached notoriously (obvious to the public) for 20 years,
3. Encroached continually for 20 years, and
4. Encroached exclusively for 20 years.

In this case, the neighbors met the first two criteria, but not the last two.  The land trust had testimony from other neighbors that the encroachment was neither continuous, nor exclusive. However, with the first two criteria met, a “Prescriptive Easement” could be claimed. A “Prescriptive Easement” provides for the shared use of the land, and the Easement automatically transfers to future owners of the land to which it is attached.  The land trust had offered shared use before the litigation, and is pleased with the result.

The neighbors’ attorney had attempted to intimidate the land trust into abandoning the parking area. However, the land trust attorney countered with a demand that the neighbor prove his (and/or the prior land owner’s) continuous and exclusive use of the parking area for 20 years. When the neighbors could not prove this use, their case folded.

Now the neighbors have recorded a “Prescriptive Easement” where in the land trust retains ownership of the land, has the exclusive use of 2 parking spaces for trail users, and the neighbor has the principal use of the other 8 spaces. However, the land trust has the right to the exclusive use of all the spaces for a few events a year with 2 weeks advance notice.

Jerry says that “this matter should have been pursued back in the 60s by the prior land owner.” At this point the land trust didn’t have any other options since the 20 year time period had expired.” The land trust attorney did some pro bono work and the land trust was able to keep his charges below $4,000. However, land trust Board members spent over 200 hours of volunteer time on the case. According to Jerry, legal costs could easily have been over $25,000 if the land trust, and its attorney, had not short circuited the neighbors’ contentions through their interviews and their attorney’s skilled handling of the case.

The land trust extended the trail this spring to the opposite side of the preserve. The land trust is accomplishing its objectives of making the property available to the public, and expanding its use for youth education; especially for high school students to learn more about flora and fauna in this unique geological area.

Now that the land trust is alert to “Adverse Possession” risk, the board acts to preclude it from becoming a problem on other fee property. In this case some neighboring home owners are starting to cut their lawns over their lot lines. This time the land trust is taking immediate action to post the boundary, and to educate the neighbors.

For more information:
Jerry Petersen
Kettle Moraine Land Trust
jerry@kmlandtrust.org
http://kmlandtrust.org/

Kettle Moraine is a large moraine in the state of Wisconsin stretching from Walworth County in the south to Kewaunee County in the north. It has also been referred to as the Kettle Range and, in geological texts, as the Kettle Interlobate Moraine.

The moraine was created when the Green Bay Lobe of the glacier, on the west, collided with the Lake Michigan Lobe of the glacier, on the east, depositing sediment. The western glacier formed the Bay of Green Bay, Lake Winnebago and the Horicon Marsh while the eastern one formed Lake Michigan. The major part of the Kettle Moraine area is considered interlobate moraine, though other types of moraine features, and other glacial features are common.

The moraine is dotted with kettles caused by buried glacial ice that subsequently melted. This process left depressions ranging from small ponds to large lakes and enclosed valleys. Elkhart Lake, Geneva Lake, Big Cedar Lake are among the larger kettles now filled by lakes.

Some 20,000 years ago, two lobes of a great ice sheet met along a line extending northeast from Richmond in Walworth County through the Oconomowoc Lake country to Kewaunee County. One lobe moved down what is now the Green Bay-Lake Winnebago area. Spreading under tremendous pressure, the two lobes met and in the encounter, large blocks of ice were broken off and buried in the glacial deposit or till. As the ice melted, "kettles" were formed, some only a few yards across, others 100 to 200 feet deep.

The ice moved under great pressure, changing shape rather than sliding across the face of the land. As it changed shape, large amounts of rock, gravel, sand and silt were picked up and carried along by the glacier. When the ice melted, this material was deposited, in some instances, across glacier-formed valleys. Some "kettles" were formed this way.

The Kettle Moraine is an area of varied topography--parallel, steep-sided ridges, conical hills and flat outwash plains, mostly composed of sand and gravel. Many of the conical hills are conspicuous. Holy Hill reaches an elevation of 1,361 feet above sea level and some 340 feet above the stream valley to the east. Sugar Loaf or Pulford Peak (elevation 1,320 feet) is 320 feet above Pike Lake. Lapham Peak (elevation 1,233 feet), where there is a picnic area and observation tower, is 343 feet above Nagawicka Lake.

Similar detached sand and gravel conical hills, called kames, characterize the moraine throughout much of its extent. Some of these kames are cones formed beneath the glacier by surface streams which fell through holes in the ice. The undulating level-topped, narrow ridges called eskers were probably deposits in open cracks (crevasses) in the ice. In some areas the outwash terraces are pitted due to the melting of buried ice masses.

The Kettle Moraine area rises to 300 or more feet above the lands to the east and west yet is not a continuous divide. Maximum thickness of the drift is not known because few wells reach bedrock. It is possible that the drift reaches a thickness of 500 feet in some places.

Limestone underlies much of the Kettle Moraine. This formation is 450 to 800 feet thick and dips gently eastward. Its western edge or escarpment extends from Washington Island to the Illinois line near Walworth. It lies 20 miles to the west of Kettle Moraine at Greenbush, is completely covered by the moraine in the Waukesha County area, and is 8 miles east of the moraine at Elkhorn. Because of the cover of drift, there are few outcrops in the moraine.

Lakes, of several origins, add greatly to the attractiveness of the Kettle Moraine. With the exception, of Pewaukee Lake, which lies in a preglacial valley blocked on the west and east by drift, all lakes in the Oconomowoc area occupy kettles. Long Lake, Big Cedar Lake and Elkhart Lake occupy preglacial valleys between morainic ridges. These valleys were probably occupied by ice blocks and escaped being filled by glacial drift.

Georgia Department of Transportation plans call for an 800-foot wide, 125-foot deep gash to be blasted through Dobbins Mountain, the location of the conservation easement.  The proposed mountain cut is tall enough to hold a 12-story building and wide enough to comfortably fit four 747 jet planes sitting wingtip to wingtip.  The DOT's chosen route also crosses several creeks in the Etowah River basin and would further jeopardize the threatened Cherokee Darter.

Anyone who has suffered through stop-and-go traffic on the winding road between Rome and I-75 in Bartow County knows that a highway bypass is long overdue.  The Georgia DOT is moving ahead with plans to build a bypass, but the specific route would cause environmental damage, waste millions of taxpayer dollars, and take much longer to construct compared to other viable options, according to the Georgia Conservancy.

Dobbins Mountain is a Bartow County landmark that soars more than 1,000 feet high. The preferred DOT route doesn't go around this formidable obstacle. It barrels right through it.

Compared to other alternatives, the DOT's favored route is 2.5 miles longer and requires the construction of seven more bridges and overpasses. In all, the cost difference runs about $80 million-- a stunning figure given the DOT's well-documented budget woes. The DOT has explored a more cost-effective and environmentally friendly option (known as "Route G") only to reject this approach in favor of a path through Dobbins Mountain ("Route D").

"There's a cheaper, more environmentally friendly way to build a road than to blast through Dobbins Mountain," says Pierre Howard, president of the Georgia Conservancy. "The proposed route was a bad idea years ago, and it's a bad idea now. It is unfair to taxpayers to build the most expensive route that also does the most environmental damage."  For a comparison of the two routes, click here.

The City of Euharlee took control of a key piece of the planned route through Dobbins Mountain in Bartow County.  The Council voted to accept a perpetual conservation easement offered by the landowners, and the documents, which create the wildlife refuge, were filed the next day.   A letter to the state from a high-powered Atlanta legal firm followed, saying that because the City of Euharlee designated the 100-acre tract as a “significant wildlife refuge,” it should receive Section 4(f) protection from development.

Section 4(f) of the Department of Transportation Act of 1966 prevents DOT agencies from approving the use of public parks, recreational areas, wildlife refuges or historical sites unless there is no “feasible and prudent” alternative.

Euharlee City Manager Trish Sullivan said the City Council was moved by a May presentation at the Rollins family’s Carters¬ville Ranch that highlighted the natural habitat and other resources.  The easement will enhance downstream water quality and will protect headwater tributaries that support stream habitats of the Cherokee Darter.  The easement also preserves 100 contiguous acres of hardwood forest from encroaching metro development.  That acreage is of sufficient size to protect sensitive species and to act as an important wildlife corridor.

“This is a significant and permanent conservation easement," said Euharlee City Manager Trish Sullivan. "Our city council is working proactively to avoid development of environmentally sensitive land resources and to preserve irreplaceable wildlife habitat in our part of Georgia.”

“We are particularly interested in greenspace and preservation,” Sullivan said. “How it affects the connector is not our decision to make.”

The Georgia Conservancy understands the need to invest in transportation infrastructure to ease traffic congestion in Bartow County and to better serve the Rome area. However, the rush to build the wrong road would come at far too great an expense.

Despite the City’s designation of the conservation easement as a significant wildlife refuge, the DOT still wants to condemn the easement land.  As for the automatic federal protections that fall to a wildlife refuge, the DOT project manager was quoted as saying that you cannot manufacture a refuge just to stop a road and “Federal Highway is going to fight that fight in court.”  The landowners and the City of Euharlee need help to fight DOT’s plans to condemn the easement property for road construction.  For more information, please contact the individuals listed below.

The Georgia Conservancy has joined an effort to fight the DOT proposal. A group of concerned citizens known as the Coalition for the Right Road also is blogging about the issue at http://therightroad.wordpress.com/

The 7.3-mile limited access connector is aimed at providing a direct link from Rome to Interstate 75 and easing congestion on U.S. 41 in Cartersville. The route cleared a regulatory hurdle last year, but the proposed interchange at I-75 could open the door to reconsideration.

The Sutherland law firm (Henry Parkman and Lee Davis specifically) have been retained to fight the road and to protect the critical mountain landmark and wildlife habitat.

Read more: RN-T.com - Euharlee seeks to preserve land on 411 Connector route
See (https://www.georgiaconservancy.org/index.php?page=411-connector)
See also:  (http://www.gpb.org/news/2010/06/18/city-protects-land-from-road-project)

For more information:

Chip Stewart
Senior Vice President
Cookerly Public Relations One Alliance Center
3500 Lenox Road, Suite 510
Atlanta, GA  30326
Phone: (404) 816-2037
chip@cookerly.com

Paul Donsky
Georgia Conservancy
817 West Peachtree Street, Suite 200
Atlanta, Ga. 30308
phone: (404) 876-2900
fax: (404) 872-9229
pdonsky@gaconservancy.org

Laura Curliss offers a unique insight into the benefits of insurance pooling among a group as a way to share the expenses of defense and enforcement. As a board member of Clinton County Open Lands, Inc., Curliss embraces the responsibility to steward conservation easements in perpetuity.  As a board member of Miami Valley Risk Management Association, she believes insurance pooling is the best solution to the legal challenges facing land trusts.

Curliss believes an insurance pool for the land trust community will better the conservation community in three distinct ways by providing:

• Legal defense for land trusts of all sizes, locations, and budgets

• National sharing of easement language and defense strategies

• Increased conservation easement and fee land management expertise

The proposed Conservation Defense Insurance program would help land trusts to prevent and mitigate risks. Since the program is the first of its kind, a major challenge to the program is risk management.

“Clear easement language that addresses known risks is one key to reducing interpretation risks or violations,” stated Curliss.  “A pool helps to concentrate claims management and legal expertise regionally and, in this case, nationally.  This will lead to more predictability in claims handling and outcomes and to strengthened easement language.  As land trusts use best practices in risk management and incorporate more enforceable language into their easements, legal decisions or outcomes should be favorable to the conservation community,” she said.

As the number of land trusts committed to the insurance pool increases, Curliss predicts the number of knowledgeable lawyers available to defend their cases will increase too.

“A good claims management team is invaluable”, said Curliss. “Most cases will not go to court. Your team can help you to avoid unnecessary litigation and resolve a case before it heads to court, if that is the best thing to do for conservation permanence.”

One key to risk management is regular review of best practices.  “Pools usually offer targeted training to their members to address common risks.  The Land Trust Alliance does this now, but pooling will bring another level of organization and communication.  Best practices information will be quickly disseminated based on claims management experience.” Curliss said.  “Finally and most importantly, there is strength in numbers.  Land trusts will succeed in the awesome task of perpetual stewardship by working together on conservation easement defense.”

A single adverse decision from a legal case could endanger the permanence of thousands of easements. And without action now, the land trust community risks losing many of the gains made in recent years. To date, more than 270 land trusts from 46 states have committed over 88% (or 10,611) of the necessary 12,000 conservation easements and fee owned parcels to make the proposed Conservation Defense Insurance program feasible.  If land trusts commit 100% of the needed conservation interest, then the Alliance board can consider moving to the next step of raising $4 million in capital to start the program.

Note: Your commitment is essential in order for the Alliance board to vote to proceed to the next step. Your one-time registration fee now would be used for start-up costs if the program starts.  If not, the Alliance will return it in full. One of the next steps after enough land trusts commit to the program is to create a $4 million dollar endowment for the program.  Land trusts who sign up for the program will NOT be asked to contribute to that fund, although all contributions are welcome. The Alliance proposes to raise the $4 million in capital from foundations and individual major donors. The Alliance welcomes suggestions and advice from land trusts about who might be interested in contributing to that fund.