News Articles:

• Wyoming files suit to restore scenic trust, Forbes (7/30/08)
• State sues to restore scenic trust, Casper Star Tribune (7/30/08)

More information:

• Text of the complaint (PDF, 5MB)
• Overview of the full case of Hicks v. Dowd

News Articles:

• Wyoming files suit to restore scenic trust, Forbes (7/30/08)
• State sues to restore scenic trust, Casper Star Tribune (7/30/08)

More information:

• Text of the complaint (PDF, 5MB)
• Overview of the full case of Hicks v. Dowd

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.

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

What this Case Means for Land Trusts

The Van Dusen v. Commissioner, 136 T.C. No. 25 (June 2, 2011) case is of concern to both land trusts and volunteers but you can do a few things to make it less troubling. The volunteer and not the land trust should be responsible for tracking expenses and presenting those expenses to the land trust. All expenses submitted should be itemized and clearly documented as solely for the benefit of the land trust. The land trust should officially designate an appropriate party to receive the documentation from volunteers, such as the board treasurer if the land trust has no staff, who would then check the documentation for obvious errors such as an expense that is obviously not connected to land trust work. The land trust must look for any obvious errors or expenses not for the benefit of that land trust.

The land trust can then issue the required contemporaneous written acknowledgement letter for any expenses in excess of $250 not reimbursed by the land trust, consistent with the judge’s comments in Van Dusen. The land trust is not required to track volunteer expenses. Please note a technicality: the $250 threshold is for individual expenses, not cumulative expenses. A $249 airfare to attend Rally does not require the "no goods and services" letter for example. It is only individual expense items of $250 or more that require that extra documentation.

Case Background

Van Dusen, cat enthusiast and volunteer for Fix Our Ferals, a 501(c)(3) organization that neuters and fosters feral cats, sought a tax deduction for her costs associated with long-term foster care of approximately 80 feral cats, which she provided from her private residence. She claimed numerous out-of-pocket expenses in excess of $250 directly tied to the charity Fix Our Ferals, but lacked specific documentation of exact expenses and did not obtain the required contemporaneous written acknowledgment from an officer of the all-volunteer, loosely organized charity. The court, however, found that Van Dusen’s individual expenses of less than $250 each were allowable deductions under the substantial compliance doctrine because she substantially met the documentation requirements, which are either a cancelled check, a receipt from the charitable organization outlining the contribution or other reliable written records of a transaction, as stipulated in section 1.170A-13(a)(1).  

Individual expenses of $250 or more, however, were not found to be deductible, because Van Dusen failed to produce a contemporaneous written acknowledgment from Fix Our Ferals, as required by section 170(f)(8)(a).

Send Contemporary Written Acknowledgment Letters!

For a nonprofit organization and a donor, the significance of both providing and seeking an acknowledgment letter continues to be critical. If you do not already send contemporaneous written acknowledgments for all charitable donations, see these guidelines here to protect your organization and your donors. This holding may be significant for land trusts that rely heavily on volunteers and do not routinely reimburse their expenses. There may be a need for additional paperwork to substantiate volunteer out-of-pocket expenses of $250 or more. Remember that professional services are not tax deductible.   

In Van Dusen v. Commissioner, The court also briefly discussed the definition of a charitable contribution and cited three types of gifts including cash and property (whether direct, in trust or for the use of the charity), unreimbursed expenses and other legal rights.

Federal Volunteer Protection Act

Volunteers can also be vulnerable to lawsuits for negligence, so having the right training and support from the land trust is critical.  While federal law and state statutes provide some protection, the statutes lack uniformity and consistency. State legislatures try to balance protecting volunteers with assuring compensation to innocent victims. Only about half the states protect any volunteers other than directors and officers. Every volunteer protection statute -- even the federal statute -- has exclusions; the most common are based on a volunteer’s willful or wanton misconduct. Several laws also exclude gross negligence or another category of error above negligence.

Under the federal statute, one of the key exceptions is where a volunteer performs an activity that falls outside of the job description. While valuable, the intent of volunteer protection laws is to limit liability if a claim falls within the scope of the protection, but they do not prevent the volunteer from being sued. The statute and various articles are posted in the Clearinghouse collection under Federal Volunteer Protection Act. Learn more on the Council of Foundation's website and the Public Entity Risk Institute's website.

The land trust can also help volunteers by ensuring that they stay within the bounds of their roles and follow organizational policies. Use this resource to find the right software to track contact info, schedules, time sheets and work locations, freeing time to build loyalty to the mission and to provide sufficient supervision.  

In addition to having appropriate oversight of volunteers, land trusts should carry both general liability and directors & officers insurance coverage to provide a financial backstop when there is litigation concerning a land trust’s volunteers activities. Volunteer coverage is also recommended.

The SCC agreed with its hearing examiner that the need for the line had been proven, specifically to cure the reliability problems that will occur on an existing high-voltage line by 2011. The Mt. Storm-Doubs line is a major transmission source of electricity for residents and businesses in Northern Virginia. The SCC determined that the anticipated reliability violations on that line must be fixed.

Several opponents of the 502 Junction-Loudoun line had argued that other alternatives, including new generating plants and conservation programs, could eliminate the need for the line. Some urged the SCC to initiate integrated resource planning to determine whether a combination of options could be superior to the proposed line in removing the threat to reliable power service for Northern Virginia.

In its final order, the SCC said, “We are indeed sympathetic to the opponents’ position that planning for transmission, generation and conservation should be done in an integrated and holistic process, in order to arrive at the most rational and cost-effective plan to meet Virginia’s future load growth and transmission reliability needs.” The Commission went on to say, “The reality is, however, that the law and facts applicable to this matter do not enable us to use a transmission line case [to initiate such a planning exercise] and then use the result of that exercise as the legal basis to deny an application … when a clear reliability need has been shown and the proposed transmission line is an acceptable option under Virginia statutes to meet that need.”

The SCC noted that, by law, the primary responsibility for transmission line planning is given to a regional transmission organization which Virginia’s electric companies were required to join. PJM, Interconnection LLC, headquartered in Pennsylvania, is regulated by the Federal Energy Regulatory Commission (FERC). Federal policies prohibit PJM from the type of integrated transmission and generation planning advocated by the opponents.

PJM also controls when new power plants are allowed to interconnect with the regional electricity grid. In this case, PJM testified that federal policies prevent PJM from accelerating the order in which planned generating units are to be built or from ordering construction of a specific unit even when doing so would solve an identified reliability problem and remove the need for a new line. The SCC said, “Since PJM is regulated by FERC, whether these federal rules represent sensible policy is ultimately for Congress to decide.”

One of several alternatives analyzed by the Commission involved the prospect of accelerating construction of the proposed CPV Warren and Possum Point 7 generating plants. The SCC wrote, “As a result of the current development status of these plants and the limitations imposed by PJM … we cannot reasonably assume that these facilities will be available for dispatch [in time].”

Even assuming that PJM would accept these facilities into the grid by 2011, the SCC said, “… they would not solve the problem that establishes the need for this line.” The SCC explained that the factual evidence shows that even if both these units could realistically be available by then, transmission line overloads would still be present on the Mt. Storm-Doubs line.

With regard to conservation programs, the SCC wrote, “… the [power demand] forecasts that we utilize [in our analysis] include projected megawatt savings from [conservation] programs … We do not find, however, that [conservation] alone – or in hypothetical combination with other alternatives – is a reasonable proposal to meet the need satisfied by the transmission line.”

The SCC also considered another proposed high-voltage line projected to run from West Virginia through Maryland known as the Amos-Kemptown line. The SCC found that, “…the potential for construction of the Amos-Kemptown line remains too speculative.” The SCC said, “We cannot take the risk that a proposed Amos-Kemptown line will be available to meet on a timely basis the proven need [to assure reliability of electricity service to Northern Virginia].”

The SCC agreed with the hearing examiner’s recommendation that approval of the Virginia portion of the 502 Junction-Loudoun line was logically contingent upon approval of segments of the line in West Virginia and Pennsylvania. The SCC ordered that construction of the Virginia segment cannot begin until both the applicable West Virginia and Pennsylvania state authorities have approved segments of the line in those two states.

The SCC also adopted the hearing examiner’s recommendation regarding the route for the line. Generally, this locates the line partially or wholly within existing transmission rights-of-way. For Dominion Virginia Power, this is generally known as the “Southern” route. The SCC found that the route reasonably minimizes adverse impact on scenic assets, historic districts, and the environment of the areas concerned. In areas subject to open space easements, the SCC directed that the line stay within such easements and property owners be given the option of shorter towers in exchange for an additional 60-foot easement into the open space land.

Retired SCC Commissioner Preston C. Shannon was recalled for this case and joined SCC Commissioners Mark C. Christie and Judith Williams Jagdmann in the unanimous decision. Shannon added a separate concurring opinion. Commissioner James C. Dimitri did not participate.

Read SCC Decision

View excerpt containing Commissioner Shannon's Opinion

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The men received a suspended 18-36 month sentence but will serve 60 days with a pre-approved furlough community restitution program, to begin immediately. A restitution hearing will take place within the next 30 days. The two are also barred from the Big Jay property. The plea agreement brings an end to the state’s case against the men, who illegally cut nearly 1000 trees along a 20 to 60-foot-wide swath that extends more than 2,000 feet from the top of Big Jay, Vermont’s twelfth-highest peak. State officials estimate the cost of damage is nearly $50,000.

"It is good to see a felony conviction in this case," said Secretary Jonathan Wood at the Agency of Natural Resources. "This was one of the most serious cases of damage to public lands we have seen. We appreciate the diligent work of the Orleans State Attorney’s office in aggressively pursuing this case. "We hope that this sends a message to anyone else that cutting ski chutes will not be tolerated," Wood added.

In July 2007, state foresters and Green Mountain Club personnel investigated the cut after reports of chainsaws being heard on Big Jay. Several weeks later, the men signed a confession and were later arraigned on charges of unlawful mischief greater than $1,000, a felony.

Big Jay is owned by the state and is managed as part of Jay State Forest by the Department of Forests, Parks and Recreation. The Green Mountain Club acquired 1573 acres including Big Jay in 1993 as part of its Long Trail Protection Program. GMC transferred the land to the state, retaining a conservation easement co-held with the Vermont Housing and Conservation Board which restricts development and vegetation cutting. See more. The Long Trail, the nation’s oldest long-distance hiking trail, crosses the property and climbs Jay Peak, from which there are spectacular views of Big Jay.

Ted Vogt of the Green Mountain Club’s Stewardship Committee said "We appreciate the efforts of prosecutor Joe Malgieri in handling the criminal case.　 The Green Mountain Club’s ongoing concern is doing what it can to facilitate the restoration of this beautiful place that has been seriously damaged."

The Green Mountain Club has been working over the last two years with the state, the adjacent Jay Peak Ski Resort and skiers to revegetate the cut area and to prevent skiing on the cut land. Once the young trees start to crest the snow pack in winter, they are especially susceptible to damage from skiers. Management of the area over the next ten years will be critical to restoring the area and erasing the scar from the mountain

Officials at Jay Peak ski area worked collaboratively with the Agency of Natural Resources and Green Mountain Club, said owner and president Bill Stenger. The two men were not in any way affiliated with the ski area, the state, or the easement holders.

"I am pleased that the people responsible will have to pay restitution," Stenger said.

Photos by Rebecca Washburn

Using the ‘National Interest Electric Transmission Corridor’ designation allows utilities federal condemnation authority to site transmission lines, is exempt from environmental review, and preempts traditional state regulation of transmission lines and local land use laws.

Read more about the background of the issue

Find out who to contact for more information

2/12/09 Update:

Utility Infrastructure Advocacy Coalition and Obama Administration Energy and Environmental Advisors

Presented by Sherri Evans-Stanton Director, Environmental Management Center Brandywine Conservancy

 5/16/08 Update:

The Senate Energy and Natural Resources Committee plans to hold an oversight hearing on the Department of Energy's (DOE) implementation of the transmission corridor program, which permits the federal government to overrule state concerns in siting transmission lines. The hearings were prompted by a bipartisan coalition of 14 senators who say DOE has exceeded its authority in establishing high-priority transmission areas and has infringed on state rights.

DOE received widespread criticism after issuing a final rule last October that designated large swaths of land in the Mid-Atlantic and Southwest as corridors, cases our conservation defense team have been following closely. More

How you can help

 Articles by Nancy McLauglin:

• Condemning Open Space: Making Way for National Interest Electric Transmission Corridors (or Not), (PDF, 130KB)
• Condemning Conservation Easements: Protecting the Public Interest and Investment in Conservation, (PDF, 330KB)

March Updates

3/24/08 Article:

• Los Angeles Times, 'Corridors' of power are finding resistance

3/19/08 Update:

Senator Casey (PA) has launched a nationwide petition on his website against the Department of Energy’s implementation of the National Interest Electric Transmission Corridor designation. NIETC designation affects all or portions of 8 states in the Mid-Atlantic and 2 in the Southwest, and is quickly becoming a national program. The petition is not specific to Pennsylvania. If you are from PA, please send Senator Casey a thank you for being a leader on this important issue.

See the petition and a useful summary of the issues, maps and news articles

February Updates

2/29/08 Update: Senate Panel To Hold Oversight Hearing On Transmission Corridors

2/11/08 Update: Eleven environmental organizations sued the U.S. Department of Energy (DOE) in January over DOE’s designation of an eight-state area where federal eminent domain can be used to fast track new high-voltage transmission lines. Led by the National Wildlife Federation and the Piedmont Environmental Council, the groups filed suit because of DOE’s failure to study potential environmental impacts.

The Alliance is assisting by hosting this conservation defense section of the website and discussion group. Also see an article from the new Exchange on tactics to fight condemnation.

For more information:

• Contact Rob Marmet at Piedmont Environmental Council at rmarmet@pecva.org or (540) 347-2334
• Go to the Piedmont Environmental Council website
• Go to the Pennsylvania Land Trust Association website

• "Environmentalists sue DOE," Boston Globe (MA), 1/14/08
• "Proposed power corridor focus of lawsuit," The Wilmington News Journal, 1/19/08

Background

A national electric corridor "threatens over 400,000 acres of roadless forest in southern California,” according to the California Wilderness Coalition. See a map of the threatened corridor in California and Arizona (PDF, 1MB).

The US Department of Energy has also designated more than 116,000 square miles in upstate New York through Ohio in another corridor. The Corridor encompasses all of Delaware and 52 counties in Pennsylvania. See a map of the threatened corridor in the Mid-Atlantic (PDF, 2MB).

Using the ‘National Interest Electric Transmission Corridor’ designation allows utilities federal condemnation authority to site transmission lines, is exempt from environmental review, and preempts traditional state regulation of transmission lines and local land use laws. 

For more information:

• Contact Liese Dart at Piedmont Environmental Council at ldart@pecva.org or (202) 857-7982
• Go to the Piedmont Environmental Council website
• Go to the Pennsylvania Land Trust Association website

Additional Resources:

• Letter to Secretary Samuel Bodman, United States Department of Energy, from Brandywine Conservancy.
• Comments of the Southern Environmental Law Center, et. al , responding to the United States Department of Energy's draft Mid-Atlantic area national corridor & draft southwest area national corridor.
• Map of electric transmission congestion areas according to the Department of Energy, created by Piedmont Environmental Council.
• "Juicing the System" an article from Forbes by Daniel Fischer
• "Groups Challenge Department of Energy over Mid-Atlantic Corridor Designation" an article from the PA Department of Environmental Protection
• Announcement of public meetings January on West-wide energy corridors
• Map of the final designation of the Mid-Atlantic Corridor Map
• Map created by Piedmont Environmental Council showing proposed transmission lines benefit nation's oldest, dirtiest power plants.
• Pages from EPA Act 2005
• Application for rehearing and immediate stay of the Department of Energy's order of the Southern Environmental Law Center, et. al. for the Mid-Atlantic are NIETC and the Southwest area NIETC
• The Wilderness Society
  Nada Culver, Senior Council
  nada_culver@tws.org
  303-650-5818 x 117

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.

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

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.

Tennessee Parks and Greenways Foundation

The Tennessee Parks and Greenways Foundationwas established in 1998, merging the Tennessee State Parks Foundation and the Tennessee Greenways Program of the Conservation Fund. In its commitment to conserve Tennessee’s land and waters, three strategies guide its efforts: conserving Tennessee’s natural resources, creating greenway corridor connections, and fostering conservation education initiatives. For more information about this violation please contact Land Conservation Coordinator Nora Beck at nora@tenngreen.org.

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.