Conservation Easement

[Terrel L. Shields]

Subcontractor working on a 302 ac mixed highland ranch in E. Oklahoma..emailed me after the courthouse research and inspection..

[You would think the borrower] would have at least mentioned the easement in perpetuity on 40 acres that was granted to the (NRCS) for $36,540 Bk 390 Pg 903-912. He can't graze it or cut down a tree, for ever.

OK, folks. We have very little experience with such an easement. The 40 appears to be along the Illinois River - a protected stream and probably is already in a flood zone. It is miles from any impending development so, it is just woodlot / pasture / farm. The easement probably relates to the status of the River as protected.

Locally land is selling for $1000 - 1800/acre. Floodable land appears to bring about 60% of that - that's a pfa estimate.

I haven't had a look see at the document yet. I am going to have to find out the terms from the NCRS office and find out if other such leases have sold.

 

[Don Clark]

B) Terrell,

Your experience is far greater than mine but I have experienced something similar except on much samller parcels. Around here we have land where the National Fish & Wildlife Service has either purchased or had portions of land donated to them. When that happens is is usually for land that has little value anyway and we generally make note of it and value the remainder of the parcel. In some cases title has passed to that acerage and in some cases it has not. It makes it easier obviously when title has passed to the acerage that Fish & Game has rights to.

 

[Terrel L. Shields]

I really have not read the document yet and am concerned about how invasive it is. Usually, these easements only prevent development [i.e.-a house or barn], not prevent grazing or other uses. This is the first that I find prevents cutting trees or grazing the land.

 

[Ted Martin]

I've been thinking about signing up for one of these easements. They are done on a case by case basis. If we were to sign up grazing would be allowed and we would have to cut the trees and brush plus agree to a burn schedule for our land. Currently they really want larger tracts of land than a 40, but I suppose it depends on what the easement is meant to protect. Sounds like a water shed in your case, in ours it would be tallgrass. You might look into the IRS regs on this one, they are taking a hard look because of abuse. Seems some high end suburban homes have been putting their driveways in the program and claiming large charitable contributions. An appraisal was done to establish the value of the easement which might also help you if you can get a copy.

 

[Mark Sweitzer]

I have not appraised any of these conservation easements either. However, I have seen enough of them go through to wonder where the values actually come from. For instance...

In Highlands County a number of years ago, a national big-box retailer wanted to develop 20 +/- acres of land for a super-big box. They were forced to purchase 40 acres of mitigation property elsewhere so they could develop it.

A year later, a national grocer wanted to develop a 12 acre piece kitty-cornered from the big box. They also had to buy 40 acres that happened to be adjacent to the big-box purchase. For a lower price, but same type of property.

Then, recently I came across a sale of 8,000 acres of timber/scrub land. Wondered why someone would pay so much with all the restrictions listed on the deed. Found out they had a 25 acre piece somewhere near Tampa/St. Petersburg they wanted to develop and they had to purchase this for mitigation.

So, you have three sales 20=40 acres, 12=40 acres, and 25=8,000. You figure what an acre is worth.

I realize that mitigation might be different than what you are talking about, but I wouldn't want to appraise it.

 

[Stone]

Mitigation is not the same as easement

Terrel -

It should be recorded. Look for your owner to be the grantor, or look for NRCS to be the grantee. Frequently, the NRCS easements are fairly restrictive. And, as mentioned above, they are different for different properties. They have standard easements, but they are modified for each tract.

Things you want to consider:

1. What are the rights of NRCS? Likely they have access across the other lands. Can they do with the land as they wish? That should be spelled out in the easement. Is there public access?

2. What are the remaining rights of the owner on the affected lands? Can they place any sort of structure (non-residential) on those lands? Can they construct trails? Can they put up tree blinds/stands? Those things differ from easement to easement.

3. What are the responsibilities of the owner? Do they have to actively manage the lands? Is the owner responsible for maintaining a certain type of cover? Maintaining fences?

Can the owner tile or affect the flow of other waters on the lands that are not encumbered? It is pretty common when shoreline is involved in an easement that the flow of springs, ditches, tilings, etc. on the owners remaining lands are actually affected, as well.

4. (probably the most important, IMO) Subdivision of the land: Can the 40 be divided? And, can those 40 acres be counted towards meeting the minimum density requirements of the local zoning? For example, if you are appraising 302 acres with say 35 acre minimum zoning, do you lose a building right? (302 divided by 35 or 262 divided by 35). If the land can be divided and count towards minimum lot size requirements, then there isn't a loss in building rights depending on other factors. However (and this is very common), if the 40 acres cannot be counted towards lot size minimums, then your property likely has one less buildable site than it would otherwise (using the 35 acre example). This is a key to realizing what effect the easement has.

Those are just some things that come to mind. If you have more specific questions, feel free to pm me. I deal with easements on a regular basis, though I am not sure how much help I can be with a property in a different state. I am on my way out the door for the rest of the work day, but will be back this evening.

If you read through the entire easement document, you should be able to find most of your answers. One final thought: I find that even fairly un-restrictive easements tend to face some market resistance. Sometimes it is just a knee jerk reaction from buyers hearing that one is on the property, but it exists. More savvy buyers will look through the documents and find out how/if the easement really impacts what they want to do with the land.

Good luck

 

[John Hassler]

I've done a few of these. Sit down and thoroughly read the easement. They are all different! Sometimes it restricts development and sometimes they restrict what you can do with the land.

I had one job where there was a "butterfly" easement. Seems one species of butterfly nests only in a certain type of tree and the property owners were restricted from doing anything in or around those trees on their acreage. Wooded lots are typical for that area and I didn't see any negatives, maybe even a positive since it is a conversation topic and adds extra appeal to the sandal and tie-dye crowd - this town, like an elephant graveyard, is where every VW Bus comes to die.

On another job the land owner of 500 acres (zoned 60ac/site) had sold their development rights to a public agency for about $500,000 several years prior. Had a long conversation with that agency. If such an agency is involved definitely talk to them. They are usually passionate about what they do and love to talk! Comps were few and far between, but due to the easement the property was worth about $1,000,000 less than it would be otherwise.

 

[Jim Bearden]

If the land can't be used for anything then it can't be developed then it has no use and no value.

 

[Verne Hebert]

Michael has done a nice job.

I am not in agreement with Jim's previous post.

Simply, today, how has utility of this acreage been limited (comprimised) by the conservation easement? if at all.

Treat each easement as unique; because most of them are (to some degree).

On the surface, the only diminution in value is the lack of grazing rights. If this forty is not fenced (is this a "freerange" area?) then any animal can wander over and graze on it anyway.

How is weed control and fire control handled in the documents?

 

[Jim Bearden]

Originally posted by Verne J. Hebert, MFLA@Aug 16 2005, 02:04 PM
Michael has done a nice job.

I am not in agreement with Jim's previous post.

Simply, today, how has utility of this acreage been limited (comprimised) by the conservation easement? if at all.

Treat each easement as unique; because most of them are (to some degree).

On the surface, the only diminution in value is the lack of grazing rights. If this forty is not fenced (is this a "freerange" area?) then any animal can wander over and graze on it anyway.

How is weed control and fire control handled in the documents?

Why am I wrong? I said

If the land can't be used

not does it have a use?