Conservation Easements vs. Fee Simple Acquisitions: Part 1
Conservation easements are used by land trusts and government agencies as an alternative to fee simple acquisitions of land for conservation and recreation purposes. While most practitioners agree that conservation easements are valuable tools, a debate has been simmering over whether conservation easements should be preferred over fee simple acquisitions.
As a statistical matter, the acquisition of conservation easements is the most popular method of conserving land among local and state land trusts. The numbers show that conservation easements are used by land trusts more frequently than any other conservation tool and that their popularity is increasing, but that doesn’t necessarily mean conservation easements should be preferred over fee simple acquisitions.
Anecdotal evidence provides insight into differing opinions on the merits of these tools. In an informal survey on the “Landtrust” listserv, some respondents felt that conservation easements should be preferred because of lower acquisition and stewardship costs, less potential for liability, and landowner and community preference for conservation easements. Others preferred fee acquisitions, challenging the assertion that conservation easements are categorically cheaper and less risky and instead praising fee acquisitions for providing greater control and ability to allow public access and environmental education.
Still others questioned the notion that one approach to land conservation should be preferred in the abstract, arguing that specific conservation goals, resources and functions should be the driving factor in selecting a conservation tool. This focus on conservation goals is consistent with the conclusions in a recent report to the Washington Legislature, titled “Conservation Tools,” prepared for the Washington State Recreation and Conservation Office by GordonDerr and ENTRIX. The Conservation Tools report is the subject of Part 2 of the conservation easement blog series.
Sometimes the choice of conservation tool will be dictated by financial constraints, landowner needs, community preferences, or other factors outside the land trust’s or agency’s control. But when the project team has the luxury of making a choice, full consideration should be given to both conservation easements and fee simple acquisitions, which have different benefits and disadvantages in a variety of situations.
So the answer, to the advocates of conservation easements and the defenders of fee simple acquisitions, is that you’re both right: In some cases, conservation easements are the better choice; in other cases, fee simple acquisitions make more sense. But in almost all cases, the choice isn’t (and shouldn’t be) driven by a general philosophical preference for one tool over the other but by a delicate balancing act that considers conservation goals, costs, liabilities, and other factors in the context of a particular property or landscape.
Comments (4)
Read through and enter the discussion by using the form at the endDale D. Hughes - September 21, 2010 11:07 AM
As a real estate lawyer in NY I have represented quite a number of easement grantors and grantees (not on the same transactions!) and have been a staff member, board member and/or advisor to several land trusts. Basically, I agree with the conclusions above on the fee v. easement debate. The answer - it depends. Often the choice will be dictated simply by what the property owner wants. My take on the issues to be considered (without any real empirical evidence) follows:
Fee Pros:
More reliable protection - encroachments, deliberate trespass, violation of owner's rights less likely and, if they occur, likely to be less severe
Better understood by the public
Far less complex transactions
Greater protection - nothing happens on the land without owner's (land trust's) consent
More certain valuation and thus tax audits for donors less likely
Fee Cons:
More expensive if purchased for FMV
While this may well vary from state to state, I would expect transaction costs to be higher
Higher carrying costs (insurance, taxes, maintenance, etc.)
Greater liability for negligence
Best practices would require a conservation easement held by 3rd party on them to protect against judgment or debt collection against the land
Probably requires more intensive monitoring (where yearly inspections may work for easements, fee owneership (particularly if there is public access) will certainly require more frequent visits.
Easement Pros:
Less liability for negligence
Lower carrying costs
Cheaper to acquire if paying FMV
Generally easier to get donation of an easement than donation of the fee+
Monitoring probably easier
Easement Cons:
Less protection
Far more complex transactions than fee transactions
Less well understood by the public than fee ownership (e.g., public may think they always have access rights)
Probably greater risk of tax audits
Violations more likely
Enforcement costs (read litigation) more likely and if such costs are incurred are likely to be much higher
Disputes/misunderstandings with fee owner - there is no one to have those problems with if the land trust owns the fee
These are my initial thoughts. I'm sure others will have much to add to or disagree with my conclusions.
Duncan Greene - September 21, 2010 4:04 PM
Dale, thanks for the comment. I don't disagree with any of your conclusions. Good point about fee owners also granting a conservation easement to a third party to protect against judgment or debt collection. I would be interested to hear how often land trusts actually follow that best practice.
Jessica Owley - September 22, 2010 5:02 AM
One factor I think you are missing is the fact that the trade off is not necessarily between fee or CE.
First, many governments (federal, state, and local) are choosing between CE use and some type of land use regulation.
Second, a willing seller/donor of a CE may not be interested in selling/donating fee. The choice may be between CE or nothing.
Third, for exacted CEs (and there are a lot of those out there), the choice may be between CE or denial of a permit or an alternative type of exaction.
This just goes back to your point though that you have to look at situations individually to determine the best approach (and tool) for land conservation.
Peter McKeever - September 24, 2010 1:00 PM
A benefit (if we can call it that) of fee acquisitions is that it is typically easier to raise private dollars for fee purchases. Donors understand that if the land trust owns the land, it is protected - no worry abourt enforcing easements, unpredictable court proceedings, etc. They are confident that their investment is sound and long-term.
It has been my experience, both as an attorney representing land trusts and land owners, and as a former TNC state director, that donors who contribute for land acquisition are also more likely to donate for operations, stewardship, etc. Of course, a land trust should not do bad projects simply to sell itself to its donors, but I am aware of land trusts that are leaving money on the table because of their reluctance to buy land. Limiting their activities to donated easements is undermining their community support.
Ultimately of course, the resources, i.e., the conservation values, ought to drive the process and dictate the most appropriate tool. Realistically, sometimes a CE is the only available tool because of landowner desires, but fee acquisitions ought to be in the tool box, both because they protect land and because they have the potential to help build and strengthen the organization.