FALLEN ANGELS – THE DEVIL IS IN THE DETAILS OF CONSERVATION EASEMENTS

By Guest Contributor Howard Hutchinson
Email: [email protected]

Conservation easements are promoted for a variety of benefits. These include protection of critical habitat for threatened and endangered species, protecting agricultural lands from development, and aiding carbon sequestration.

Those who sell or donate their private property can boast about their virtuosity at the next wine tasting party, relating how they are saving this or that charismatic species. Behind the high-minded pronouncements are the not-for-profit land trusts and easement bundlers who market development offsets. These offsets can be provided to land developers, carbon credit shares, tax deductions or all three.

At the State Level
When property is placed into a conservation easement its value is appraised. This is where the details can drift into shady agreements. In Colorado, an April 2016 article by David T. Brennan of the Otten Johnson Law Firm wrote:

In March 2016, a group representing several hundred Colorado landowners sued the Colorado Department of Revenue in federal court in Denver, asserting that the State has mismanaged the conservation easement program, disallowing landowners’ tax credits and causing them financial harm.

The controversy started when Colorado found that property assessments improperly inflated the values of the conservation easements. In subsequent years the Colorado legislature has attempted to pass legislation to restore those tax credits.

At the Federal Level
According to an October 16, 2024 Department of Justice press release:

Two accountants were each sentenced today to 20 months in prison for their roles in the promotion and sale of abusive syndicated conservation easement tax shelters.

A January 9, 2024 press release states:

Victor Smith promoted and sold tax deductions to his wealthy clients in the form of units in illegal syndicated conservation easement tax shelters organized and created by co-defendants Jack Fisher, James Sinnott and others. Smith, along with his firm, sold approximately $14 million in false tax deductions to their clients, causing a tax loss to the IRS of about $4.8 million. He earned $491,400 in commissions from Fisher and Sinnott for his role in the scheme.

The release further stated:

The scheme entailed the creation of partnerships that would purchase land and land-owning companies and then donate conservation easements over that land or the land itself. Appraisers would value the land and the partnerships would then claim a charitable contribution tax deduction based on the appraised value of the conservation easement, resulting in tax deductions flowing to the wealthy clients who purchased units in the partnership. Many of these clients joined the tax shelters after the donation of the interest in land and after the close of the relevant tax year.

Conclusion

• Aside from tax schemes, conservation easements are typically in perpetuity.
• The imposition of conservation easements forecloses potential beneficial land uses for future generations.
• Allows residents from the past to dictate uses that may not be desirable for future residents.
• The tax base of counties and local governments is reduced and frozen.
• Land values on other properties are increased after adjacent lands are placed into easements and availability of lands for housing is reduced.

Proponents of conservation easements like to tout the altruistic benefits. However, the devil is in the details. Those in support are part of the call for fifty percent of lands to be in preservation status by 2050 to protect and restore the ecosystem and halt and reverse global warming. They ignore and obfuscate the schemes and those engaged in greed and tax evasion. The nation needs to realize they are only posing as divine angels when are really fallen.

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About the Author

Howard Hutchinson, a nationally-known property rights activist, is the founder and executive director of the Coalition of Arizona/New Mexico Counties for Stable Economic Growth. The Coalition was formed to fight and reverse an aggressive regulatory onslaught by the Environmental Protection Agency and the Endangered Species Act that sought to protect the extensive habitat of the Mexican Spotted Owl. As the size of the “habitat” increased, land use restrictions crippled the timber and ranching industries with a significant loss of jobs. As usual, environmental groups presented and relied on “fake science” to prove their case.

Howard Hutchinson owns a small farm and orchard in Southwest New Mexico. He served on the New Mexico Water Quality Control Commission for twenty plus years and for thirty-three years drafted numerous state and federal regulatory and legislative impact analyses.