Forever is a Long Time
The problem with conservation easements, says Montana rancher, Llew Jones, is "perpetuity." "A lot of people are beginning to worry about 'forever.' It takes a lot of arrogance to sit here and say we have a plan that will be good forever," Jones explained. The Montana legislature, in which Jones serves, has become concerned that conservation easements will stymie development and subsequently undermine local tax bases. In 2005, legislators ordered the Legislative Audit Committee to investigate what impact "easements have on the market value of easement property and that of adjacent properties," and have a report of its findings and recommendations ready for the 2007 session. Mr. Jones is not unsympathetic to those wishing to preserve the beauty of rural areas, but easements should not be forever he contends. "Who knows what will happen in 500 or 1,000 years," he asked. Montana realtors are discovering the downside of conservation easements as well. It takes a long time to sell property that is burdened by a conservation easement because once a potential buyer learns of it, he often loses interest, according to Big Timber Realtor Mark Norem. Malta Realtor Jim Knudson reports easements are not very attractive to secondary buyers because they don't enjoy the tax benefits. He is also leery that easements won't benefit ranchers down the road. "Take a rancher who's just holding on by a thread and people are pushing an easement for $400,000. Fifteen years from now, he's probably going to be right back in the same position."
Selling easment properties a tough deal
By LORNA THACKERAY Of The Gazette Staff
When buyers checking out property in Eastern Montana learn there's a conservation easement on a place they are considering, they often lose interest.
Big Timber Realtor Mark Norem showed one large easement property "many, many times" before a buyer came along.
"About the time the conservation easement came out, buyers became very critical of the document," he said.
Every buyer is going to dissect the easements on a property before handing over the money, he said. Some of the older easements were very poorly written, Norem said.
"Buyers in central and Eastern Montana scrutinize the documents even harder than in Western Montana," he said, "They don't want to have to deal with a 40-page document."
They are also less tolerant of restrictions on property, Norem said.
"I'm very much a proponent of conservation easements, but you have to go into it with your eyes wide open," he said.
Ranch owners who know that a sale looms in their future need to understand that the easement will likely lower the asking price and may make the property harder to sell.
Malta Realtor Jim Knudson has been working with an easement property owner trying to decide if he wants to sell.
"If someone buys, it's going to be solely for grazing cattle," he said. "It depends on the price. It limits the sale."
Secondary buyers don't share the same enthusiasm for conservation easements as the original owner, because they don't reap the same tax benefit, Norem said.
Knudson worries that cash infusions from the sale of easements may not help ranchers hold on to their property in the long run.
"It's kind of scary," he said. "Take a rancher who's just holding on by a thread and people are pushing an easement for $400,000. But take a look 15 years from now and see if it's working. Fifteen years from now, he's probably going to be right back in the same position."
No rush in developing area subdivisions
As far as Malta Realtor Jim Knudson knows, there's no rush to develop residential or commercial subdivisions in the wide-open spaces of Eastern Montana.
But land prices are rising just the same, he says. Mountain-high pricing hasn't crossed from Western Montana, but there has been a trickle-down effect.
"People are selling their places in Western Montana for big money and moving east to ranch," he said. "I got three calls last week from (Western Montana) ranchers looking at Eastern Montana."
By comparison, Montana prairie country is still a bargain, said Mark Norem, a land manager and Realtor from Big Timber who handles properties all over the West.
"They have a high-value mountain or river ranch in Western Montana and sell out at a high price," he said.
Malta appraiser Gary Knudson, Jim's cousin, said local sales recently have come in at $300 to $400 an acre. He even has heard rumors of $500-an-acre sales.
Norem said a ballpark figure for Eastern Montana is between $150 and $300 an acre, depending on the quality of the land. The market has been very good, he said.
Ranchers moving west to east, however, aren't solely responsible for a steady increase in Eastern Montana land prices. Lots of people with different motives are looking at ranch country.
Gary Knudson said he's seen a lot of out-of-state interest from people wanting to buy land as an investment.
His cousin says he's also fielded a few inquiries from recreation and amenity buyers. Hunters in particular are looking over Eastern Montana, he said.
"I go to a lot of sports shows and gun shows to display listings," Jim Knudson said. "People who want to get away from people are coming this way."
Another factor is conservation groups, such as the Nature Conservancy and the American Prairie Foundation, which have purchased tens of thousands of acres of ranchland south of Malta near the CMR Wildlife Refuge.
"They paid prices for it no one else could have paid for it," Gary Knudson said.
Published on Monday, February 27, 2006. Last modified on 2/27/2006 at 12:44 am
Copyright © The Billings Gazette, a division of Lee Enterprises.
Critics of easements take issue with permanence
By LORNA THACKERAY Of The Gazette Staff
Conrad farmer/rancher Llew Jones has a one-word objection to conservation easements -- perpetuity.
"A lot of people are beginning to worry about 'forever,' " he said.
Conservation easements come with that word attached, and Jones, a Republican representative in the Legislature, says it burdens future generations and communities with restrictions that may run counter to their best interests.
"Only God has the vision to see what will happen in the future," he said. "It takes a lot of arrogance to sit here and say we have a plan that will be good forever."
Jones loves the open spaces on his property on the Rocky Mountain Front and would like to see it preserved. He sympathizes with the people and organizations who want the same thing. But conservation easements should not be forever, he contends.
"I would not visit that upon our children," he said. "What if the second generation decides they need a new barn or a new road, but the conservation easement says they can't do it? Their rights have been signed away forever."
Conservation easements should have a finite horizon so future owners can make their own decisions, Jones said. Perpetual restrictions could affect more than just the individual property owner, he said. What if sometime in the future, the community decides an easement property would be better used as a hospital or school?
"Who knows what will happen in 500 or 1,000 years?" he asked.
Growing alarm about the easements' potential to thwart development and, as a result, prevent growth of the local tax base, prompted state Sen. Aubryn Curtiss, R-Fortine, to introduce a resolution in the 2005 session seeking an audit of possible revenue impacts.
Senate Joint Resolution 20, which passed into law, asks the Legislative Audit Committee to examine the effect easements may have on the market value of easement property and that of adjacent properties.
The legislators asked that the committee present its findings, recommendations and proposed legislation to the 2007 Legislature.
Rep. Rick Maedje, R-Fortine, has been trying since 2003 to put some constraints on conservation easements and private land trusts -- so far, without success.
He proposed legislation in 2003 that would put serious obstacles in the way of future conservation easements. His bill would have prohibited easements that prevent development of natural resources and would have made easements subject to approval of the local governing body. The bill died in committee.
In 2005, Maedje introduced other legislation that would have required licensing of private individuals and organizations that facilitate or purchase conservation easements. He also introduced a bill that would have altered fundamentally the way courts view disputes between landowners and easement trustees. Under existing rules, courts must interpret agreements in the light most favorable to the trustee. Maedje proposed a change that would instruct courts to interpret agreements in the light most favorable to the property owner.
Maedje's bills were introduced late in the 2005 session, and House leadership said there was not enough time to study their implications. He agreed with their suggestion to postpone action until the 2007 session.
Published on Sunday, February 26, 2006. Last modified on 2/26/2006 at 1:34 am
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