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A move to make land trusts more accountable
by Jennie Lay
Land Trust Alliance unveils accreditation program to weed out ‘bad actors’
A Better Business Bureau for land trusts: That’s what the Land Trust Alliance would like to see, instead of federal legislation that would likely end most tax incentives for land conservation.
Under the national organization’s newly unveiled voluntary accreditation program, land trusts will soon be able to open up their books and their conservation easements to an independent commission for its stamp of approval.
"It took a long time for the (land trust) industry to come around to this being OK," says Martha Cochran, executive director of the Aspen Valley Land Trust, Colorado’s oldest. But she and other leaders now believe that accreditation is essential to alleviate growing concerns that conservation easements are too easily abused for personal gain (HCN, 5/30/05: Write-off on the Range).
Conservation easements have become the primary tool for preserving private land. An easement is a deed restriction that restricts or eliminates future development rights. Landowners can donate those development rights to a land trust — a private nonprofit land-conservation organization — in exchange for federal tax deductions. As an added incentive, 14 states offer their own tax credits for donating conservation easements.
Concerns about abuse of conservation easements hit the national news in 2003, when the Washington Post published a series of stories about dubious land deals and conflict of interest within the leadership of The Nature Conservancy, the world’s largest land-conservation organization. The Post also exposed a few smaller land trusts doing questionable easements, and wealthy landowners taking hefty tax write-offs for easements on golf courses, dude ranches, and bits of open land in ritzy subdivisions.
The coverage caught the eye of Congress, which began holding hearings and commissioned a report from the Joint Committee on Taxation. Released in January 2005, the report recommended eliminating almost all benefits for conservation donations. The Internal Revenue Service also jumped in, announcing that it would do an unprecedented 400 audits of conservation easements this year.
"Conservation easements and land trusts really have been wearing the white hats for 30 years," says land trust veteran Dan Pike, president of Colorado Open Lands. "Now they’re under attack — and frankly, some of it is justified."
A test run in Colorado
In an attempt to get ahead
of Congress and the IRS, earlier this year the
Land Trust Alliance, which represents more than
1,000 of the nation’s 1,500 land trusts, conducted
several pilot tests of the accreditation program
it has been developing since 2004. The group
zeroed in on Colorado, where a generous state tax
credit program has made conservation easements
extremely popular and where the IRS is conducting
half of its 400 audits. Three land trusts — Estes
Valley, Eagle Valley and Aspen Valley — allowed
two evaluators to comb through hundreds of pages
of policies and easement agreements and to do site
visits of specific easements.
What will Congress do?
Most land trusts have embraced the idea of
voluntary accreditation, though some smaller
trusts say they will have a difficult time finding
the time and manpower to pull together all the
necessary documents. Other land-trust officials
worry that the program does not include local
governments, which hold many conservation
easements and have also come under fire for
providing inadequate oversight. But the biggest
hurdle remains Congress, which is still debating
changes to the tax code affecting land
Others argue for a stronger role for accreditation. Colorado Open Lands’ Pike believes the tax-exempt status of land trusts should be tied to accreditation, while Eagle Valley’s Cohagen argues that the IRS should allow tax deductions only for landowners who work through accredited trusts.
However, a Senate aide involved in ongoing discussions with the Land Trust Alliance says that the accreditation program, although a vital step, is still not enough. Additional measures will be needed to end conservation easement abuses, says the aide, including stricter land-appraisal standards.
At a recent meeting of land trusts, Pike outlined what he thinks some of those new measures will be when a tax bill finally makes it out of the Senate: formal appraisal standards for conservation easements, including a requirement for two appraisals on any donation over $5 million; personal accountability for land-trust boards and staff members in cases of fraud; the elimination of deductions for golf courses and small "backyard"-size easements; and, as a reward for good conservation practices, a possible bump in the size and duration of income tax deductions.
Mike Strugar, a Colorado tax credit broker,
welcomes the changes. "You’re supposed to be
getting the tax benefits for something that
hurts," he says. "If it doesn’t hurt you, if
you’re not leaving something on the table, you
shouldn’t be getting the benefits."
Page Updated: Thursday May 07, 2009 09:14 AM Pacific
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