Senator John Brenden and Block Management

[Big Fin]

Befuddles me as to why anyone would sell the soul of the property w/ an easement of "in perpetuity". An easement in most cases de-values property significantly.

I think in some places, what you state is the case. If the land is production-based land with not too much in the way of recreation values, there is little conservation easement value to be obtained, relative to the impacts such easement would have on the property value.

Having helped hundreds of clients in the part of the state where ranches sell based on views and fishing, we have found that conservation easements do very little to impact property values. Amenity buyers are not going to sub-divide, or mine, or ...... so those rights have been stripped from the property via a conservation easement has little to no impact on eventual re-sale value. (Don't tell the IRS that, as the appraisal system they require us to use does result in large value dimunition and thus large tax benefits, even if real life evidence shows otherwise.)

We also find that properties in areas that have a high percentage of land in conservation easements sell for more than properties in areas without a lot of conservation easements. Part of that may be the attractiveness of the location, but a big part of it is that people are more inclined to pay a higher price for a property if they know their neighbors have donated/sold their development rights and in doing so, eliminate the concern that two years after buying their dream ranch, the buyer wakes up one morning to find out his dream ranch is now going to be surrounded another ranchette subdivision.

Conservation easements are nothing more than taking one of the many rights associated with real property, whether access rights, development rights, mineral rights, logging rights, grazing rights, and exchanging them via a sale/gift/donation. Anyone who would restriction how people can do that is a closet Communist, plain and simple.

There will be some legislators who see Senator Brenden's bill and will try to use it to force their Tea Party/Communist views upon the rest of us, via this piece of legislation. As much as the Senator loves to grill me when I am in front of his committees, I would gladly work with him to see that his goal gets accomplished, so long as he will fight the Tea Bag Communists from using his bill to steal property rights from landowners by restricting what landowners can do with those rights via easements.

 

[Straight Arrow]

Property that is of greatest economic value by exploitation for resource extraction or production by the owner and successive owners certainly may be de-valued by imposing CE restrictions.

However, many lands are of more intangible values and the easement restrictions protect those values for perpetuity. A prime example is the Flying D Ranch north of the Spanish Peaks Wilderness Area. In my opinion, that stretch of earth between the Gallatin and the Madison Rivers is one of the most beautiful and wildlife nurturing areas on the planet. It will remain essentially the same forever for the owner to enjoy and for the public to enjoy as we travel across the public access through that property to the Spanish Peaks trailhead and recreate on the trails skirting the ranch.

Aside from consideration of the superb skiing recreational value and the huge economic engine role of Big Sky, the hypothetical more far reaching scenerio of that area being restricted from development sometime in the sixties would have established a tremendous wildlife zone and hunting ground / natural outdoor recreational area unlike any other. For those interested only in the dollars generated and the ever-increasing opportunity to spend them on whatever fancies oneself during a limited, relatively inconsequential lifetime, Big Sky's economic values are of greatest importance. For some of the rest of us who highly value the concept of pristine landscape between the Gallatin and Madison rivers and north out of the Yellowstone area, we can only conjecture about what might have come from a conservation easement supported by the Crail Ranch or Chet Huntley. It's not that big of a stretch to imagine. Stand at Lone Mountain Chapel, look up at the peak, close your eyes and mentally erase all the hardscape. Wow!

 

[RobG]

So is the CE deduction treated the same way as depreciation? i.e. you have to recapture the gains if you sell it? [/derail]

 

[HSi-ESi]

Straight Arrow - that's a great post. I have often thought about how cool Big Sky would be without 'Big Sky'.

How big of an impact is this 'double-dipping'. If we can get some hard numbers - how many CE's are double-dipping and what are the actual costs?

I can see where this could be an issue - but if the benefit of putting in legislation on this is very small, then why waste taxpayer dollars on it?

 

[Straight Arrow]

HSi-ESi, there are many of us who recall the natural beauty and wildness of that large basin to the east of Lone Mountain down to the Gallatin River. There are accounts of the great elk, mule deer, sheep, and goat hunting up the west side, accessed by logging trails up Jack Creek to then public forest.

It's those recollections and "what-ifs" that motivate folks to promote conservation easements on the appropriate properties and to lobby for protection of public wild lands that make Montana truly "the last best place" worth protecting.

 

[bigskyblueman]

I ponder the same wistful thoughts when I'm working down in Big Sky. A friend of mine killed a moose back in the 1960's close to where the Summit Hotel sits today, and he recounts what a marvelous wildlife habitat the area was and does not ever want to be in Big Sky again. Ted Turner elicits some negative sentiments around this neck of the woods sometimes, but to his credit , he could have made a a lot of of money developing the Flying D, but chose to preserve it instead.

 

[Big Fin]

So is the CE deduction treated the same way as depreciation? i.e. you have to recapture the gains if you sell it? [/derail]

Not quite like that. Part of the cost basis of your property is to be allocated to the property rights in your easement, whether sold or donated. That reduces the amount of cost basis you have to the retained property and if you eventually sell that property, you will have lower cost basis and thus higher gain from the sale.

 

[RobG]

Not quite like that. Part of the cost basis of your property is to be allocated to the property rights in your easement, whether sold or donated. That reduces the amount of cost basis you have to the retained property and if you eventually sell that property, you will have lower cost basis and thus higher gain from the sale.

Oops, I meant recapturing the depreciation , but I understand what you are saying.

 

[Pierre]

Agreed, it is worthwhile to try to work with Brenden. The flip side is that sportsmen deserve to be treated with respect as well. I have seen the Senate F&G committee treat sportsmen very poorly. Can be improvements on both sides

 

[bigskyblueman]

If Brendan knows he has the committee votes he needs , he'll do what he wants. Focusing on the other committee members may be a better approach.