GATESVILLE BEWARE!! More Observations & Warnings by Our Land Our Lives About Conservation Easements/Purchase of Development Rights The following statements about Conservation Easements are true as related to the use of perpetual conservation easements for the purpose of establishing a Fort Hood, Texas, rural buffer zone. Most of these statements are also true of perpetual conservation easements (CE) and purchase of development rights (PDR) generally. 1. According to A&M research, conservation easements are the worst of the worst legal instruments for obtaining voluntary agreements to preserve rural land. 2. Perpetual conservation easements guarantee a family s ultimate loss of the land rather than insuring long-term family ownership and control. 3. Most Coryell County farm and ranch land subject to buffer interest by Fort Hood is not self-sustainable as agricultural enterprises. 4. With almost no exceptions, farmers and ranchers who make their living in agriculture do so by leasing more land than they own at very favorable lease rates. Thus, their agriculture enterprise is in effect being subsidized by an extremely low cost of capital. 5. Most land owners owning sizable places, 200 acres and above, either inherited their land or bought and paid for it by years of off-farm employment, in many cases by both husband and wife. 6. Thus, almost all land ownership has made economic sense only because of land appreciation over time. Almost none of that appreciation can be attributed to the agriculture value of the land. It is almost entirely due to anticipated development and/or fracturing value of the property some time in the future. 7. When the above statements are properly understood and appreciated, the inevitable conclusion is that once you have sold the development rights/conservation easement, you guarantee the future bankruptcy of your children/heirs as an agricultural enterprise. 8. You put your heirs in the strange position of being obligated forever to maintaining the property, pay taxes on the property, and realize a net loss on operations. They are ultimately faced with the choice of selling the land for whatever they can get for their 1
remaining interest or continuing to lose money owning and operating it without any opportunity of recovering that loss by way of appreciating value of the development rights. 9. Ironically, all of this tragedy will be taking place during a period of time when others, who were wise enough not to sell their development rights/conservation easement, will be enjoying the best anticipated period of increasing land values that this kind of property has ever had. (per A&M research on trends in land use, land prices, fracturing, and the effect of millions of baby-boomers retiring and desiring to return to a rural setting for the rest of their life) 10. Coryell County, especially western Coryell County, (hill country) is primed to be the next Fredericksburg, being centrally located between San Antonio, Abilene, Fort Worth/Dallas. Austin, Waco, and Temple in which many of these baby-boomers live. 11. So, just when the long years of hard work and sacrifice required to buy and hold on to central Texas farms and ranches is about to pay off big time, Fort Hood, Nature Conservancy, & AFT want to rush in and gain control of the development value of the land using someone else s money (Fort Hood, etal) to buy conservation easements, all the while claiming to provide a way for multiple generations of the current owners to continue to own the land. 12. It will not be long until these so-called multiple generations will realize, the hard way, that grandpa and grandma got smooth-talked out of the only economically viable part of the property, while all they have left is the money losing ag value part where they work harder and harder each year and lose more and more money. 13. With a few possible rare exceptions, there has been no land in Coryell County sold at ag value in the last 35 years. All prices have been affected by future anticipated non ag value of the property being bought. 14. Full time farmers and ranchers in Coryell County seek to lease land rather than buy land to increase their size of operations. They know you cannot pay for the land by farming and ranching it. 15. Banks are currently willing to make ag operation production loans based on financial statements including market value of someone s farm or ranch. What will they do when that farm or ranch can no longer be listed at market value because of a sale of development rights/conservation easements. 2
16. An analysis of the values we believe Fort Hood is working with indicates a conservation easement purchase price of about $1000/acre on current real market value $4000/acre land. But, the land owner is selling all interest in his land except ag value which is at best $400/acre. Thus, $4000 less conservation easement payment of $1000 less $400 remaining ag value = $2600 immediate loss to land owner and future land appreciation now belongs to American Farmland Trust. 17. It is certainly reasonable for land owners to be concerned about the possibility that one major goal of the Army through its conservation easement approach at buffering could be to. cap the future eminent domain acquisition cost of this same land. Since they would already own the development rights, in a future acquisition of the property by eminent domain, they would only have to pay the ag value of the property to those land owners who signed up to a conservation easement. Said another way, with one of these easements the Army has bought a forever option to get the rest of the ownership of your land at ag value. Should a conservation easement program be broadly successful, it could serve as a future enticement of the Army to get our land under eminent domain at an extremely cheap price. 18. From reading about and watching recordings of Texas legislative consideration of the 2005 conservation law, it is obvious that the dark side of conservation easements was not thoroughly investigated and revealed if at all. 19. OLOL would like to officially request that Texas General Land Office hold a public debate/hearing in Gatesville, TX, prior to deciding to sponsor any conservation easement based Army buffer program. We strongly believe that such a hearing will greatly increase the land office s understanding, the land owners understanding, and community understanding of the perpetual problems of such a program. In the 1970 s acquisition attempt by the Army over much of this same land, Senator Tower held armed services committee hearings in Gatesville, TX. Only then did it become clear that such an acquisition was not justified and would have reaped immeasurable damage to land owners and the community. We strongly believe that land commissioner hearings in the current situation would be similarly revealing. 20. If the Army s success is dependent upon ill-informed or deceived land owners, does the Texas Land Office really want to be a part of this effort? 3
General observations on conservation easements, not necessarily related to Fort Hood. 21. Conservation easements, as recently being used in Texas, are primarily instruments of legal tax avoidance, both estate and income, by very wealthy individuals. The conservation easement crowd justifies and promotes their land control efforts on the basis of conservation, environment, water quality, and preserving family farms and ranches. Their stated motivation is impugned by the fact that not enough land in the state of Texas is owned by people who fit the wealth profile to make any significant difference even if they were able to sign up all of them. Probably less than 10% of the rural/open space/ag/ranch land in the state of Texas is owned by individuals wealthy enough to make the tax benefits of conservation easements attractive. So, even if one assumes that this movement could sign up 50% of such wealthy individuals, the resulting protected land would probably be no more than 5% of the total land desirable for the so-called protection. Even then the desired difference that such a program purports to pursue would only be the net improvement that such protection would produce over and above that which the existing owners are already providing. Thus, with a generous estimate of a 10% improvement on the 5% of the land in the program would only provide ½ of 1%, improvement in the conservation, habitat, water quality, environment quality of the state of Texas. Of course, there is a very real possibility that such absentee control of land would actually result in a net negative impact, especially since such bureaucratic type of land management programs in Europe, Red China, East Germany, & Cuba have all proven to be very negative in effect on these same qualities. Let us get back to being positive. Assume Texas actually realized ½ of 1% improvement in the environment, etc. The obvious question becomes. at what cost? If that same large amount of money were used in a more direct and efficient program of incentives offered to all land owners, wouldn t it be reasonable to expect much greater improvement in the environment, etc. per million dollars spent. Conservation easements just will not pass the test of a reasonable business model. 22. Many other major countries in the world today that have looked at the success of the United States with envy, have recognized that private ownership of property and the owners security in that ownership is key to our success. They are busy, in their own 4
way, moving state and bureaucratic control of property to private control of property. Why in the world are we, the United State, through the use of Purchase of Development Rights/Conservation Easements, trying to do the opposite? Our Army has expended years of capital and human life trying to give countries like Iraq individual freedom and private property ownership. That same army is currently being used by the conservation easement people to do the opposite to the citizens of the United States. Does this make sense? Our Land Our Lives P. O. Box 411 Gatesville, TX 76528 ourlandourlives@htcomp.net www.ourlandourlives.com August 2008 5