Managing Conservation Easements in Perpetuity - Environmental ...

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if necessary. A complete appraisal may not be required; a restricted
use appraisal report prepared by a qualified appraiser or a letter of
opinion may suffice.
Both attorney and appraiser can assist a land trust in determining what
level of appraisal is required to make the determination with respect to
the benefit arising from an amendment. For example, suppose an easement
landowner with no inside relationship to the land trust, whose
protected land is located in a suburbanizing environment, proposes
an amendment to allow a new house to be constructed on easement
property where none is currently allowed by the easement’s terms. This
proposed amendment would clearly put dollars in the landowner’s pocket
by increasing the fair market value of the property. The amendment, as
proposed,would convey impermissible private benefit in violation of law,
and the land trust can either refuse or modify such an amendment, but
should not accept it as presented. On the other hand, suppose a landowner
proposes to amend an easement by adding additional land to the
easement’s protection. Neighbors to the property (who are not related to
the easement landowner) will enjoy an increase in their property value
as a result of this amendment. This increase in value of the neighboring
property is considered incidental private benefit because, both qualitatively
and quantitatively, the public benefit received by the protection of
additional land outweighs the incidental increase in property values to
the neighbors. Conveyance of incidental private benefit is not prohibited
and may be unavoidable by the very nature of land trust activities.
As noted above, the prohibition on private inurement applies to land
trust “insiders.” Many land trusts wonder if conservation easement
donors are considered “insiders.” The IRS has not published an answer
to this particular question; however, taking into account the intent
of the various regulations, it is reasonable to conclude that being a
conservation easement donor alone, without any other factor, does not
qualify the donor as an insider. Insider is generally defined as an individual
who has the ability to exercise control, or influence control, over
the activities of a charitable organization, or a close relative of such an
individual. Most conservation easement donors do not exercise such
control or have such influence or potential for influence over land trust
actions that would cause that person to be considered an insider.There
may be unique circumstances, however, in which an easement donor’s
actions may elevate the donor to the position of an insider. A person
who made a very large cash donation, or land or easement donation, to
a land trust may cross the threshold and become an insider by virtue of
Managing Conservation Easements in Perpetuity