The end of 2007 saw a flurry of new conservation easements in Montana and Flathead County. Good news? Perhaps not.
First, the main reason for this flurry isn’t idealism. It’s money. Stuffed way down in the Pensions Protection Act of 2006, apparently by Sen. Max Baucus, D-Mont., is Section 1206 covering “provisions relating to exempt organizations.”
Since the mid-1970s, federal law has allowed parties donating conservation easements to shield up to 30 percent of their adjusted gross income from income tax for up to five years or until the value of the easement is amortized. This law first came about because land trusts (primarily The Nature Conservancy, which today is still the largest) realized they would never be able to “save” all the land they wanted by actually buying it. They therefore prevailed upon Congress to pass tax breaks for donated easements – in effect, playing the time-honored political game of using “Other People’s Money.”
Section 1206, which expired Dec. 31, temporarily expanded upon existing law by “Using Even More Other People’s Money;” upping the payoff period to 15 years and the tax shelter percentage to 50 percent in all cases. For landowners who make more than 50 percent of their gross income from agriculture, the shelter is 100 percent of adjusted gross income. That’s a heck of an incentive for a cash-strapped rancher. For one 2,600-acre ranch down at Wisdom, The Nature Conservancy (TNC) bought one-fourth of the development rights (a bit of cash) while the family donated the rest (what the Billings Gazette called “a big break on his income taxes” on what little they make ranching. TNC representative Tana Kappel told the Gazette that “the fact that the law is expiring was motivation for [the family] to complete the easement.” Under the old law, 30 percent of nothing for five years is nothing, after all.
Here in the Flathead, Glenn and Hazel Johnston put the old family place on Columbia Falls Stage Road under easement. Dr. Johnston, retired from his psychiatry practice in Salt Lake, picked rocks there as a kid and like most of us, would hate to see it go. But because, as Jim Mann of the Daily Inter Lake wrote, “people end up having to sell off part of the land they inherit just to pay the estate tax,” the Johnstons made the deal.
But there are others, who probably neither need nor deserve help getting in on the game. TNC just signed another easement on 8,900 acres near Twin Bridges owned by a Rockefeller heiress.
Near Ennis, the Sun Ranch is in line to have 11,000 acres placed under easement, paid for with $4.43 million specifically set aside by Baucus in the latest 9,000-plus-earmarks 2008 Omnibus Appropriations Bill.
Sun Ranch owner Roger Lang is a California software tycoon who scored $313 million in IPO money in 1996, and used some to buy the 18,700-acre Sun Ranch from fading action star Steven Seagal in 1998. Lang has already set aside 6,800 acres in an easement donated to The Nature Conservancy in 2003.
Currently, Lang has a lodge at the Sun Ranch. Luxist.com explains packages for those “hankering for luxury, a Western [and] eco-friendly experience” start at $900 per person, double occupancy for three nights.
Furthermore, Lang just bought the 7,000-acre Schroeder ranch in the Bitterroot for $26 million. The Missoulian reported on Dec. 17 that Lang will put much of the land under conservation easement while developing an “eco-lodge” plus “a dozen or so homesites on the ranch.”
Add in a Wheeler and Associates report that Montana’s luxury land market is not slowing a bit (up 47% in 2006 alone) while the small-place market has bombed, and it looks like Lang knows what he’s doing – darn well – not just by selling those exclusive homesites at a premium, but also by pocketing his tax savings.
As for the rest of us, Lang’s savings, and those realized in every one of these multi-million-dollar deals, will have to be made up by every other taxpayer in America … or their grandchildren.
Hey, we shouldn’t mind rich people keeping their money. But paying taxes to make up for breaks that make them even richer? No thanks.
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