Have you ever wondered exactly how a conservation easement works? 

Put simply, with a conservation easement a landowner voluntarily limits future uses on his or her land. Why might a landowner want to put restrictions on his or her property? Let’s use my friend Charley as an example.

Charley spent most of his life building up a small ranching/farming operation in a valley bottom. Back in 1882, Charley’s grandfather homesteaded a section of land in the mountains adjacent to Charley’s place. The land was handed down to Charley’s father, and now it’s his. Charley uses it to graze his cattle for part of the year. But since the old home place is near 9,000 feet in elevation, it can’t support a year-round operation, so the cattle come down to Charley’s place in the valley for the winter. Both sections of land are also important to the local elk herd.

Charley faces a dilemma that a lot of small ranchers and farmers in the country do today. Charley wants to preserve the traditional uses of his family’s land. Yet the old homestead up in that postcard country is worth a lot of money— enough that it will trigger estate taxes. When Charley’s time comes, his kids will have to pay estate taxes (beyond the standard exemption) at a rate of about 50 percent. For some families in Charley’s situation, the end result is the sale of all or enough of the family ranch to pay the taxes. And then come the 40-acre ranchettes and their detrimental effects on the elk and all sorts of other wildlife that depend on Charley’s mountain section for forage.

As Charley looks for a way out of his dilemma, he learns that a conservation easement might help him save the family ranch, though it will put some restrictions on what his kids will be able to do with the land. What he learns when he contacts the Elk Foundation is that the foundation may not need or want every easement that’s offered. His ranch will have to be evaluated to see if it meets the Elk Foundation’s mission. For the sake of our discussion, let’s jump ahead to find that the foundation decides Charley’s mountain section is perfect habitat to pass on to the next generation of elk and people.

Now Charley’s going to learn there’s no free lunch for either him or the Elk Foundation. This isn’t the sort of thing where someone from the foundation comes out to the ranch and over a cup of coffee in Charley’s kitchen signs a fill-in-the-blank form and everything is done. Professional standards and ethics require that the foundation recommend Charley hire an attorney and an independent land appraiser familiar with conservation easements. Remember, Charley’s easement donation is going to last forever, so everything needs to be done right and above board. The easement on the mountain section will prevent it from ever being subdivided and may require that it always be used for agricultural purposes and in a way that will protect its habitat values. Charley wants to protect the family ranch just as much as the Elk Foundation wants to protect wildlife habitat.

Land with an easement on it that prohibits subdivision is not worth as much as it was when it could be cut up and sold off into those little ranchettes. So once the easement is in place, the value of the land is reduced, perhaps below the estate tax threshold, and the ranch passes along to the kids without the giant tax bill. In addition, if the easement “qualifies“ under the Internal Revenue Code, Charley can deduct the value of the easement donation to the Elk Foundation from his income taxes, spread over as many as six years. The value of that easement is the difference between what the land is worth with and without the easement. Charley can likely recover all those out-of-pocket expenses for the lawyer and appraiser from the tax savings and then some, but he still had to front the money to get everything going.

So Charley’s bottom line is he can pass the ranch on to his kids intact, but it will now have an easement that forever restricts the land to its traditional uses. In Charley’s case, he wanted to protect the ranch anyway, and it fit with what he wanted the future of his ranch to be. 

Now let’s look at the Elk Foundation’s side of the situation. The foundation had to spend money to evaluate Charley’s property and determine if it fit with the mission. Then they had to do the legal work to prepare the easement documents and negotiate with Charley and his attorney. Once the foundation accepts a conservation easement, it takes on the responsibility of monitoring that easement forever, which also has costs. One way the foundation covers these costs is through its Conservation Easement Protection Fund, which is supported through donations from landowners and other supporters. (See related story, page 74.)

Why is it important to monitor easements? Let’s say it is 30 years into the future, and Charley’s grandson now owns the family ranch. He grew up in the urban canyons of downtown Denver, and his passion is baseball. He wants to sell the ranch and buy a nice loft near Coors Field. The land would be worth a lot more if he could build a few upscale houses and sell it off a piece at a time. But he knows someone from the Elk Foundation comes by at least once a year to monitor the ranch and make sure the conditions of the easement are being met. So Charley III will have to settle for a smaller condo and box seats instead of the loft and a skybox. And though there will be a new landowner, the easement stays with the property, and so do the restrictions. Elk Foundation staff will continue to visit the land at least once a year to monitor the easement.

Donated easements make up the great bulk of the conservation easements the Elk Foundation holds. However, the foundation has purchased some easements to protect critical habitat. Tax laws will always have an effect on donated easements, but as long as there are people like Charley who love their land and the lifestyle it gave him, there will be a motivation to donate to organizations like the Elk Foundation. The current tax benefits for people like Charley are just a bonus.

One last item that always seems to come up is the phrase, “Let’s make ’em give us hunting access!“ That’s a normal reaction most of us have. But almost everyone I’ve talked with soon realizes that ranchers like Charley will accept some restrictions, but they also want to maintain their privacy. After all, they are giving us a conservation easement worth thousands of dollars.

Purchased easements, however, can be negotiated with access rights. But you can be sure that will affect the price of that easement. More hunting access is always good, and we always want to look for ways to increase it; but if access is going to be a deal breaker, protecting vital wildlife habitat is many times more important. You can have all the access in the world, but if there’s no good habitat then there’s no elk. It’s up to hunters to work with state game agencies to improve access programs. I’ll look to the Elk Foundation to protect habitat.