The Conservation Easement in California

Copyright ©1983 by The Trust for Public Land.

All rights reserved. No part of this book may be reproduced in any form or by any means without permission in writing from the publisher: Island Press, Star Route 1, Box 38, Covelo, California 95428.

Printed in the United States of America.

First printing

Library of Congress Cataloging in Publication Data

Barrett, Thomas S., 1947–

The conservation easement in California.

Bibliography: p.

Includes index.

1. Servitudes—California. 2. Land use—Law and legislation—California. 3. Natural resources—Law and legislation—California. I. Livermore, Putnam, 1922- II. Trust for Public Land (U.S.) III. Title. KFC163.5.B37 1983 346.79404’35 83-4329

9781597268561

347.9406435

ISBN 0—933280—19—X (pbk.)

Text and cover designer: Judith Barrett

Editor and production coordinator: Linda Gunnarson

Proofreaders: Carey Charlesworth and Netty Kahan

Typesetters: Dharma Press (text), Ad Comp and Solotype

(titles and cover type), all of Oakland, California

Printer and binder: BookCrafters, Chelsea, Michigan

Table of Contents

Title Page

Copyright Page

FOREWORD

ACKNOWLEDGMENTS

INTRODUCTION

CHAPTER ONE - CONSERVATION EASEMENT LEGISLATION IN CALIFORNIA

CHAPTER TWO - TAX INCENTIVES FOR THE DONATION OF CONSERVATION EASEMENTS

CHAPTER THREE - DRAFTING THE CONSERVATION EASEMENT

CHAPTER FOUR - CATALOG OF OTHER REAL PROPERTY CONSERVATION TECHNIQUES

CONCLUSION

APPENDIX 1: LEGISLATION

APPENDIX 2: - SAMPLE CONSERVATION EASEMENT

NOTES

SELECTED BIBLIOGRAPHY

INDEX

FOREWORD

Pioneering new techniques of land protection for public enjoyment has been a goal of The Trust for Public Land since its founding. As we complete our tenth year, we can point with pride to the 45,000 acres of land that we have guided into public ownership for the access and enjoyment of the American public. At the same time, we recognize the value to the public of lands of great scenic appeal, as well as lands that harbor unique plant and animal habitats, and historic and archaeological sites. The public may never walk on these lands. In fact, their significant value might be destroyed by physical access. In their current use, however, they provide greenbelts around urban areas, foregrounds preserving aesthetic views of national and regional recreational attractions, and scenic farming and grazing countryside.

Public agencies and private land conservation organizations have turned to TPL for help in protecting these areas. Their aim has been to promote the continuation of the current use of these lands. Repeatedly, we have been asked to explain the concept of a conservation easement as a tool to use in accomplishing land protection goals.

Conservation easements are just beginning to see popular use in California. The National Park Service and the U.S. Fish and Wildlife and Forest services have long used easements in other parts of the country, but among public agencies in this state, only the California State Parks and Recreation Department has had much experience with easements, principally at Columbia State Historical Park in Tuolumne County. Local public agencies have been too unfamiliar with easements to make much use of them in their efforts to carry out their adopted general plans. In the private sector, conservation easements have been used extensively by land conservation organizations in the Northeast and mid-Atlantic states, but again very little locally. Of the few California examples, perhaps the most notable is The Nature Conservancy’s conservation easement over Santa Cruz Island, off the Santa Barbara County coast.

Of benefit to government agencies and land trusts alike, California’s enabling statutes for easements are among the most comprehensive anywhere. At the federal level, legislation enacted in 1980 made permanent the federal charitable tax deduction for gifts of conservation easements. Public agencies and land conservation organizations hailed this legislation for saving an important incentive for use of this valuable tool. As people become more familiar with it, the conservation easement should begin to see wide use in California.

The need for practitioners to know more about the conservation easement prompted Putnam Livermore, long-time California conservationist and attorney, to launch the substantial research project that The Conservation Easement in California represents. Thomas Barrett, an attorney with a National Park Service background, assumed principal responsibility for completing the research and writing the manuscript. The result of their collaboration is a superb handbook that, better than any other, can acquaint attorneys, landowners, public agency staffs, appraisers, tax counselors and land conservationists with the legal context for conservation easements in California.

The Trust for Public Land has welcomed the chance to sponsor this significant publication. As an organization known for its training and technical assistance to public agencies and local land trusts in real estate transactions, TPL more and more frequently is showing local communities how to use conservation easements along with fee acquisition and zoning techniques to protect significant natural and productive resources. This volume offers to us in the field the definitive resource that we have needed for some time. On behalf of The Trust for Public Land, I wish to thank Put Livermore and Tom Barrett for developing The Conservation Easement in California, and to express our appreciation to the Dean Witter Foundation for helping make its publication possible.

JENNIE GERARD

Director, Land Trust Program

The Trust for Public Land

ACKNOWLEDGMENTS

This book has been in the works for some time. Along the way, a number of people became involved whose contribution, invisible to the rest of the world, could not be more obvious to us now that we have the final product in hand. With gratitude we acknowledge the help of: Linda Johnson, who laid the groundwork for this project, doing considerable organizing, research and fact-finding in the crucial early stages; Kitty Codd, who prepared our working bibliography; Andrea Gilchrist, who, systematically reviewing and analyzing a large number of easement instruments, helped us bring at least a measure of coherence to our treatment of easement drafting; Judy Motoyama, who helped to coordinate it all; and Maureen Carroll, Lynne Azevedo, Paul Merar, David Goldberg, Mark Kapp and Mary Ellyn Gormley, who patiently and professionally worked draft after draft of the manuscript through their magical word processors. We are grateful to the many people who reviewed and commented on the manuscript at various stages of its development, including Martin Rosen, Ralph Benson and Jennie Gerard—President, General Counsel and Land Trust Program Director, respectively, of The Trust for Public Land—and especially Professor William T. Hutton of Hastings College of the Law, on whose expertise in the tax aspects of this field we leaned heavily. We thank Commissioner John F. Dunlap of the Workers’ Compensation Appeals Board for taking the time to confirm the accuracy of our account of the history of the open space legislation he sponsored as a state assemblyman, and later state senator, from Napa. We thank our colleagues at Chickering & Gregory, several of whom read and offered constructive criticism of the manuscript, and all of whom remained supportive of the project through the countless hours it consumed. Finally, we are forever indebted to the late James Walton, for many years Land Manager, and later Vice President, of Leslie Salt Co., whose special sense of the importance of finding reasonable means of protecting one of the world’s finest examples of open space, the San Francisco Bay, helped motivate us to write this book. We dedicate it now to his memory.

INTRODUCTION

Land is America’s most valuable resource, and no state is richer in land than California. The majestic mountains, fertile valleys, deep coastal forests, and the great rivers, lakes and estuaries of California offer up a landscape of Biblical fullness; it is the promised land within the promised land, the culmination of American wealth and dreams, the Golden State.

Not surprisingly, California has grown in a short time to be the most populous of any state, and still it continues to grow. But even for so rich a place, the pace has been too swift. California’s resources, bountiful as they are, are not limitless and have become subject to increasingly more competitive demands. Urban and agricultural users clamor for space and water, and it is clear that not all can be satisfied. Planning and control of resource use is imperative if the state’s natural riches are to be fairly distributed among its people. Land is the key. The source. The health and wealth of Californians depend on how they use their land. The great farms, forests, grasses and fisheries are what sustain life here. To the extent these things are allowed to be depleted by growth, growth will be self-defeating, a prelude to disaster. To remain bountiful, the California landscape must be respected, so that it can continue to support Californians and their children as generously as it has until now.

The central importance of open land in the California dream is not well understood because many of the life-giving functions of land happen invisibly. There was a time when open space was looked upon only as a scenic amenity, an aesthetic luxury good for the mind and soul but little else. To set aside open space was to sacrifice what in economic terms was the highest and best use of the land in order to provide a modicum of psychological enjoyment. Although preservation of scenic beauty is still recognized as an important goal in land conservation, the benefits of open space are now understood to be far more diverse. With the increased awareness of the ecological interrelationship of all living things has come the realization that leaving land open serves many purposes essential to the well-being of the human community. Cropland, forest land, grassland, wetland, flood plain, watershed, aquifer, river, lake: all directly contribute to the quality of our air, water and soil, the very elements of our survival. To protect these things is to assure that our life line remains intact. Despite the appearance of technological self-sufficiency, our dependence on the land is absolute. For the land to sustain us, every link in the ecological chain must be strong. The preservation of open space is a necessity, not a luxury.

The development of land for residential, commercial or other non-land-related use is, for all practical purposes, an irreversible commitment to such use. Once developed, land almost never reverts to open use, particularly land developed for residential purposes. Because there is an abundance of good land in California, it is not surprising that so much of it has been inefficiently used. Until recently, there has been little effort to match uses with the types of land most suited to them. Prime agricultural land adjacent to urban areas, for example, has been rapidly converted to low-density residential use because it is so easy to build on. Only within the last few years has it become apparent that this needless squandering of agricultural lands has drastically undercut the ability of potentially self-sustaining regions to remain supplied with fresh meat and produce at reasonable prices and has left them potentially vulnerable to critical shortages caused by national and international pressures on supply.¹ Other instances could be cited of unchanneled development leading to the depletion or deterioration of local water supplies, flooding and erosion. The message is a simple one. The careless use of our resource base can and should be avoided. Resource protection is not incompatible with growth, only indiscriminate growth. Lands should be put to their best use, and development should be channeled away from those lands whose best use can only be achieved if they are left open.

Standing in the way of sound land conservation practices in California and elsewhere in our country is the deeply embedded social and legal tradition that land ownership carries with it the right to use one’s land in any way one wishes, short of creating a nuisance—a right that implies, most importantly, the right to maximize the profitability of one’s land. In recent years, various legal techniques have been introduced in an effort to reconcile this tradition with the need to conserve open space. Most are variations on zoning, often with some form of compensation added to soften the regulatory effect. Planned unit developments, subdivision ordinances, cluster-site housing, phased annexation, mitigation, exaction, compensable regulation and transferable development rights: there are many approaches to the problem, some still quite experimental. Transferable development rights, for example, contemplate the creation of a market in which landowners whose lands are designated for protection can transfer the development potential of their land, foreclosed by regulation, to persons wishing to develop other land that has been zoned for development. The purchase of development rights would enable landowners in those areas zoned for development to build at higher, more profitable densities than otherwise would be permitted. Conceptually, the transferable development rights idea, based on the separability of the right to develop property from the property itself, is a departure from popular notions of property rights and, no doubt, will take some time to catch on. However, it represents a serious attempt to balance society’s need for open space with the individual’s right to fairness. Not yet widely used, it is a concept to which a number of communities are beginning to turn as the adverse social and environmental effects of uncontrolled development become more visible.

The transferable development rights technique builds on a fundamental legal theory of land ownership that conceives of real property not concretely, as land and improvements, but abstractly, as a bundle of rights. Far from being indivisible, real property can be seen, in the light of this theory, to be divisible in many ways: spatially or temporally, tangibly or intangibly. An owner of land owns not only what can be seen (what in legal terms might be called the surface rights) but also what cannot be seen (including air rights, mineral rights, access rights and the right to possess or develop any of these). The owner can hold all these rights himself or divest himself of any of them as he sees fit. He can create present interests in others (e.g., a mineral lease) or future interests (e.g., ownership commencing at his death, a remainder interest). This concept of property ownership has led to another approach to land conservation, similar in some ways to transferable development rights but more firmly rooted in the English-American legal tradition: the open space or conservation easement.

Easements draw on a long history of common law usage. An easement is an incorporeal but, for that, no less definite interest in real property entitling the easement owner to some limited use of the property of another or restricting the landowner’s use of the property for the benefit of the easement owner. The type of easement most commonly encountered is a right of way, as for an access road or utility pipeline. However, the easement device can be adapted to serve a wide variety of needs, and, when adapted to conservation purposes, it provides a degree of economy, flexibility and specificity that makes it unique among conservation techniques.

Easements have been used for conservation purposes at various times and by various persons and governmental agencies throughout this century with little fanfare but to great effect. The technique is simple. A landowner grants an easement that limits by its terms his right to develop certain property. For its part, the grantee of the easement assumes the responsibility of assuring that the terms of the easement are honored. It is a transfer of development rights not for the purpose of using them elsewhere, but rather for the purpose of not using them at all.

Most of the early conservation easements were for scenic purposes. The federal government employed scenic easements to preserve the view along the Blue Ridge Parkway and the Natchez Trace Parkway in the 1930s and 1940s; Wisconsin did the same along the Great River Road and other state highways in the 1950s. In the 1960s, the National Park Service acquired scenic easements to protect integral views at Mount Vernon and several other Eastern historical parks. More recently, the Park Service has used scenic easements in the Sawtooth National Recreation Area in Idaho and has coupled scenic easements with access rights along federally designated wild and scenic rivers and on the Appalachian Trail.

The easement technique has been used historically to serve critical ecological needs as well. In by far the largest conservation easement program to date, the U.S. Fish and Wildlife Service has been using easements since the 1950s to preserve wild waterfowl breeding habitats in the glacier-created pothole wetlands of Minnesota and the Dakotas. To prevent farmers, for whom these wetlands represent only a waste of potential cropland, from burning, draining and filling them, the Fish and Wildlife Service has purchased perpetual easements prohibiting such activities over approximately 1,100,000 acres of wetland.² Whereas the outright purchase of so much acreage would have been prohibitively expensive, the easement approach, by focusing only on those few property rights that are essential to saving the crucial waterfowl habitat, has made it possible for the government to protect four times as much habitat as it could have otherwise.³

In addition to using easements in its own programs, the federal government has made funds available to state and local governments for the acquisition of scenic and open space easements under such diverse cooperative programs as Title III of the Highway Beautification Act of 1965⁴ and the Open Space Land Program of the U.S. Department of Housing and Urban Development.⁵

There are other instances of the successful use of the conservation easement technique by public entities. In New York, Wisconsin and Minnesota, for example, state agencies have acquired fishing easements from owners of land adjacent to trout streams.⁶ In California, the easement technique has been used since 1933 by the State Department of Parks and Recreation to restrict the use of lands in and adjacent to state parks. Although the authority exists to purchase or condemn easements, the Parks Department has acquired its easements primarily by gift, to the benefit of such parks as Point Lobos State Reserve, Pfeiffer-Big Sur State Park and Columbia State Historic Park.⁷ California law also contemplates the acquisition of scenic easements along state and interstate highways.⁸ In short, although the conservation easement is still widely perceived as something of a novelty, there is a substantial body of history to draw upon regarding its use.

Today, those most likely to call upon this history are not public agencies but private ones, such as local land trusts and local, regional or national conservation organizations. The reason for this is twofold. Fiscal