America needs more land that’s under stewardship of people who want to conserve it for the future. We’ve lost so much native biodiversity, but there’s still pockets that can revive it if managed appropriately.
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It became a niche segment in the real estate. The idea is you find land that is cheap, but you have a feeling it has mineral wealth. You buy it cheap, get the survey done, and show that it was really worth a lot more. But instead of building a mine/oil well, you declare the land undeveloped for perpetuity. The tax benefit you receive is commensurate to the (now highly increased) value of the land.
You make a profit this way, and the environment benefits.
It's a very risky part of real estate. There are lots of environmental groups who closely monitor the land, and will file a lawsuit if they suspect you are developing on the land. Fighting lawsuits is part of the risk.
Anyway, the person who did the presentation showed some interesting statistics. Supposedly, for every 10 acres of land that is developed in a given year, roughly 9 acres are declared undevelopable for perpetuity. That's really significant (if true).
> One example: the former Millstone Golf Course outside of Greenville, South Carolina. Closed back in 2006, it sat vacant for a decade. Abandoned irrigation equipment sat on the driving range. Overgrowth shrouded rusting food and beverage kiosks. The land’s proximity to a trailer park depressed its value. In 2015, the owner put the property up for sale, asking $5.8 million. When there were no takers, he cut the price to $5.4 million in 2016.
> Later in 2016, however, a pair of promoters appeared. They gathered investors who purchased the same parcel at the market price and, with the help of a private appraiser, declared it to be worth $41 million, nearly eight times its purchase price. Why? Because with that new valuation and a bit of paperwork, the investors were suddenly able to claim a tax deduction of $4 for each $1 they invested.
- https://www.propublica.org/article/conservation-easements-th...
I think the law is still a good idea, but like many things it has been ruined by the rich and will need to be reformed or eliminated.
Yes, I do know about the potential for fraud. Ultimately, this sounds more like a problem with the government not doing their due diligence as opposed to a problem with the idea itself.
And yes, this is fundamentally something only rich people can make use of. The average Joe doesn't have over $100K sitting around to buy a piece of land only to intentionally lower its value!
The example of the golf course they give is weird. You're not allowed to do it to a property that has a structure on it (at least not one with utility connections). Nor can it have paved roads. What kind of golf course was this?
Still, thanks for the article. It provides a more down to earth context.
Isn't this "undeveloped in perpetuity" status an application, so that you have to request an agreement to your valuation and the government has to approve it, meaning that the burden of proof goes the other way from your comment? At least, for my personal residence where I have the opposite incentive, it's not that I can go to the local government with a valuation of $3.50 for my house and they have to prove it's not; I can object to their valuation and try to prove my case, but the burden is on me, not on them.
> To be eligible for a deduction, land needs to meet at least one of four broadly defined “conservation purposes.” These include protecting “relatively natural” habitats; historic sites or buildings; land for public recreation or education; and open space (including farms, ranches and forests).
My guess is that since the golf course was primarily for public recreation (or could be), and was mostly "natural" open space (grass), they argued it qualified. Probably not hard it claim it as historic as well.