I talked with an old friend last week about selling a large New England farm that’s been in his family since the 1930s. The farm is in a pretty setting, at the foot of publicly owned mountains. Land prices have risen dramatically during the last 15 years, driven by second-home buyers and retirees from southern New England and, primarily, the Boston area.
Of the 300 or so acres, about one-third has been used for cattle grazing and haying. This area is bounded on two sides by state-maintained highway. It is flat. It’s not particularly productive dirt, but it has dramatic views, easy access and many potential lots. The rest of the ground is a mix of woods and wetlands, which is not suitable for much of anything except recreation.
My friend placed the agricultural field in a conservation easement that prohibits any use other than agricultural. Not a single house is permitted to be built in perpetuity. He did this with the best of intentions some years ago. His health has changed for the worse as he’s gotten older. His income is limited. The farm is his major asset, and most of its value was in the 100 acres of field.
Without this easement, a developer might pay $10,000/acre for the right to divide it into five to ten second-home lots. With the easement in place that keeps this marginal farmland as marginal farmland, the price might be $1,000/acre on a really good day for the seller. My friend’s life would be a lot more comfortable going forward with $900,000 more in gross sale revenue. Of course, sale to a developer means five to ten newly built second homes where hay once grew.
At the time he placed this easement on his land, he wanted to preserve the 100 acres as open space and keep it in agricultural uses. He got tax benefits for the easement. Now he needs the money. Now he’s stuck with the personal consequences of what I would consider a questionable choice.
Many good reasons exist to place conservation easements on property. Owners, however, must consider the long-term consequences for themselves and their heirs of prohibiting all development forever.
Had my friend allowed one residence to be built on the 100 acres, the value of the easement would have been marginally reduced. But he would have been able to sell the property in his time of need for maybe $7,500/acre or more. The land would have still been kept primarily agricultural and open.
I have seen other cases where economic fortunes have turned against a landowner whose last asset was land–burdened with a conservation easement. The surviving spouse and the heirs received substantially less inheritance than the calculation at the time when the easement was donated.
I’m interested to hear from advocates on both sides of this question.
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