Maine Land Conservation Law E-Bulletin – March 2016

March 14, 2016 at 4:03 pm

In this Issue:

  • Major New Hampshire CE Amendment Approved
  • Tax Court Case Sheds Light on Habitat and Open Space Tests
  • Disappointing Virginia Case Highlights Importance of Easement Construction Provision
  • Sabbatical Time… See You in the Fall!
  • E-Bulletin Information

Major New Hampshire CE Amendment Approved

In New Hampshire, conservation easement amendments are reviewed by the Charitable Trust Unit of the New Hampshire Attorney General’s Office.  This office recently issued a no-action letter approving a proposed amendment to a 2012 conservation easement held by the Society for the Protection of New Hampshire Forests.  The easement protects 5,690 acres of the Balsams Resort in Dixville Notch.  (The Forest Society is New Hampshire’s biggest land trust, and similar in scale to MCHT in Maine.)

At its peak, the Balsams Resort included a grand hotel and a downhill ski area, while employing 500 people.  The Resort was shuttered in 2011 and was purchased in 2014 by Les Otten (who has considerable business, charitable, and political interests in Maine).  Otten now seeks to reopen the hotel and adjoining ski area, and views the easement amendment as crucial to his plans.

The easement amendment would allow for portions of three new ski lifts and new ski trails on the protected property.  As mitigation for these additional structures and surface alterations, the landowner agreed to a host of steps, including increased protections on a 90-acre parcel and purchase and protection of two additional parcels totaling 116 acres.  An appraisal found that the value to Otten from the changes was more than offset by the mitigation package.

The agreement between Otten and the Forest Society was not without controversy.  As the no-action letter recognizes, the Forest Society solicited input from all of the 1,600 donors to its 2011 fundraising campaign that led to protection of the property.  Ultimately, two donors and a member of the public objected to the proposal, and the process was the subject of heavy media coverage.

In the thorough and well-reasoned no-action letter, the Attorney General’s Office concluded that the amendment proposal met the seven amendment principles contained in a guidance document published by the Forest Society and the AG’s Office.  These seven principles are the same as those enumerated in the Land Trust Alliance’s 2007 Amendment Report, and are incorporated in many land trusts’ amendment policies.  Thus, this particular amendment process in New Hampshire may be used as an instructive case study for other land trusts, in Maine and elsewhere.

 

Tax Court Case Sheds Light on Habitat and Open Space Tests

A new case out of the United States Tax Court, Atkinson v. Commissioner, T.C. Memo 2015-236 (U.S.T.C. 2015), provides a detailed analysis of how a conservation easement might fail both the habitat and open space prongs of the conservation purposes test under I.R.C. § 170(h)(4)(A).  The two easements at issue encumbered golf course properties within a gated residential community, and the Tax Court was persuaded by the IRS that neither easement protected significant habitat or open space.  The court analyzed but rejected a variety of habitat-related arguments by the taxpayers.  In particular, the court focused on the lack of evidence that any threatened or endangered plant or animal species were present in substantial numbers.  The court also noted that for whatever habitat did exist, the easement was not written in such a way to ensure that it would be protected.

 

Disappointing Virginia Case Highlights Importance of Easement Construction Provision

The Virginia Supreme Court has issued a disappointing decision in the recent case of Wetlands America Trust, Inc. v. White Could Ventures, No. 141577, — A.3d — (Va. February 12, 2016).  A key issue at trial and on appeal was whether a conservation easement should be subject to the strict construction rule that applies to traditional restrictive covenants.  This rule holds that restrictive covenants should be construed in favor of the free use of land.  After reviewing Virginia’s conservation easement enabling statute, which is similar in many respects to Maine’s and many other states’ enabling statute because it is based on the Uniform Conservation Easement Act, the Supreme Court, in a 5 to 2 decision, held that this traditional construction rule did indeed apply to conservation easements.  The decision points to the importance of including a pro-conservation construction provision in the easement proper; the easement at issue in this case had no such provision.

The underlying substantive issue in the case also offers lessons for other conservation easements, because it addressed what sort of structures might be allowed in an easement that permits wide-ranging agricultural activities.  The dispute arose over a large building erected by the landowner that served as a combination creamery, bakery, wine tasting room, and retail store.  Some of the products involved in these commercial activities were derived from the protected property or an abutting property owned by the same landowner.  The trial court found that this building was indeed a permitted “farm building” within the meaning of the easement.  The Virginia Supreme Court affirmed, noting that production, preparation and marketing were inherent components of agricultural activities and therefore permitted under the terms of the easement.

 

Sabbatical Time…  See You in the Fall!

             On a personal note, the E-Bulletin will be on a hiatus as I take a sabbatical this year from April through September.  I will attempt to bike across the country (Delaware to Seattle) with my wife Sarah and our daughter Cedar.  If you’re interested in following our progress, you can e-mail me and I’ll add you to our trip journal list.  See you in the fall!

 

E-Bulletin Information

I send E-Bulletins 3 or 4 times per year to provide updates and analyses on legal and policy matters respecting Maine land conservation.  I do my best to keep my messages brief, timely, and useful to conservation-minded landowners, as well as land trust professionals and volunteers.  At the same time, no one should rely on these E-Bulletins as legal advice, and I encourage you to consult a qualified attorney for advice on any particular situation.

If you find this free E-Bulletin to be valuable and interesting, please forward it to a friend or colleague.  Subscriptions remain free, and I respect my subscribers’ privacy.  Anyone who would like to receive this E-Bulletin or the Maine Nonprofit Law E-Bulletin can e-mail me at rob@roblevin.net.  If you’d like to be removed from my list, simply drop me a line at that same address.  Recent E-Bulletins can be found on my website, www.roblevin.net.

Entry filed under: Land Conservation Law E-Bulletin. Tags: , , , , , , , , , , , , .

Maine Nonprofit Law E-Bulletin – January 2016 Maine Nonprofit Law E-Bulletin – November 2016


Robert H. Levin, Attorney at Law

Contact Information

Mailing Address: 94 Beckett St., 2nd Fl., Portland, Maine 04101
Telephone: (207) 774-8026
E-mai: rob...roblevin.net (replace ... with @ symbol)

Recent Posts