Now, can you walk me through the process of your experience placing Agave Canyons Ranch under the conservation easement?
Mark: The first step is making several phone calls and to gauge the interest in the land trust organization, potential legal counsel, and I would say making a phone call to your existing level of consultants, your current estate planner or your tax professional, one or the other, to work together. What you want to do is gauge their interest to see if your values align with each other. You need to find someone that you can talk to and communicate well with, because there's a lot of intensive form work that goes into this type of thing.
Then, you go ahead and engage your legal counsel—that is going to be an extraordinarily important step in this process. Can you use your local attorney? Yes, sir. I would suggest that you consider visiting with one of those attorneys that specialize in conservation easements. The legal background of these things change quite frequently—either the legal code, the tax code, administrative codes of land use in different counties.
And then from that point, you can start using those folks to engage the land trust organization and your other consultants, such as the appraiser and the surveyor and the other consultants that you will ultimately engage to get the easement created on your property properly.
Romey: I think you're laying out that this is a very technical real estate transaction. You know, it's based on a hopefully mutually feel-good story of wanting to preserve and protect a landscape and a ranch. But it requires significant amounts of attention, oftentimes resources and good consultation, because as you're making decisions that may affect the management forever and your heirs, it's really, really critical that you are looking at it from a holistic vantage point and understand the accumulating effects of these decisions. That's not to scare anybody; it's just to say that stewardship requires this type of attention, and if you're motivated to do good stewardship, these are the sorts of things you can expect.
I also love to talk about how conservation easements are not the tool for everybody everywhere. It's a very specialized…it's a very good tool for the right circumstances and the right families.
Exactly right. This is going to be an intense process for, let's just say, a year for the most part. And you want to make sure that those professionals that you engage, that you can enjoy a good working relationship on an intense level for a year. And then after that it’s, can you maintain the relationship going forward, as you administrate Years Two, Three, Four? And through 15 or 16, depending on the tax codes that you deal with, and then on into perpetuity.
So that alignment is so important. And to get the language right within the terms of the conservation easement, while also securing flexibility to operate and manage your property the way that you envision it needing to be done. So, every easement is a custom job that is negotiated in good faith between your land trust and your landowner, and those terms are specific and unique to the circumstances of the landowner and the property.
The land trust holder will steer you to the basic framework of what you need to do. If you want to pursue all of the tax advantages…you don't have to pursue the tax advantages. But if you want to, they'll kind of direct you in to the numbers and the ratios of things that you'll need to do to meet those criteria. But if you say, look, ‘I want to drill five more water wells on our place in the future,’ we can create language to accommodate that going into the future. If you want to cut out a thousand-foot setback from your major road frontage for commercial development going into the future, you can do that. You can say, ‘hey, I don't want any windmills on my place forever that generate electricity’—you can do that.
After the closing, life kind of returns back to normal, except that you have a partner in the land trust and the resources in their network that they can bring to you. If you have a question like, ‘I have a management goal that looks like this. Can you help me understand that and bring me some resources?’ they're there to do that, but they're also there to take a backseat and simply meet with you once a year to make sure that the terms of the easements are met during their monitoring visit.
Let's say that you want to build, or you want to impound water, on your property and you really don't know how to go about it. Well, they've got some resources that they can call upon to assist the landowner. They can get a lot of that consulting, design work, advice.
Then they can throw all those people at you at a highly professional level and it can happen quickly. And that's one of the features that Renea and I really like with regards to TLC is that we talked about doing some hydrological work in the future…we're going to need some help, and so, let's lean on those folks.