I was disappointed that you perpetuated a common falsehood about valuing conservation easements (HCN, 5/30/05: Write-off on the Range).

The article defines an easement’s value as "... the difference between what a parcel of land would be worth if it were developed and what it is worth when the development rights are voluntarily limited." Wrong. I have appraised conservation easements since 1991, and that definition has never been true, even though many naive people, including all too many who work for land trusts, still parrot it.

Since 1998, IRS regulations clearly define the value of the easement as the difference between the market value of the land as it presently is, and the market value of the land as encumbered by the specific terms of the easement. The land as it presently is includes the value of whatever legal work may have been done, including platted subdivisions, but this market value is generally much less than the aggregate value of those subdivision lots (which is what people usually mean when they talk about the "value of the land as developed").

A conservation easement takes away a part of the owner’s property rights, leaving him with less than he had. Where we get high-valued sales of lands encumbered by conservation easements, it is because the current limited supply of easement-encumbered property has collided with a sudden increase in demand for aesthetically pleasant properties. This has created an opening for con men and swindlers to market easement-encumbered parcels to well-meaning suckers at hyped prices. As the supply of easement-encumbered property increases, this market will get saturated. Buyers will gradually realize they are being duped and their land values will settle down to something much more reflective of the reality of what they actually own.

Peter Sartucci
Lafayette, Colorado