ARTICLE Helena, Mont. (March 3, 2017) – Rick Berg’s Norwegian great-grandfather settled in the Lennep Valley in the late 1880s. He became a butcher, supplying the area’s miners and railroad workers, then later homesteaded and ranched sheep. In the 1950s, the ranch he founded converted to cattle. Today, Rick’s daughter and her husband are the fifth generation to operate the place. They run their Angus cattle on 10,000 acres of private and state land, much as Rick and his wife, Gayle, did in the 1980s and 90s.
The only real difference between now and a century ago is the property holds a conservation easement that ensures it will remain intact and undeveloped in perpetuity.
“To think what my great-grandfather, grandfather, father and I did to create this beautiful block of land, I wanted to preserve the integrity of the land everybody worked so hard to put together,” Berg said. “Nothing inspires me more than to see large, beautiful, uncluttered spaces.”
Berg’s conservation easement is through the Montana Land Reliance (MLR), a private, non-profit land trust. He is one of more than 800 landowners – many of them working farmers and ranchers – who have partnered with the organization to permanently protect agricultural land, fish and wildlife habitat and open space since it began nearly four decades ago. It’s the largest land trust in the state, the largest agricultural land trust in the country, and, by the end of 2017, when the organization hits the 1-million-acre mark, it will be the largest state-based land trust in the country.
“We are preserving a way of life by preserving the agricultural heritage of Montana,” said Jessie Wiese, MLR southwest manager. “It’s a piece of what Montana is; it’s a piece of what keeps land in good health in the long term; and a piece of what keeps a connection to multigenerational work.”
Land trusts like MLR protect land through conservation easements, voluntary legal agreements with landowners that put limits on how the land can be used in order to conserve it. Landowners retain their property titles, which forever keep the conservation easement, even after the property is sold. The donation of an easement qualifies as a charitable contribution, so in exchange most landowners receive significant income, estate and gift tax reductions.
Agricultural lands make up about 10 percent of MLR’s total acreage: approximately 162,000 acres of crop, hay and pasture and close to 830,000 acres of range and forest.
That’s by design.
“The Land Trust has really helped large farms and ranches survive,” said Wiese. “We are preserving agricultural heritage and preserving the integrity of ecosystems by working with ranchers who have great management of their land.”
An easement allows owners to continue to farm and ranch as they please, as well as to construct buildings, fences, water improvements, and the like, necessary for agriculture. Under the terms of an MLR conservation easement, owners cannot subdivide land for residential development; pursue some non-agricultural commercial activities including surface mining; or dump non-compostable or hazardous waste.
Other than that, it’s hands off – unless landowners request stewardship assistance. The philosophy of the organization is that farmers and ranchers know what’s best for their land.
“Rangelands are important ecologically and also important to people who work on the land and it’s those people who are the best stewards of the land. They’re the ones looking at production and asking, ‘How many cows can I run?’” Wiese said. “We are in the business of perpetuity. We don’t get into day-to-day land management. We take the big picture approach.”
For Berg, the stipulation against surface mining meant that prior to establishing his easement in 2007 he carved off a small gravel pit that’s provided much-needed income in tough years. He also sold a parcel of land to an out-of-state buyer to build a vacation house and granted him access rights to the ranch for recreation. The buyer liked that the land surrounding him – Berg’s ranch – would never be developed; Berg liked that the sale generated cash to help him through the drought years.
In certain cases, landowners can get NRCS funding to put a conservation easement on their properties. The arrangements, by far the minority of those held by MLR, are known as Agricultural Land Easements and provide money to conserve certain kinds of habitat, including sage grouse habitat.
In 2015, Congress made permanent enhanced income tax benefits for conservation easement donations. Gifts are still treated as tax-deductible charitable contributions and the new law provides a charitable deduction equal to 50 percent of the donor’s adjusted gross income in the year of the donation and each year for the next 15 years.
Farmers and ranchers do even better under the new law. They can take the deduction up to 100 percent of adjusted gross income, also with the 15-year carryforward. This applies to individuals, partnerships and corporations.
Conservation easements can also be used as an estate planning tool because they reduce property values for estate and gift purposes. The amount of value reduction is unique to each property, but is generally the difference between its subdivision development value and its agricultural value.
“In the early days of easements, we had a model that favored the rich and famous. The tax incentives were such that they favored high incomers, but it didn’t pencil out for traditional farmers and ranchers,” said Kendall Van Dyk, MLR’s project manager for eastern Montana. “Now for qualified farmers and ranchers it’s more workable from a tax perspective. It’s no longer the millionaires and billionaires club.”
Because the easement is tied to a property’s title in perpetuity, the depreciation is as well.
“When people dive into the details they often times realize, ‘Yes I’m giving up something significant,’” he said. “It’s a judgement call for the landowner.”
So while conservation easements aren’t for everybody, they can make it easier financially – and emotionally – to pass along an operation.
“People work on their land their whole life and they want to know it will stay the way it is and it’s viable to pass along to family,” Wiese said. “It forces families to have important conversations about estate planning. It gets everybody thinking, ‘What do we want for this property?’”
Because the MLR is an ag-oriented land trust – interested in preserving open spaces and “view sheds” over particular kinds of wildlife habitats – it “tries to leave what economics it can for people,” Van Dyk said. In other words: working farms and ranches are in large part what make Montana’s landscape special.
“The development pressure is very real in Montana. That has a lot of benefits to it, but it can also be the incentive people to need to sell,” Wiese said. “The time is now to get something done here.”
Sarah Brown – The Prairie Star