GOVERNMENT CONSERVATION LANDS

LOWER LAND PRICES ENCOURAGE
GOVERNMENTS TO PURCHASE LANDS

By Steve Wright

If every gray cloud has a silver lining, then perhaps every brown chunk of dirt has a Green lining.

The Green movement -- gaining momentum each day as we learn to protect our forests, conserve our water sources and preserve healthy green space in urban, suburban and rural settings -- is reaping the benefits of lower land prices.

Developers, many who overpaid for properties during the peak of the housing boom and are faced with a shortage of both financing and buyers, are covering their losses by selling their land for conservation.

Keith Fountain, director of land acquisition for The Nature Conservancy's Florida office, said the marked drop in land prices means "opportunities for conservation are unprecedented."

"Back in the real estate boom, people were speculating on Central Florida ranch-type land -- buying to sell six months later at a 30 percent profit. But when the music stopped playing, they couldn’t find a chair. They don’t have the resources to carry the land, so now they need to sell."

Fountain said not only are prices more attractive, but the availability of sensitive land is at an all-time high.

The Nature Conservancy and others have worked for years on the Kissimmee Basin, a part of Central Florida that serves as the headwaters for Lake Okeechobee.

Okeechobee feeds the Everglades and also provides the drinking water for heavily populated South Florida.

"We've been working with farmers to get conservation easements," Fountain said. "In the boom, couldn’t get ranchers to talk to us. Now, they are talking. They are looking at straight easement sales."

Fountain said he's now pursuing lands that various agencies worked on years ago, but were rebuffed by unwilling sellers.

"The suite of top priority land coming to us is absolutely unprecedented," he said. "Our phone rings off the hook with people wanting to sell us tracts."

"This allows us to focus on some real jewels," Fountain continued. "The availability of large tracks that tie very important areas together is amazing. In some cases, the last piece of the puzzle needed to assemble hundreds of contiguous acres of conserved lands."

Tampa-based Bill Eshenbaugh, 2003's Land Realtor of America, said land conservation sales are good for the Green environment and -- as an option in time of stagnant sales -- can lead to a pot of gold.

"It pays as a broker to sell the preservation interests and they historically can be more active in a slow market, as they can buy without the price pressure from developers," said Eshenbaugh. "For developers, buyers will pay a premium for communities with conservation -- `Green’ sells and is sustainable."

Eshenbaugh, an avid outdoorsman who goes by the apropos moniker of The Dirt Dog, said lower land prices can also create opportunities for elected officials to make more political hay.

"For politicians, it creates good will with the public and it leaves a heritage. Think about the Teddy Roosevelt influence on western parks along with the Rockefellers and Yellowstone, Grand Teton National, etc. -- where the great open spaces have been preserved and the views of the Tetons maintained."

"Here, (former Florida Governor) Jeb Bush did a great job of acquiring a lot of land including a major part of Babcock Ranch," he said, referring to the state’s $350 million purchase of a 74,000 acres of 92,000-acre ranch in southwest Florida’s Lee County. The largest tract of contiguous conservation lands in the state’s history, it will protect endangered species, provide a water recharge area and ultimately, a wealth of outdoor recreational opportunities.

"Governor (Charlie) Crist could leave a tremendous heritage if he acquires the sugar lands as planned," Eshenbaugh said about the current Florida governor's proposal for the state to buy thousands of acres presently farmed for sugar cane -- to convert them into reservoirs and other uses needed to support the multibillion dollar Everglades restoration project.

Asked if rising food prices have increased the value of farmland enough to offset its drop in value as developable land, Eshenbaugh said "I don’t see any evidence here in Florida that that has happened."

"However, higher corn prices probably do impact the cost of fattening out Florida beef in the Midwest feedlots. The cost of fertilizer has gone up dramatically along with diesel fuel that impacts all agricultural production from tractors to trucks to deliver to markets to diesel-driven irrigation pumps," Eshenbaugh observed, suggesting that many farmers remain land rich but cash poor.

Several non-profit land conservancy trust executives also stressed that not every parcel of farmland is a plot prized for preservation. Rather than shopping for pure open space, many trusts are focusing in on coastal, forest, ravine, mountain and endangered species habitat land -- much of which may not be suitable for agriculture, meaning it is more affected by the drop in development value than any nationwide gain in farmland value.

"My Midwest farm broker friends tell me the price of corn and grain crop land is indeed up. It is a yield issue -- when corn prices are higher and farmers can make more money, the price of high-quality high-yield land has gone up," Eshenbaugh said. (But conservation) agencies tell me they are swamped with calls and submissions of land that the current owners feel would make good conservation deals as the market has dramatically slowed for development."

The Trust for Public Land (TPL), one of the nation's largest nonprofit land conservation organizations that protects parks, historic sites, rural lands and other natural areas, is reporting several lowered land price success stories.

Tim Ahern, TPL's director of media relations, said a flagging housing market has given rise to:

• TPL's deal to buy a 70-acre former Camp Fire Girls park northeast of St. Paul, Minn. for $3.8 million. The Minnesota Council of Camp Fire USA decided to sell the land two years ago and had it under contract with a developer for nearly $5 million. But when the real estate market softened, the Council decided to accept a little less than 80 cents on the dollar. The action will permanently preserve Camp Ojiketa, once slated for housing, as open space.

• The $4 million purchase of a 27-acre parcel in suburban Portland, Ore. to be added to an existing city park. A developer had panned to build 65 homes selling on the $300,000 to $375,000 price range on the property. But when the housing market fell, the developer decided to sell and TPL stepped in with a $1.6 million loan to help preserve the green space until several government agencies could pool funds to close on the deal.

• Ongoing negotiations to buy beachfront land on the Gulf Coast of Florida that once was destined to be a $120-million condo project. Atlantis West Development Company paid $28 million for four acres of prime land that stretches from the Gulf of Mexico to the Intracoastal Waterway in the small Town of Indian Shores in the Tampa Bay-St. Petersburg area. But the present day market value is less than half of what developers paid for it in 2005. TPL is working to buy the southern two acres of the parcel for a local park. With a fair market value shrunken to about $6 million, TPL is working with town, county and state officials to make the land preservation deal happen.

Rodney Bartgis, state director of The Nature Conservancy in West Virginia, said the price of protecting land is more complex than a simple downswing in real estate development.

“Those (good land deals for conservation) mostly apply to the many areas where real estate development, especially housing, is the principle driver of land values,” he said. “But at least here in the Central Appalachians, it often does not apply to tracts of large, raw land acreages -- the type that is often of most interest to The Nature Conservancy and similar groups.”

Bartgis said domestic and foreign investment in timberland is keeping prices up for large, forested tracts in prime timber production areas.

“We were attempting to acquire a 1,300-acre timber company holding this spring and were unsuccessful because we could not compete against an investment group willing to pay a price well above that previously established in the local market,” he said. “So even though timber prices are down -- because of less demand due to the housing downturn -- and local lumber mills are struggling, some investors can take a 20-plus-year view of timber and are still willing to pay fairly well for the land.”

Bartgis said land used for energy resources also is impacting conservation in ways that weren’t a factor until the huge upward spiral in energy costs.

“On mountain tops -- until recently of value primarily for recreation and maybe timber -- there is widespread leasing of land for industrial wind facilities, often at a fairly good price,” he said. “Throughout much of West Virginia, there is widespread leasing of natural gas as companies hope to tap into the Marcellus shale, a deep source of gas not previously exploited because of the costs and technical hurdles. But with energy prices up, the Marcellus is a hot item.”

This is land whose lease fee value otherwise would be $1,500 per acre, or even less, being (driven up) to maybe $4,000 per acre,” Bartgis continued. “So energy demand and inflation are keeping the values of much Central Appalachian land up. Even where the energy resources are speculative, these events are keeping land prices up because they have substantially raised landowner expectations.”

Tim Glidden, director of the state agency Land for Maine’s Future, said “it’s not yet clear how the credit crisis and massive slowdown in residential real estate” will affect land conservation opportunities.

“State conservation strategies are focused on conserving the `best of the best’ and high-end real estate on Maine’s spectacular coast and lakes continues to command premium prices,” he noted. “While inventory is growing in these categories, we are not seeing big price declines. On the other hand, local land trusts looking to conserve open space in and around urban centers are seeing opportunities as developers seek to reduce their exposure and inventory of subdivision land.”

Glidden said development slowdown gives state government a breather, so it can step back from the breakneck pace and better plan for conversation and development.

“The need to be strategic in taking advantage of any opportunities is imperative,” he said. “Some land that might be now available should be held as inventory for future housing and commercial development – these communities will still need to grow. The opportunity is to shape, not block, that needed growth.”

Wright frequently writes about Smart Growth and sustainable communities. He and his wife live in a restored historic home in the heart of Miami’s Little Havana. Contact him at: stevewright64@yahoo.com