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| Real Estate & Land |
Land Through the Generations
Daniel Gross
06/01/2004
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In the 1990s, as the stock market and the economy boomed,
the potential for development, even in remote regions, raised tough questions
for the family. And it also meant that the IRS might place a high value on the
land when its ownership would be transferred, thus triggering onerous estate
taxes. “We needed a solution that would ensure long-term protection of our
forestland while simultaneously providing immediate economic returns and relief
from estate taxes,” Schley told Congress.
In 1996, the New England Forestry
Foundation, a nonprofit foundation based in Littleton, Mass., approached Pingree
Associates with a potentially elegant solution. By creating a conservation
easement—a legal means through which landowners sell development rights to the
government or a conservation group, but not the land itself—the family could
gain liquidity and ensure the future of its timber business for at least several
more generations. Additionally, selling the development rights would lower the
market value of the land, thus slashing potential estate-tax liability.
Despite differences of opinion within the family, the Pingree descendants
reached a consensus. Under a deal crafted in 1998 and completed in 2001, some
762,192 acres of the Pingree holdings—a tract bigger than Rhode Island—have been
placed out of the reach of development. In exchange, the Pingrees received $28
million, or $37.10 an acre. The transaction is the largest ever of its type, and
has been chronicled in a 110-page Harvard Kennedy School of Government case
study.
The area covers the Allagash lakes, and lengthy stretches of the St.
John River. In all, it includes more than 100 lakes and substantial bald eagle
and peregrine falcon habitats. On a dollars-per-acre basis, the transaction does
not seem very generous. But the easement, which affords the Pingrees a large
measure of independence in managing the forests, provides something potentially
more valuable: the peace of mind in knowing that the family’s 160-year-old
timber business will be free to continue for as long as future generations
desire.
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