Nature Noted

Notes on a changing Nature

Location: Bellville, Texas, United States

I never would have predicted this one

Tuesday, June 07, 2005

The Sleazy Stuff

The staff findings on two areas, the Conservation Buyer Program and Emissions Credits seem likely to provide most of the negative headlines you will see coming out of this report. The Conservation Buyer Program (CBP) lets trusts sell interests in land rights that are subject to conservation easements. But the finding reinforce the notion that TNC cut sweetheart deals for insiders. The most outrageous claim is that TNC might have sold emissions credits that would allow polluters to actually INCREASE the amount of pollutants they spew into the air. Here again, are selected highlights... First about CBP
TNC structured many transactions with buyers to consist of two parts - the purchase of property at restricted value price, and a cash contribution for the additional consideration paid by the buyer to TNC.
CBP transactions also raise donative intent issues. They test the limits of present-law charitable contribution deduction rules because cash amounts paid by the buyers to TNC in the transactions appear to have been a condition of the completion transactions. In many, if not all, of these cases, it appears that TNC would not have conveyed the property to the buyer without the receipt of cash from that buyer.
Parties to CBP transactions often involved related parties or insiders and, as a result, these transactions might have excess benefit transactions tax consequences to the insiders and TNC’s organization managers.
At least until recently, TNC generally did not make the CBP properties avaiable for purchase by the general public. .... In many instances, TNC and the buyer specifically identified by TNC worked together to structure the papramenters of the acquisition and disposition of the property by TNC, taking into account the CBP buyer’s objectives and interests with respect to the to the property. .... The Committee questions whether this practice allowed TNC to receive the optimal sales price for easement-restricted properties (i.e. a member of the public might have paid more than an insider to acquire a property.) In addition, conservation restrictions in certain situations permitted CBP buyers to construct large new homes, swimming pools and tennis courts on the restricted property.
Programs such as the CBP that are regularly and systematically conducted by a conservation organization, and that affect significant assets of an organization, should be subject to a formal analysis and review that takes into account actual rather than hypothetical facts....

Great.... here come the swimming pool stories.
It gets worse, check out the Emissions Credits section..
TNC participated in eight emissions credit or allowance arrangements from 1995 through 2004, involving $34 million of cash payments made by financial participants to TNC under the various agreement.
TNC’s emissions credit arrangements provide financial participants with the right to receive potential emissions credits or allowances in exchange for cash provided to TNC for a conservation project..... the Staff questions:(a) whether the for profit participants obtained an impermissable private benefit as a result of the arrangements; (b) whether TNC owned the emissions credits or allowances and thus was required to receive fair market value for their current or future transfer to and use by the for-profit participants....
TNC “actively markets” these projects to potential participants.
While furthering one exempt purpose, i.e. the preservation of land, TNC’s assignment to the for-profit participant of potential credits (as opposed to TNC’s retaining and retiring them) would appear to frustrate an environmental purpose - the reduction of greenhouse gases. TNC’s transferring of potential credits to the for-profit participant presumably permits such participants to maintain their current emissions levels, or in the worst case, actually increase their emissions levels.

Lovely. An environmental organization participating in schemes to increase emission levels. All to make a buck.


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