Subdivision, Ranch, or Something New
At last December’s local Board of Equalization hearing in Buffalo, Debra Nagel Smith, who was Albany County assessor for 24 years, testified that in her opinion, Sand Creek was a subdivision, but still a ranch.
“I have ranches [in Albany County] that have platted divisions in them for a family,” Nagel said. “They’ve got four-acre here and two-acre there and–for the family or whoever else, I’m not in the genealogy business, ends up owning those. And it’s still in the middle of an entire, operating ranch. And it is–all the land around it–is still ag,” she said.
Elsom, of Johnson County, doesn’t see Sand Creek as farmsteads and ranch.
Sand Creek, says Elsom, is not agricultural.
“They don’t have barns or animals or farm machinery. Those houses can’t be farmsteads,” she said.
Elsom thinks Sand Creek is its own Land Economic Area, or LEA, the term used to describe subdivisions and filings valued by an assessor. LEAs are often described as “neighborhoods.” According to Elsom, Johnson County has 72 neighborhoods.
“It’s a whole new neighborhood, a different concept, totally,” she said in an interview with WyoFile. “We can’t compare Sand Creek to Emerald Creek or Cloud Peak subdivisions [developments close to Sand Creek]. We have to assess [Sand Creek land] at rural residential.”
Sand Creek has one feature that makes it unique, truly a “different concept.” Sand Creek is the only housing development in Wyoming that includes a land conservation easement.
A conservation easement is a land use agreement that limits most commercial development, usually in order to protect open space or sensitive ecological areas. It’s a trade-off. The landowner retains ownership of the land but gives up future development rights, typically tract housing or a commercial enterprise. For this loss, the owner gets a federal tax deduction equal to amount he or she would have made if commercial development had proceeded.
In granting a conservation easement, the property owner conveys to a governmental entity or a charitable organization –a grantee –the rights to enforce the use limits of the agreement.
Jenkins couldn’t find a traditional organization, like the Nature Conservancy or the Wyoming Stock Growers Agricultural Land Trust, to be the grantee for his conservation easement.
Pamela Dewell, executive director of the Wyoming Stock Growers Agricultural Land Trust, said she was not working for the organization at the time Jenkins proposed his conservation easement.
“But I can tell you the most common reason why we reject being a grantee for many conservation easements: we do not see enough production agriculture,” she said. “It [the easement] has to have a net positive value for production agriculture. We like to see very limited development.”
At the same time, Dewell praised the idea of Sand Creek.
“It’s indicative of the evolution we’re seeing in Wyoming land use. People forget that the idea [of limited development] is just emerging in Wyoming. We need more tools in our tool box,” she said.
The Nature Conservancy rejected Jenkins’s easement because the group concentrates on large habitat projects, but Paula Hunker of the Conservancy visited Sand Creek and said, “I applaud John very much for what he’s trying to do.”
When interviewed by WyoFile, Wyoming Stock Growers President Jim Magagna said he was familiar with Sand Creek and thought the project qualified as “viable agriculture.”
Magagna said, however, that the balance between housing and agriculture in Sand Creek “wasn’t ideal.”
“It needs to watched closely,” he said. “But there’s a lot of 40-acre parcels that currently qualify as ag land. Agriculture is the key to open space.”
Jenkins, unable to enlist the Stock Growers or Nature Conservancy as grantee, turned for help to Governor Dave Freudenthal, who sits on the State Land and Investment Board.
The State Land and Investment Board consists of Wyoming’s five statewide elected officials. The board manages the state’s 3.6 million surfaces acres and 4.2 million mineral acres.
Freudenthal’s interest in Sand Creek “began because I’ve known John [Jenkins] forever,” he told WyoFile. “I became intrigued because the Sand Creek Ranch seemed like a vehicle for those who hadn’t been blessed by an oil well.”
Freudenthal said he was “bewildered” by the Stock Growers’ refusal to be grantee of a Sand Creek conservation easement.
The governor said he went to Johnson County and visited the property, which so impressed him he brought the matter of the conservation easement to the April 7, 2005 meeting of the State Land and Investment Board.
At the governor’s urging, the State Land and Investments Board became grantee of the Sand Creek conservation easement. The vote was 3 to 2, with Freudenthal, State Treasurer Joe Meyer, and Superintendent of Public Instruction Jim McBride voting yes. State Auditor Rita Meyer and Secretary of State Max Maxfield voted no.
State Land and Investments Board documents show Jenkins said the easement was worth between $1.5 and $3.0 million and that the entire property was worth between $6 and $8 million. Jenkins told WyoFile he took a $2 million deduction off his federal income tax.
The Board did not ask for or receive an independent appraisal of the value of Sand Creek ranch.
The Sand Creek conservation easement is the only one the State Land and Investments Board holds, because in its next session, in 2008, the Legislature passed House Bill 111, forbidding the State Land and Investments Board to sponsor more conservation easements.
“Many of us felt doing so [holding the easement] was outside the scope of the board’s duties,” said Kermit Brown (R-Albany), one of the bill’s sponsors. “The State Land Board needs to stick to what it was created to do, and it needs to do so without any potential conflicts about its mission or its loyalty.”
Stock Growers president Magagna, who 12 years ago was Gov. Jim Geringer’s director of the Office of State Lands and Investments, also supported the bill to prevent the Board from becoming grantee for more conservation easements.
“Our belief is that the function of the State Land Board is to manage state lands,” Magagna said. “Getting into the conservation easement business did not fit the mission of the State Land Board.”
The 2008 legislature, however, also passed a bill designed to encourage “conservation development.” The legislation, Senate File 11, titled “Subdivisions–Large Acre Parcels,” allows counties to give developers who protect open space incentives in the form of fewer subdivision requirements.
In 2009, the legislature passed House Bill 10, sponsored by the Joint Corporations, Elections and Political Subdivisions Interim Committee. It allowed agricultural operations within subdivisions, platted or non-platted, to be taxed as agriculture. This would seem to solve John Jenkins’ problem with platted subdivisions, assessments and rates.
Lynda Cook, an attorney for the Legislative Service Office who worked on the bill, said it was not special-interest legislation.
“It wasn’t pushed by anyone,” said Cook. “It was the work of the interim council.”
Not everyone agrees.
“Mrs. Freudenthal was actively lobbying for Mr. Jenkins for the passage of the bill,” said Rep. Pete Illoway (R-Laramie), a member of the Joint Corporations, Elections and Political Subdivisions Interim Committee.
This legislation potentially offers great benefits to Jenkins for this and later tax years. Elsom has already announced she will follow the new law when assessing Sand Creek for 2009.
“That is absolutely not true, Jenkins says. “Dottie Elsom has sent us a 2009 assessment for ‘rural residential’ and ‘vacant land.’ No agriculture. She won’t even follow the law even though the statutes provide for what we’re doing.”