Adirondack land deals: a policy debate or a "witch hunt"?
This week, I’ve been looking at the controversy surrounding the big land conservation deals that are reshaping the Adirondack Park.
Hundreds of thousands of acres have been affected in the last 15 years, either through easements restricting development on private land, or through outright purchases of land by the state of New York.
Critics of these deals are raising some legitimate and interesting questions.
Is the Department of Environmental Conservation too closely intertwined with the Adirondack Nature Conservancy, the leading green group on many deals?
How exactly can the public determine where the interests of the state and its taxpayers end, and the interests of this private green group begin?
Is it appropriate for the Conservancy to partner closely with state officials when New York negotiates with local elected leaders about the future dispositions of vast tracts of land?
These are decisions that will shape the future of Adirondack hamlets for generations, and some leaders question the power and influence of environmentalists.
Finally, are there enough opportunities for public oversight of the financial terms of these deals?
These questions aren’t just fair. They are essential.
Now that most of the big timber companies are gone, green groups have emerged as the largest and most influential landowners in the Park.
Their activities warrant continued scrutiny.
State Attorney General, Andrew Cuomo, says he will review one Clinton County deal in particular, in particular.
He is expected to report on whether the best possible practices are being followed. All sides have welcomed his probe.
But beyond this policy debate, some critics have also lobbed allegations about behavior that they believe amounts to corruption, collusion, and political chicanery.
Hopefully, Cuomo’s report will shed more light on these claims.
But my investigation and detailed interviews with many of the players could find no evidence to support them.
Indeed, most of those making allegations offer few facts, only suspicions; and some of the harshest claims have been made anonymously.
Did the Nature Conservancy collude with the Adirondack Park Agency to force people from their land?
Is the green group pocketing sizable profits from their work in the Park?
The answer to both questions appears to be no.
On the Clinton County deal, the sale price was set by state officials following no fewer than five appraisals, two by DEC officials and three by different private auditors.
What’s more, the Conservancy’s “sweetheart deal” profits — more than $3 million — were largely gobbled up by the costs of holding and managing the land on behalf of New York state.
There’s also apparently no evidence of political string-pulling on the Clinton County deal.
That kind of corruption would have required the approval of three Governors, one Republican and two Democrats.
“Do I have any evidence of that? No,” conceded Fred Monroe, head of the Adirondack Local Government Review Board. “I have suspected it though.”
Again, it’s important to ask serious and probing questions about environmental groups, their methods and their agenda.
It’s also important to watchdog the activities and decisions of state agencies, which wield vast power in the Park.
But it’s crucial that the debate focus on facts and evidence, not mere distrust and suspicion.
Your thoughts are welcome.
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It's all moot to me. The State should be selling land, not buying it. The agenda driven purchases are just salt in the wound.
There would be far less forest management in the Adirondacks were it not for deals between timber investment companies and The Nature Conservancy. These companies would not invest in these thousands of acres without an organization like TNC and the State of New York partnering to share an otherwise impossible real estate tax burden. Jobs in this industry have been preserved, along with indirect spin off benefits to families and communities, as a direct result of TNC's ability to move quickly when traditional papermakers, like Finch, decide to sell their holdings. Some of Fred Monroe's neighbors who work in these industries must be shaking their heads and asking him if TNC does not commit to keeping lands open for forestry, who will? Fred is simply doing the political bidding of others, but it doesn't help his neighbors to have him dredge up material for downstate reporter Fred Dicker to use.
"I have my suspicions though."Says it all. And this guy gets the megaphone.Others have suspicions that the world is actually flat. Can't prove it, but still. Why aren't they in the op-ed pages?
Would it be a "witch hunt" to investigate negotiations between developers and a government economic development agency that resulted in substantial tax abatement, low/no interest development loans, relaxation of zoning rules, etc.? Why is partnering with a government agency to preserve the environment suspicious but partnering to get special benefits for development not? Could it depend on which side you are on? Both cost the taxpayers in one way or another but an announcement that a new business is coming is rarely accompanied by a detailed list of what it cost the taxpayers to bring it.
When TNC's local chapter has been left with a $100 million loan the state committed to pay off in better times, to secure the former Finch, Pruyn lands and keep much of them in sustainable forestry, preventing development that would have reshaped the Adirondack Park, it's pretty hard to swallow the idea of "sweetheart deals." It's a sweetheart deal for the area that an organization like TNC is willing to go that far out on a limb to secure land for the state, which cannot act quickly or creatively enough to do so alone. These issues are complex and worth discussing, but any news here happened long ago. It seems an opportunistic legislator has just discovered how land conservation works and is counting on the fact that many people don't know, even though they reap the benefits. We need a better analysis of the economic impacts of land conservation in the region so such "suspicions" aren't such easy tinder for political arsonists.
"Would it be a "witch hunt" to investigate negotiations between developers and a government economic development agency that resulted in substantial tax abatement, low/no interest development loans, relaxation of zoning rules, etc.? "This would be fine if said investigation focused on a full exploration of facts and evidence, all the facts and evidence, rather than gut feelings or ideology. Responsible investigations should be based on demonstrable evidence, not suspicions.Unfortunately, the pattern lately is that a journalist with an agenda (as illustrated by past published opinions) comes up with a story that makes waves despite rather dubious holes and it's left to Brian Mann and other journalists to responsibly add the rest of the story. That's not the way it's supposed to be. The journalists doing the original story should get it right (not just the truth but as close to the whole truth as possible) the first time.
I heard Fred Monroe talk about APRAP and said he thinks the 480a forest management tax breaks given to forest owners is a form of state control, not unlike forest preserve. He basically said that the tax breaks lock up land from development.
I heard Fred Monroe talk about APRAP and said he thinks the 480a forest management tax breaks given to forest owners is a form of state control, not unlike forest preserve. He basically said that the tax breaks lock up land from development.
Brian, You raise some excellent questions. There could be legitimate concerns that go beyond the purchase price issues. I think that some folks have a legitimate question regarding why the state paid market price for land they perhaps could have gotten below market value and in turn saved a cash starved state several million dollars. Appraisals, whether you get one or five, are simply a tool that you use to negotiate a land transaction. In the case of NYS they set the upper limit on a potential offer. They are not a “no haggle” price tag on the land. But all that aside the investigation should focus on whether it is legitimate for the TNC or any other private entity to act as what appears to be a “broker dealer” for these types of transactions. The transaction cost in this particular case had it occurred immediately with the state would have been a net profit of about 3 million dollars for TNC as I understand the deal, a very good return. I understand that the “profit” would have been tied to a wholesale-retail spread issue. However the transaction took place too slowly and holding costs eroded those potential returns. Had the state acted more quickly they could have helped TNC maximize its return. I know what many folks reading this are thinking. TNC has no interest in “maximizing its returns” under these transactions. Sure that is probably the case but if TNC’s motives were otherwise they could easily take advantage of this situation if they were operating with the state or any other potential buyer. That is why we have things like the SEC regulating broker dealer transactions in other types of “securities”. Also, forget the word “collusion”; are the state and TNC “cooperating” in a way that might disadvantage another potential buyer? Two private entities are welcome to act in cooperation in ways that may give them an advantage over other buyers. You might question the ethics of such behavior but that is how the game is often played. Is it all right for a state agency to be involved with private entities in ways where these types of behavior are not properly regulated or monitored? In these cases, everyone’s intentions appears to be good, but when either side has a bad egg get involved at some point in the future you don’t know what might happen. Also, remember on the Champion land deal, Brian I told you about the almost 500,000 dollar APA enforcement action that was ongoing at the same time that the company was trying to secure an APA permit to allow the subdivision required to close that deal with the state on easements as well as the purchase of the land by Heart Wood Forest Fund III. Here is another example where the AG should look closely for any opportunities the parties might have to improperly influence a transaction. I am not saying that anything was afoul. But it is hard to define yourself as just another potential easement buyer when you hold the cards that could make or break the whole deal.Bottom line in my opinion, if the state cannot find a way to operate as quickly as a private buyer in these transactions and avoid the broker they should maybe leave it well enough alone.
"The transaction cost in this particular case had it occurred immediately with the state would have been a net profit of about 3 million dollars for TNC as I understand the deal"Paul, TNC claims it basically broke even on the deal and I've heard no one provide any evidence to the contrary. It points out that the "profit," as you call it, was used almost entirely to pay interest, fees and… umm… local property taxes. All expenses associated with any land purchase and ownership.If TNC paid 7 million for the land, paid 3 million more on these associated expenses and sold it for 10 million a few years later, then it did NOT make a profit.The mechanics and appropriateness of these deals in and of themselves is a fair discussion.But the whole implication everyone seems to be making in this case is dubious. Just because parcel had a higher market value several years after it was purchased hardly suggests any skullduggery.
One of the TNC tracts that NY wants to add to the Forest Preserve produced over 1500 truckloads of wood last year. According the the state land master plan, productive forestland should not be acquired for inclusion in the Forest Preserve. What gives? Why would the state violate it's own policies?
TNC justifies it's profit margins saying they've incurred carrying costs and transactional costs. Just like the Wall Street firms huge bonuses can be considered transaction costs…The margins are approaching usury levels.
Once again the finances of the Nature conservancy are open and reported on their 990 for public review. The point of the Nature conservancy is to take land that is environmentally sensitive and protect if from any development. To me if they can help the state do that by acting as a broker to hold land until the state can purchase it for conservation then they are simply doing what they are supposed to do. I think it is okay to disagree with their mission and claim that indeed the Adirondacks should be developed and that the TNC should get out of the way. I don't think chiding them for doing their job is right though.
Anyone is free to make a purchase offer to any landowner inside the Blue Line and close on that contract, with their own funds and do whatever they want with that land, subject to land use regulations. That includes subdivision and individual parcel sales at a profit, if the market is there. They are welcome to earn “usury levels” of profit. Of course they will also have to pay interest (or forgo income on their invested cash) and pay real estate taxes to carry that land because it doesn't generate any income unless there are sporting club leases or logging sales in place and those revenue sources won't come close to funding the holding costs. The Nature Conservancy steps up, with their own money at risk and get criticized for breaking even. This isn't even close to how Wall Street operates. Good article, Brian M.
Why not replace "witch hunt" with "due diligence"?
"TNC claims it basically broke even on the deal and I've heard no one provide any evidence to the contrary." Brian F., yes, the broke even after having to hold the land for several years and pay taxes etc. My point was that if they had not had to wait and could have more quickly "flipped" the land they would have avoided some of those costs and perhaps done better. I think the market was stronger when TNC bought the land so it may have been even a larger spread.
Brian F. Also, my point was not to suggest any kind of nefarious activity it was just to show the stakes in this kind of activity. Form an earlier comment:"There would be far less forest management in the Adirondacks were it not for deals between timber investment companies and The Nature Conservancy." Is this really accurate? Isn't this really the only large TNC "brokered" deal to date that has closed? The TNC has purchased Adirondack land and "donated" it to the state in the past but I am not aware of any other successfully closed transactions similar to this deal. Can someone tell us of some other large deals that TNC has brokered that have closed? I think some of the press surrounding these deals has maybe exaggerated the impact to date of TNC brokered deals.Also, I think that some folks here dismiss the serious nature of this kind of land transfer activity and it's potential for abuse because they simply support the end result.
Anon 7:13. “The Nature Conservancy steps up, with their own money at risk and get criticized for breaking even. This isn't even close to how Wall Street operates.” The criticism isn’t towards TNC they have done a good job at managing their assets. Also, they have a very keen handle on how to manage those assets. TNC’s treasurer and finance chair is a managing director at Goldman Sachs. These are very sophisticated and smart business people working with an organization with deep political ties. I am afraid we do not have the same type of depth representing the taxpayers on the state side. We need to be very careful about how we go about these deals or we could get burned.