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HomeMy WebLinkAbout2009-1019 Study Session PACKET CITY OF ASHLAND " ,--",.,~:"y_,~,-<,:Y_,; :'1 ,., " _' ,.O_,'Y',; .--;:"', ",',' ,-,. ,;,~>~'-,>'r\'t;", __",:,"'--", ,"':, _,~,'_:,,;"'c>: -; "1m porta ,nt: ;AriX: ~itizen: may~ prall y address :thc'(3QuriciI-on non-ag~noaitems'd,uri~g)h~'~~liblic_ Porum. ,:Any'.citiie~]'"~ayisub~it _: , wriqen; c'orrini,~ht~,J?-t6~;_Cou~cO :Orl any; itcm,o~,_)~~:Age~,cJ~ tl!lje~~,i t 'i$ 't~e"~u.bj~c~,?,f<1,~?~li{~c~ri~,gJ~i}dih~ 'r~coid isc1oS9~;," , - < : :?xcept fOf:P-UWlcJrearJ_n<g~; there 'Is.no abso]utc,right:t?::,)rai)y:~ddress;thc COU~d)loh~.iJl~ag~nd~~J,iciil: :'Tih1~:peITllitting, th~':': . \ 'i' :; 'Pres;.dIng_cifns~t: -~~Y:'ano~:'?,~aj,;t~sti'mo~y;~()\yev'~h:p~pli~:njeet{~gs la~;giia;antee~:?~]y_py_t2fjs ;~tt~nd~~,~~;.' ~;ot; p~blic, ;;:~,:!~" :;: ,l.;;,' :" i: : p.~lTticiP.~ti?~,'}~'yo~';~is~:t;? ,sp~~~_;: please fill__9.ut:th:~,,~peak~~}~,e,~uest'fol-ry1;lqcate4 I1~'!t;the}~tra,~~~,t.o'th~ Co'~~Fil,.\haJTl~_crs; _<;\ _, The chair wl,IIxecognlze)'ou~and'lnform you,as t.o th.e'?wot}n!:o,ftIrne. al]9tted:tO.You, _1f.ant~_,)rJ;1ctJD1_e'granted ~111:be d~peT1d~_nt'to, .- '. so~~ cX~~~\_~?,:!~:~:~_~t.~~~_.~fthe jtern.undcr d'i~Cri~s_~~r:~i~.e.~~_y~~e:; o~pc~p'I~.w~~ w~s~'~~?,;~ff~~~~.; ~?d. the:len~~.~ _~r!~~e.a'g~~~.~:;.."::~: CITY COUNCIL STUDY SESSION AGENDA Monday, October 19, 2009 at 5:30 p.m. Siskiyou Room, 51 Winburn Way 5:30 p.m. Study Session 1. Look Ahead Review 2. Discussion regarding will the Council review and discuss the possible grant of a Conservation Easement encompassing the Imperatrice property? [30 Minutes] 3. Discussion regarding what direction the Council has for further development and eventual adoption of an intergovernmental relations plan and policy? [45 minutes] In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting. please contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800-735- 2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to' ensure accessibility to the meeting (28 CFR 35.102-35.104 ADA Title I). COUNCIL MEETINGS ARE BROADCAST LIVE ON CHANNEl. <) vrsn THE CITY OF ASHLAND'S WEB SITlo AT WW\V.ASHLAND.OR.US ~ ~ coO,) ~ m c;. ~ W 1\,)...... 0 <0 ~~~~~~~~ ~~~I~~~~~~~~~~ ~g!g~m~.~ 5.gg ~~3~5~5g5g ~o;ocai~ ~~~ ~~~.~~~~~~~ -jI:::J $"00 .-+";:;:,,-' @ o'cr ~ @ ~.og g &l c)'@ c)' ~m.Q~~ffi~g _J::I :J On __::1_:1 ~5(D5'6-<s_a; ;Uroo c~~o~~ffir..:o;Oo r to VI co ~ (D <0 -. co ::I en c:;ti C ~ O:::l -. ::I (D~~_am m ~m~~-.I~:Jm~~~~~ ~(DOO<~ a ~a~'~ggl~g~8a(D~~ mi~m~ 5'~~~@~~~.~~~~~(D~~. .5 m ~ ~m(l> co.!2 ~(C -(J)Q.::l CD cf"-' ::;Eg.a.-Q: '"';-- . ""Oc~"O~mIP(Cb.@:::!!mm)> (1) ~~~~a ~~mgm~ ~~~a;~~g c ~~~~~ 3~~~.g~ a.~'O~~-~ X m::Jm~o mO~2:~::I )>~aQo 3 m :J~m-.:J ao m~_ -'~5'~~ ro ~ Ii) ltl f/I .~ :J' c: m (j)::I- .:a 10, m 1_ Q) :J ..... -~a;=)> ::I a.o~ O~::J~-' - 0 m-_o3 (I>_'~' <~~ ~ no~ m ~ c m::l - m fill 0 m~m ::I ~ ~ ~~ ~f ~!~ ~ ~~a i ~ ~ am (il.e ~ S ~. a ~ ~ @ o 8; ~a -. ~ en -. ~ ff e ~ ~ ~ ~ - ~ :gl ~. ~ ~ : ~ ! 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" '" ~ '" 0. ~ Q, 0- o " a. 5. <0 or o c U> " ~ " <0 " 2- r- r- " " <0 <0 ~ ~ ~ ~ ~ " <0 " 2- () o c " ~ s: c ~ o. u. !< () o c " s:;u 5 g: 0' Q) ir a !< () o c " r- r- r- " " " <0 <0 <0 ~ ~ ~ I " I " I ~ m w Q. w I I I I I I III 0 0 0 z " " " " m " ,~ <;; <;; 0 " m '" " '" 0 0 0 I~ 0 0 '" " " '" " 0 0 0 'i' 0 " " " ~ ~ " E! '" " o o <D . . . . . -10 :I: -. iii~ -0 en... ~~ '" c::r ~~ "TIo. -10 ~o zc: c" " en= C;s: tIl.. '-.. mQ; 0" -I'" -Ir 00 o~ :I:~ ~::r z.. GJ"' mo. . . . . . CITY OF ASHLAND Council Communication Study Session - Imperatrice Property Conservation Easement Meeting Date: October ]9, 2009 Primary Staff Contact: James Olson 552-24]2 Department: Public Works E-Mail: olsoni@ashland.oLus Secondary Dept.: Parks Departme . t Secondary Contact: Michael Faught 552-2411 Approval: Martha Bennet Estimated Time: 30 Minutes Question: Will the Council review and discuss the possible grant of a Conservation Easement encompassing the Imperatrice property? Staff Recommendation: Staff recommends that the Council provide further direction regarding the possible grant of a Conservation Easement overlying the Imperatrice property. Background: \ Executive Summarv At the June 15,2009 study session, staff presented a draft request for proposal (RFP) for the beneficial use of the Imperatrice property. One element of the discussion was the creation of a Conservation Easement encompassing all or a portion of the property. Since the existence of a Conservation Easement would likely restrict the future development of the property, the Council determined that the details and possible impact of the easement should be thoroughly researched prior to proceeding with the RFP for use of the property. Working with City staff, the Southern Oregon Land Conservancy (SOLe) has proposed a draft Conservation Easement which offers differing degrees of restrictions on portions of the property and encompasses the entire Imperatrice property. Under this proposal the upper four tax lots (lots 500, 600 and 700 on map 381E28 and lot ]00 on map 38]E27) would contain restrictions to protect the following values: . The scenic open space values, which would allow consistent agricultural uses and applicant of City effluent (if necessary) . The re]atively natural grassland and Oak Savannah habitats . Public recreational use such as hiking trails To protect these values, the easement would restrict the ]mperatrice property as follows: . The entire property (seven tax lots) would be subject to a prohibition on subdivision or partitioning. This would be the only restriction placed upon the lower three tax lots (lots] 00 and 200 on map 381E32 and lot 200 on map 381 E33) . The use of tax lots 600 and 700 on map 38] E28 and lot ]00 on map381E27, and the northerly sloping portion oflot 500 on map 381 E28 containing significant natural grasslands, would be limited to consistent agricultural use, development of hiking and other low impact recreational trails, spraying of treated effluent and other uses that do not impact the property's scenic and habitat values. Pagelof5 _.11 r..lI CITY OF ASHLAND . On the remainder of tax lot 500 on map 38]E28, being that area southerly ofa clearly marked and mutually agreed upon habitat area, the easement would allow for the development of necessary facilities and structures needed for the application of treated effluent from the wastewater treatment plant (to preserve this option, if needed to address temperature regulations.) Easement Definition As set forth in ORS Chapter 27] .7] 5, a Conservation Easement is a non-possessory interest of a holder in real property imposing certain limitations for the purpose of protecting natural, scenic or open space values ofreal property, ensuring its availability for agricultural, forest, recreational or open space use. In this description, holder means a state, county, city, metropolitan service district, a soil and water conservation district, or a charitable or nonprofit corporation or trust established for the purpose of retaining or protecting the natural, scenic or open space values of rea] property. Easement Consideration A Conservation Easement is a permanent legal document which runs with the land and is not terminated upon sale of the land. No two easements are identical and each must be individually crafted to accomplish the goals of all parties to the easement. Amendments to them are possible, but generally speaking, it is possible to add more restrictive language or additional protections but very difficult to amend an easement to provide fewer protections. PROS . The easement would effectively protect valuable natural, scenic, and open space values. . The easement may be specifically crafted to allow those uses which the City deems desirable, such as the land application of wastewater plant effluent, agricultural uses, or parks uses. . The Southern Oregon Land Conservancy will be the grantee of the easement and will have legal authority to enforce all aspects of the easement. The Conservancy is a neutral third party and has not interest apart from the easement itself . The Siskiyou Mountain Reserve Conservation Easement has been in place since 1992 and has effectively protected that property. . The easement could effectively protect the City's viewshed. . The easement can be tailored to allow less sensitive parts of the property to be developed. . The easement would resolve community concerns about whether the scenic, recreational, or natural values of the property will be protected. CONS . It is very difficult to terminate the easement. . The easement may reduce future value and salability of the property. Should the City wish to sell the property in the future, the easement, including all its restrictions and requirements remains in place. . Future uses of the property must be thought through, identified and listed as authorized uses on the easement · The City would be legally liable for uses of the property that are inconsistent with the terms and conditions of the easement. Page 20f5 IIF." \ r_~ CITY OF ASHLAND Effect of Easement on Propertv Value The Imperatrice property is currently zoned EFU (Exclusive Farm Use) and as such is subject to certain tax assessment reductions. The current taxes and the listed rea] market value (as established by the Jackson County Assessors Office is as follows: MAP NO. TAX LOT NO. RMV AREA TAX I 38 IE 27 100 $960,010.00 160 acres = $236.75 2 38 1 E 28 500 $970,990.00 125 acres $156.03 3 38 IE 28 600 $274,140.00 35 acres = $60.07 4 38 1 E 28 700 $626,600.00 80 acres = $]37.33 5 38 IE 32 100 $156,290.00 3.16 acres - $2.85 - 6 38 IE 32 200 $989,710.00 65.88 acres = $51,28 7 38 IE 33 200 $3,633,740.00 359.98 acres = $264.72 TOTAL $7,611,480.00 829.08 acres = $909.03 The creation of a Conservation Easement will affect the value of the property, but to what is extent, is not known. ORS Chapter 271.729 outlines the conditions under which the County Assessor will make a determination of the property value. The County Assessor will prepare a report on the effect of the easement conveyance upon the assessed value of the property when requested to do so by the property owner, and in the following manner: 1) The request for the report must be in writing and must include the following: . An appraisal of the property prepared within three (3) months preceding the date of the request . The appraisal must state the appraiser's opinion of the property both before and after the easement is conveyed . A copy of the Conservation Easement must be provided to the assessor 2) Upon receipt of the completed application the assessor will prepare a written report of the value of the property. Creation of Easement Should the Council wish to proceed with the creation of the Conservation Easement, ORS again specifies the course of action to be taken. It is required that one or more public hearings be held and that a notice of the hearing be published at least twice in a local newspaper. The publication must be not less than 12 days for the first publication, and not less than 5 days prior to the hearing. The City must also provide a 30-day notice of the hearing to Jackson County as the governmental body having jurisdiction in the area of the easement acquisition. Draft Easement SOLC has provided a possible draft Conservation Easement for the Imperatrice property, which is attached as Exhibit A. Exhibit B is a quick guide to the form and content of the easement. The guide Pagc3 of 5 ~~, CITY OF ASHLAND lists and explains each section of the easement document and explains the purpose of that section and the intent of the wording. The easement document in turn has 3 or 4 exhibits which further define the property, the conservation plan and existing conditions. Exhibits A and C, the property description and the Baseline Documentation Report are not included with the draft. The baseline report is a complete and detailed physical description of the property and will include a summary of notable features including the existence ofrare or endangered plants and animals. The Baseline Report is prepared after the easement is approved but before it is signed and recorded. The proposed Conservation Easement would encumber the entire Imperatrice property comprising seven existing tax lots; however, the document proposes three differing degrees of protection and restrictions. The southerly or lower three lots (381 E 32 tax lots 100 and 200 and 381E 33 tax lot 200) would contain only a single restriction which would prevent future subdividing or partitioning of the property. This condition would also apply to all lots within the Imperatrice property. The upper four lots including tax lots 500, 600 and 700 on map 38 IE 28 and lot 100 on map 38 IE 27 all would have stronger restrictions placed on them. The use on these lots would be limited to consistent agricultural use, development of hiking and other low impact recreational trails, land application of treated effluent and other uses that do not impact the property's scenic quality and habitat. It is important that the option to land apply treated wastewater effluent be retained on all lots since the property was originally purchased with funds earmarked for that purpose. The draft easement appears to adequately protect that use. Lot 500 which is one of the upper or north lots is to be further divided along the lines, which would be mutually agreed upon, of significant natural grasslands. The lower of the southerly portion of this lot which contains more of the flat plateau would have a further approved use for the construction of physical structures which might be necessary for the distribution of the treated effluent. The structure that might be included would include storage reservoirs and a pump station. Next Steps The decision to proceed with the creation of a Conservation Easement must be made at a regular session where further details could be discussed and a public hearing date set. It is recommended that the public hearing date be set at least 45 days following the Council meeting to provide adequate time for notification. Once the issuance of the Conservation Easement is received, we can resume work on the development of a RFP for the beneficial use of the property. Related City Policies: ORS Chapter 271.725 grants the City and SOLC the authority to create Conservation Easements to protect natural, scenic or open space values of real property. Page 4 of5 r~' CITY OF ASHLAND Council Options: The Councils comments and concerns with regard to the possible acquisition of a Conservation Easement over the Imperatrice property are encouraged and appreciated. Potential Motions: No motions are presented at this study session. Attachments: . Exhibit A, Draft Conservation Easement . Exhibit B, A Quick Readers Guide to Conservation Easements . Exhibit C, 26CFR Chapter I (IRS Regulations) . Maps Page 5 of5 r.l' EXHIBIT A Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. After Recording, return to: Southern Oregon Land Conservancy. Inc. P.O. Box 954 Ashland, Oregon 97520 DEED OF CONSERVATION EASEMENT TEMPLATE ;",'" :.~ .......,.-,. This Deed of Conservation Easement is made this_ day of .. .;'.:., ,200_, by The City of Ashland, Oregon, Grantor, in favor of Southern Oregoii:Eind .G.(lllservancy. Inc.. a nonprofit Oregon corporation, having an address at PO Box 954, Ashlarid,Oregon 97520, Grantee. '.:.: RECITALS;;" 1. The Grantor owns certain real property in Jach()nFoupt)'iOregon, consisting approximately 824.53 acrcs commonly known asta"Jots 100 and 200 on map 38IE32. tax lot 200 on map 381J;::33,t~x lots 500, 600,~nd 700 on map 381E28. and tax lot 100 on map 381 E27 and morefaTrryllily described i!,.the attached Exhibit A and referred to herein as thc Impenitnce p;';;p~rty; and '<., 2. The portion of the Imperatrice PropertyJocatect)n the northeili'four tax lots (tax lots 500,600 and 700 0?rn~Jl}~jE28 and taxI9t.!()Oanmaii}8IE27) contains approximately 4qO~cres afop,?n grasslan<!,1!)asture used for livestock production, and an intact Oreg"JI,white Oak saxanna/woodl.and with a native bunchgrass understory, all of which poss,?ss natural, s,,';nic, habitat:fRrest and open spacc valucs (collectively, "Conservati9P'y'~.lues:').()f greai>ll1Portance to Grantor, the people of Ashla~d,the people of}~7kson County,an<!tliepeople of the State of Oregon. This porti"n bf the Ifllperatrice Property is formally dcscribed in thc attached Exhibit B and is refer;ectla.hereinaithe Protected Property; and ,_:.:C_"",,' ""'::', "",:.'. 3: "The Grantor wishes to protcct)n perpetuity the natural scenic, educationlli, habitat ::':'~J:tq consistent pubiic)"ecreatioTI(il..values of the Protected Property; and 4. 'Ille'protected Property)~ highly'visible from the City of Ashland, creating an extensive component of,thc city's sccnic view shed towards the Grizzly Peak foothills, and from multiple public"highways and thercfore its conservation will preserve valuable 'o~cn. spacc.fo{ihe scenic enjoyment of the general public and provide a significant public benefit as described in26 USC 170(h)(4)(A)(iii) (I) and 26 CFR Section I.170A'14(d)(4)(i)(B); and 5. The Protected Property's open grassland and oak savanna/woodland habitats contain multiple native species, including Ranunculus Austro-oreganus which is listed as a scnsitive species by the Bureau of Land Management and as a State candidate for listing as threatened or endangered, as well as regionally rare habitat types, and Very Sensitive Big Game Winter Range as identified by the Oregon Department of Fish and Wildlife and therefore its conservation will protect significant relatively natural habitats 1 . Initials: Grantor_. Grantce_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. as described in 26 USC 170(h)(4)(A)(ii) and 26 CFR Section 1.170A 14(d) (3); and 6. The Protected Property is zoned for Exclusive Farm Use (EFU) and owned by' the City of Ashland which wishes to preserve its scenic open qualities in perpetuity and its protection will help fulfill Statewide Planning Goal 5 for the protection of natural resources and conservation of scenic areas and Goal 3 for the pres,rvation of agricultural lands as those Guals are reflected within the Jackson County CRPprehensive Plan and is therefore pursuant to a clearly delineated Federa!., ,~\ate or local governmental conservation policy and will yield a signific~rit pti.blie benefit as described in 26 USC 170(h)(4)(A)(iii)(Il) and 26 CPR Section 1.179A~14(d)(~)(i)(A); and 7. Grantor will establish and maintain outdoor rccreatioral ~nd cduc'ati?fl~l facilities compatible with the scenic nature of the Protectec1,~roperty for the usegfthe general public and therefore will prescrvc a land area fpphe outdoor recreation arid education of the general public as described in 26 uSq)70(h)(4)(A)(i) and 26 CFR Section 1. 170A-14(d)(i); and -":>:~'" ,,::, :,. -'coo"'" . - -'. . .:," ~". 8. The specific Conservation Values of the Proted~d, ProF~y:ai:c furthcr documented in an inventory of relevant features of the Protected Prpperty (the Baseline Documentation Report) which iSc1~ted. ':,2009, attached here as Exhibit C, and on file at the offices of the,. Grantee. The Baseline Documentation Rcport (BDR) is incorporated intotl1is e~'se;;;eptby this re'i,r~flce and is agreed by the parties to accurately rcprcscnt theProtected,!:,r"pel'lY at ihe)ime of this grant through its maps, ph()tpgr-~phs and otherdoc\ln1entatioDiillpwhich is intcnded to scrvc as an objectiy!"thoughl1pnexclusive,igformation baseline for monitoring compliance witlH.heterms of \111s grant; a'iiA, 9. The State of Qr~gon has deterritined that iti.sin the public interest to protect existing open spaces forih, use and,rjoYl11ent of Oregon's scenic landscapes (ORS 390.01O(3)(a)); and: . .:,.,.' 10. Th"c:;raritee,is a publiclY. supported, tax'exempt, nonprofit organization qualified und2~ Section' 59J (c )(3)ahd 170(h) of the Internal Revenue Code whose primary purpose is the p~es~~~atiori>'pwtection, and enhancement of lands in its natural, '~;;scenic, historical, a~icultural"::forcsted, amI/or open space condition; and II. OR.S271.715 to 271 :795 permit' the creation of conservation easements for the purpos~_of retaining o"tj'.fotecting natural, scenic, and open space values of real property,:,~ssuring its '!",,ulability for agriculture, forest, recreational, or open space use, protectJ~~ natltf~:.ie.sources, maintaining or enhancing air or water quality, or preserving the .hjst<Jiical, architectural, archaeological, or cultural aspects of real property; and ",'S'" 12. The Grantor interids to convey to Grantee the right to preserve and protect the Conservation Values of the Protected Property in perpetuity; and 13. Grantee agrees by accepting this grant to honor the intentions of Grantor described in this Easement and to preserve and protect in perpetuity the Conservation Values of the Protected Property for the benefit of this and future generations. 2. Initials: Grantor_. Grantcc_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement wiII depend on the specific proposed uses and restrictions outlined during the project development and ncgotiations. AGREEMENT In consideration of the above and the mutual covenants, terms, conditions and restrictions contained in this document and pursuant to the laws of the State of Oregon and in particular ORS 271.715 through 271.785, Grantor voluntarily grants and conv~ys}o Grantee a Conservation Easement in perpctuity over the Imperatrice Prop~.~.ty 'of the nature and character and to the extent set forth in this document (Easem~,~t)..,'., .-.",',,":- ",', I) PURPOSE. It is the purpose of this Easement to protect an(rpreserveth~Protected Property's significant habitat areas, scenic and open spa.ce characteristicS iri;~ manner which protects the public viewshed while allowingf"r,ci:msistent agriculturalal(d public outdoor recreation and educational uses of thc RroteCted Property, such as trails al1d related facilities, and to prevent any use of the ProtectedR~"perty whiSh is inconsistent with this purpose and to restrict subdivision of the entire Impe~f'trice..f'~operty in order to supplement the preservation ofthe Protected Property's conservaticil1Yalu,,, . 2) RESERVED RIGHTS. Grantor reserv~s. all rights and obligations accruing from ownership of the Imperatrice Property;.inclci<!!l1gthe rightio:~llgage in or permit or invite others to engage in all uses of the ImperatriceProperty that aie:riot expressly prohibited by this Easement and are not inconsistentv.:ith the pUrp"ses of this Easement. Without limiting the generality of,the.~oregoing, thes~ re~erxed uscSsPfcifiCally include the following:,'. ..........;,;!; .:.' A) All legal uses oYthat portion of the Imperaidce Property which is not included within the Protected Pr"perty except that no subdi~Jsion or pUltitioning will be allowed as described belowinsection,4(A); ..' . B) Additionally the foll"wjngusesare spefifif~llyreserved to Grantor within the Prote.cteq.P!llperty:;' ., . n:';.,> The dev~l"pmeni()ftraiIs with permeable surfaces and related public facilities ":for non-motori~~<!, 10wiiIlpact recreation such as hiking according to the terms of , a plan approvedbyGrarite~.llS described below in Section 5. Grantor shall submit ,a,trail and deve]o'PU1,~nt plan to Grantee prior to anyon-site construction or prep.aration showing the location of all trails and facilities. Grantee shall approve stich plan unless Grantee determines that the location or design of the trails or faciliiies~\Vill si&ll]ficantly impact the Protected Property's habitat values, especiallY:iIJlp~cts 'to any rare plants or plant communities, or its natural scenic qualities; ..... ii) Repair, maintenance or replacement ofthe existing roadways, water systems, and infrastructure which is described in more detail in the BDR; iii) The management of the Protected Property, including any agricultural or livestock use, under the terms and conditions of an approved Conservation Management Plan (CMP) which is described in more detail in the. attached Exhibit D (The eMP will derail the expected types of management which is expressly 3. Initials: GranIOf_. Gmmee_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. permitted such as grazing, ,praying of treated effluent, and other specifically known or expected activities. It would also ine/ude standards for establishing other activities over time and provisions for their review and approval) ; iv) The establishment of buildings or other facilities, including water storage, reservoirs and other necessary infrastructure used in conncctio~ with the permiltcd wastewater treatment and effluent spraying described herein ()ll:that portion of tax lot 500 on map 38lE28, as described in Exhibit B as Tract(G)/~utside the "grassland habitat area" described and mapped in the ~1?~;:,AlI such buildings and facilities shall be designed to limit their visual illJpact thrp.llgh the use of non- reflective, earth tone and similar colors; and . ". v) The posting of signs to limit access to the):,r<lperty by the pubUc"i.!'cluding any required signs to restrict hunting or otherielated use of the Property:, except that Grantor shall make pOltions of the PJ:9peity available for public recreational and educational use with no more than re~~onable clo~llre for public safetyaod seasonally or otherwise to protect habitat are'as from sigmficant impact. "',". ,;,_.n .,.,..,......'.,.,., 3) RIGHTS OF GRANTEE. In ordertopr()tectthe Protect~4Property's Conservation Values and to accomplish the pllrposeofthi~.J.':i1sement, tbef()llowing rights are conveyed to Grantee by this Easement:'. . ". . . '. . A) To preserve, protect, and enhance the'J;1atural, sdillie, rangehind,forest, open space, habitats, and other ecol,?gi~i1l features of the Protectect Pr9P~rtY; B) To establish and Il!Aintain reil~()llable siglls, po larger than two square feet in area each, along thel'rotected Prope.rty bordeisin locations to be mutually agreed upon by the Parties, acknowledging th~"r;resence ohhis Easement and the private nature of the Protected Property;<.' .... '<. C) To enter upon the pr()t~ct~4Pr<lperty i1t.r~asomlble times in order to monitor Gr3Ilt.o(.~.c()lfiphance ",ith and otherwise eoforce the terms of this Easement. In all (;,as,es;'except t~()~~ where.Prantee determines, ill its sole discretion, that immediate ,:'~mry is required io."p.revent,:t~rminate, or mitigate a violation of this Easement, such . :':,:~~try shall be with"rc~sonabl~"P9()r notice to Grantor as described in Section 1 0 bel,o\V, and Grantee ~h~g not un;'~asonably interfere with Grantor' use and quiet enjoYment of the Propef!Y; and To enjoj~~ny activitY.Oll' or use of, the Imperatrice Property that is inconsistent with the purpose of this R~ement and to require the restoration of such areas or features of the Impcratrice.P.~_opeity that may be damaged by any inconsistent activity or use, pursuant to the remedies set forth below ill Section 6. D) In the event of unforeseen, or unconsidered activities, Grantee may, in its sole discretion, approve other uses of the Imperatrice Property, even if they are prohibited' by the terms of section 4 below, but only if Grantor can show by clear and convincing evidence that such activity will enhance the protection of the property's conservation values; that such proposed use will not create any private inurement or impermissible private benefit as such terms are defined by the Internal Revenue Code; and that the 4. Initials: Grantor_. Grantee_ Draft October 9, 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiatious. proposed use will not affect the qualification of this Easement or the status of Grantee under any applicable laws, including ORS 271.715 through 271.785 or Section 170(h) of the Internal Revenue Code and any successor provisions. Grantee is under no obligation to consider or approve any such proposal and may condition any such review in any manner it deems appropriate. Grantee's approval under this section must be in writing and must confirm that the conditions describ~,~bove have been met. .;::!.< 4) PROHIBITED USES. Any activity which is inconsistent. With the' purpose of this Easement is prohibited on the Imperattice Property unle~s shch use is"specifically reserved to Grantor above. Without limiting the gener~lity of the forcgoing,.the following activities are expressly prohibited:.>: '.. -f'..:- - A) The legal or de facto subdivision or partitiolliJ:tgof any portion of the Impeiatrice Property; ,:--.... :,.", B) [n addition to the prohibition on subdivision foiilld,aboy~jnsection 4(A), the following uses are prohibited within the Protected I'f()perty unless expressly permitted under the provisions ofS~ction 2 above, an approved CMP, or this Section 4: i) Industrial use::,"::'", "';'" ii) Commercial use incompatible'Y.ith thep.u.rp.o~e, of the Easement; iii) The use of off~r()adychiclcs except ollc~rreritlyestablished roadways as indicated in t~yJ!iantee'~.Jiles and Bp~; :61-" in emerge'ncies; iv) The dey,?[()pment of aiiyresidences.,:~tructures, signs, or improvements, except as specifically allo;':ed under the'terms of this Easement or as specifically , " . . .' ':'. " ~ ~ -. 'L permitted by (irantee topnlmote the purposes of this Easement; v) The exploraiiollf()r()t~{t{.~btjonl)fm;iibrals, hydrocarbons, oil or materials . o#6ibAI()'Y the surface of the Protected Propelty; vj)'" Anyilltd.~tjon oflh,esurlaee of the land or streams, including, withoUl '", limitation, the:'~,~~avation,,9~ removal of soil, sand, gravel, rock, peat, sod, or building of roads and othcHight-of-ways within the Protected Property except de :>minimus disturbai1~~:related t6 allowed and regular use, or as; vii) .":;.'!be proce.ssing~':storage. dumping, or other disposal of hazardous, toxic or other'.'Yastes, andn,fuse on the Property except for the permitted spraying of treated '~'ffluent.."" .,'i.C,.... """,", 5) NOTICE AND APPROVAL A) Grantor agrees to notify Grantee prior to undertaking any activity which may have an adverse impact on the Conservation Values of the Property, and specifically prior to undellaking any activities such as those described in Exhibit D. The purpose of such notice is to provide Grantee with an adequate oppOltunity to review and monitor the activities to ensure that they are consistent with the purpose of this Easement. All such notices, except as specified elsewhere in this Easement, shall be provided not 5. Initials: Grantof_> Grantee_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. less than thirty (30) days prior to commencement. B) In all cases where Grantee's approval is required, except as specified in elsewhere in this Easement, Grantcc shall grant or withhold its approval within thirty (30) days of receipt of Grantor's written request for such approval. In the case of all plans submittcd pursuant to Exhibit D, the timelines described in Exhibit D shall apply. Unless otherwise specified, any approval required of Grantee un~er,the terms of this Easement shall be granted or withheld solely at the discretio~3f.Grantee. '< ~ 6) GRANTEE'S REMEDIES. In order to provide for the pr<)!~~tionof.!he Property's Conservation Values, Grantor hereby waives any defen~". ofhlches, estoppel, abandonment or prescription and expressly grants theJollowing rights of enforcement which shall be cumulative and in addition to all r"lJ1~clie~ now or hereafter existing at law or in equity. .' .:.., ." A) Notice and Corrective Action. If Granteedetermines that (]pntor is iu violatio.n of this Easement or a violation is threatened, Grantee..shall give written notice to Grantor of such violation and demand con-ective action sufficieildo cure the violation, and where the violation involves inju~y}()..the Imperatrice Pr()perty resulting from any use or activity prohibited or inconsistent with ,the purposes of this Easement, to restore the portion of the Property so injured. .....,..:. ':" B) Injunctive Relief. If Grantor fails to cure the violati011 within tl1irty (30) days after receipt of notice of th"yi(jlation li'om Granteeqf, under ci[pumstanccs whcre the violation cannot re~~qriablyl?"cured witllin,the thirty (30) day period, fails to begin curing said violation within the. thirty (30) day period or fails to continue diligently to cure said viola!i,,!, until finally'sured, Grariteemay bring an action at law or equity in a court of competent jurisdi".tioll,.t9.."nforce th",!erms of this Easement, to enjoin the violation ex parte asnecessaryby"tempqrary ai-permanent injunction, and to require the re.st9mtio.~of theImp';r~trice Propert)iio' jhe condition in which it existed prior to ~ny.such injury, . . C) 'Damages. Grantee~,hall beeI1titled to recover damages for violation of the terms of . "i.tJ)J,s Easement or inj\l!}',to any"'~,?nservation Values protected by this Easement inCluding damages for'tl1e loss of scenic, aesthetic, or cnvironmental values, as well as tl1e,,,~lue of any min,,~als, crops, timber or other material removed from the ProteCte<,lProperty in .vio.lation of this Easement. Without limiting Grantor's liability therefor, Grllntee in its.sole discretion may apply any damages recovered to the cost of undertakiri!i;llPY5ortective action on the Property. D) Emergency Erifo'ri,ement. If Grantee in its sole discretion determines that circumstances require immediate action to prevent or mitigate significant damage to the Conservation Values of the Property, Grantee may pursue its remedies under this Section 6 without prior notice to Grantor and without waiting for the period provided for cure to expire, provided that notice shall be given contemporaneously. E) Scope of Relief. Grantee's remedies shall be cumulative and in addition to all remedies now or hereafter existing at law, or in equity. Additionally, Grantee's rights 6. Initials: Grantor~, Grnntee_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. under this Section apply equally in the event of either actual or threatened violations of the terms of this Easement and Grantor agrees that Grantee's remedies at law for any violation of this Easement are inadequate and that Grantee shall be entitled to the inj uneti ve relief described in this Section, both prohibitive and mandatory, in addition to such other relief to which Grantee may be entitled including specific performance of the terms of this Easement without the necessity of proving ei,ther actual damages or the inadequacy of otherwise available legal remedies, ,,,'>:-;'" F) Enforcement Costs. If any action or suit is instituted to enfQr~~ the terms of this agreement, the prevailing party shall be entitled to recoverfromt~e,other party, in addition to any other rights and remedies it may have, all teasonable\,~penses and attorney fees at trial or on appeal, and all costs (i~ehiding attorney fees),~ssociated with any restoration required as a result of Grantor's violation of the tenl1sof this agreement. ".~. .;,", G) Grantee's Discretion. Grantor intends that"the,enforcement of the terms and provisions of this Conservation Easement sh~i1 b,e, ~t thect1stretion of the Grantee and any forbearance by Grantee to exercise its rights her~mi'der in the event of any breach hereof by Grantor shall not be d"TIjl",d"or construed to'J?~a waiver of Grantee's rights under the Conservation Easement i~the'iv9H of any sub~egucnt breach, H) Acts Beyond Grantor's Control.NQthirig c.i:J~tained in thi~Easement shall be construed to entitle Grantee to bring any actioiiagaj!l~tGrantodor any injury to or change in the Protected Property resulting from"causesbeyond Grantor's control, including, withoutli~'ii~'tiiiti~'fire, flood,stQriri: 'drought: ini~station, and earth movement, and.from any prud~nt action tak.~n by Grantor under emergency conditions to pi~v;'mt or mitigaTe significariiinjury to the Protected Property resulting from such causes, Or for the~~ts?r ?missioils',of third parties other than Grantor's agents, employees,c()ntr,actors, orsuJx:onu'actors, except to the extent that the acts or omjs~i.i:Jns,.i:Jflhird parties;iITe caused by the fault of Grantor or its agents, employees, F.i:J~tracto'rs; ors?~eontra~t()rs or are otherwise performed with Grantor's knowledge :\1'?d permission,'"" '" " . ... .. . - - 7) COSTS, LIABILITIES AND ENVIRONMENTAL WARRANTEE. A) Grantor retains all resj)(),nsibilities and shall bear all costs and liabilities of any kind relating'to,the ownership, operation, upkeep and maintenance of the lmperatrice Propertyalld does hei~by indemnify and hold Grantee harmless therefrom. Grantor also remains S.i:Jlely.responsible for obtaining any applicable governmental permits or approvals for any"aCtivities or use permitted by this easement, FUllhermore, nothing in this Easement shall be construed as giving rise to any right or ability in Grantee to exercise physical or management control over the day-to-day operations of the lmperatriee Property, or any of Grantor's activities on the lmperatrice Property, or otherwise to become an operator with respect to the lmperatriee Property within the meaning of the Comprehensive Environmental Response, Compensation, and 7. Initials: Grantol'_, Grantee_ Draft. October 9. 2009. This draft is designed for information purposes. The rmal provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. Liability Act of 1980. as amended (CERCLA) or any corresponding state and local statute or ordinance. B) Grantee shall be sole]y responsible and shall bear all costs and liabilities of any kind relating to the Monitoring of the Imperatrice Property by Grantee and shall hold Grantor harmless therefrom. C) Grantor warrants that he has no actual knowledge of a release onhreatened release of hazardous substances or wastes on the Imperatrice Property,~,s'}Jch substances and wastes are defined by applicab]e law, and hereby promisesiililldemnify Grantee against, and hold Grantee harmless from, any and alllo~s,<c6st;'Cjai;n (without regard to its merit), liability or expense (including reasonab],e attorney 'de",) arising from ur with respect to any release of hazardous waste oryiq]ation of enviroIiin,elllallaws. Additionally, if at any time after the effective <lat~,of this Easement there ""curs a release in, on, or about the Imperatrice Prop!'ity'()f any substance now or her!'~ter defined, listed, or otherwise classified pursuaryuo any fed~r~l, state, ,or ]ocal law, regulation, or requirement as hazardous, toxic,PQ)lutinll"o{otherwise contaminating to the air, water, or soil, or in any way harmful or trr!'~ten'ing to human health or the environment, Grantor agrees to t~e, 'VI,steps that may.j:)~ required under federal, state. or local law necessary to assuje it~,c9.ptainment and,{t;mediation, including any cleanup. '\:, "'\"',i<':;'" 8) TAXES. Grantor agrees to pay before deii~quenc/ailt~J(~sand as~essment fees and charges of whatever destriptfo;';]evied on o~ag,;jrisi the Imp~i~trice Property by any competent authority (coi]ectivel)ita,xes) incilldirt,g any taxes imposed upon, or incurred as a result of, this EO,semenl. If at aR-Y,time taxes 'rife, found to be delinquent, Grantee is authorized, but in l1oj,vent obligated, to, make or~gvance any payment of taxes, upon three (3) days prior wnttenr?ficetoGiant.or,)[] ,accordance with any bill, statement or estimateprocuregfrom the appropriate authority; without inquiry into the validity of the taxeso'f:ilccui:;ity'6ftre biil,'stqtement or estimate. Grantee shall be entitled to i~,,'diate reimbursen)ellt tro~'9:~antor for any taxes so paid and the obligation created bY'S,~1.9h a payment shall,~~~r intere~~"until paid hy Grantor at the lesser of 5 percentage poirits;o,yer the prime rate'qK intel'estfrom time to time charged by the US Bank National Associationor the maxim~Ill rate allowed by law. .-d. ... . - ... '-;.:- . :';.:;:.~ 9) HOLD HARMLESS. ,,{;, A) Grantor shall h.9lfl"h;inn]ess, indemnify and defend the Grantee and its members, directors, officetS;'einployees, agents and contractors and their heirs, persona] representatives, successors and assigns (collectively indemnified parties) from and ,against all liabilities, penalties, costs, losses, damages, expenses, causes of action, claims, demands or judgments including without limitation reasonable attorney fees arising from or in any way connected with: (i) Injury or death to any person or physical damage to any property resulting from any act, omission, condition or other matter related to 8. Initials: Grantor_, Gran!ee_ Draft. October 9,2009. This draft is designed for infonnation purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. occurring on or about the Imperatrice Property regardless of cost unless solely due to the negligence or willful misconduct of any of the indemnified parties; (ii) The violation or allegcd violation of, or failure to comply with, any state, federal, or local law, regulation or requirement by any person other than one of the indemnified parties which ir)llI1Y way affects, involves or relates to the Imperatrice Property,;,,-,' (iii)The presences or release in, on, from, or a[)04fll1e Imperalrice Property, at any time, of any substance nO\,/'6; hiier,defined, listed or otherwise classified as hazardous, to~ic;':~6iluting,'8rotherwise contaminating to the air, water or soil; 'or in any way htihnful or threatening to human health or}.~{environment, unless such. presence or release is due solely tD th" ~stSuf any of the indemnified panies; (iv)The obligations specified in Sections (7) aJ]dJ~) above. " B) Grantee shall hold harmless, indemnify and def"J]Q theGr~ntor and his heirs, personal representatives. successors and assigns (collectiveIY..im!"mnified parties) from and against all liabilities, penalties, cq~.~S._~9sses, damage's}A~penses, causes of action, claims, demands or judgments inclti.:lirig~ithout limitaiiopreasonable attorney fees arising from or in any way cDnnccte#,with "iiiju,~yor death'f<) any person Dr physical damage tD any property resulting frDinany actor'OlllissiDn of the Grantee or its employee, agents or _C9~~~~c:~ors during"()! OCC!-:lp:-lrig In '~9~:t:l.~ction with the MDnitoring of theIJ];lperaificcp,ropcrty by grantcc. ' " ".-,' ., 10) ACCESS. This EaSement does no(affcet the pi,yate nature of the Imperatrice Property and it does not conveY',any righ~.?r~sce~s by th{general public except for the access described abDve fDr publis, r"c,reatioi131 P"WD:;"s, Huwever, in Drder tD monitDr cDmplial1w','{ithJl1e terms:N'this Easement it does give to Grantee or its agent or design"eHieiigi1t;jp,~dditi(;~:\O those rights of access given to the general public, to etllRCllpon the Imperav'ice ProPeny to inspect the Imperatrice Property at reasonablc times,~nd upon at least 15 ,days notice to the current owner of the Imperatrice Property (unlesst~e owner agreeslo~horter'notice), Failure to conduct such inspections shall not constitute'a waiver of the fight to do so, nor a waiver of the right to enforce any violation of the terin's,' of this Easelllent which would have been apparent on inspection, Also, in the eventthai'G.ra,ntee r"""onably believes that the tenns of this Easement have been or are about to be violate.~;:'Grantee or its designee or agent may conduct further inspections of the Imperatrice PriJperty at any time upon reasonable notice under the circumstances to Grantor. This notice shall be determined by Grantee in its soIe discrction and may include no prior notice if Grantee detennines immediate access is necessary for the protection of the Conservation Values. Any inspection authorized by this Section 10 shall be conductcd solely for the purpose of determining whether the condition of the Imperatrice Property complies with the terms of this Easement. 9. Initials: Grantor_> Grantcc_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. II) CHANGE OF CONDITIONS. A) If in the opinion of Grantee circumstances arise in the future that render thc purpose of the Easement impossible to accomplish, the Easement may only be extinguished or terminated by Grantee, whether in whole or in part, by judicial proceedings in a COutt of competent jUlisdiction brought by Grantee. The amount of proceeds, after satisfaction of prior claims, to which Grantee shall be entitled uP()u:any sale, exchange, or involuntary conversion of all or a portion of theJwperatrice Property subsequent to such extinguishment or termination shall bethe:proportionate amount of the' proceeds determined in accordance with Section,g'.~dow>qrantee shall use any proceeds received under the circumstances desclibedin this SeCii.on II in a manner consistent with its conservation purposes,.\Vhich are exemplified by this Easement.,.:". . ........ B) In making this grant, Grantor has considered the' possibility that uses prohibit,d by the terms of this Easement may become mOre:"Fonomically.:v~luable than uses,.. permitted by the terms of this Easement; that neigl1boring)roperties may in the future be put entirely to such prohibited uses; that GraniorU1~y'.be unable, or find it unprofitable, to conduct or implewenLany or all of th'(~ses pennitted under the terms of the Easement; and it is the inten(of bilt)1,grantor and Grantee that any such changes shall not be deemed to be circumsianc,s jnstifyingthe termination or extinguishment of the Easement pursuant to paragr~phll (A).>' 12) VALUATION. ThisEasement constitutes a real property interest immediately vested in Grantee, which th~Pllrties stipulat~to have a'faj'rmarket value at least equal to the proportionate value ih~t this E'!:~~iiieI?t, as determii),ed at the date of conveyance, bears to the fair market value oftl1e,!llj'estric'tedIn1!,e~aP;ice Propel1y as a whole at that time. This pr()~riionate value' shall femain constant bilt shall exclude any increase in value attrib'!tabl~ ioimpJ'()v\,men'ts~onstructed or placed on the Imperatrice Property sl1i:>~eqiient to the Dat,of this E~s.~ment. The values used to determine the above ratio shallbe those used to cal(;ulate anY:;<lpduction for federal income tax purposes allowable by rea~on of this grant, pUrsuant to Section 170(h) of the Internal Revenue Code. The Parties sh~ll execute a letter:~onfirming such values prior to the date any deduction is taken by Griq1tor and a copypf such letter shall be kept on file at the offices of Grantee. In the event thatno tax.deduction is taken pursuant to Section 170(h) of the Internal Revenue Code thell.tlle.,;,alue of this Easement may be determined by a qualified, licensed AppraisefchMen by Grantee at the time such valuation is required under Section II or 13 of this Easement. 13) CONDEMNATION. If all or part of the Imperatrice Property is taken by an exercise of the power of eminent domain or acquired by purchase in lien of condemnation, whether by public, corporate or other authority, so as to terminate this Easement, in whole or in part, Grantor and Grantee shall act jointly to recover the full value of the interests in the 10. Initials: Grantor_. Grantee~ Draft. October 9. 2009. ) This draft is designed for information purposes. The fiual provisions of any easement will depend on the specific proposed uses aud restrictions outlined during the project development and negotiations. [mperatrice Property subject to the taking or purchase in lieu of taking and all direct and incidental damages resulting therefrom. All reasonable expenses paid by Grantor and Grantee in connection with such an action shall be paid out of the amount recovered. Grantee's share of the balance of the amount recovered shall be the proportion determined in Section 12, above, unlcss otherwise provided under state law. Grantee shall use any proceeds received under the circumstances described in this SectioIl.13in a manncr consistent with its conservation purposes, which are exemplifie~by;this Easement. ......-.,,-.-...,- 14) ASSIGNMENT. This Easement is transferable, but Granteeillay'~~sign its rights and obligations under this Easement only to an organizationtha(i'~ a qualified organization at the time of transfer under Section 170(h) of the Interna,l Revenue Code (O;'~IlY successor provision then applicable), is authorized to acquireaIld hold conservation e..sements under then applicable Oregon law or the laws Sf.m, United States, and has adeqllwe resources to enforce the restrictions of this Easenwnt. As a cSIldition of such transfer, Grantee shall require that the conservation purpose'.~h~t thi~.gr~rii is intended to further continue to be carried out. Grantee agrees to give wntt,nnotice to Grantor of an assignment at least 20 days prior to ll!.."d,ate of such assighW\ent. The failure of Grantee to give such notice shall not affect thi;"alidity,of such assign}Jl~nt nor shall it impair the validity of this Easement or limit its enforceabilitY)llany wa{If.t)1e Grantee (including q successor or transferee Grantee) ever ceas..,s to exist,'?r:npJonger,i.jualifies under [RC 9 170(h)(3) and ORS 271.7J5(3), a court witl1 jurjsdiciionshl1Il, ,on its own accord or upon petition by Grant"fol' Grant"r' successsrsorby any entity that would so qualify, transfer this easementlo' another 'qualified org~zation having similar purposes that agrees to assume .t,~{responsibility'\mposed bY'tIps Deed. :.:-;.... , . . . .' ....'.~ :;., . '. '". '-- , 15) SEVERABILITY. If any pro"isiiinofthis,c:"nserVation Easement or its application to any pef~on 'oi".circumstaric~ 'is found to be invalid, the remainder of the provisions of this Con~ef\laii6iiEasement and Ill'" application of this instrument to persons or circumstances other;than those to ";;hicl1 it is'foul!d to be invalid shall not be affected. ',.;:,<. '-,';':',,~ '''::..'': 16) LIBERAL CONSTRUCTION. Any rule of construction to the contrary notwithsian~ing, this Easement shall be liberally construed in favor of the Grantee to affect thepum," ose of this Easement. [I' any provision in this instmment is found to be ambiguous, th~n,an inter6i~t~tion consistent with the purpose of this Easement that would render the'WSy'i~Wii valid shall be favored over any interpretation that would render it invalid. . 17) SUBSEOUENT TRANSFERS AND ENCUMBRANCES. Grantor agrees that the terms, conditions, restrictions, and purposes of this grant will be inserted in any subsequent deed or legal instrument by which Grantor divests itself of any interest in the [mperatrice Property including, without limitation, a leasehold interest. Grantor further agrees to give written notice to Grantee of the transfer of any interest at least twenty (20) '11. Inilials: Grantor_, Grantcc_ 18)RECORDATION. This instrument shall be recorded by the 9#iit~e in the Official Records of Jackson County, Oregon, promptly following its,execuhofland prior to any transfer of any interest in the lmperatrice Property by the Grantor. ,....,. ..... ,..,:.,-- c;_;_;. 19) ESTOPPEL CERTIFICATE. In the event of any pending sale of the Imperatrice Property, then upon request by Grantor, Grante,e}pall within thirty (30) days execwe and deliver to Grantor any document including au est()l'pel certific~t~,which certifies , Grantor's compliauce with any obligations of Granior,contaj.r!ed in this Easement and otherwise evidences this Easement as may be requestixlbY,9rantor. 20) ENTIRE AGREEMENT. This insd.hirlel1t sets forth thee-ntire agreement between the Pmties with respect to the Easement a~(rsup;;~~~es ~Il priordiscussions, negotiations, or agreements relating to the Easement, all of which 'are'merged iriio'(his Easement. ','- -.:.,:._,-,'.'_.-,- - .," . . . . .. - - . . - .'- - - ... - . . . 21) NOTICES. Any notic~,demanq,/equest, 2()flsent:~pproval,();:other communication required or permitt9q,hereunder shfl.Il be in w'riting and either served personally or sent by first class mail, po,,\~ge prepaid, of.pertified maiJ~ return receipt requested, addressed to such address as eith~rl'""ty froIp}ilIl~W time shalldesignate by written notice to the other. In the event no such address is designated" 'or any notice sent to the designated addressisr~Wrfleq as undeli{e'red, eitherPartYIllay use the address recorded in public record,s/such as ihos~foundaHhe Oregon Secretary of State's Corporation Division, busiriess registry or the)aekson (::()unty Assessor's office for property tax purposes, and m~l,jing to such addres'~'~'hall cohstitute notice, Notices shall be deemed given when rece;~ed, or four days fr"iri the date'S!' mailing, whichever occurs first. ., . -, . . ,- . --. -, . -. . . ...-.. ." " 22) SUCCESSORS. The COVenants, terms, conditions, and restrictions of this Easement shall be binding ,l)POn afld)riure to the benefit of the Parties to this Easement and their respective pers()n~trp~.f,~sentatives. heirs, Sllccessors, and assigns. and shall continue as a servitude running iriperpetuity with the Imperatrice Property. Any reference in this Easement to either Grantor or Grantee shall include their respective personal representatives, heirs, successors, and assigns. 23) AMENDMENT. If circumstances arises under which an amendmeut to or modification of this Easement would be appropriate, Grantor and Grantee are free to jointly amend this Easement provided that no amendment shall be allowed that will affect the qualification 12. Initials: Grantor_. Grantee_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. of this Easement or the status of Grantee under any applicable laws, including ORS 271.715 through 271.785 or Section 170(h) of the Internal Revenue Code and any successor provisions. Furthermore, any amendment must be consistent with the purposes of this Easement and shall not lessen the protection afforded by this Easement. affect its perpetual duration, or result in any prohibited inurement or private be!lefit. Any such amendment shall be recorded in the official records of Jackson Coumy/Oregon. "" ",,' ~". ""; 24) CONTROLLING LAW. This Easement shall be governed al1dccl~strued in accordance with Oregon Law. ...... . ::. '" 25) EXmBITS AND RECITALS. document by this reference. , ':'::"';.'- ,..... 26) NO FORFElTUHE. Nothing in this easement 'sh~ll be construM to result in a fodeiture or reversion of Grantor's title to the property in any.r~peC!. .: ".' . ..'."c-' [Signat\ll~]>age Follows] ;;'. ,.' ~ ~.:' ".< ,.....',. "",.' ..:, ,:",:" 13. Initials: Grantol'_. Grantcc_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific p,'oposed uses and restrictions outlined during the project development and negotiations. TO HAVE AND TO HOLD unto Grantee, its successors and assigns, forever. EXECUTED on the day and year first written above. GRANTOR: day of by State of County of This instmment was acknowledged before me on th~ '" as of the City of Ashland.: :,' Notary Public My COJTI.JTl.ission Expires: "." ..-" . -- --- ... '<0'. --';',::->.;" ";":..:"!. ACCEPTED on this _ day ,01':,\ ,~Op~.''':, ,:' GRANTEE: SOlITHERN.()~EGO~,LAND C()l\!~,?RV ANCY, INC., an Oregon nonprofit corporation ." ..... . :"';.'. ....",... ....~ . B~ " Title: President (,.; ,':",', S tateo(Oregon County of" ',,', ~:<'" This instrument was acknowledged before me on the day of , 2009 by "..: as .:.'. of Southern Oregon Land Conservancy, Ine, an Oregon nonprofit corporatio~:~__: ":".., -"," Notary Public My Commission Expires: 14. Initials: Grantor_. Grantee_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. Exhibit A Imperatrice Property (This is the full legal description of the entire property) 15. Initials: Grantor_. Grantee_ Draft. October 9. 2009. This draft is designed for information purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. Exhibit B Protected Property (This will include a legal description for tax lots 500, 600 and 700 in 381E28 and tax lot 100 of 381E27 each identified as a separate "tract" or parcel so we qm clearly identify TL500 for use in conjunction with the wastewater trea,bllent) ".;"'.'.>' "'.:.-i; 16. Initials: Gran(or~, Grantec_ Draft. October 9, 2009. This draft is designed for infonnation purposes. The final provisions of any easement will depend on the specific proposed uses and restrictions outlined during the project development and negotiations. Exhibit C Baseline Documentation Report 1 7. Initials: Grantof_, Grantee_ EXHIBIT B A Quick Readers Guide to Conservation Easements Prepared by SOLe Staff Attorney, Alex Liston Dykema Introduction: No two easements are identical because no two projects are identical. Each easement should reflect the landowner's unique goals and property, however, most follow a-template that is described below_ Easement Elements: I. Opening. The first paragraph states the date of execution and who the parties are. This is very basic but crucial information. 2. Recitals. These describe the property, establish its conservation values, both for'lhe Land Conservancy's reference and for purposes of any tax deduction taken by the landowner; they incorporate the Baseline into the document, and they set the legal framework for the Easement and SOLe's ability to hold it. By the time a reader is done with the Recitals, they should have a good sense of the project. 3. Grant. The paragraph prim'to the Purpose is the actual grant of the easement. 4. Purpose. This is the hem1 of the Easement. The language here is crucial because it guides the entire easement. Any test for a violation will go back to the purpose, especially if it is not a clear violation of a definite prohibited use. It needs to be general enough to incorporate changing conditions, but specific enough to guide future members of SOLC and owners who had nothing to do with the original grant. One example is; a. It is the purpose of this Easement to protect and preserve the Property's native plant and animal communities in order to preserve and promote the healthy, relatively natural habitats for the benefit of the native species present and to promote the Property's scenic and open space characteristics while preventing any use of the Property which is inconsistent with the purpose of this Easement. 5. Reserved Rights. This includes whatever specific activities the Grantor (landowner) wishes to reserve and will focus largely on those uses which would otherwise violate the easement. It is here that residential, forestry, agriculture, recreation etc. are included, There is also a broad reservation of all uses that do not violate the purpose of the easement. This is a statement that the Owner still owns the land and may use it as he/she sees fit as long as that use does not violate the easement. In other words, ifthe use is not prohibited or limited, and it does not violate the purpose, the landowner is free to do it 6. Rights of Grantee. This is what SOLC, the grantee, has the right to do. In its shortest fDlm, it is simply a statement that SOLC has the right to monitor and enforce the terms of the Easement. 7. Prohibited Uses. This almost always begins with a'broad prohibition of any use that is inconsistent with the Purpose, It will then list specifically prohibited uses that everyone agrees would violate the Easement. To be in compliance with the IRS regulations, it must prohibit commercial and industrial use (at least in so far as such use would interfere with the purpose, or in the case of commercial use such as dude ranches, is more than de minim us), and it must prohibit surface mining or other uses that would clearly damage the Conservation Values being protected. In other words, if the Land Conservancy is protecting a scenic view, that should be reflected in what is prohibited; if SOLC is protecting habitat, that should be reflected etc. , 8. Notice and Approval. Notice and Approval states the actual process for dealing with the approved and prohibited uses provisions. . 9. Grantee's Remedies. (Also called Enforcement.) TIlis says that if SOLC misses something once, it can still enforce it later (waiver of laches, estoppel, abandonment and prescription). The Land Conservancy has to give notice, unless it is an emergency. Ajudge can tell the landowner to stop, fix , and pay the Land Conservancy for the harm caused. An owner cannot be liable lor someone else's acts, unless thcy approved thcm, or kncw enough that a reasonable person would havc stopped them. 10. Costs, Liabilities and Environmental Warrantee. This says that the owners still own the land and are liable for its costs. 11. Taxes. This says the landowner has to pay the taxes, but if they don't, SOLC can pay them to avoid a tax lien which would pre-empt the easement. It also has a sentence removing the Land Conservancy from any liability if taxes go up because of the easement. This could happen if an easement prohibits forcstry or agriculturc and thc property has a preferential tax status based on those uses. The new Oregon Conservation Easement Special Assessment should cover this should a landowner lose the special forest or farm assessment. 12. Hold Harmless. [n some easements this is referred to as indemnities, which means that either party will hold the other harmless for acts out of their control. 13. Access. This gives SOLC the right of access for monitoring and tells how much noticc is required to give landowners. Notice is required unless there is an emergency as we see it. Also note that this right of access does not apply to most residential areas described in Reserved Rights. This also states that the there is no right of public access given (unless there is) which is technically unnecessary, but clarifies that for landowners. 14. Change of Conditions, Valuation and Condemnation. These are a reflection of the tax code provisions, but are in all easements. They say the easement reflects part of the value of the land and that value belongs to SOLe. Also, SOLC cannot give up the easement without ajudge's determination that its purpose is impossible to fulfill (extremely unlikely) and that if the land is taken, or the easement is extinguished, SO LC gets the part of the proceeds that the easement represents. This language remains in whether the owncrs arc taking a deduction or not, because it is important for everyone to understand that the easement is a gift of real monetary value and because they restrict the Land Conservancy's ability to abandon property we protect. 15. Assignment. This clarifies that the easement can be transfen'ed to another land trust if necessary. It is in compliance with L T A standards and the [RS code and makes good practical sense to include it. 16. Miscellaneous. This is the entire agreement of the patiies: it runs with the land forever; if part of it is invalid, the rest stays; SOLC gets any benefit of the doubt in any legal proceeding; SOLC can and will record it; it binds everyone who owns the land even ifSOLC doesn't say that every time something is mentioned in the easement; SOLC can give notice by writing to a legal address in the public records; SOLC can change it only if the change offers better protection for the land and everyone agrees; it should be read under Oregon law; everyone is responsible lor what happens as long as they are an owner or holder but not after the ownership is transferred (unless the problem stems from their actions while they did own it); SOLC will give an owner a written statement that they are in compliance and be bound by that if they ask; and the agreement includes everything referred to in the document or exhibits. 17. Exhibit A. The Property. This is the legal description from a CUlTent title report. It is the land that the easement attaches to and must be accurate to be enforceable. 18. Exhibit B. This is often the residential area if there is a solid description. The residential Area is also described in the Baseline. 19. Exhibit C. Conservation Management Plan. This is atl important part of the document. It should provide good solid guidance, but not be so specific that new knowledge or conditions cannot be incorporated. This is especially hue offorestry, agriculture 01' other management. lfwe think about what was state of the art 100 years ago versus today, and ask what we would have wanted included 100 years ago which would still be binding today, it helps when we look at specific language. In other words, goals and guidelines are better than detailed specifics, but it should be clear enough to guide future users and holders without confusion. . 20. Exhibit D: Baseline Documentation Report (BDR). This is the property description, including maps and photos, that details the current condition of the property. It should be recorded along with the easement and signed by the landowner. EXHIBIT C Internal Revenue Service, Treasury t.'\xpayer must substantiate in accord- ance with the requirements of this sec- tion. (15) Substantiation of charItable con- tI'ibutions made blJ a partnership or an S corporation. If a partnership or an S corporation makes a charitable con- tribution of .$250 or more, the partner- ship or S corporation will be treated as the taxpayer for purposes of section 170(0(B). Thereforo, the partnership or S corporation must suhstantiate the contribution with a contemporaneous written acknowledgment from the donee organization before reporting the contribution on its income tax return for the year in which the contribution was made a.nd must maintain the con- temporaneous written acknowledgment in its records. A partner of a partner- ship or a shareholder of an S corpora- tion is not required to obtain any addi- tional substantiation for his or her share of the partnership'!'> or S corpora- tion's charitable contribution. (Hi) Pw.chase of an annllity. If a tax- payer purchases an annuity from a charitable organization and claims a charitable contribution deduction of $250 or more for the excess of the amount paid over the value of the an~ nUity, the contemporaneous written acknowledgment must state whether any goods or services in addition to the annuity were provllled to the taxpayer. The contemporaneous written ac- knowledgment is not required to in- clude a good faith estimate of the value of the annuity. See ~ 1.170A-l(d)(2) for guidance in determining the \'alue of the annuity. (17) Substantiation of ITwtched pay- ments-(i) In general. For purposes of soction 170, if it taxpayer's payment to a donee organization is matched, in whole or in part, by another payor, and the taxpayer receives goods or services In consideration for its payment and some or all of the matching paymel1.t, those goods or services will be treated as provided in consideration for the taxpayer's payment and not in consid- eration for the matching payment. (it) Example. The following example illustrates the rules of this paragraph (0(17). Emmple Taxpayer makes a $100 payment to Charity L, a donee organizatIon. Puraunnt to 1\ matching payment plan, Ta.xpayer's em- ~ 1.I70A-14 ployer matches Taxpayer's $400 llayment with an additional payment of $400. In con- slllemtJon for the combined payment.s of 1600. L gives Taxpayer nn Item that it esti- mates hl\5 a fail' market.. value of $100. L does no!. give the employer any gooos or services III consldemLion Cor its contl'llJutLon. The contemporaneous wrIttoen acknowledgment pl'ovided to the employer must include a statement that. no goods or services were JlI'ovided in consideration for the employer's ~jOO payment. The contemporaneous written acknowledgment providt!u to Taxpayer mus!. include a sta~ement of the amount of Tax. payer's payment, a descrIption of the i~em rece1ved by Taxpayer, a.nd n statement tha,t, L'a good faith estIrnaLe of the vl\lue of the 1t.em i'ecelved by TaXDl\yer 1s $100. (16) Effective date. This paragraph en applies to contributions made on or aCLer December 16, 1996. Howevor, tax- payors may rely on the rules of this pnragmph (f) for contributions made on oj' Mter January 1, 1994. ('1'.0. 8002, 49 FH. 50664 and 50666. Dec. 31, 1984, as a.mended by T.D. 8003, 49 FR 50659, Dec. 31. 1961: T.D. 8199, 53 FH. 16080, May 5, 1966; 53 FR 18372, May 23. 19118; T.D. 8623, 60 FIt 53128, Oct. 12, 1995: T.D. 6690, 61 FR 65952, Dec. 16, 1996J I} 1.170A-14 Qualified consel'vation contributions. (a) Qualified conservation contribu- tions. A deduction under section 170 is generally not allowed for a charitable contribution of any interest in prop- erty that consists of les8 than the do- nor's entire interest in the property other than certain transfers In trust (see ~ 1.170A-6 relating to charitable contributions in trust and U.170A-7 re- lating to contributions llOt In trust of partial interests in property). However, a deduction may be allowod under sec- tion 170(C)(3)(B)(Hi) for the value of a quallfied cansel'vation contdbution if the requirements of thIs section are met. A qualified conservation contribu- tion is the contribution of a qualified real property interest to a. qualified or- ganIzation exclusively for conservation purposes. To be eligible for a deduction under this section, the conservation purpose must be protected in per- petuity. (b) Qualified real property interest-H) Entire interest vf donor other than quali- fied mineral interest. 0) The entire inter- est of the donor other than a Qualified mineral interest is a qualified renl property interest. A qualified mIneral 149 ~ 1.170A-14 interest is the donor's interest in sub- surface oil, gas, or other minerals and the right of access to such minerals. (it) A real property interest shall not be treated as an entire Interest other than a qualified mineral interest by reason of section 170(h)(2)(A) and this paragraph (b)(1) if the property in which the donol"s interest exists was diviUed prior to the contribution in order to enable the donor to retain con- trol of more than a qualified mineral interest or to reduce the real property interest donated. See 'l'reasury regula- tions U.170A-7(a)(2)(i). An entire inter- est in real property may consist of an undivided interest in the property. But see section 170(h)(5)(A) and the regula- tions thereunder (relating to the re- quirement that the conservation pur- pose which is the subject of the dona- tion must be prot.ected in perpetuity). Minor interests, Buch n.,<; rlghts-oC-way, that wlll not interfere with the con- servation purposes of the donation, may be transferred prior to the con- servation contribution without affect- ing the treatment of a property inter- est as a qualified real property interest under this paragraph (b)(l). (2) Perpetual conservation restriction. A ';perpetual conservation restriction" is a qualified real property interest. A "perpetual conservation restriction" is 0. rostriotion granted in perpetUity on the use which may be made of real property-including, an easement or other interest in real property that under state law has attributes similar to an easement (e.g., a restrictive cov- enant or equitable servitude). For pur- poses of this aection, the terms ease- ment, conservation restriction, and per- petual conseJ'vation restriction have the same meaning. The definition of per- petual conservation restriction under this paragraph (b)(2) is not intended to pre- clude the deductib1l1ty of a donation of affirmative rights to use a land or water area under fi 1.170A-13(d)(2}. Any rights reserved by the donor in the do- nation of a perpetua.l conservation l'e- strlctton must conform to the require. ments of this section. See 8.g., para- graph (d)(4)(il), (d)(5)(I), (e)(3), and (g)(4) of tbis section. (c) Qualified organization-.(1) Eligible donee. To be considered an eligible donee under this section, an organiza- 26 CFR Ch, I (4-1-02 Edition) tion must be a qualified organization, have a commitment to protect the con- servation .purposes of the donation, and have the resources to enforce the re- strIctions. A conservation group orga- nized or operated plimarily or substan- tially for one of the conservation pur- poses specified in section 170(h)(4)(A) w111 be considered to have the commit- ment reQuIred by the proceding sen- tonco. A qualified organization need not set aside funds to enforce the re- strictions that are the subject of the contribution. For purposes of this sec- tton, the term qualified organization means; (I) A governmental unit described in section 170(b)(1)(A)(v); (li) An organization described in sec- tion 170(b}(1)(A)(vi); (111) A charitable ol'ganlzatlon de- scribed in section 501(c)(3) that meets tho puhlic support tost of section 509(a)(2); (tv) A charitable Ol'fffl.nization de- scribed in section 501(c)(3} that meets the requirements of section 509(a)(3) and Is controlled by an organization described in paragraphs (c)(l) (t), (ti), or (ili) of this section. (2) 1'ransfers by donee, A deduction shall be allowed fol' a contribution under t.his section only if in the instru- ment of conveyance the donor pro- hibits the donee from subsequently transferring the easement (or, in the case of a remainder interest or the res- ervation of a qualified mineral inter- est, the property), whether or not for consideration, unless the donee organi- zation, as a condition of the subsequent t,ransfer, requires that the conserva- tion purposes which the contribution was originally intended to advance continue to be carried out. Moreover, subsequent transfers must be restrjcted to organiza.tions qualifying, at the ttme of the subsequent transfer, as an eligible donee under paragraph (c)(l) of this section. When a later unexpected change in the conditions surrounding the property that is the subject of a do- nation under paragraph (b)(l), (2), or (3) of this section makes impossIble or im- pl'actical the continued use of the prop- erty for conservation purposes, the re- quirement of this paragl'avh will be met if the property is sold or ex-, changed and any proceeds are used by 150 , Internal Revenue Service, Treasury the donee organi...ation in It manner consistent with the conservation pur- poses of the original contribution, In the caso of 0. donation under po.ragrnph (b)(3) of this section to which the pre- ceding sentence applies, see also para- graph (g)(5)(11) of this section. (d) Conservation purposes--(l) In gen- eral. For purposes of section 170(h) and this section, the term conservatif?n pur- poses means-- (i) The preservation of land areas for outdoor recreation by, or the education of. the general public, within the meall- ing of paragraph (d)(2) of this section, (it) Tho protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem, within the meaning of paragraph (d)(3) of this section, Oil) The preservation of certaIn open space (Including farmland and forest land) within the meaning of paragraph (d)(4) of this section, or (Iv) The preservation of a historically important land area or a certified his- toric struct.ure, within the meaning of paragraph (d)(5) of this section. (2) Recreation 01' education-(1) In gen- eral. The donation of a qualified real property interest to preserve land areas for the outdoor recreation of the general public or for the education of tlle genoml publ1c will meet tho con. servation purposes test of this section, Thus, conservation purposes would in- clude, for example, the preservation of a water area for the use of the public for boating or fishing, 01' a lHl.ture or hiking tratl for the use of the public, (ii) Access. The preservation of land areas for recreation or education will not meet the test of this section unJess the l'ecI'eat-lon or education is for the substantial and. regular use of the gen- eral public. (3) Protection of environmental system- (i) In general. The donation of a quali- fied real property interest to protect a significant relatively natural habitat in which a fish, wildlife, or plant com- munity, or simIlar ecosystem normally lives will meet the conservat.ion pur- poses test of this section. The fact that the habitat or environment has been altered to some extent by human aotiv- ity will not result In a deduction being denied under thls sectlon if the fish, wUdl1fe, or plants continue to exist ~ 1. 170A-14 there in a relatively natural state. For example. the preservation of a lake formed by a man-made dam or a salt pond formed by a man-made dike would meet the consorvation purposos tost if the lake or pond were a nature feeding area for a wildlife community that in- cluded rare, endangered, 01' t,hreatened native species. (ii) Significant habitat or ecosystem. Significant habitats and ecosystems include, hut are not limited to, habi- tats for rare, endangered, 01' t.hreatened species of an1mal, fish, or plants: nat- ural areas that represent hlg'l1 quality exampleg of a terrestlial community or aquatic community, such as Islands that are undeveloped or not intensely developed where the coastal ecosystem is relatively intact; and natural areas which are included in, or which con- tribute to. the ecological viab1l1ty of a local, state, or national park, nature preserve, wildlife refuge, wilderness area, or other s1mnar conservation area. (iiO Access. Limitations on public ac- cess to property that is the subject of a donation under this paragraph (d)(3) shall not render the donation non- deductible, For example. a restriction on all vubIic access to the habitat of a threatened native animal speCies pro- tected by a donation under this para- graph (11)(3) would not cause the dona- tion to be nondeductible. (1) Presen;ution of open ~'P(lCe-{i) In general. The donation of a qualified real property interest to preserve open space (including' farmland a.nd forest land) wlll meet the conservation pur- poses test of this section if such preser- vation 1s- (A) PUI'suant to a clearly delineated Federal, state, or local governmental conservation pOlicy and will yield a significant public benefit, or (B) For the scenic enjoymont of the general public and will yield a signifi- cant public benefit. An open spnce easement donnted on or after December 18, 1980. must meet the requirements of section 170(h) in order to be deductible. (ii) Scenic cnjoyment..........{A) Facturs. A contribution made for the preservation 151 ~ 1.170A-14 of open space may be for the scenic en- joyment of the general public. Preser- vation of land may be for the scenic en- joyment of the general public if devel- opment of tho property would Impair the scenic character of the local rural or urban Ifl.1ldscape Dr would interfere with a scenic panorama that can be en- joyed from a park, nature preserve, road, waterbody, trail. or historic structure or land area, and such nrea or transportation way is open to, or uti- lized bY, the public. "Scenic enjoy- ment" will be evaluated by considering all pertinent facts and circumstances germane t.o the contribution. Regional variations in topography, geology, biol- ogy. and cultw'a} and economic condi- tions require flexibility in the applica- tion of this test, but do not lessen the burden on the taxpayer to demonstrate the scenic characteristics of a donat.ion under this paragraph. Tho application of a particular objective factor to help define a view as scenic in one setting may in fact be entirely inappropriate in another setting. Among the factors to be considered are: (1) The compatibility of the land use ...:ith other land in the vicinity; (2) The degree of contrast and varIety provided by the visual scene; (3) The openness of the land (which would be a more significant factor in an urban or densely populated setting or in a hea\'lly wooded area); (4) Relief from urban closeness; (5) The harmonious variety of shapes and textures; (6) The degree to which the land use maintains the scale and character of the urban landscape to preoorve open space, visual enjoyment, and sunlig'ht for the surrounding area; (7) The consistency of the proposed scenic view with a methodical state scenic identification program, such as a state landscape inventory; and (8) The consistency of the proposed scenic view with a regional or local landscape inventory made pursuant to a sufficiently rIgorous review process, especially jf the donation is endorsed by an appropriate state 01' local gov- ernmental agency. (B) Access. To satisfy the requirement of scenic enjoyment by the general public, visual (rather than physical) ac- cess to or across the property by the 26 CFR Ch. I (4-1-02 Edition) general public is sufficient. Under the terms of an open space easement on scenic property, the entire property need not be visible to the public for a donation to qualify under this section, although the public benefit. from the donation may be insufficient to Qualify for a deduction if only a small portion of the property is visible to the public. (111) Govem.mental conservation pol- icy-(A) In general. The requirement that the preservation of open space be pursuant to a clearly delineated Fed- eral, state, or local governmental pol- icy is intended to protect the types of property Identified by representatives of the general public as worthy of pres- ervation or conservation. A general declaration of conservation goals by a single official or legislative body is not sufftcient. However, a governmental conservation policy need not be a cer- tification program that identifies par- ticular lots or small parcels of individ- ually owned property. This require- ment' wlll be met by donations that further a specific, identified conserva- tion project, such as the preservation of land within a state or local land- mark district that is locally recognized as being Significant to that distlict; the preservation of a wild or scenic river, the preservation of farmland pur- suant to a st,ate program for flood pre- vention and control; or the protection of the scenic, ecological, or histOlic character of land that is contiguous to. or an Integral part of, the slli'roundings of existing recreation or conservation sites. For example, the donation of a perpetual conservation restriction to a qualified organization pursuant to a formal l'cl:lulution or certifiClttion by a local governmental agency established under state law specifically identifying the subject property as worthy of pro- tection for conservation purposes will meet tho requirement of this para- graph. A program need not be funded to satisfy this requirement, but the pro- gram must involve a significant com- mitment by the g.overnment with re- spect to the conseI'Vation projoct. For example, a governmental program ac- cording preferential tax assessment or preferential zoning for cert.ain property deemed worthy of protection for con- servation purposes would constitute a 152 Internal Revenue Service, Treasury significant commitment by the govern- ment. (B) Effect of acceptance by govern- mental agency. Acceptance of an ease- ment by nn ag'ency of the Fedoral Gov- ernment or by an agency of a state or local government (or by a commission, authority, or similar body duly con- stitut.eu by the state or local govern- ment and acting on behalf of the state or local government) tends to establish the requisite clearly delineated govern- . mentaJ policy, although such accept- ance, wi thout more, is not sufficient, The monl rig-ora us the review process by the governmental agency, the more the acceptance of the casement tends to establlsh the requisite clearly delin- eated governmental policy. F'or exam- ple, in a state where the legislatuxe has establisheu an Environmental Trust to accopt gifts to the state which meet certain consorvation purposos and to submit the gifts to a review that re- quires the approvai of the state's high- est officials, acceptance of a gift by the Trust. tends to establish the requisite clearly uelincated governmental pol- icy. However, if the Trust morely ac- cepts such gifts without a review proc- ess, the requisite clearly delineated governmental policy is not established. (0) Access. A limitation on public ac- cess to property subject to a (Ionation under thi~ paragraph (d)(4)(ili) shall not render the deduction nondeductible unless the conservation purpose of the donation would be undermined or frus- trated wIthout public access. For ex~ ample, a donation pursuant to a gov- ernmental policy to protect the scenic character of land near a river requires visual access to the same extent as wouid a donation under paragraph (d)(4)(H) of this section. (tv) Significant public benefH-(A) Fac- tOTS. All contributions made for the preservation of open space must yield a significant public benefit. Public ben- efit will be evaluated by considering all pertinent facts and circumstances ger- mane Lo Lhe contribution. Factors ger- mane t,o t.he evaluation of public ben- efit from one contribution may be Ir- relevant in determining public benefit from another contribution. No single factor will necessarily be determina- tive. Among the factors to be consld~ ered are: ~l.170A-14 (1) The uniqueness of the property to the area: (2) The intensity of land development in the vicinity of the property (both ex- isting development and foreseeable lJrenus of development); (3) The consistency of the proposed open space use with public programs (whether Federal, state or local) for conservation in the rebrion, including programs for outdoor recreation, irri- gation or water supply protection, water quality maintenance or enhance- ment, flood pI'evention and control, erosion control, shoreline protection, and protection of land areas included 1n, or related to, a government ap- proved master' plan or land manage- ment area; (4) The consistency of the proposed open space use with existing private. conservation programs in the area, as evidenced by other land, protected by easement or fee ownership by organiza- tions referred to in ~1.170A-14(c)(1), in close proximity to the property; (5) The likelihood that development of the property would lead to or con- tribute to degradation of tho scenic, natural, 01' historic character of the area; (6) The opportunity for the general' public t.o ul3e the property 01' to appre- ciate its sconic values; (7) The importance of the property in preserving a local or regional land- scape or reSOUl'Ce that attracts tourism or commerco to the area; (8) The likelihood that the donee will acquire equally desirable nuu valuable substitute pl'Opel'ty or proporty rights; (9) The cost to the donee of enforcing the terms of the conservation restric- tion; (10) The population density in the area of the property; and (11) The consistency of the proposed open space use with a legislatively mandated program identifying par- ticular parceis of land for futuI'e pro- tection. (B) Illustrations. The preservation of an ordinary tract of land would not in and of itself yield a significant public benefit, but the preservation of ordi- nary land areas in conjunction with other factors that demonstrate signifi- cant publiC benefit or the preservation 153 ~ 1.170A-14 of a unique land area for public em- ployment would yield a. slgnificanL public benefit. For ex..'\.mple, the preser- vation of a vacant downtown lot. would not by itself yield a significant public benefit, but the preservation of the downtown lot as a public garden would. absent countervailing factors. yield a significant publlc benefit. The fol- lowing are other examples of contribu- tions which would, absent counter- vailing factors, yield a significant pub- lic benefit: The preservation of farm- land pursuant to a state program fot' flood prevention and control; the pres~ ervation of a unique natural land for- mation for the enjoyment DC the gen- eral publiC; the preservation of wood- land along a public highway pursuant to a government program to pl'eSel've the appearance of the area so as to maintain the scenic view from the highway; and the preservation of a stl'etch of undeveloped property lo- cated between a public highway and the ocean in order to maintain the see. nic ocean view from the highway. (v) Limitation. A deduction wlll not be allowed for the preservation of open space under section 170(h)(1)(A)(i1i), if the terms of the easement permit a de. grao of intrusion or future development. that would interfere with the essential scenic quality of the land or with the governmental conservation pOHCY that is being furthered by the donation. See ~1.170A-14(e)(2) for rules relating to in~ consistent use. (vi) Relationship of requirements-(A) Clew'ly delineated governmental policy and significant public benefit. Although the requirements of "clearly delineated governmental policy" and "significant public benefit" must be met independ. sutly, for purposes of this section the two requirements may also be related. The more speCific the governmental policy with respect to the particular site to be protected, the more likely the government..'\l decision, by itself, will tend to establish the significant public benefit Msodated with the do~ nation. For example, while a statute in State X permitting preferential assess~ meut for farmland is, by definition, governmental policy, it is distinguish. ablo from a state statute, accompanied by appropriations, naming the X River as a valuable resource aod articulating 26 CFR Ch. I (4-1-02 Edition) the legislative policy that the X River and the relatively natural quality of its surrounding be protected. On these facts, an open space easement on farm. land in State X would have to dem. onstrl\te additional factors to establish "significant publiC benefit." The speci- ficity of the legislative mandate to protect the X River, however, would by itself tend to establish the significant public benefit associated with an open space easement on land fronting the X H.iver. (B) Scenic enjoyment and significant public benefit. With respect to the rela. tionship between the requirements of "scenic enjoyment" and "significant public benefit," since the degrees of scenic enjoyment offered by a variety of open space easements are subjective and not as easily delineated as are In- creasingly specific levels of govern- mental pOliCY, the significant publiC benefit of Pl'eserving a scenic view must be independently established in all cases. (C) Donations may satisfy more than one test. In some cases, open space ease. ments may be both for scenic enjoy. mont and pursllant to a clearly delin- eated governmental policy. For exam- ple, the preservation of a particular scenic view identified as part of a see. nic landscape inventory by a rigorous governmental review process will meet t.he tests of both paragraphs (d)(4)(i)(A) and (d)(4)(1)(B) of this section. (5) Historic preservation-{i) In general. Tho donation of a. qualified real prop- erty interest to preserve an histori- cally impol'tant land area or a certified historic structure will meet the con- servation purposes test of this section. When restrictions to preserve a build- ing or land area within a registered historic district permit future develop. ment on the site, a deduction will be allowed under this section only if the terms of the restrictions requlre that such development conform with appro. printe local, state, or Federal stand. ards for construction or rehabilitation within the district. See also, ~L170A- 14(h)(3)(ti). (if) Histcnically important land area. Tho term historically important land area incl udes: 154 Internal Revenue Service, Treasury (A) An independently significant land area including any related historic re- sources (for example, an archaeological site or a Ciyil WRr bl\ttlefield with re- lated monuments, bridges, cannons, or houses) that meets the National Reg- ister Criteria for Evaluation in 36 CFR 60.4 (Pub. L. 89---665, 80 Stat. 915); (B) Any land area within a registered historic district including any build- ing's on the land area thRt can reason- ably be considered as contributing' to the sig'nificance of the district; and (0) Any land area (including related historic resources) adjacent to a prop- erty listed individually in the National Register of Historic Places (but not within a registered historic district) in a case where the physical or environ- mental features of the land area con- tribute to the historic or cultural in- togTity of the property. (lil) Certified historic stntct1l1'e. The term ceJtified htst01'ic structure, for pur- poses of this section, means any build- ing, structure or land area which ia- (A) Listed in the National Register, or (B) Located in a registered historic district (as defined in section 48(g)(3)(B)) and is certified by the Sec- retary of the Interior (pursuant to 36 CFR 67.4) to the Secretary of the Treasury as being of historic signifi- cance to the district. A stmcture for purposes of this section roeMs any structure, whether or not jt is depreciable. Accordingly easements on private residences may qualify under this section. In addition, a struc- ture would be considered to be a cer- tifled historic structuL'e if it were cer- tifiod either at the timo tho transfer wa.s made or at the due date (including extensions) for filinS- the donor's return for the taxable year in which the con~ trlbution was made. (iv) Access. (A) In order for a con- servation contribution described in section 170(h)(4)(A)(Jv) and this pa.ra- graph (d){5) to be deductible, some vis- ual public access to the donated prop- erty is required. In the case of an his- torically important land area, the en- tire property need not be visible La the public for a donation t.o qualify undoI' this section. However, the public ben- efit from the donation may be insuffi- cient to qualify for a deduction if only ~1.170A-14 a small portioD of the property is so visible. Where the Mstoric land area or certified historic structure which is the Subject of the donation is not visible from a public way (e.g., t.he structure is hidden from view by a wall or shrubbery, the structure is too far from the public way, or interIor characteris- tics and features of tho structure are the SUbject of the easement), the terms of the easement must be such that the general public is given the opportunity on a regular basis to view the chn.ra.c~ teristics and features of the property which are preserved by the easement to the extent consistent with the nature and condition of the property. (E) Factors to be considered in deter- mining the type and amount of publiC access required under paragraph (d)(5)(lv)(A) of thIs sectIon include the histoeical significance of the donated property, the nature of the features that are the subject of the easement, the remoteness or accessibility of the site of the donated property, the possi- bility of phYSical hazards to the publiC visiting the property (for example, an unoccupied structure 1n a dilapidated condition), the extent to which public access would be an unreasonable intru- sion on any privacy interests of indi- viduals living on the property, the de~ gree to which public access would im- pair tho preservation interests which are the subject of the donation. and the availability of opportunities for the publiC to view the property by means other than visits to the site. (0) The amount of access afforded the public by the donation of an easement shall be determined with reference to tho amount of accoss permi tted by the terms of the easement which are estab- lished by the donor, rather than the amount of access actually provided by the donee organization. However. if the donor Is aware of any facts indicating that the amount of access that the donee organization will provide 1s sig- nificantly less than the amount of ac- cess permitted lU1der the terms of the easement, then the amount of access afforded the public shall be detel'm1ned with reference to this lesser amount, (v) Examples. The provisions of para- graph (d)(5)(iv) of this section may be illustrated by the following examples: 155 ~ 1.170A-14 Example J. A and his family live Ln a house in a c~l'Liflecl historic dlstlict in the State of X. The entire house, Including its Inl;erlo1'. ba.s architectural features representing clas- sic Vlctol"lan pel'lod architecture. A donates 1m ext.erior and Interlor Bl\Ssment on t.he property to a Qualified organlzaLlon but con- tinues to live In t.he house with hill family. A's house Is surl'ounded by a high stone wall which obscures the public's view of It from the street. PUl1mll.nt 1.0 the tmma of tho Oll.6O- ment., t,he house may be opened to the public from 10:00 a.m. to <1:00 p,m. on one Sunday in May and one Sundl\y In November each year for house and garden tours. These tours are to be under the Bupel'vision of the donee and open to memhers of the Kener'lll Dubllc upon payment. of (l. small fee. In IUldll.lon, under the terms of the easement., Lhe donee organi- zation ll~ given the I'IR"ht to photograph the inLel'lol' amI extel'lor of the house aDd dls- trlbut.e BUch phoLograpbs to magazines, newalet.LeI'S, 01' otho1' Dllbl10ly available pub- lIcat.lolls. The tenns of the easement also permit persons affiliated with educational organlzations, professlon:l.1 architectural l\S- 8OciaUons, and historical societies to make an appolntment through the donee organiza- tion to study the property. The donor is not aWI\.l'e of any facts Indicating that the public access to he provided 11Y thf! donf!e ol'ganlz.'\- tlon wlH be elgnlflcantly leM than that per- mlLted by the terms of the easemenL. The 2 O}}pol'tunlties for publlc visits pel' year, when combined with the ability of tbo gonoml pub- lic Lo view Lhe H.l'chltactural chal'acteristlcs and features that al'e the subject of the ease- ment throug'h photographs, tho opportunIty for schollu'l.v sLudy of Lhe property, and the fact that the house Is used as an occupied resldencc. wlll cnnblo the donation La satisfy the requirement of publlc access, F.l:ample 2. B owns an unoccupicd farm- houss buIlt In tbe 184.0'11 and located on a property t.hat is adjacent to a Civil War bat~ tIe field. Dul'ing t.he Civil Wal' Lhc farmhousc wa.a used as quarters for Union trOOlJ8, The battlefield Is visited year round by the g-en- entI pubHc, The condition of Lhe fal'mhouse Is sucb that the safeLy of visitors will not bu jeopardized and opening it to the public wlll not resulL In sjgnlrlcant deterioration. The farmhouse is not visible from the ba.ttlefield or any publlc way. It Is llccesslble only by way of a private road owned by B. H donl\tss a conservation casemont on the farmhouse 1..0 a qUll.l1f1ed organlza.tlon, The Lerms of Lhe easement provide that the donee orgll.n12:Il.- Lion ffil\Y open the jll'OI>el'ty (via B's road) t..o the general publlc on four weekends each year from 8:30 a.m. to 4:00 p.m. The donation does not meet the publie i\ccesa requil'ement bocause the farmhouse is &afe, unoccupied, Il.nd eRSily accessible to the general public who have come to Lhe slle to visit CIvil War historic land arMS (and related resources), but will only he o}}en to the (lubllc 011 foul' 26 CFR Ch. I (4-1-02 Edition) weekends each year. However, the donation would meet the publlc access reQulrement if the Lel'mS of the easement permitted the donee organh;atlon to open the property to the public every oLhel' weekend dul'lng the year and Lhe donor is not aware of any rflct5 Indicating that the donee organlzaLlon will 1}l"Ovlde significantly leS8 acces.<! t'!lan that permitted. (e) E:J.:clustvely {or conservation pur- poses-{l) In general. To meet the re~ quirements of this section, a donation must be exclusively for conservation' purposes. See paragraphs (c)(1) and (g)(1) through 19)(6)(ii) of this section. A deduction will not be denied under this section when incidental benefit in- ures to the donor merely as a result of conservation restrictions limiting the uses to which the donor's property may be put, (2) Inconsistejzt use, Except as pro- vided In paragraph (e)(4) of this sec- tion, a deduction will not be allowed if the contribution would accompliSh one of the enumerated conservation pur- poses but would permit destruction of other significant conservation inter- ests. FOl' example, Lhe preservation of fal'mlanrl pursuant to a State program fol' Oood prevention and control would not qualify under paragraph (d)(':!) of this section if under the terms of the contribution a significant naturally oc~ curring ecosystem could be injured or destroyed by the use of pesticides in the operation of the farm. However, this requirement is not intended to prohibit usos of tho proporty, such as selective timber harvesting or selective farming if, under the circumstances, those uses do not impair significant conservation interests, (3) inconsistent use permitted, A use that is destructive of conservation in- terests will be permitted only if such use is necessary for the protection of the conservation interests that are the subject of the contribution. For exam- ple, a deduction for the donation of an casement to preserve an a.rchaeological site that is listed on the National Reg- ister of Historic Places will not be dis-- allowed if site excavation consistent with sound archaeological practices may impair 9. scenic view of which the Janel Is a part. A donor may continue a pre.existing- use of the property that does not conflict with the conserva.tion purposes of the gift. 156 Infernal Revenue Service, Treasury , (0 Examples, The provisions of this section relating to conservation pur- poses may be illustrated by the fol- lowing exnmples. J..':l.'rllllple I, State S containa many large tJ.'net foreslos that are desirable recreation and scenIc area", for the general public. The fOl'est....' RCenic values attract mllllons of peo- ple to lohe State. Howevel', due to the fn- creasIng IntensIty of land developmenl. h\ State 8, the continued existence of forestland parcels greater th.-tn 45 acres Is threatened. J gmnts a perpetual easement. on f\ lOll-acre parcel of forestland that is part of one of tho St..'l.te's scenic areas to [l. quali- fying organlzatJon. The easement Imposes restrlctJons on the lIse of the parcel for the pUl'pose of malnt..aJnlng il.s scenic values. The restrictions Include a requIrement that the pn.rcel be maintaIned forever as open space devoted exclusively to cOllsel'vation pumoses and wildlife protectlon, and that there be no commercial, Industl'lal, resIdentIal. 01' OLhcl' develolJment. U13e of such parcel. The law of Sl.ate S recognizes a limHed public right. to enter private lfmd, l.'lfl.l't1culal'ly fol' rec- reational pUl':>uil.$, un1e~ such land is postell 01' t..he landowner objects. 'fhe easement Ape- clflcn.lIy restrIcts the landowner from post- illg th~ parcel, ot' from objecting, tht:lrllby ma.int.a.inlng public access to the parcel ac- cording tQ the cUlltom of the State. J'a par- cel provides the opportunity for the public t.o enjoy t.he use of the property and appreciat.e its scenic Value:>, Accordingly, J'e donatIon qualifies for a deduction under t.his secr-Ion. E.Tample 2. A Cjualified conserval.ion Ol'gl\ni- z..'\tlon owns Greenacl'e In fee as a nature pre- serve. Greenacre contains a high Quality ex~ ampl~ of a (,all grass prairie ecosyst..em. Farmacre, an operating farm, ad.loins Greenacre and is a compatible buffer t.o the nature pl'cf'lcrve. Conversion of Fl\l'macre 1,01\ more intense use, such as a housing develop- ment, would n.dversely affect the continued use of Gl'CCnl\Cre f\8 a nature prcgel've be- cause of humall traffic generar.ed by the de- velopment. The owner of FarmaCl'e donntes an el\5ement preventing any fu(;ure develop- ment on Fluma.cl'e to the Qualified conserva- tion o('ganlzatlon fOl" COll/Jer-vatlon PU1'POseS, Normal agl'lcultiul'l\1 uses will be aUowed all Fal'macre. Accordingly, the donation quali~ f1es fot' a deduc(;ion under l.hls section. Example J, Hawn:; Gl'ccnacre, a 90D-acre parcel of woodhmd, ro1ling pasture, ami 01'- chards on Lhe cres!. of a mountain. All of Greenn.cro is clQnrly visible from a nearby natiorul.l park. Because oC the strict enforce- ment of an applicable zoning plan, the high- est IUld best usc of Gl'eenl\cre is as a subdivi- sion of 40-acl'e tl'acLs. H wishes to donate a Bcenlc easel11el1~ on Greenn.cl'e (-.0 a quall- fying cOlllull'vaLlon organization, but. H would like to reSOlve the right to subdlvldo Gl'eenacl'e into 90-acl'e p.'u'Cels wit..h no more ~ 1.I70A-14 than one single-family home alJowable on each parcel. Handom building on the prop-- erty, even as litUe as one home for each 90 acres, would destroy the scenIc character of the view, Accordingly, no <lerluctlon would 1)e allowable under this section, EJ:ample -I.. Assume t.he snme fncts as in e,t.- ample (3), except that not all of Greenl\cre is vlailJle from Lhe park and the deed of ease- ment nl10ws [or limited cluster development of no more than five nIne-acre clustera (wlr,h foul' hOWles on each cluster) located in arefl.S generally not visible from the national park and subject to site and bulldlng plan np- pl'Oval by l.be donee orgn.nizatlon In order to preserve the scenic vIew from the park. The donor and the donee have already Identified sites where limil.ed ciusl.er development would not be visible from tbe park or would not, Imp..1.il' the view, Ownol'B of homos in the clusters will not have any I'igh18 wltb re- spect to the sun-ounding Greena.cl'e properLy that are noL also available to the geneml pubUc, Accordingly, the donation qua-lines foJ' n deduction under this aectlon, F-:camvle 5, In order to Drotect St.ate 8'8 de- clining open space that is suited for agricul- tural use from increasing developm"nt pres- sure that has led to a marked decline In such open space, Lhe Legislat..ure of State S Dassed a statute autborizing the pUl'chllse of "agri- cultural land development rIght.s" on oven acreage. Ag-ricultural land development l'igbt.'l allow the State to place agrlcu1l.ural pl'eserval.lon restrictions on land designated l\S wOl'th~' of protection in orde!' to preasrve open space and farm reSOUl"Ces, Agricultural preservat..ion l'8sLrictions prohibit or I1mit construction or placement of buildings ex- cept tbose used Cat' agl'iCllU,UI'n.l purposes or dwel!inga used for family I1vhlK by the farm- er and hi!! family and employees; removal of mineral substnnces In any mannel' that ad- versely affects the land's agrlculLural poten- tial: or ol.hel' uses detrlment.al to retention of tho land for agricultural use. Money baa been npproprlated for this pmgl'am and some Inndowners have in fact sold their "agricul- tural laud development rlghLs" t..o Stat.e S. K owns and operates a small dairy farm In State S located in an area designat..ed by ~he Legisll\.ture as worthy of }Jl'Otectlon. K {le- sIres to llr\lserVe his farm for agrIcultural purposes In perpetuity, Rather than selling the development rights to State S, K grants to a qualified ol'ganirotlon an agricultural pl'eaervat..lou restrict-iOIl on hi:> propert.y in the form of a conservation easement, K re- llOrVes to himself, his heirs and a..~'llgn:\ tbe l'iKht to manage the farm consistent with sound ar.riCl1.ltul'al and management. p:'ac- tices. The preservaLJon of K's hmd is punm. ant. to a clearly dellnented governmental policy of preserving open space avallable for n,grlcultural use, and will yield a si(,'nlflcant pllbllc benefit by preservIng open space against lncreasing development pressures. 157 ~ 1.170A-14 (g) Enforceable in perpetuity-(l) In general. In the case of any donation under this section, any interest in the property retained by the donor (and the donor's successors in interest) must be subject to legally enforceable restrictions (for example, by recorda- tion in the land records of the jurisdic- tion in which the property is located) tha.t will prevent uses of the retained interest inconsistent with the con- servation purposes of the donation. In the case of a contribution of a remain- der interest, the contribution will not qualify if the tenants, whether they are tenants for life or a term of years, can uso the property in a manner that di- minishes the conservation values which are intended to be protected by the contribution. (2) Protection of a conservation purpose in case of donation of property subject to a mortgage. In the case of conservation contributions made after February 13. 1986. no deducion will bo permitted under this section for an interest in property which is subject to a mort- gage unless the mortgagee subordi- nates its rights in the p1'Opnrty to the right of the qualified orgf\Jllzatlon to enforce the conservation purposes of the gift in perpetuity. For conservation contributions made prior to February 14, 1986, the requirement of section 170 (h)(5)(A) is satisfied in the CMe of mortgaged property (with respect to which the mortgagee has not subordi- nated its rights) only if the donor can demonstrate that the conservation pur- pose is protected in pel'petufty without subordination Of the mortgagee's rIg-hts. (3) Remote future event. A deduction shall not be disallowed under section 170(f)(3)(B)(iii) and this section merely because the interest which pa.sses to, 01' is vested in, the donee organization may be defeated by the performance of some act or the happening of some event, if on the date of the gift It ap- peal'S that the possibility that such act or event will occur is so remote as to be negligible. See paragraph (e) of ~ l.170A-1. Ii'or example, a state's statu- tory requirement that use restrictions must be rerecorded every 30 years to l'emajn enforceable shall not, by itself, render an easement non perpetual. 26 CFR Ch. I (4-1--02 Edition) (4) Retention of qualified mineral inter- est-(i) In general. Except as otherwise provided in paragraph (g)(4)(ii) of this section, the requirements of this sec- tion are not mot nnd no deduction shall be allowed in the case of a contribution of any interest when there is a reten- tion by any per'Son of a qualified min- eral interest (as defined in paragraph (b)(l)(i) of this section) if at any time there may be extractions 01' removal of minerals by any surface mining meth- od. Moreover, in the case of n Qualified mineral interest gift, the requirement that the conservation purposes be pro- tected in porpetuity Is not satisfied jf any method of mining that is incon- sistent with the particular conserva- tion purposes of a contribution is per- mitted at any time. See also U.170A- 14(e)(2). However, a deduction under this section will not be denied in the case of certain methods of mining that may have limited, localized impact on the real property but that are not irre- mediably destructive of significant conservation interests. For example, a deduction will not bo denied in a case where production facUlties are con- cealed or compatible with existing to- pography and landscape and when sur- face alteration is to I)e restored to its original state. (ii) Exce-plio71 for Qualified conservation contriblltions afler JulV 1984. (A) A con- tribution made after July 18, 1984, of a qualified real property interest de- scribed in section 170(h)(2)(A) shall not be disqualified under the first sentence of paragraph (g)(4)(i) of this section if the following requirements are sa.tis- fied. (1) The ownership of the sudace es- tate and mineral interest were sepa- rated before June 13. 1976, and remain so separatod up to and including the time of the contribution. (2) The present owner of the mineral interest is not a porson whose relation- ship to the owner of the surface estate is described at the time of the con- tribution in section 267(b) or section 707(b), and (3) The probability of extraction or removal of minerals by any surface mining method is so remote as to he negl1gjble. 158 Internal Revenue Service, Treasury Whether the probabIlity of extraction or removal of minerals by surface min~ ing Is so remote AS to be negligible jB a question of fact and Is to bB made on A. case by case basis. Relevant factors to be considered in determining if the probability of extraction or removal of minerals by surface mining is sa re- mote as to be negligible include: Geo- logical, geophysical or economic data showing thc absence of mineml re- serves on the property, or the lack of commercial feasibility at the time of the contribution of surface mining the mineral interest. (B) If the ownership of the surface es- tate and mineral interest ftrst became sepl\rated after June 12, 1976, no deduc- tion is permitted for n contribution under this section unless surface min- ing on the property is completely pro- hibited. Oii) Examples, The provisions of para- graph (g)(4)(i) and (it) of this section may l.Je illustrated by the following ex- amples: EJ:omple l. K owns 5,000 acres or bottomland hardwood propel.ty a.long n. major waLel'shed system In the southem p<-'\.rt oC tho Unlted SW\.tes. Aj;l"encles within the DeDn.rtment oC the Interiol' have deLermlned Lhat southel'n bol.Lomland hardwoods are a rnpidly dimin- Ishing l'esource and a critical ecol:lY8tem in the south becll.use of Lhe intense pressure to cuI, Lhe trees and convert the land to agricul- tural use. These agencies have tm'l.her deter- mined (and have indicated In correspondence with K) l.hat boLLomland hardwoods Dl'Ovide 1\ supel'b hablLal. for numerous species and play a.n ImporL.'UlL l'ole in controlling aooels and pUl'Hying rivel'S. K donates to a. ([ua.llried organization his entIre Intel"est in this prop- erty other than his interest in thlj g1l..'l ll.nd all deposltB that have been Identified under K's property. K covenan t.s and can ensure that, although drilling for gas and 011 on tbe propel.ty may have some temporary localized Impf\.ct on the real property, Lhe drilling wlll not interfcl'e wit.h tho overall conservaLlon purpose of the gift, which is to protect the unique bottomla11d hardwood ecosystem. Ac- cordingly, the donaL1on qual1C103 fol' f\. deduc- tion under this secLion. Example 2, Assume the same fa.cLs as In E~'- ample (1), except that. In 1979, K sells the min- erai interest to A, an unrelaLed person, in an arm's-length transact.ion, subject. to a. re- corded prohibition on t.he removal of any minends by any slll'face mining met.hod llnd a recorded pl'ohibHion agalnst any mining teclmique thaI, will harm the bottomland hardwood ecosysLem. After the sale to A, K danat.es f\ qualHled real !>I'opel.ty Intel'l;!~t. to ~1.I70A-14 a quail fled organization to protect the bot.-- tomlaml hardwood ecosystem. Since at the time ot the tmnster, llUrface mlnlng and any minlng techni<!ue thl\t wlll harm the bottom- land h<\rdwood ecoBystt!ffi R.i'e completely prohibited, the donn.t1on qun.l1nes tor a de- duct.ion under t.bis Sl:!cUon. (5) Protection of conservntion purpose where taxpayer reSef'ves certain rights-(1) Documentation. In the case of a dona~ tion made after li'ebruary 13, 1986, of any qualified real property interest when the donor reserves rig.hts the ex- el'cise of which may impair the con- servation interests associated with the property. for a deduction to be allow- able under this section the donor must make available to the donee. prior to the time the donation Is made, docu- montfl.t1on sufficient to establish t.he condition of tho property nt the time of the gift. Such documentation is de- signed to protect the conservation in- terests associated with the property. which although protected ill perpetuity. by the easement, could be adversely ar~ fected by tho exercise of the reserved rights. Such documentation may in- clude: (A) The npproprlate survey maps from the United States Geolo!fical Sur- vey, showing the property line amI other contiguous or nearby protected areas; (B) A map of the area drawn to scale showing all existing man~mnde im- provements or incursions (such as mads, buildings, fences, or gravel pits), vegetation and ldentlflcation of flora and fauna (including. for example, rare spocies locations, nnimnl brooding nnd roosting areas, ancJ migration routes), land use histOl'y (including present uses and recent past disturbances), ana distinct natural features (such as large trees and aquatic areas); (0) An aerial photograph of the prop- erty at an appropriate scale taken as close as pOSSible to the date the dona- tion is made; and (0) On-site photographs taken at ap- proprIate locations on the property. If the terms of the donation contain re- strictions with regard to a partjcular natural resource to be protected, such as water quality or air quality, the conriltion of the resource at or near the time of the gift must be established, The documentation, including the 159 61.l70A-14 maps and photographs, must be accom- panied by n statement signed by the donor and a representative of the donee clearly referencing the documentation and in substance saying "This natural resources inventory Is n.n accurate rep- resentation of (the protected property) at the time of the transfer,". (i1) Donee's right to inspection and legal remedies. In the case of any dona- tion referred to In paragraph (g)(S)(i) of this section, the rlonor must agree to notify the donee, in writing, before ex- ercising any reserved right. e.g. the right to extract certain minerals which may have an adverse impact on the conservation interests associated with the qualified real property interest. The terms of the donation must pro- vide a right of the donee to enter the property at reasonable times for the purpose of inspecting the propel'ty to determine if there is compliance with the torms of the donatiOll. Addition- ally, the t~'Jl'ms of the donation must provide a dg'ht of the donee to enforce the conservation restrictions by appro- priate legal proceedings, including but not limited to, the right to require the restoration of the property to its con- dition at the time of the donation. (6) Extinguishment (I)' In general. If a subsequent unexpected Change in the conditions surrounding the property that is the SUbject of a donation under this pnrngraph can make impossible or impractical the continued use of the property for conservation purposes, the conservation purpose can nonetheless be treated as protected in perpetuity if the restrictions al'e extinguished by ju- dicinJ proceeding and all of the donee's proceeds (determined under paragraph (g)(6)(U) of this section) from a subse- quent saie or exchange of the property are used by the donee organization in a manner consistent with the conserva- tion purposes of the Oliginal contribu- tion. (ii) Proceeds. In case of a donation made after February 13, 1966. for a de- duction to be allowed under this sec- tfon, at the time of the gift the donor' must agree that the donation of the perpetual conservation restriction gives rise to a property right, imme- diately vested in the donee organiza- tion, with a fail' market value that is at least equal to the proportionate 26 CFR Ch. I (4-1-02 Edilion) value that the perpetual conservation restriction at the time of the gift, bears to the value of the property as a whole at that time. See U,170A- 14(h)(3)(111) relating to the alloCk'l.tion of basis, For purposes of this paragraph (g)(6)(ii), that proportionate value of the donee's property rights shall re- main constant. Accordingly, when a change in conditions .give rise to tIle extinguishment of a perpetual con- servation restriction under paragraph (g)(6)(j) of this section, the donee Ol'ga- nization, on a subsequent sale, ex- change. or involuntary conversion of the Subject property, must be entitled to a. portion of the proceeds at least equal to that proportionate value of the perpetual conservation restriction, unless state law prOVides that the donor is entitled to the full proceeds from the conversion without regal'll to the terms of the prior pel1:>etual con- servat.ion restriction. (h) Vuluation-(1) Entil'e interest of donor other than qualified mineral inter- est. The value of the contribution under section 170 in the case of a contribution of n taxpayer's entire interest in prop- erty other than a qualified mineral in- terest is the fair market value of the surface rights in the property contrib- uted. The value of the contribution shall be computed without regard to the mineral rights. See paragraph (h)(4), e.-rample (1), of this section. (2) Remainder interest in real property. In the case of a contribution of any re- mainder interest in real property. S8C- tion 170(0(4) provides that in deter- minIng' the valuo of such interest fol' purposes of section 170, depreciation and depletion of such property shall be taken into account. See ~1.170A-12. In the case of the contribution of a re- mainder interest for conservatiOn pur- poses, the current fair market value of the property (against which the Umita- tions of ~1.170A-12 are applied) must take into account any pre-existing or contemporaneously recorded rights limiting, for conservation purposes, the use to which the subject property may he put. (3) Perpetual conservation restrlction.- (i) In general, The value of the con- tribution nnder section 1'70 in the case of a charitable contribution of a per- petual consorvatlon restriction is tho 160 Internal Revenue Service, Treasury fair market value of the perpetual con- servation restriction at the time of the contribution. See ~ 1.170A-7(c). If there is a substantial record of sales of ease- ments comparable to the donated ease- ment (such as pw'chases pursuant to a governmental program), the fair mar- ket value of the donated easement is based on the sales prices of such com- parable easements. If no substantial record of market-place sales is avail- able to use as a meaningful or valid comparison, 3.S a general rule (but not necessarlly 1n fill cases) the fair mar- ket value of a perpetUf\.l conservation restriction is equal to the difference between the fair market value of the property it encumbers before the granting of the restriction and the fall' market value of the encumbered prop. erty after the granting of the restric- tion. The amount of the deduction in the case of a charitable contribution of a. perpetual conservation restriction covering a portion of the contiguous property owned by n dOIlOl' and the do- nor's family (ft." r1efined in section 267(c}(4}) is the difference between the fair market value of the entire contig- uous parcel of propel'ty befol'e and after the granting of tho restrIction. If the granting of n porpotual conservation restriction after January 14, 1986, has the effect of increasing the value of any other property owned by the donor or a related person, the amount of the deduction for the conservation con- tributIon shall be reduced by the amount of the Increase in the value of the other property, whether or not such property is contls-uous. If, as a re- sult of the donation of a perpetual con- servation resl.riction, the donor or a re- lated person recoives, or can reason- ably expect to receive, financial or eco- nomic benefits that are greater than those that will inure to the general publiC from the transfer, no deduction is allowable under this sectioll. How- ever, if the donor 01' a related person receives, or can rel\Sonahly expect to receive, a financial or economic benefit that is substantial, but it is clearly shown that the benefit is less than the amount of the tl'ansfer, then a deduc- tion undQl' this section is allowable for the excess of the amount transferred over the amount of the financial 01' economic benefit received or reasOll- ~1.I70A-14 ably expected t,o hc rccolved by the donor or the related person. For pur. poses of this paragraph (h)(3)((i), .re- lated person shall have the same mean- Ing as In either section 267(b) or section 707(b). (See t:J;cunple (10) of paragraph (h)(4) of this section.) (ii) Fair mm'feel value of properly before and after restriction. If before and after valuation is used, the fail' market value of tho propcrt,y before contrIbu- tion of the conservation restriction must take into account not only the current use of the property but also an objective assessment of how Immediate or remote the likelihood is that the property, absent the restriction, would in fact be developed, as well as any ef. feet from 'Zoning, conservatIon, or his- toric preservation laws that already re- strict the property's potential highest and best use. Further, there may be in- stances whore the grant of a conserva- tion restriction may have no material effect on the value of the property or may in fact serve to enhance, rather than reduce, the value of property. In such instances no deduction would be allowable. In the case of a conservation rest1"lction that allows for any develop- ment, howcvol' limited, on the property to be protected, the fair maket value of the property after conttibution of the restriction must take into account the effect of the development. In the case of a conservation easement such as an easement on a certified historic struc- ture, the fair market value of the prop- erty after contribution of the restric- tion must take into account the amount of access permitted by the terms of the easement. Additionally, if before and after valuation is used, an appraisal of the property after con. trlbution of tho restrIction must take into account the effect of restrictions that will result 1n a reduction of the potentjal fall' market value rep- resented by highest and best use but will, novortholcss, permit uses of the property that will increase its fair market value above that represented by the property's current use, The value of a perpetual conservation re- striction shall not be reduced by reason of the existence of restrictions on transfer designed solely to ensure that the conservation restriction will be 161 ~ 1.170A-14 dedicated to conservation purposes. See ~1.170A-14 (c)(3). (lil) Alfocation of basis. In the cn.sc of the donation of a Qualified real prop- erty interest for conservation purposes, the basis of the property retained by the donor must be adjusted by the elimination of that part. of the total basis of the property that is properly allocable to the qualified real property interest granted. Tho amount of the ba..9is that Is allocnble to the qualified real property interest shall bear the same ratio to the total basis of the property as the fair market value of the qualified real property interest bears to the fair market value of the property before the gronting of tho qualified real property interest. When a taxpa;yer donates to a qualifying con- servation organization an easement on a structure with respect to which de- ductions are taken for depreciation. the reduction required by this para- graph (h)(3)(ii) in the basis of the prop- erty ret.'l.ined by the taxpayer must be allocated between the structure and the underlying la.nd. (4) Examples. The provisions of this section may be illustrated by tho fol- lowIng' examples. In examples 111us-' trating the value or deduct1bHity of do- nations, the appUcabJe restrictions and limitations of ~1.170A-4. with respect to reduction in amount of charitable contributions of certain appreciatod property, and ~U70A-8, with respect to limitations on charitable deductions by individuals. must a.lso be taken into ac- count. El'alllple 1. A owns Goldacl'I:J, i\. pl'opl:Jrty ad- jacent to It st.'l.te park. A wa.nts to donate G<llda.cl'e to the state to bc used 1\5 part of the pal'k, but A wants to reserve a qualitJed milleral intel'est in the pl'Opel'l.y, to exploit clll'rentJ.v and to devise I\t. death. The fail' market value of the surface rights In Goldacre is $200,000 and the fall' mal'ke~ wllue of the minerai 11~hts In SlOO.OOO. In order ~o ensure that the Quality of the pnrk will not be degraded, restrlctlons musl. litl imJlosed on ~he right to extract the minerals Lhn.~ reduce the fall' markot vnlue of tho mln- emll'lghts to iSO,OOO. Under this section, Lhe value of the contribution 15 S2(JO,OOO (the value of the surface rights}. Example 2. In 1984 B, who Is 62, donal.es a remainder interest in Greenacl'e to a qnall- fyillg' organizati011 for conservation Jllll'JlOSes. Greellacr6 Is a tract of 200 acr6S of undevel- oped woodland Lhat is valued at $200,000 at 26 CFR Ch. I (4-1-02 Edition) its highest and besl. use. Uutler U.170A-12(b), I.he value of a remAInder Interest in real property following one life Is determined under 125.2512--5 of this chapt.er (Gift Tax Regulations). (See ~ 25,2512"5A of this cbapter witb respect ~o I.he valuation of annuities, Interests fOl' lIfe or term of years, and re- mainder 01' reverslor.al'y Interests trans- fen'cd before May I, 1999.) Accordingly, I.he value of the remalndel' Interesl., and thu8 the amount eligible fol' all Income tax deduction under section 170m, Is .$:)5,996 ($200,O(lOX.27998). Example. 3. Assume I.he Bame facts a.s in E:J:- ample (2). except. that Greenacre Is B's 200~ acre estate w!th a. home built during the co- lonll\l perlo<l. Some of the acreage around the home is cleared; the balance of Oreenacre, except foJ' access roads, is wooded and undeveloped. See section 170(f)(3)(1l)(I}. However, B would like Greena.cre to be main- tained lnlt.s current st.aw after hIs death. so he donates II. remainder inl.erest in Greenacre to 11 qualifying organl2ALlon for cansel'vA-Uon purposes I.lUl'Sunl. to section 170 CD(3)(B)(iil) and (h)(2)(B). At t.be I.ime of the l{lft the land bas a. value of $200,000 and the bouse b.1.5 n value of $100,000. The value of the remainder Intel'esl., and thus the amount eligible for an Income tax deduction under secl.lon 110m, Is computed pursuant to ~ 1.170A-12. See j1.l70A-12{b)(3). E~'(Jmple 4. Assume the same facts R8 In E..- ample (2), excel'lt thaI. aL age 62 Im~tea.d of do- nal.lng a remainder lnl.el'est B donates an easement in Greenacre to a quallf.vlng 011:'a- nizatlol1 for conservation purposes. 'I'he fair market value of Orcenll.cre after l.he dona- tion Is l'educeu 1.0 SI10.000. Accordingly, the value of ~he easement, and I.hus the amount eligIble for a deduction under section 170m, Is $90.000 (.$200,000 less S110.(00). Example S. Assume I.bc same (acts I1S in El'v ample (4). am] assume that three yearS ln~er, at age GO, B decIQe8 to donat.e a remainder In- terest In Greenacre to a (IUnllfying organiza- tion Cot' oonservlI,.tlon purposcs. Increasing real estattl values In the area have mlsed thc fall' market value of Greenacre (subject to the ca.<;ement) 1.0 $130,000. Accordlngly, the value of the remaindcr Intel'l}.9t, flnd thus the amounl. eligible fol' II. deductJon undel' sec- tion 170(f), 15.$41,039 (Sl30.000x.32030). E~mllple 6, ASllume the same facw as in Ex- ample (2), except I.hat. at the time o( the do- nation of a remainder interest In GI'6enIl.Cre, B also donat.es an eaaement 1.0 ll. different qualifyIng organIzation for COnS6rVl\tlOll pur, poses. na8ed on all I.be (acta and clr- cumstancos. tbe value of the easement is de- tel'lnined to be Sloo,OOO. Therefore, the value of the propert.y af1;er tile easemenl. ls $100,000 and the value of the remaindel' Interest, and I.hus tho amount cllgll1lc fo!' deduction unde!' sedloll 170m, Is $27,998 (SlOO,OOOx.271l98). 162 Internal Revenue Service, Treasury EJ.'umple 7. C owns Greenacre. a 200-acre es-- tate containing a house buIlt during" the co- lonial period. At Its higheBt and best use, for home development. the Call' ma.rket value of Greenacre is S300.000. C donates an easement. (t.o maintain t.he house and Green acre in their current st.ate) to A. qualifying organiza- tion COI" conservl1.tion purposes. The fair ma.r- l!et value of Greenacre aft;.er the donation Is reduced to S125,000. Accordingly. the value of Lhe easement and t.he amount ellgil)le for a deductIon under section 170(0 is $175.000 (5300,000 less Sl25,OOO). Example 8. Assume t.he Bame Cacts as in E,l'- ample (7) and assume that. three years later, o decides to donate a remainder Int.cl'Cst. in Greenacre La a qualifying ol'gMization for conservation )llll'po.'WR. Increi\.'ling real estRte values in the area have raIsed the fall' ml\!'- ket value oC GreenaC1'8 to $180.000. Assume that because of the perpetual easement pro- hibiting any development of the land, the value of the house is 3120,000 and the value of !.he land lB S60,OOO. The value of the remain- der lnl.eresL, and lhw; the amount eligible Cor an income tax deduction under section 170(n, is computed pursuant to '1.170A-.12. See ~1.l70A-12(b){3). Emmple 9. D owns property with a basis of .520,000 and a fail' market. value of SOO,OOO. D donat.es to a Qualifying organization an ease- ment for conservat.lon purposes t.hat is deter- mined onder this section t.o have a fair Inar4 keto value of 360,000. The amount of basis al- locable to the easement. I:> 315,000 ($60,0001 sro,000=.$15,000l$20,000). Accordingly, the basis of the property Is reduced Lo $5,000 ($20,000 minus 315,000). Example 10. E owns 10 one-acre lots that am curnmUy woods and parkland. The fall' mar- ket value of each of I!:'s IOt6 is 315,000 and the basis of each lot is $3,000. E gmnts to the counLy a perpetual easement ror conserva- tiOll purposes to use ami maintain eight of the aCI'as as a public park and to 1'est.1'Jot. any fut.ure development Oll tbose eight acres. As a I'eault of t.bs l'est.l'lcUons, Lbe value of the eight acres Is l'educed to $1.000 an a01'e. How- ever, by perpetul\lly restl'lctlng developmenL on this portion of the land, E hltS ensuI'ed that the two l'emainlng acres will always be boI'dered by paI'kland, thus Increasing t.helI' Cair market value to $22,500 each. If the eight acres l'elWesented a.1I of E'a land, t.he fall' market value of the easement would be S112.OOO. an amOUllt. equal t.o the Call' market value of the land before t.he gmntlng of the easement (8x$15,000=$120,OOO) minus the Jail' market value of Lhe eDl,:umbered llUld afLer the gmnting of the easement (BxSl,OOO=.$8,OOO). However, because the ease- lUeut only covered a portion of the tax- payer's COllUguOUS land, t.he amount of t.he deduction under section 170 Is reduced Lo S97,000 ($150,000-$53,000), that Is, the dif- ference between the fair market value oC ilia entire Ll'act of lR.nd before (Sl50,OOll) and after ~ l.170A-14 ((8l<.SI,OOO)+(2x $22,500)) the granting of the easement. E:rample ]1. Assume the same facts as In ex- ample (0). SInce the easement covers a pOl'. Won of E's land, only the basis of that por- tion is rtdjusted. Therefore, t.ila amount of bi\.'lts allocable to the easement Is $2'2,400 (( 8x$3,OOO )x(S1l2 ,000lS1 20,0(0)). AccordIngly, the basis of the eight acres encumbered by the easement Is reduced to 11,600 (.521,00lJ-- $22,4(0), 01'.$200 for each aore. The basis oC the two remaining acres 18 not affected by tbe donation. EIumple 12. F owns and uses n.s professional offlce5 a two-sLory building that lies within II. regJstered historic dlst.I'IcL. F'B huilding is all ouwtandlng example of period architec- ture witll a fall' ml\1'ket value of Sl25,OOO. Re- stric\,cd to Ita current use, which loll t.he high- est and !lest. use of the property wlLbout making changes to the facade, the bnlldlng and ]01. would have a fall' mll.l'ket. value or $100,000, of which $SO,OOO would be a.lIocab]e Lo the building and $20,000 woud be nJlocable to the 10L. F's basis In the property Is $50,000, of which :S.IO,OOO Is alIaea-ble to l.he building a.nd 310,000 is allocable to the 10L. F's nelgh- bol'hood is n mix of resldentla.l and commer- cial uses, and it Is pOBSlble that F (or an- ot.her owner) could enlarge the building Cal' more ext.ensh'e commeJ'Cill.l use, which is Its blgbest. alld hesl. use. However, thie would re- Quire changes to the Ca.cade. F woulU Ilke to donate to II. qUl\lifylng presel'vaLlon organiza- tion aD casement rest.rlcting any changes to the facade and promising to maintain the fa- cade In perpetuity. The donation would qual. ify COt' a deduct,lon under this section. 'fhe lair rruwket vo.lue of t.he ensoment is 125,000 (the fair market va.lue of the property hefore the ea.~ement, $125,000. minus the fair market. value of t.he property after the easement, $100,000). Pursuant t.o g 1.l70A-14(h)(3)(ill), the basis a.lJoca.bie to t.he easement Is $10.000 alld the basis of the underlying pl'operty (Ilulld- Ing and Lot) Is reduced to S40,000. (i) Substantiation requirement, If a tax- payer makes a quaUfled conservat.lon contribution and ch\lms a deduction, the taxpayer must maintain written records of the fall' market value of the underlying property before and after the donation and the conservation pur- pose furthered by the donation anJ such information shall he stated in the taxpayer's Income tax ret.urn if re~ qulrcd by the return 01' its instruc- tions. See a.lso ~1.170A-13(c) (relating to substantiation requirements for de- ductions In excess of $5,000 for chari- table cont.1'1butiolls made after 1984), a.nd section 6659 (l'elat.lng to additions to tax In t,he case of valuation over- statements), 163 ~ 1.171-1 r (j) Effective date. Except as otherwise provided in g1.170A-14(g)(4)(ii), this 8ec~ tion applies only to contributions made on or after December 18, 19BO. [T.D. 8069, 51 FR 1199, Jan. 14, 1986; 51 FR 5322, Feb. 13, 1986; 51 FH G219. Feb. 21, 1986, as amended by T.n. 8199, 53 FR 16085, May 5, 1988; T.n. 8510, 59 FH 30105, June 10, 1994; T.ll. 8819,64 FIt 23228. Apr. 30, 1999] fi 1.171-1 Bond premium. (a) Overvie1.l}--{l) In general. This sec- tion and M1.171-2 through 1.171-5 pro- vide rules for the determination and Amortization of bond premium by a holder. In general, a holder amortizes bond prerruum by offsetting the inter- est allocable to an accrual period wi th the premium allocable to that. period. Bond premium Is allocable to an ac. crual period based on a constant yield. The use of a constant yield to amortize bond premium is intended to generally conform the treatment of bond pre- mium to the treatment of original issue discount under sections 1271 through 1275. Unless otherwise pro- vided. the terms used in this section and ~~ 1.171-2 through 1.171-5 have the same meaning as those terms in sec- tions 1271 through 1275 and the cor- responding regulations. Moreover. Ull- less otherwise provided, the provisions of this section and ~U.171-2 through 1.171-5 apply in a manner consistent with those of sections 1271 through 1275 and the corresponding regulations. In addition, the anti-abuse rule in ~ 1.1275- 2(g) applies for purposes of this section and ~91.171-2 through 1.171-5. (2) CI'oss-references. For rules dealing with the adjustments to a holder's' basis to reflect the amortization of bond premium. see U.I016--5(b). F'ol' rules dealing with the treatment of bond issuance premium by an issuer, see ~1.163--13. (b) Scope-(l) In general. Except as provided" in paragraph (b)(2) of tills Bec- tion and U.171-5. this section and ~~ 1.171-2 through 1.171-4 apply to any bond that, upon its acquisition by tlle holder, is held with bond premium. For purposos of this section and ~~1.171-2 through 1.171-5, the telw bond -has the same meaning as the term debt instnl- ment in ~ 1.1275--Hd). 26 CFR Ch. I (4-1-02 Edition) (2) Exceptions. This section and ~~1.171-2 through 1.171-5 do not apply to- (1) A bond described in section 1272(a)(6)(0) (regular interests in a REMIC. qualified mortgages held by a REM1C. and certain other debt instru- ments, or pools of debt instruments. with paymentB subject to accelera- t.ion); (il) A bond to which U.1275-4 applies (relating to certain debt. instruments that provide for contingent payments); (Iii) A bond held by a holder that has made a ~ 1.1272-3 electfon with respect to the bond; (Iv) A bond that is stock in trade of the holder. a bond of a kind that would properly be included in the inventory of the holder if on band at the close of the taxable year, or a bond held pd. matily for sale-to clllItomers in the or- dinary course of the holder's trade or business: or (v) A bond issued before September 28, 1985. unless the bond bears interest and was issued by a corporation or by a government. or political subdivision thcreof. (c) Generalrule---(1) Tax-exempt obliga- tions. A holder must amortize bond pre~ mium on a bond that is a tax-exempt obligation. Soo ~ 1.171-2(c) Example 4. (2) 7'a:rable bonds. A holder may elect to amortIze bond premium on a taxable bond. Except as provided in paragraph (c)(3) of this section, a taxable bond is any bond other than a tax-exempt oblt- gallon. See ~1.171-4 for rules relating to the election to amortize bond pre- mium on a taxable bond. (3) Bonds the interest on which is par- tially excludable. For purposes of this section and ~U.171-2 through 1.171-5, a bond the interest on which Is partially excludable from gl'OSS income is treat- ed as two instruments, a tax-'exempt obligation and a taxable bond. The holder's basis in the bond and each payment on the bond are allocated be- tween the two instruments based on a reasonable method. (d) Determination of bond premium---{l) In general. 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( 0' '0.0 .; (I CJ V D ~ G8 0 Q.J / .r..' ~ \ ...J / :;:t; rtl , U " Vl ~ 0 . "V ~~ 61 " ' .. " \';; L 'ip ,\ ... ' '... o .:!!:~, ;.'~:"_ =: ~-:._-~ ~...,," ..- L'I _ ,- r-"'~' " . 'iT' ~- ::;rtJ " '\ , E. ;~~ ',:::;,... - d CITY OF ASHLAND Council Communication Study Session Discussion of Draft Intergovernmental Policy Meeting Date: October 19,2009 Primary Staff Contact: Martha Bennett Department: Administration E-Mail: bennettm@ashland,oLus Secondary Dept.: None Secondary Contact: , Approval: Martha Bennet Estimated Time: 45 minutes Question: What direction does the City Council have for further development and ~ventual adoption of an intergovernmental relations plan and policy? Staff Recommendation: Staffrecommends that the Council work towards adoption of an intergovernmental plan, At your study session, we will walk through the following discussion questions with the City Council: - Does the Council concur with the guiding principals related to why the City would work with other governments (e.g., to prevent new mandates, etc.)? - Does the Council concur with the overall structure of how intergovernmental relations would work on the staff level? In other words, does Council agree that the primary responsibility for working with staff from other agencies rests with the staff people who are charged with the relevant issue? - Does the Council agree with the general principals about Council and City staff contact with Federal and State elected officials? In other words, if it is related to the guiding principals or an established City position, then Councilors can have contact. Otherwise, Council and staff need to seek Council direction before making contact. - Does the Council generally agree with the responsibilities of people who are formally appointed to regional groups to both seek direction from and report progress to the City Council? - How does the City Council wish to proceed with developing the substantive agenda for Federal, State, and Regional intergovernmental work? Background: Staff and Council have been discussing the need to formally adopt an intergovernmental plan for several years. All City officials need to know what they are trying to achieve in their work with other governments, Additionally, Councilors have asked for clarity about how they should work with other governments and report back to the Council as a whole, Finally, the City can be more effective in achieving desired results with other governments ifthere is a coordinated agenda that is moved ahead at different points, After this study session, staff will make changes desired by Council and bring it back to Council for further action in January 2010, This document should be updated annually, Attachments: Draft Intergovernmental Plan Page 1 of I / r.l' City of Ashland Intergovernmental Plan and Policy DRAFT October 7,2009 Introduction The City of Ashland interacts with numerous governmental organizations, and actions ofregional, state and federal governments can have a direct impact on the City and the community, Ashland requires a policy about intergovernmental relations to: I. Ensure effective working relationships with the Federal, State, and County elected officials who also represent Ashland, 2, Ensure open, clear communication with regulatory agencies that govern City operations, 3, Ensure that Ashland uses all possible avenues to achieve community goals, 4. Achieve City Council goals 5, Protect the home rule authority of the City of Ashland to make decisions that are best for the community. 6. Ensure that key City revenue streams are protected, 7, Secure federal and state funds for projects that benefit the City of Ashland and other community institutions, Guidin!! Principles The City of Ashland will take positions on federal, state, county, or regional issues if that issue affects Ashland and: 1. Maintains, reduces or increases revenue that funds services in the community; or 2. Protects, threatens, or increases local control; or 3, Supports, threatens, increases or decreases funding or otherwise benefit specific programs or services used by citizens or institutions in Ashland; or 4. Imposes a new unfunded mandate; or 5, Supports or threatens implementation of an adopted City Council Goal; or 6. Supports or contradicts City policy. All City Officials, elected and appointed, will represent the official position of the City of Ashland in their work with other government groups. In no case may a City Official represent their own personal views if they are performing intergovernmental work as part of their official duties. If a City Official does not know whether the City has an official position, he/she should first check with the City Administrator or City Recorder. [fthis does not reveal the City's official position, the City Official should request that the item be placed on the agenda for City Council discussion. Draft Intergovernmental Plan and Policy October 7, 2009 Page 2 Federal Government The City of Ashland works with Congress and Federal Administrative Agencies on a wide variety of issues, Some of the City's Federal goals affect the community generally, affect specific institutions, or affect City Operations. In general, the City deals with the Federal Government in four ways: a As a partner agency with mutual or overlapping responsibilities, a As a land owner with land surrounded by Federal Forest land. a As a grant and funding recipient o As a local government regulated by Federal laws and rules Federal Legislative Issues The Mayor, City Councilors, or City of Ashland staff may directly correspond with a U,S, Senator or U,S. Representative on a legislative matter if: o The legislation relates directly to one of the six guiding principals identified above and the position taken by the Mayor or staff supports the City's interests; or o The City Council has already taken an official position on the issue and the correspondence supports the position; or o The City is asked to contact Congress by the National League of Cities or the League of Oregon Cities and the City of Ashland does not have a position contrary to the one advocated by NLC or LOC. If the Mayor, Councilor, or City staff person wishes to correspond with a member of Congress on an issue that does not meet one of these three criteria, then the item should be placed on the next regularly scheduled City Council agenda (in accordance with AMC 2.04,030). All correspondence between the City and a member of Congress shall be shared with every member of the City Council, with the City Recorder, and with the City Administrator. Specific Requests for Federal Funds through Congress The City of Ashland mav elect to request that members of Congress seek earmarks or direct allocations of Federal Funds either for its own projects or for the projects of key community institutions, such as Southern Oregon University, Ashland Community Hospital, the Ashland School District, Rogue Valley Transportation District, etc, The City may seek these through the annual appropriation process or through the reauthorization of major legislation (such as the Transportation authorizations). For its own projects, the City of Ashland will seek earmarks or direct allocations only for projects that can be completed within five years of receiving the earmarked funds to build trust with the Congressional delegation. The City of Ashland will also support funding measures that affect key federal agencies that benefit Ashland, For example, the City will support ongoing funding for the U,S, Department of Fish and Wildlife's National Forensic Laboratory, The City will also support continued operation of at U,S,D,A, Forest Service Ranger Station within Ashland, Likewise, the City may support, on a case- by-case basis, specific federal capital projects that meet community objectives, 2009-2010 Federal Legislative and Funding Issues - THESE NEED TO BE DEVELOPED BY COUNCIL In the coming year, the City of Ashland will actively participate in the following federal issues: 2 Draft Intergovernmental Plan and Policy October 7, 2009 Page 3 . Watershed protection, forest health, and fire prevention, The City of Ashland will continue to work with Congress and the USDA Forest Service to implement Ashland Forest Resiliancy for the purpose of protecting municipal drinking water, preserving Forest Health, and reducing fire danger. The City will actively pursue an aggressive monitoring program to meet community goals, . Telecommunications, The City will continue to advocate for legislation that protect's the City's right to manage its rights-of-way. Additionally, the City will support legislation that allows franchise fees or equivalent taxes on all telecommunications providers including cellular and satellite providers, . Ambulance Services/Medicare Reimbursements, The implementation and reduction of payments from Medicare to local ambulance providers has a harmful impact on the City's budget. Additionally, the number of calls for ambulance service has increased dramatically at the same time as the Medicare payment per call has dropped, This has shifted the burden of paying for the ambulance to Ashland taxpayers, Thc City will support efforts to increase the payment for ambulance transport and to recognize the importance of adequate payments in smaller communities with large rural service areas, . Transportation, The City will advocate for reauthorization ofthe TEA legislation that supports modal equity and supports its economic development objectives, . xx . xx . xx . xx Contact with Federal Agencies Generally, the City Staff in charge of a particular program should be the primary people responsible for working with Federal Agency staff. For example, the City's Community Development Department Staff work directly with Federal Housing and Urban Development staff to administer the City's Community Development Block Grant Program. In another example, Fire Department staff work on the FEMA grants for the City's CERT program. In one last example, Police Department staff work with the Federal Drug Enforcement Agency on the asset forfeiture program. Other City officials, staff or elected should not generally directly contact Federal Agency staff to request or direct specific actions unless requested by the Council, by the staff administering a given program, or on the request of the Federal Agency itself. 3 Draft Intergovernmental Plan and Policy October 7, 2009 Page 4 State Government The City relies on the State of Oregon in a wide variety of ways, and the City's relationship with State Government is closer than our relationship with any other level of government. In general, the City deals with the State Government in five ways: o As a local government whose functions and responsibilities are defined by the Orgeon Constitution and Oregon laws, o As a local agency that provides services that are regulated by State laws and rules o As a partner agency with mutual or overlapping responsibilities. o As a grant and funding recipient o As a recipient of technical assistance State Legislative Issues The Oregon Legislature considers many issues that could have significant impact on local government and the City of Ashland, During sessions of the Oregon Legislature, staff in the City Administration Department will monitor legislative issues. Because of short deadlines, particularly during the end of the Legislative Session, the City is often asked by the League of Oregon Cities to contact Ashland's legislative delegation with little notice. Usually, the turnaround time does not permit a review of the issue by the full council at a regular meeting The Mayor or City of Ashland staff may directly correspond with member of the Oregon Legislature or with the Governor's Office without prior direction of the Council if: o The legislation relates directly to one of the six guiding principals identified above and the position taken by the Mayor or staff supports the City's interests; or o The City Council has already taken an official position on the issue and the correspondence supports the position; or o The City is asked to contact a legislator by the League of Oregon Cities and the City of Ashland does not have a position contrary. If the Mayor, Councilor, or City staff person wishes to correspond with the Legislature on an issue that does not meet one of these three criteria, then the item should be placed on the next regularly scheduled City Council agenda (in accordance with AMC 2,04.030). All correspondence between the City and a State Legislator or the Governor's Office shall be shared with every member of the City Council, with the City Recorder, and with the City Administrator. 2010-2011 State Legislative Obiectives- THESE NEED TO BE DEVELOPED BY COUNCIL . Support for Transit Funding . State and Local Finance Reform o Ballot measure 5/50 o Transient occupancy tax restrictions o Real estate transfer tax 4 Draft Intergovernmental Plan and Policy October 7, 2009 Page 5 . Seek changes in state law related to telecommunications to respond to shift from wired technology to wireless technology . Increase State grant and loan funds for infrastructure projects, . Support for Southern Oregon University . Prevention of new local mandates or pre-emptions o Avoid preemptions related to telecommunications and franchises o Ensure changes to collective bargaining laws protect public interest. . . XXX . XXX . XXX Contact with State of Oregon Agencies Generally, the City Staff in charge ofa particular program should be the primary people responsible for working with State Agency staff. For example, the City's Public Works Department staff should work directly with the Oregon Department of Environmental Quality on implementation of regulations for the Clean Water Act. Similarly, Community Development Department will work with Department of Land Conservation and Development Staff on issues related to the City's implementation of Oregon Land Use laws and regulations, Other City officials, staff or elected, should not generally directly contact Staff Agency staff to request or direct specific actions unless requested by the Council, by the staff administering a given program, or on the request of the State Agency itself, If the relationship between the City and the Agency is unclear, the Mayor, City Council, City Administrator, and affected department director will work together to resolve how the City should work with that agency, 5 Draft Intergovernmental Plan and Policy October 7, 2009 Page 6 Rel!ional Participation The City of Ashland ,recognizes that few of the issues that the community faces stop at the City limits, Whether the topic is transportation, public safety, recreation, growth management, air quality or economic development, the City depends on the other local governments in Jackson County and the Bear Creek Valley for its economic, social, cultural, and environmental health. The City of Ashland has Council and staffrepresentation on numerous regional committees, It is imperative that both council liaisons and staff liaisons are in sync with one another and are consistent in conveying the City's position and message. Obiectives . Build strong and effective working relationships with other regional agencies . Build coalitions with other governments in the region on issues of mutual concern . Coordinate participation in regional groups by all elected and appointed officials to ensure that Ashland is conveying a clear, consistent message on critical policy matters . Support regional issues that specifically achieve City and community goals, including adopted City Council goals, 2009-2010 Regional Policy and Program Obiectives- THESE NEED TO BE DEVELOPED BY COUNCIL . Transit. The City of Ashland has longstanding policies that support transit and alternatives to the single-occupancy automobile as viable transportation choices, Therefore, in its work in the Rogue Valley Region, the City of Ashland will advocate for: . The long-term viability ofa single regional transit provider. None of the communities in the Rogue Valley can "go it alone" in supporting residents, businesses, and visitors to the region, With few exceptions, Ashland residents need to tr . Air Quality . Economic Development . Growth Management and Land Use . Quality of Life . XXXX . XXXX . XXXX . XXXX Regional Representation The City of Ashland has opportunities to interact with other governments on a wide variety of issues, In some cases, those interactions take place on an issue-by-issue basis. For example, the City Council may communicate occasionally with the Jackson County Board of Commissioners on a specific issue being considered by either the County or the City. The same could be true in work between the City of Ashland and another municipal government or with another entity such as the Rogue Valley Transportation District. In addition to working with other governments as issues arise, the City has official representation on several groups that deal with regional issues, Some of those groups are required by State or Federal 6 Draft Intergovernmental Plan and Policy October 7, 2009 Page 7 Law and others are groups that have formed to work on a specific issue that affects multiple agencies in the Rogue Valley. In some cases, the City of Ashland appoints an official delegate to serve on those groups, In other cases, a City Official serves by virtue of their office. Lastly, a regional group may also request that a particular official representing City of Ashland serve, Elected Official Appointments . RV ACT (Rogue Valley Area Commission on Transportation) - The RV ACT advises the Oregon Transportation Commission on the State Transportation Improvement Program for the Rogue Valley, RV ACT selects projects that achieve state and regional transportation goals, The City of Ashland addresses many regional and local issues through its participation on RV ACT and provides feedback to ODOT abut projects that meet critical regional needs, . RVMPO (Rogue Valley Metropolitan Planning Organization) Policy Committee - The MPO allocates Federal Transportation dollars . RVCOG (Rogue Valley Council ofGovemments) Board of Directors . RPS (Regional Problem Solving) Policy Committee Citv Staff Appointments . RVMPO Technical Advisory Committee . RPS Technical Advisory Committee . Regional Managers Group . ARE THERE OTHERS? Other Potential Groups . Public Safety Coordinating Council . Jackson County Committtee on 10 year plan to end homelessness . ARE THERE OTHERS? 7