Sunday, January 3, 2010

NY Times article on property purchases = preservation

From the New York Times:

Preservation Groups Find Bargains in Housing Bust
Conservation organizations have taken advantage of
depressed property prices and foreclosures to protect open

January 1, 2010
Preservation Groups Find Bargains in Housing Bust
From the Florida Everglades to the bluffs overlooking the Deschutes River in Oregon, conservationists are snapping up prime property for preservation, often at a fraction of what the asking price was at the real estate market’s height.

On Wednesday, the threatened bog turtle got a reprieve when conservationists scooped up 166 acres of marshland in Frankford Township in northern New Jersey, where developers had planned to build luxury homes. Hours later, city officials and environmentalists in Boise, Idaho, were rejoicing as they closed a deal to protect 1,300 acres of wooded foothills beloved by local hikers.

The victories reveal a green lining of sorts in a credit crisis that has depressed real estate prices, prompted foreclosures and derailed development projects across the nation.

The purchases by conservationists and state and local governments assure that thousands of acres will be put aside in perpetuity for parks, watershed protection or simply preservation of open space.

“We are getting a second bite at properties that never should have been developed in the first place,” said Will Rogers, president of the Trust for Public Land, a national nonprofit group that buys land for preservation. “We are working on dozens of these deals across the country, and I know other land trusts are as well.”

Although the real estate bubble burst in 2008, it was only in the last 6 to 12 months that many developers and banks became desperate enough to slash prices deeply enough for the trusts, Mr. Rogers and several other conservationists said.

Suki Molina, vice president of the Foothills Conservation Advisory Committee, which joined with the City of Boise in spending $10 million to preserve open space, said her group noticed a change in the way local landowners were approaching the committee early this year.

“The prices were lower,” Ms. Molina said, “but what has really changed is the attitude of the developers — they want to get out. Before this year, they would call, say they had a great piece of land and wanted top dollar. Now, they just want to sell.”

So what seemed like dream property forever out of their reach — including waterfront sites near cities or land bordering untouchable parks — is suddenly attainable.

In Little Egg Harbor, N.J., north of Atlantic City, Mr. Rogers’s group is buying 46 acres covered with pine scrub and marshes for $3.5 million. A year ago, it was priced at $6.2 million after its developer dropped plans for 73 single-family homes as part of a development called the Landings. Now it will become part of the adjacent Edwin Forsythe National Wildlife Refuge.

Similarly, officials in New York City announced on Tuesday that a park would be created on a site in Jamaica Bay, Queens, where 21 two-story attached houses with views of water had been planned only a year ago. The bay is polluted yet nutrient-rich, and buffering wetlands are needed there for bird and wildlife protection.

And in Portland, Ore., 27 acres of grassy and wooded hills at the city’s southeastern end that were to become a residential subdivision are now open for hiking, picnicking and dog walking.

The land has been added to a city park called Clatsop Butte. It sold for $4.4 million when the market collapsed, down from its estimated worth of $5 million a few months earlier.

In many cases, the preservation deals are negotiated with banks that have foreclosed on property and are eager to get bad assets off the books.

Bill Eshenbaugh, a real estate broker in Florida who goes by the promotional moniker the Dirt Dog, said the trusts’ endowments often allowed them to pay cash, which banks now require in such cases.

In 2009, “we did over $60 million in land deals, and not one penny financed,” Mr. Eshenbaugh said. “It was all cash. The trusts can come up with the cash, and cash is what it’s all about.”

Still, while the trusts see more opportunities, they have also been taking in fewer donations since the economic downturn. Local and state governments enlisted to cover part of a purchase or to maintain donated land are usually struggling as well.

Keith Fountain, director of land acquisition for the Florida chapter of the nonprofit Nature Conservancy, which focuses on preserving large swaths of undeveloped land to protect ecosystems, said the past year’s offerings were the best in the 17 years he had pursued properties, among them 500,000 acres that protect rivers feeding the Everglades.

But this year, for the first time in two decades, shortfalls led the State of Florida not to budget its annual $300 million for land conservation. Previously, the conservancy had put together deals and the state put up the cash. As a result, Mr. Fountain said, the conservancy has had to pass up some gems.

When a preservation purchase succeeds, not every municipality is necessarily happy. Towns may mourn the loss of development that could have generated revenue.

Officials in Albemarle County, Va., for example, are frustrated that Forest Lodge L.L.C., a local developer that had permits to build 3,100 houses and apartments on 800 acres of meadows and forest, gave that land and 400 acres more to the state for a park this week in return for tax credits.

Supervisors had anticipated $38 million in commitments for public improvements from Forest Lodge. What is more, said Dennis Rooker, a member of the board of supervisors, the county spent more than $200,000 in staff time to hammer out that plan.

But in the long run, said Mr. Rogers of the Trust for Public Land, even developers recognize that newly protected lands can have a positive effect on real estate prices.

“Developers have long seen that conserved land next to a development adds value,” he said. “There are genuine economic benefits for everyone that will come out of this.”