Possibilities of the conservation easement

Even as I slogged toward the Christmas holidays the business bug kept buzzing around. By now, Dallas, Mark and I had a clear idea about the possibilities at Belmont Downs. We were going to propose to Tim and the First Commitment Bank - the bank that held the $10 million dollar, non-performing note but on which they could not foreclose due to the bank's own solvency problems, that they reserve 10% of the property for exclusive home site but put everything else, all 400 residual acres in a conservation easement, give the easement to a land trust and harvest the tax credits and deductions for use by bank investors who had a vested interest in seeing that the bank stay in business. The problem now became, what land trust? There were lots of them chartered in Georgia but was there a perfect one? The answer came, as so many of the big ones had so far: from a remarkable source. Mark and I were eating breakfast together one rainy morning and I was looking at the survey and the appraisal that Jim Rice had given me. Having had some prior experience with appraisers, I decided to call the guy who had done the work on Belmont Downs and go pick his brain. His name was Dennis and he turned out to be an odd but remarkably articulate fountain of information on easements. he volunteered almost immediately that the Trust for Public Land and their local Director, Ken was who we needed. I liked Dennis right off as he had a big sign beside the door to his very cluttered office that read, "Nobody gets to see the Wizard, Not Nobody, not No How." he was the wizard alright. And man, was he right about Ken. The Trust for Public Land is a huge, old land trust that has as its mission "Land for People." And Ken was a disciple of the religion of conservation but he had a can-do attitude that seemed to suggest that he could think in technicolor. He listened carefully to our plans, made a few thoughtful suggestions and gave us every indication that we could count on this land trust to help execute Belmont Downs and perhaps many more. In his office in downtown Atlanta, I saw for the first time that our process could work, it could work in lots of different settings and circumstances and we could make money helping people with broken land deals either using the equestrian facilities idea or not. The outline of an evolving business was emerging right in front of us.

It seems the right time to say that i am a firm believer in a variation of the Protestant work ethic. My theory goes: work hard at something constructive and something good comes from the effort. it might not be the good you intended, but it'll be good never the less. My idea of starting a business to save broken real estate projects, and community banks in the process was picking up momentum and I was beginning to believe it, despite the fact that we had no proof that it would even work outside a couple of exotic examples

Just a ways down the road...

Tim turned out to be a small man, about my age more or less who had been trained as a Bell South sales manager but had stumbled into real estate development later in life. He's put together some small projects and then got a chance to buy these 400 acres from an acquaintance. He told us that a farmer friend of his family had just clear cut his property of the Georgia pine trees that had grown there for a generation and was now ready to sell the land. He bought it for a steal and got the bank to go along with an ambitious development plan to assemble 502 lots. he talked wistfully about the go-go days 2003 - 2005 when developed lots anywhere in greater Atlanta we red hot. Builders from all over the region had crews in town building for the insatiable appetite of the never ending population of people flocking to the prosperity Atlanta offered. Armed with prescient insight, he talk about how easy it was to borrow $10 million dollars from a consortium of community banks, built strictly for the purpose of capitalizing on this boom. And finally, he talked about the unbelievably cheap mortgage money available from the legions of mortgage lenders spread out across the country to feed this monster. He and two partners had thrown themselves into the furiously flowing credit river and now were drowning in debt. Then, in an instant he gathered himself, defended his actions and spoke just as passionately about the promise within those hills. He clearly loved his land and seemed to be the last man standing to believe that it could really become a shining city on the hill. He defiantly argued that they had not borrowed too much money - he in fact tried to retract the exact amount that they owed. He said that it was worth every bit of the $15 million dollar asking price and insisted that we jump into his four wheel drive Toyota truck for an off road tour. the tour itself was interesting as he told us every detail of the development process. he drove us through what seemed like miles of pine trees now just a head taller than the truck. To the previous owners great credit, he'd replanted the pine forest that was, sure as the world re-generating almost perfectly. indeed, one day this tract would be a magnificent example of a managed forest.he lamented all of the evidence of human disregard for the land - the four wheelers neglect of erosion control measures, the hunters disregard of posted "no trespassing" signs and the eyesore of the weekend party-ers littering of the tracts most scenic views.

real estate team ASSEMBLE!

As if I needed any more motivation to succeed the incentive stock options that I had earned during my career that were worth $500,000 at the start of the year had fallen to a value of less than $50,000 during the first month that I was thinking about what to do with the rest of my life. I had earned an old fashioned pension too but had no idea if that had any value any more. Facing the loss of most of my retirement assets I resolved that I had everything to gain from succeeding. So, on I marched...

My next call was to a tax lawyer with whom I had worked often, Tony. Tony and I are contemporaries, both from North Carolina and our business relationship had always been super. We have even had a few personal/social outings that were fun as well so I felt like he'd give me the straight scoop on what it was that I was trying. After exchanging voice mails for a week, we finally connected and he was encouraging but deferred to an accountant with whom he worked often who had directly relevant experience. Rick B. is the managing partner of a 180 person accounting firm in Atlanta and he called me back promptly. As it turned out, he had a client several years ago who was developing a 200 acre tract on lake Oconee, about 90 miles from Atlanta. The subdivision was a complete bust so, at Rick B.'s direction he put a conservation easement on all but a hand full of acres, went from 200 building lots to 20 and went through the elaborate process of having the state certify the conservation effort so that he could get the tax benefits designed to encourage land conservation. Additionally, he master planned an inexpensive equestrian facility for the easement property to attract land buyers who enjoyed such amenities. As luck would have it, he sold all of his lots (at a much greater price than he was asking originally) and when combined with the tax benefits that ultimately did come - the venture was a roaring success. Now, three years later the whole transaction is being audited by the IRS but they all feel as though their defense is air tight and they will not only prevail but they'll pave the way for folks like us to similarly succeed. Realizing that having a super qualified resource like Rick B. in my corner, I made plans to cultivate his friendship and get him squarely on our team.

In my experience, there is no better way to demonstrate our serious capacity than to introduce Rick B. to the richest guy I knew. That guy was Rick S. I met Richard S. several years ago and had been moderately successful in getting him to move his investment management relationship to me. Rick S. was 63, had grown up in California where he was a practicing accountant - a "good fact" in the grand scheme. He had worked for one of the state's largest audit houses then left to start his own firm. he built that into a regional player in California finance in the 1970's. During this time his wife had bought a dress shop that was struggling financially. he assumed control of it and when they sold "it" 6 or 7 years later they had 240 retail stores on the west coast. In the late '70's Rick S. sold all of his interests and started developing real estate. Well capitalized, he survived the recession of the early 80's and had the foresight to buy lots of property in the then depressed part of north Dallas, Texas. In the mid '80's when the oil patch was beginning to boom he sold his properties without developing a single one! He took his second fortune and bought then depressed real estate in north Atlanta where he built over a thousand homes and 10 million square feet of industrial space.When he and I met he was worth $100 million and looking for the next thing. He liked my idea but needed confirmation. I was willing to bet that Rick B. would be a credible source of such confirmation and would be interested in meeting such a successful prospective client. My hunch was right and they hit it off beautifully. I now had a confederacy with Dallas, Chuck, Tony, and two different Rick's. I was a long way from imagining how to make money at this but it certainly felt as though I was on to something.