Guest Editorial:
Eight Ripoffs in land acquisitions
by Oregon's non-profit institutions
By Oregon State Senator Ted Ferrioli, 2/19/04
Recently, a friend told me of a fundraising effort
in Oregon that raised more than $65 million in
cash and pledges over the past two years for
acquisition of lands considered to be the "last of
the wild." I told her those programs were a scam
on state and federal taxpayers and actually do
irreparable harm in rural communities.
She was shocked at my response and demanded that I
prove the point that instead of conserving
precious resources, these programs are a ripoff to
the taxpayer with no guarantee that the promised
benefits will materialize. So, here's how the scam
works:
Ripoff #1 happens because donations to these
non-profits are tax-deductible. Ordinarily, this
is a good thing, allowing schools, churches and
charitable organizations to raise money and do
good works. But the tax code makes no distinction
between preservationist groups and real charities,
making a perversion of the whole concept of
charitable giving.
Ripoff #2 occurs because non-profit funds are used
to "leverage" other funds, increasing the
resources available to purchase targeted
properties. Non-profit purchases become a
"magnet," attracting grants from watershed
councils, conservation districts, state and
federal agencies, and other non-profits. Dollars
sucked up by leveraging are unavailable for
restoration projects and real charitable and
educational institutions.
Ripoff #3 occurs when negotiations begin. Real
farmers and ranchers can only offer the amount
based on what the land will produce in animal
units, crops or timber. Because most non-profits
have no intention of timber harvest, farming or
ranching, the whole concept of "the market" is
destroyed. And non-profits are spending "free
money," so the sky is the limit! Non-profits now
"make the market" in some areas, forcing out the
real farmers and ranchers.
Ripoff #4 happens when the seller learns that
non-profit organizations can offer more than the
asking price (on paper), then, accept a "donation"
of a substantial part of the sale price (on
paper), which can significantly reduce the
seller's capital gains taxes! In other words,
non-profits can structure a transaction that
"nets" the seller more cash with less
"out-of-pocket" expense. This practice borders on
fraud. Who loses? All federal, state and local
taxpayers and "real" ranchers and farmers who
can't compete with such inducements.
Ripoff #5 happens after the title is transferred.
Since the property is now owned by a non-profit
entity, it comes off the tax rolls, increasing the
burden on other taxpayers and robbing local
jurisdictions of revenue for schools, hospitals,
police and fire protection.
Ripoff #6 happens when non-profits take the
acquired land out of production. Since there is no
intention of growing crops, timber or livestock,
the production values, including wages, income
taxes and earnings, never occur. The longer the
property lies fallow, the more the community loses
in terms of jobs and revenue to local and state
government.
Ripoff #7 happens when public access to the
property is cut off. Most private land owners
allow some sort of recreational use, and millions
of acres of private land are available to hunting
and fishing by permission. Even though these
properties are acquired with tax-subsidized gifts,
non-profits almost never allow public access,
fishing or hunting.
Ripoff #8 happens over time. Non-profits focus
their efforts on acquisition, termination of
production and locking up the land. Rarely, if
ever, do they commit to long-term management
planning or funding. Such properties often become
havens for weeds and predators, and become a huge
burden for local fire protection districts, weed
control districts, and predator control
authorities, not to mention neighbors.
Over the next 10-15 years, futurists say that
Oregon's population will increase by 1 to 1.5
million people. Most will live in cities. But how
many of those new residents will be farmers?
Ranchers? Tree Farmers?
Will the misguided efforts of preservationists,
our flirtation with socialist-style central
planning, our hostility toward ranching and
farming and our state tax policies make Oregon a
place where people must live and work only in
over-populated metro areas and where the rural
landscape is reserved for trophy homes and
wildlife preserves?
Don't get me wrong. Non-profit charitable and
educational institutions do a lot of good things
in Oregon, and not all acquisitions of private
land for public purposes is bad. But Oregon state
and local governments have lost a greater
percentage of revenue than in any other state in
the Nation, and we still have the country's
highest rates of hunger, poverty and unemployment.
In view of these realities, how much more rural
land should be taken out of production and off the
tax rolls? How long should state government
continue to subsidize elimination of food and
fiber production and the jobs they create?
Maybe it's time to re-examine the way in which
non-profits are allowed to get and keep their
tax-exempt status and what they do with the
millions they raise, then, judge the tree by its
fruits. Maybe it's time we limited tax-exempt
status to charitable and educational institutions
that actually do charitable work or offer
classroom instruction. The state would have far
more in spendable revenue without raising taxes on
private citizens or business, and the future of
agriculture, ranching and forestry would be far
more sustainable.
Senator Ted Ferrioli can be contacted at
Ferrioli.Sen@state.or.us
