Finding a green lining in slow property sales

Trust gets break on Maine land

The developer who sold Kitteredge Brook Forest, on a scenic island off Maine, at a discount to Maine Coast Heritage Trust this week will get a $2 million tax deduction. The developer who sold Kitteredge Brook Forest, on a scenic island off Maine, at a discount to Maine Coast Heritage Trust this week will get a $2 million tax deduction. (Bill Greene/Globe Staff)
By Jenifer B. McKim
Globe Staff / July 3, 2011

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MOUNT DESERT ISLAND, Maine - Developer Shepard Harris has spent summers in Maine since childhood, so he knows the state’s vast stretches of unblemished space are precious. But his decision to keep this island’s largest remaining piece of undeveloped land from being dotted with homes came down to something more pragmatic: a tax break.

Last Monday, a land preservation group paid $2 million for Harris’s tract - 516 acres of forest and wetlands adjacent to Acadia National Park - about half of its appraised value. Harris, 54, said accepting a discounted price, getting a $2 million tax deduction, and pleasing the island’s conservationists was more appealing to him than the prospect of clearing 50 or 60 house lots at a time when the real estate market remains stubbornly sluggish.

“Every day that goes by, I don’t get a lot younger,’’ Harris said. “The tax benefit helped - that’s what made the deal work.’’

The sale of the prime parcel to Maine Coast Heritage Trust, a nonprofit whose mission is to save coastal land and islands from development, is an example of the gains conservationists are making in New England and across the country. With the housing industry in the doldrums, an increasing number of property owners are cutting their losses by selling land to environmental and preservation groups at attractive prices. That means more coveted islands, mountain ranges, and riverside plots are going into public trusts or coming under state protection.

“It’s a community victory, and it is also a victory for the habitat and the water quality and the wildlife in the park,’’ said David MacDonald, director of land protection for the Maine Coast Heritage Trust. “With the slowdown in the real estate market, there are more sellers willing to come to us first. When the market is hot, they say, ‘We are listing it, and good luck if you can compete.’ ’’

Indeed, the down real estate market has provided an upside for conservationists, presenting them with enticing opportunities. In Massachusetts, for instance, the state recently paid $3 million for more than 840 acres in the foothills of the Berkshires, significantly less than the developer’s original asking price. Two weeks ago, a coalition of nonprofits led by the Lincoln-based Massachusetts Audubon Society bought a 337-acre mountainous area in the Connecticut River Valley for $1.35 million from a bankrupt developer, who scrapped plans to build homes on the land.

“It really is one of the true silver linings of this downturn,’’ said Robert Wilber, Mass. Audubon’s director of land protection. “Important properties are being protected at a fraction of what they would have cost only a few years ago.’’

Acadia National Park accounts for about 44 percent of Mount Desert Island’s 69,000 acres. The scenic isle about 275 miles north of Boston is a bounty of nature. It features spectacular cliffs, winding bike paths that were once carriage roads, bare-topped mountains that appear more formidable because they rise from sea level, and the fjord-like majesty of Somes Sound. Mount Desert has also long been a favorite destination for the ultrarich. David Rockefeller, Martha Stewart, and Edward C. “Ned’’ Johnson III, head of Fidelity Investments, are among the many who own estates on the island.

MacDonald, 47, who grew up in the small village of Somesville on Mount Desert, said that over the years hundreds of acres of wildlife habitats have been taken over by housing - from mammoth summer compounds to modest houses for year-round residents.

The newly-purchased property, known as Kitteredge Brook Forest, abuts Acadia at two locations and also borders some small neighborhoods as well as the grounds of the regional high school. The inland parcel doesn’t offer the dramatic ocean views or mountaintop vistas that draw 2.5 million visitors a year to the national park, but it is a popular local spot for walking and fishing.

“This is a significant acquisition,’’ said Stephanie Clement, conservation director for the nonprofit Friends of Acadia group. “It presents great opportunities for habitat protection and maintenance of wildlife corridors.’’

Harris, a financial adviser who grew up in Pennsylvania and lives in San Francisco, bought more than 1,000 acres of Mount Desert land decades ago and developed about 50 house lots. Over the years, he swapped land with the park, trading some of his for parcels better suited to build on. He also said he spent some time living on the island full time and believes development should work in conjunction with conservation efforts.

About five years ago, he agreed to work with Maine Coast Heritage Trust to reconcile their differences - financial gain versus preservation - over the Kitteredge property. Together they hired a Yale University intern specializing in environmental management and mapped the land, working in concert with local and park officials.

“My role was to find the middle ground,’’ said Jules Opton-Himmel, the Yale student who Harris later hired as his project manager. “The development business doesn’t need to be adversarial.’’

Opton-Himmel said the parties eventually devised a plan for Harris to sell 516 acres to the trust. It also called for Harris to retain 50 acres that he could develop into residential subdivisions. Their thinking was that the people who bought homes would benefit from living near conservation land, raising their property values, and Harris could come close to realizing his financial goals with the $2 million sale and accompanying tax benefit. And in the process, Kitteredge would forever be safe from development.

Harris gave the trust a year to come up with the money, and the nonprofit quickly secured a $1 million grant from the US Fish and Wildlife Service while securing matching funds from other donors. The chance for the trust to make a bargain buy helped motivate people to give money, MacDonald said.

“Having the year to put it together was essential,’’ he said. “If we had to do it in a normal market setting, it wouldn’t have happened.’’

Realizing such opportunities will dissipate once the economy starts to grow faster, some conservationists are furiously trying to come up with cash to buy more land now. For instance, the Maine Coast Heritage Trust’s fund-raising campaign has been expanded to focus on closing more deals.

Angela Twitchell, executive director of the Brunswick-Topsham Land Trust, said her Maine nonprofit made a record number of small land purchases last year, including a prized farm land and riverside property. But it is not resting - the group plans to start a capital campaign this fall.

“We have some of the greatest opportunities in my career, and some of the biggest challenges,’’ Twitchell said. “If you go back 10 to 12 years, [with] these big pieces of prime land for sale, there would be several developers willing to pay above fair market value.’’

The challenges include soliciting money from individual donors still stretched thin because of the recession’s lingering effects. Also, some land owners remain hesitant to accept downsized property appraisals.

Last Tuesday, MacDonald walked to the end of a paved road that under Harris’s original plans would have been extended into a forest of white pine and spruce trees, and alongside a brook that is a favorite of trout fishermen. This piece of Mount Desert Island is secured, he said, but dozens of other smaller parcels are still at risk of development.

“It’s like a puzzle,’’ MacDonald said. “There is still more to do.’’

Jenifer B. McKim can be reached at