Investment banks and real estate developers aren’t the only ones reeling from the ups and downs of the economy. A dramatic case in point: the National Audubon Society’s 950-acre bird sanctuary on the Chesapeake Bay, which is quite suddenly facing an uncertain future due to its unique financial structure. Society officials say they’re committed to assuring that the spectacular site remains undeveloped, but the troubling bottom line is that they cannot keep the property because the funding needed to maintain it has collapsed.
The land was effectively given to the Society in 1997 by Jean Ellen duPont Shehan, a member of the affluent duPont family. But for Audubon officials, a crucial part of the deal was a promised flow of funds — about $500,000 per year — to maintain the property. Shehan established two trusts providing Audubon the money to manage the sanctuary and maintain its seven houses, several outbuildings, and over 10 miles of roads and trails; the trusts also were also designed to pay the $40,000-a-year property tax bill.
“We took the property from Mrs. Shehan and the family with the understanding that a management endowment would accompany it,” said Henry Tepper, the National Audubon Society’s vice president for Eastern State programs. “It was pretty clear from the onset… that we did not have the means to maintain it,” and without the endowment, “we would have to sell the property.”
The trusts were heavily invested in tech stocks, which took a beating in 2001 and were just barely able to provide the needed cash.
Bruce Stone, Shehan’s attorney, said it became clear in late 2007 that the trusts she had arranged to provide the annual endowment were going broke.
“Audubon is a great organization, but unfortunately we just ran out of money.” Stone said. And so the society began looking for a buyer for the sanctuary, south of St. Michaels on Maryland’s Eastern Shore, in 2008, after being informed of the situation.
Tepper says that the Audubon Society is determined not to sell the sanctuary to developers. “Our first choice is to convey it to a public agency so it will continue to be available for public use,” he said. “It is really most important for the public to know that the property will never be developed past what is on the property now… There will be a continuation of the conservation status to the land.”
It all sounds good. But area conservation groups and local residents have said they are worried about what could happen to the land because it is prime real estate with eight miles of waterfront. The tract is valued at $7.2 million for tax purposes — but would be valued at several times that amount if developed. Up the creek from the preserve, four-acre waterfront building lots start at just under $1 million.
Complicating matters for Audubon is that any sale is likely to have tax implications. The 950-acres are part of a for-profit holding company, Reinecke Fuchs, Inc., which was transferred to Audubon in 1997.
Debi Osborne, Audubon’s director of real estate, said the organization would have to pay capital gains taxes when the Shehan Sanctuary is sold because it is an asset of Reinecke Fuchs.
“There are corporate vestiges that need sorting out,” Tepper said. “This is not common, but it is not unprecedented. In conservation, you see all kinds of structures with some more complicated than others.”
Robert J. Etgen, executive director of the Eastern Shore Land Conservancy (ESLC), a private, nonprofit organization that preserves Maryland farmland and natural habitats, said the fate of the sanctuary has been the subject of intense interest.
“The Shehan Sanctuary is a critical natural area and was a longtime ESLC conservation priority up until the Audubon ownership,” Etgen wrote in an e-mail. “Since the news broke about the sanctuary’s uncertain future, we (ESLC) have received many calls and inquiries from neighbors of the sanctuary, conservation partners, and others all expressing great concern about the future of that property.”
Tepper said the land is being appraised and no asking price has been set. He said Audubon has been talking with the state of Maryland and Talbot County officials to see if they are interested in buying it for public use.
In Talbot County, known for its grand estates, the bird sanctuary is unusual because of its size. It is the fourth largest property in the county, behind the regional landfill and two farms. For decades, it was a fox-hunting preserve owned by Shehan’s father, William “Willie” duPont Jr., financier, equestrian, sportsman, and an heir to the duPont fortune.
Britt Slattery, a senior conservation biologist, who until recently was the acting director for the Maryland/D.C. chapter of Audubon, said the sanctuary is home to more than 200 species of birds that migrate in and out through the course of a year. She said the center remains open to the public on Mondays, from 9 a.m. to 4 p.m., for passive recreation such as birding and hiking. On a recent tour, she stopped to point out the wetlands restoration project that volunteers have built in the middle of a field to provide a more varied habitat.
“It’s all for the benefit of the critters,” she said.
Shehan, 85, lives with a caregiver in Coral Gables, Florida. A call to her was referred to her son, who has been appointed her guardian, but said he has little knowledge of the arrangments with Audubon.
Stone, who said he has been Shehan’s attorney since 1982, said she is no longer in a position to give Audubon another gift.
Stone said she continued to lease a house on the property until 2007.
“She spent a lot of her childhood there and was very emotionally attached to it,” he said.
He said that by the mid 1990s, Shehan was spending $400,000 to $500,000 a year to maintain the farm. He said her advisers looked at a variety of ways to divest the property. “We decided to make it an outright gift, with no string attached, to have the maximum tax benefit,” Stone said.
He said they settled on Audubon because they liked the organization’s vision for the property.
“The Audubon team had wonderful ideas,” he said. “If used properly, it could educate an entire generation of environmentalists from New York to D.C.”
Osborne said she has talked to state and local officials about the sale. “Everyone is very interested to see if they can acquire it, but these times are difficult.”
Shaun Fenlon, director of land acquisition for the Maryland Department of Natural Resources, said his office is studying the opportunity.
Talbot County Parks and Recreation director Rick Towle said the county does not have the money to buy the sanctuary , but Towle said he “is pursuing what options might be available to keep it open to the citizens of Talbot County and for the greater good of Maryland.”
Audubon officials said the decision to sell was not easy.
“This is not where you want to end up,” Tepper said. “What we can do is ensure that it is conserved.”