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T.C. Memo. 2025-96

JACKSON STONE SOUTH, LLC, JACKSON SOUTH

INVESTMENTS, LLC, TAX MATTERS PARTNER,

Petitioner

COMMISSIONER OF INTERNAL REVENUE,

Respondent

JACKSON STONE NORTH, LLC, JACKSON NORTH

INVESTMENTS, LLC, TAX MATTERS PARTNER,

Petitioner

COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________

Docket Nos. 12271-20, 12274-20. 1

Filed September 23, 2025.

__________

Anson H. Asbury, Robert B. Gardner III, Ethan J. Vernon, Lauren H.

White, and Andrew R. Vazquez, for petitioners.

Chelsey M. Pearson, Olivia H. Rembach, Rachel L. Gregory, Holly L.

Dennehy, Elizabeth M. Shaner, and Brian R. Cullin, for respondent.

TABLE OF CONTENTS

MEMORANDUM FINDINGS OF FACT AND OPINION ..................... 5

FINDINGS OF FACT .............................................................................. 6

opinion.

These cases have been consolidated for purposes of trial, briefing, and

Served 09/23/25

[*2]

Subject Properties and Ownership History ..................................... 7

Mr. Jackson’s Family and Business in Jones County ............. 7

Jackson Family Partnership .................................................... 7

Prior Appraisal of Subject Properties ...................................... 8

JSS ............................................................................................. 8

II.

Organization and Interests in JSS ................................... 8

Organization and Interests in JS Investments ................ 9

JSS Property .................................................................... 10

JSN .......................................................................................... 11

Organization and Interests in JSN................................. 11

Organization and Interests in JN Investments ............. 12

JSN Property ................................................................... 13

Land Evaluation ............................................................................. 14

Mr. Wingate............................................................................. 14

Jackson-Wingate Agreement .................................................. 16

Subject Properties in 2016 ...................................................... 17

Drilling and Testing ........................................................ 18

Colwell Letter of Intent and Quote ................................. 18

Dr. Capps’s Reports ......................................................... 19

III. Jones County .................................................................................. 20

Location, Population, and Aggregate ..................................... 20

Jones County Zoning............................................................... 21

Jones County Zoning Ordinance ..................................... 21

[*3]

Rezoning Application Standards .................................... 22

Jones County’s Comprehensive Land Use Strategy ...... 24

Granite Mining in Jones County .................................... 25

IV. Easement Transactions .................................................................. 27

Marketing ................................................................................ 27

Third-Party Investments ........................................................ 27

Execution of Conservation Easement Deeds ......................... 28

JSN Baseline Report ............................................................... 30

Appraisals ....................................................................................... 32

Hayter Appraisals ................................................................... 32

Edwards Appraisals ................................................................ 36

VI. Tax Returns and Notices of Final Partnership

Administrative Adjustment ........................................................... 37

VII. Expert Testimony ........................................................................... 37

Petitioners’ Experts................................................................. 37

Stephen Lee Echols, Jr. ................................................... 38

Gregory Stanish ............................................................... 40

Michael Wick ................................................................... 41

Benjamin Black ............................................................... 44

James C. Clanton............................................................. 46

Respondent’s Experts.............................................................. 48

Michael J. Chamberlain .................................................. 48

Raymond H. Krasinski .................................................... 51

Matthew Sullivan ............................................................ 56

[*4]

Andy D. Sheppard ........................................................... 59

OPINION ................................................................................................ 65

Burden of Proof ............................................................................... 65

II.

Charitable Contribution Deduction ............................................... 66

Whether the LLCs Had the Required Donative Intent ......... 67

Whether the JSN Baseline Satisfied the Requirements

of Treasury Regulation § 1.170A-14(g)(5) .............................. 68

Treasury Regulation § 1.170A-14(g)(5)........................... 68

JSN Baseline.................................................................... 70

Echols Report Discussion of Land Types ........................ 71

Chamberlain Report Discussion of Land Types ............. 72

Analysis............................................................................ 73

Whether the JSN Conservation Easement Satisfied an

Enumerated Conservation Purpose ....................................... 76

Protection of a Relatively Natural Habitat .................... 78

Preservation of Open Space ............................................ 88

III. Compliance with the Substantiation Requirements ..................... 94

Statutory and Regulatory Requirements ............................... 94

Whether Mr. Hayter Was a Qualified Appraiser................... 95

Whether the Hayter Appraisals Were Qualified

Appraisals................................................................................ 99

IV. Valuation of the Conservation Easements .................................. 101

Valuation Principles ............................................................. 102

Determination of FMV .......................................................... 103

Approaches for Determining FMV ................................ 103

[*5]

Determination of HBU .................................................. 105

Sales Comparison Methodology .................................... 127

Limiting the Charitable Contribution Deduction to JSS’s

Basis .............................................................................................. 135

The Parties’ Arguments ........................................................ 135

Analysis ................................................................................. 136

VI. Penalties ....................................................................................... 138

VII. Conclusion ..................................................................................... 145

MEMORANDUM FINDINGS OF FACT AND OPINION

MARSHALL, Judge: These cases involve noncash charitable

contribution deductions claimed for 2016, the tax year at issue. By

separate Notices of Final Partnership Administrative Adjustment

(FPAAs), respondent disallowed charitable contribution deductions

claimed by Jackson Stone South, LLC (JSS), and Jackson Stone North,

LLC (JSN, and together with JSS, LLCs), for their respective deductions

for grants of perpetual conservation easements over approximately 288

acres (JSS Conservation Easement) and 253 acres (JSN Conservation

Easement and, together with the JSS Conservation Easement,

Conservation Easements) of real property located in Jones County,

Georgia (Subject Properties), respectively, to Oconee River Land Trust,

Inc. (ORLT). Respondent determined that a 40% gross valuation

misstatement penalty under section 6662(h) 2 applies or, in the

alternative, that a 20% reportable transaction penalty under section

6662A applies with respect to any portions of the understatements to

which the section 6662(h) penalty is found not to apply. Additionally,

respondent determined that, if the gross valuation misstatement

penalty under section 6662(h) and the reportable transaction

understatement penalty under section 6662A do not apply, then a 20%

accuracy-related penalty under section 6662(a) and (b)(1) or (2) applies

2 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulation references are

to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times,

and Rule references are to the Tax Court Rules of Practice and Procedure. Except

where otherwise indicated, monetary amounts are rounded to the nearest dollar.

[*6] for negligence or a substantial understatement of income tax, or a

20% substantial valuation misstatement penalty under section

6662(e)(1)(A) applies.

The issues for decision are (1) whether the LLCs satisfied the

requirements of section 170 for their claimed charitable contribution

deductions with respect to their donations of the Conservation

Easements, (2) the fair market values (FMV) of the Conservation

Easements, (3) whether any charitable contribution deductions from the

Conservation Easements should be limited to basis, (4) whether 40%

penalties under section 6662(h) for gross valuation misstatements will

be imposed, or, in the alternative, (5) whether accuracy-related penalties

pursuant to section 6662(a) will be imposed. 3

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The First

Stipulation of Facts, the Second Stipulation of Facts, the Third

Stipulation of Facts, the Fourth Stipulation of Facts, the Fifth

Stipulation of Facts, the Sixth Stipulation of Facts, the Seventh

Stipulation of Facts, and the accompanying Exhibits are incorporated

herein by this reference.

The LLCs are both limited liability companies treated as

partnerships under the Tax Equity and Fiscal Responsibility Act of 1982

(TEFRA), Pub. L. No. 97-248, §§ 401–407, 96 Stat. 324, 648–71, for

federal income tax purposes. 4 Petitioners in these cases, Jackson South

Investments, LLC (JS Investments), and Jackson North Investments,

LLC (JN Investments and together with JS Investments, petitioners),

are tax matters partners (TMPs) and managers for JSS and JSN,

respectively. Howard Brian Jackson was the only manager of the LLCs

during the tax year at issue. The Petitions commencing these cases were

3 In the FPAAs issued to the LLCs, respondent relied on I.R.S. Notice 2017-10,

2017-4 I.R.B 544, in asserting penalties under section 6662A. In Green Valley

Investors, LLC v. Commissioner, 159 T.C. 80, 103 (2022), we held that imposition of

reportable transaction understatement penalties on syndicated conservation easement

transactions that are the same as or substantially similar to those described in I.R.S.

Notice 2017-10 was prohibited because Notice 2017-10 was issued without the notice

and comment required by the Administrative Procedure Act. See 5 U.S.C. § 553.

4 TEFRA, codified at sections 6221 through 6234, was repealed for returns filed

for partnership tax years beginning after December 31, 2017. Before its repeal TEFRA

governed the tax treatment and audit procedures for many partnerships, including

JSS and JSN.

[*7] timely filed on October 15, 2020. When the Petitions were filed,

each petitioner’s principal place of business was in South Carolina.

Subject Properties and Ownership History

Mr. Jackson’s Family and Business in Jones County

Mr. Jackson and his family have been in the residential

construction business in the South Atlanta region, including Jones

County, for over 70 years. They have deep ties to Jones County and to

Jasper County, which borders Jones County to the north. Mr. Jackson’s

father and all of the members of his father’s family were born and raised

in Jones County and Jasper County. Mr. Jackson and his wife, Julia B.

Jackson, were married in 1969 and raised three children, Brett Jackson,

Scott Jackson, and Amy Jackson Shiver (Jackson children). The Jackson

children reached adulthood before 2010.

In 2005, Mr. and Mrs. Jackson sold their primary residence in

Fayetteville, Georgia, and moved to Jones County. Until Mr. Jackson

retired in February 2022, he co-owned and operated Dames Ferry

Properties, LLC, in Jones County with his son Brett Jackson. Dames

Ferry Properties was engaged in real estate development in Jones

County from 2003 through 2022. Mr. Jackson also owns Dames Ferry

Communities, LLC, also engaged in real estate development in Jones

County. Finally, Mr. Jackson owns Brian Jackson Commercial Family

Limited Partnership, which owns vacant land in Jones County.

From 2003 through 2016, Mr. Jackson was involved in

approximately 150 real estate transactions in Jones County, and his

business in Jones County included purchasing, selling, and developing

single-family homes on vacant land. During this period and because of

his real estate development business, Mr. Jackson was generally aware

of whether a property in Jones County sold for market value or was

overvalued. As of the time of trial in these cases he was not aware of any

property in Jones County selling for $19 million.

Jackson Family Partnership

Mr. Jackson formed the Jackson Family Partnership in 2010 for

estate planning and wealth management purposes. In 2010 Mr. and

Mrs. Jackson conveyed hundreds of acres of land to the Jackson Family

Partnership, 561 acres of which collectively became the real property

held by each of JSS and JSN. The Jackson Family Partnership owned

the real property that became the property held by each of JSS and JSN

[*8] from December 29, 2010, through September 12, 2016, at which

point it was conveyed to JSS and JSN. Mr. Jackson was the sole general

partner of the Jackson Family Partnership from 2010. Mr. and Mrs.

Jackson gave Jackson Family Partnership interests to the Jackson

children. Mr. Jackson managed and controlled the Jackson Family

Partnership. Along with Mr. Jackson as the general partner, Mrs.

Jackson and the Jackson children were limited partners in, and the only

members of, the Jackson Family Partnership from 2010. Mrs. Jackson

and the Jackson children knew that they were partners in the Jackson

Family Partnership.

Prior Appraisal of Subject Properties

In 2013, the Jackson Family Partnership had 200 acres of real

property on the north side of Highway 18 West appraised for purposes

of securing a loan. Half of the 200 acres that were pledged as collateral

became part of the real property that was eventually held by JSN. Gary

Stroup, on behalf of Morris Bank, appraised the 200 acres of the Jackson

Family Partnership land at an FMV of $460,000, or $2,300 per acre, as

of July 25, 2013 (2013 Appraisal). As part of his appraisal, Mr. Stroup

determined that the highest and best use (HBU) of the 200 acres was

rural residential and recreational timberland. Mr. Jackson received the

2013 Appraisal and was aware of the FMV determined by the 2013

Appraisal.

JSS

Organization and Interests in JSS

On May 23, 2016, JSS was organized as a limited liability

company under the laws of the State of Georgia with its principal place

of business in Gray, Georgia. JSS issued 10,000 membership units to its

original members (together, Original JSS Members) in the following

proportions:

Name of

Partner/Member

Percentage Interest

H. Brian Jackson

39.51%

Julia B. Jackson

40.51%

Brett H. Jackson

6.66%

Scott B. Jackson

6.66%

[*9]

Amy J. Shiver

Total

6.66%

100.00%

The JSS Operating Agreement designated Mr. Jackson as the manager

and TMP of JSS. 5 Mr. Jackson was the manager of JSS from September

14, 2016, through April 22, 2019. 6 Mr. Jackson, Mrs. Jackson, and the

Jackson children signed the JSS Operating Agreement. It provided for

the members’ contributions of cash or property, as well as their rights to

share income, profits, and losses. The Jacksons all became partners in

JSS when they contributed real property interests (which they held

through the Jackson Family Partnership) to JSS. The JSS Operating

Agreement provided that the manager shall review a development plan

and develop proposals for either (1) holding property for investment and

appreciation pending a future sale of the property to a third-party

developer or (2) conveying a conservation easement to ORLT to obtain

tax benefits for JSS and its members.

Organization and Interests in JS Investments

On September 13, 2016, JS Investments was organized as a

limited liability company under the laws of the State of Georgia. The

original members of JS Investments were:

Name of

Partner/Member

Percentage Interest

H. Brian Jackson

39.51%

Julia B. Jackson

40.51%

Brett H. Jackson

6.66%

Scott B. Jackson

6.66%

Amy J. Shiver

6.66%

Total

100.00%

Under the terms of the JS Investments share purchase agreement

effective September 30, 2016 (JS Investments Share Purchase

Agreement), the Original JSS Members agreed to sell to JS Investments

5 As the manager of JSS, Mr. Jackson had the ultimate authority to manage

the business and affairs of JSS.

6 Mr. Jackson was also the TMP of JSS for the tax year at issue.

[*10] 9,500 of the 10,000 outstanding membership units of JSS in the

same proportions as those in which the Original JSS Members owned

the units. The sale contemplated in the JS Investments Share Purchase

Agreement closed on December 13, 2016. Mr. Jackson, Mrs. Jackson,

and the Jackson children signed the JS Investments Share Purchase

Agreement. After the sale, the membership units of JSS were held in

the following proportions:

Name of

Partner/Member

JS Investments

Percentage Interest

95%

H. Brian Jackson

1.9755%

Julia B. Jackson

2.0255%

Brett H. Jackson

0.333%

Scott B. Jackson

0.333%

Amy J. Shiver

0.333%

Total

100.00%

William Wingate served as the manager of JS Investments.

JSS Property

On December 20, 1976, Howard N. Jackson, Sr., conveyed to

Mr. Jackson a one-fourth undivided interest in Parcel 1 (90 acres),

Parcel 2 (150 acres), and Parcel 3 (80 acres), totaling 320 acres, all being

tracts or parcels of land in Jones County, via warranty deed. On

February 17, 1994, the trustees of the Jackson Family Trust conveyed

to Mr. Jackson all remaining interest in Parcels 1, 2, and 3, via warranty

deed. On August 17, 2009, Mr. Jackson conveyed the 320 acres of land

to himself and Mrs. Jackson as joint tenants with the right of

survivorship. On December 29, 2010, Mr. and Mrs. Jackson conveyed

Parcel 1 (90 acres), Parcel 2 (150 acres), and Parcel 3 (80 acres) less and

except a 10-acre tract, along with other property in Jones County, to the

H. Brian Jackson Farm Family Limited Partnership (Jackson Family

Partnership) 7 via warranty deed.

7 At the time it was organized, the Jackson Family Partnership was named

Brian Jackson Farm Family Limited Partnership. The Jackson Family Partnership

[*11] A new survey plat was completed for JSS on August 18, 2016,

which revised the property description to include 342.87 acres. The

survey plat depicted 342.87 acres as including Tract 1 (288.08 acres),

Tract 2 (15 acres), Tract 3 (10 acres), and Tract 4 (29.79 acres). On

September 12, 2016, the Jackson Family Partnership conveyed Tract 1

(288.08 acres) and Tract 3 (10 acres) (together, JSS Property) to JSS via

warranty deed. 8 The JSS Property lies on the south side of a two-lane

road, Highway 18 West. 9 As of December 15, 2016, land on the south

side of Highway 18 West was largely vacant land that was primarily

used for outdoor recreation and hunting, and also included some small

areas for timber production. 10 Mr. and Mrs. Jackson’s home is in Tract 2,

a parcel that is not owned by JSS but is in the middle of (and so

surrounded on all sides by) the JSS property. This has been their

primary residence since 2007. The Jones County Tax Commissioner

assessed the 2017 FMVs of the two parcels making up the JSS Property

at $507,592 and $95,000 (i.e., combined value of approximately

$603,000).

JSN

Organization and Interests in JSN

On May 23, 2016, JSN was organized as a limited liability

company under the laws of the State of Georgia with its principal place

of business in Gray, Georgia. JSN issued 10,000 membership units to its

original members (together, Original JSN Members) in the following

proportions:

filed a Certificate of Amendment Name Change on December 29, 2010, changing its

name to H. Brian Jackson Farm Family Limited Partnership.

8 Tract 2 (15 acres) was retained by Hunter’s Rest, LLC. Tract 4 (29.79 acres)

was retained by the Jackson Family Partnership. The two tracts were not conveyed to

JSS.

9 As of December 12, 2016, the JSS Property was the only asset held by JSS.

10 The area surrounding the Subject Properties is primarily agricultural with

some homes on small acreage parcels. There are very few traditional residential

subdivisions in the area. There is no public water or sewer service in this area.

[*12]

Name of

Partner/Member

Percentage Interest

H. Brian Jackson

39.51%

Julia B. Jackson

40.51%

Brett H. Jackson

6.66%

Scott B. Jackson

6.66%

Amy J. Shiver

6.66%

Total

100.00%

The Jacksons all became partners in JSN when they contributed real

property interests (which they held through the Jackson Family

Partnership) to JSN. The JSN Operating Agreement designated

Mr. Jackson as the manager and TMP of JSN. 11 Mr. Jackson was the

manager of JSN from September 14, 2016, through April 22, 2019. 12

Mr. Jackson, Mrs. Jackson, and the Jackson children signed the JSN

Operating Agreement.

Organization and Interests in JN Investments

On September 13, 2016, JN Investments was organized as a

limited liability company under the laws of the State of Georgia. The

original members of JN Investments were:

Name of

Partner/Member

Percentage Interest

H. Brian Jackson

39.51%

Julia B. Jackson

40.51%

Brett H. Jackson

6.66%

Scott B. Jackson

6.66%

Amy J. Shiver

6.66%

Total

100.00%

11 As the manager of JSN, Mr. Jackson had the ultimate authority to manage

the business and affairs of JSN.

12 Mr. Jackson was also the TMP of JSN for the tax year at issue.

[*13] Under the terms of the JN Investments share purchase agreement

effective September 30, 2016 (JN Investments Share Purchase

Agreement), the Original JSN Members agreed to sell to JN

Investments 9,500 of the 10,000 outstanding membership units of JSN

in the same proportions as those in which the Original JSN Members

owned the units. The sale contemplated in the JN Investments Share

Purchase Agreement closed on December 13, 2016. Mr. Jackson,

Mrs. Jackson, and the Jackson children signed the JN Investments

Share Purchase Agreement. After the sale, the membership units of JSN

were held in the following proportions:

Name of

Partner/Member

Percentage Interest

JN Investments

95%

H. Brian Jackson

1.9755%

Julia B. Jackson

2.0255%

Brett H. Jackson

0.333%

Scott B. Jackson

0.333%

Amy J. Shiver

0.333%

Total

100.00%

Mr. Wingate served as the manager of JN Investments.

JSN Property

On February 27, 2004, American Natural Resources, LLC,

conveyed to High Grove Development, Inc., 340.69 acres in Jones

County via special warranty deed. On August 1, 2006, High Grove

Development conveyed 340.69 acres in Jones County to Mr. and Mrs.

Jackson via warranty deed. On December 29, 2010, Mr. and Mrs.

Jackson conveyed the 340.69-acre parcel, along with other property in

Jones County, to the Jackson Family Partnership via warranty deed.

A survey plat prepared for JSN, dated August 18, 2016, depicted

the 340.69-acre parcel as Tract 5 (10 acres), Tract 6 (252.92 acres), and

Tract 7 (77.77 acres). On September 12, 2016, the Jackson Family

Partnership conveyed Tract 5 (10 acres) and Tract 6 (252.92 acres)

[*14] (together, JSN Property) to JSN via Warranty Deed. 13 The JSN

Property lies on the north side of Highway 18 West. 14 As of December

15, 2016, the land on the north side of Highway 18 West was largely

vacant land that was primarily used for timber production, outdoor

recreation, and hunting. The Jones County Tax Commissioner assessed

the 2017 FMV of the two tracts making up the JSN Property, at $99,228

and $454,379 (i.e., combined value of approximately $554,000).

The JSN Property is adjacent to the Piedmont National Wildlife

Refuge (Piedmont Refuge), which sits to the north and east. The

Piedmont Refuge is a 35,000-acre tract owned and managed by the U.S.

Fish and Wildlife Service. The JSN Property is also near the Oconee

National Forest, Cedar Creek Wildlife Management, and the B.F. Grant

Wildlife Management Area. Buttlers Creek and its floodplain run

approximately 5,280 feet through the middle of the JSN Property.

Buttlers Creek flows through the Piedmont Refuge before reaching the

JSN Property. It is a tributary of the Ocmulgee River and is in the Upper

Ocmulgee Watershed; the waters flow into the greater Altamaha River

Basin and then ultimately into the Atlantic Ocean.

II.

Land Evaluation

Mr. Wingate

Mr. Wingate has extensive experience with conservation

easement transactions, including syndicated conservation easement

transactions such as those at issue in these cases. He also has experience

in real estate and land conservation. In the aughts, Mr. Wingate was a

real estate broker who ran the southeastern office of Orvis/Cushman &

Wakefield Ranch and Recreational Properties; he was their real estate

agent specializing in outdoor properties and conservation properties.

From 2009 through 2012, Mr. Wingate worked for the Georgia

Conservancy as their vice president of advocacy and land conservation.

As of 2016, Mr. Wingate had participated in approximately 100

conservation easement transactions, of which approximately 20% were

syndicated.

From 2013 through December 29, 2020, Mr. Wingate and

Shannon Mayfield co-owned Winfield Conservation Services, LLC

(WCS). Mr. Wingate organized, marketed, and executed conservation

13 Tract 7 (77.77 acres) was not conveyed to JSN and was retained by the

Jackson Family Partnership.

14 As of December 13, 2016, the JSN Property was the only asset held by JSN.

[*15] easement transactions through WCS. In 2016, WCS provided

services to multiple landowners resulting in the donation of at least 17

conservation easements. WCS focused on, and sought, properties for

syndicated easement transactions where the HBU could be mining.

Mr. Wingate was also familiar with the “granite belt” in Georgia and

zoning issues in southern Georgia that would be relevant to a mining

property.

WCS worked on approximately ten syndicated deals a year in

2015, 2016, and 2017, for a total of approximately 30 syndicated deals.

From 2015 through 2018, mining was the claimed HBU for every

syndicated deal done by WCS, and none of those transactions ultimately

yielded a quarry. Instead, they all yielded conservation easements.

WCS found investors for their conservation easement

transactions by developing relationships with certified public

accountants (CPAs). The CPAs knew which of their clients were

interested in reducing their taxable income with deductions generated

by the conservation easement transactions.

Between late 2015 and early 2016, Mr. Jackson contacted

Mr. Wingate to learn about conservation easements. Mr. Wingate

explained to Mr. Jackson what steps were necessary to effect syndicated

deals to donate conservation easements with respect to his properties.

Before March 2016, Mr. Jackson knew Mr. Wingate would have to solicit

third-party investors to raise money needed for the transactions. As

early as March 21, 2016, Mr. Wingate believed Mr. Jackson had enough

land to do two syndicated conservation easement projects claiming

mining as the HBU. Mr. Wingate made this determination before any

drilling took place because he knew that there was a mine operated by

Vulcan Materials Co. (Vulcan) nearby and expected that a rock resource

would also be present on Mr. Jackson’s properties.

Before March 2016, Mr. Jackson and Mr. Wingate negotiated how

much money the Jackson Family Partnership would receive if the

syndicated conservation easement deals were successful. Mr. Wingate

offered Mr. Jackson $1 million per side of Highway 18 West for the land

needed for the conservation easement transactions. Mr. Wingate

determined that Mr. Jackson would be paid $1 million for each property

because that is what Mr. Wingate thought the market would bear and

the price for which he thought he could get a potential seller to sell the

properties.

[*16] Mr. Jackson and Mr. Wingate discussed only effecting syndicated

conservation easement transactions and did not discuss otherwise

donating easements on the properties. Mr. Jackson pursued syndicated

conservation easement transactions because of financial motivations

(including Mr. Wingate’s offer of $1 million per side) and because he

wanted to conserve the properties, which he loves, forever. Mr. Jackson

needed the money at the time, and no conservation easement would

have occurred on the Jackson Family Partnership’s land in 2016 unless

the target amount of money was raised from third-party investors

through a syndicated deal.

Jackson-Wingate Agreement

On March 21, 2016, the Jackson Family Partnership entered into

an agreement with WCS (Jackson-Wingate Agreement). Mr. Jackson

signed the Jackson-Wingate Agreement as the general partner of the

Jackson Family Partnership, and Mr. Wingate signed it on behalf of

WCS. The Jackson-Wingate Agreement contemplated that the Jackson

Family Partnership would receive $1 to $2 million in exchange for its

interest in the securities of the entities that received a portion of the

Jackson Family Partnership’s land (i.e., JSS and JSN). In addition to

the purchase price for the land, the Jacksons (through the Jackson

Family Partnership) would be entitled to a tax deduction of 5% of the

value of the conservation easement donation. The entities holding the

land would be 95% owned by third-party investors. Pursuant to the

terms of the agreement, WCS had to (1) pay all costs and expenses for

exploring whether the property was appropriate for a conservation

easement, (2) raise money for the conservation easement transaction

through selling ownership interests in an entity created to hold the

property, and (3) form new entities for the syndicated transaction

structure.

WCS had the option to cancel the Jackson-Wingate Agreement if

WCS would not receive a satisfactory return. Mr. Wingate viewed the

properties’ qualification for a mining HBU as directly related to WCS’s

ability to obtain a satisfactory return. Mr. Jackson did not know, or ask,

what the phrase “satisfactory return” meant as contemplated by the

Jackson-Wingate Agreement. Mr. Jackson understood that whether the

Jackson Family Partnership was paid $1 million, $2 million, or nothing

depended on the valuation of the Subject Properties.

The Jackson Family Partnership was to receive payment out of

the proceeds of the closing. The Jackson-Wingate Agreement defines the

[*17] closing as the “closing of the funding under the Syndicated

Investment Ownership Structure” and defines the Syndicated

Investment Ownership Structure as the Landowner’s agreement that

“the Contractor can raise money for a possible Conservation Easement

through allowing the sale of their ownership interests in an entity to

hold the Property” and the Landowner’s agreement “to cooperate in all

aspects with such sales.” If the funds from the sale of securities to third

parties were insufficient to pay the owner compensation, then either

WCS or the Jackson Family Partnership could elect to not proceed with

the closing without penalty. In 2016, the Jackson Family Partnership

received $2.5 million from the conservation easement transactions

involving JSN and JSS. 15

Mr. Jackson did not tell Mr. Wingate, or appraisers Dale W.

Hayter or J. Chad Edwards, about the 2013 Appraisal or its conclusions.

Subject Properties in 2016

Mr. Wingate engaged multiple professionals to establish values

for the properties on the basis of subsurface aggregate, biotite granite

gneiss, that is known to be abundant in the area. He retained (1) NOVA

Engineering and Environmental, LLC (NOVA), to test for aggregate on

the Subject Properties, (2) Richard C. Capps, an economic geologist, to

value the aggregate and mine operations, 16 (3) Mr. Hayter and

Mr. Edwards to separately appraise the easements, (4) Gregory Stanish,

a geologist, to prepare reserve reports for the Subject Properties,

(5) Michael F. Wick, an engineer with experience valuing minerals and

mineral real estate, to determine the mineral valuation on the Subject

Properties, and (6) William “Dolph” Winders from the law firm of Fisher

Broyles, LLP, to advise on the tax components of the easement

transactions and prepare tax opinion letters for JN Investments and JS

Investments. Below, we discuss these professionals’ roles in the

easement transactions.

15 Mr. Wingate increased the amount that the Jackson Family Partnership

received for the conservation easement transactions to $2.5 million because he felt that

Mr. Jackson was a great partner and it was a successful transaction.

16 The parties and their experts refer to the hypothetical activity on the Subject

Properties as both a quarry and an aggregate mine. For purposes of this report, we use

these terms interchangeably. Similarly, the parties and their experts refer to the

hypothetical mining operations on the Subject Properties as granite mining or

aggregate mining. For purposes of this report, we use these terms interchangeably as

well.

[*18]

Drilling and Testing

In 2016, Wingate Strategies, LLC, hired NOVA to complete a

preliminary geotechnical exploration, which ultimately resulted in the

production of reports for JSS and JSN (NOVA Reports) dated September

20, 2016. As part of the scope of work, Wingate Strategies directed

NOVA to explore the property and search for evidence of subsurface

aggregate deposits that, when tested, met Georgia Department of

Transportation (GDOT) Group II aggregate standards. 17

NOVA engaged Premier Drilling, LLC, to conduct drilling on the

JSS Property from April 25 to 27, 2016, and on the JSN Property from

April 27 to May 2, 2016. Premier Drilling drilled four holes on each of

the JSS Property and the JSN Property to obtain samples of subsurface

materials. NOVA engaged GeoTesting Express (GeoTesting) to

determine the physical properties of the drilling samples. After

reviewing GeoTesting’s geotechnical test reports for JSS and JSN,

NOVA concluded that the rock quality met GDOT Group II, Class A

aggregate quality standards for crushed rock aggregate that is used for

road construction. GeoTesting and NOVA prepared reports of their

findings. After testing, the core hole samples were retained by JSS and

JSN. The results of the drilling and testing were sent to Dr. Capps, of

Capps Geoscience, LLC. WCS hired Dr. Capps as its geologist to provide

a resource valuation report for the JSS and JSN Conservation Easement

projects. 18

Colwell Letter of Intent and Quote

In November 2016, JSN paid $5,000 to Colwell Construction Co.

(Colwell)19 for a letter of intent for development and general

management services for the operation of a mine on the JSN Property.

Colwell provided a separate letter of intent for development and general

management services for the operation of a mine on the JSS Property.

The identified services included support in procuring necessary licenses

17 Aggregate is crushed stone that is suitable for construction material. It is

primarily used for road construction but has other applications.

18 WCS often engaged Dr. Capps for the conservation easement transactions

that they worked on during 2015 through 2018. WCS hired Dr. Capps to provide

services related to at least 13 conservation easement projects in 2016.

19 Colwell was owned by Curtis Colwell. WCS retained Mr. Colwell to provide

mine management price quotes for the conservation easement transactions it worked

on during 2015 through 2018. WCS paid Mr. Colwell for mining management

agreements and crushing quotes in at least 11 conservation easement projects in 2016.

[*19] and permits, quarry design and development, design of crushing

operation and equipment needs, equipment procurement, market

strategy for sale of mined products, strategic forecast planning of

operations, and personnel management analysis and training, for an

hourly fee of $250. By separate letter, Colwell provided a quote for rock

crushing services of $8.75 per ton for the first year of operations with

annual 3% price increases. The quote does not include startup costs or

drilling and blasting costs.

Dr. Capps’s Reports

In December 2016, Dr. Capps prepared an overview of proposed

quarries on the JSS and JSN Properties and the profitability of

operating the proposed quarries (collectively, Capps Reports). He

determined that the net present value of minable aggregate was

$23,126,738 for each of the JSS Property and the JSN Property using a

discounted cashflow (DCF) analysis. He is not a real estate appraiser

and did not provide an FMV of the unencumbered Subject Properties.

He determined that on each of the Subject Properties there are total

resource reserves of over 20 million short tons of minable aggregate. For

his valuation of both the JSS and JSN Properties, he determined that a

40-acre mine on either property could produce 10,524,358 tons of

aggregate over 25 years that would sell for $15.75 per ton as follows:

300,000 tons in years 1 and 2 and 400,000 tons in years 3 through 7 with

an annual 1% increase in years 8 through 25. 20 In projecting the

production figures for each hypothetical mine, Dr. Capps did not take

the potential production of the other hypothetical mine into account. He

relied on Mr. Colwell’s $8.75-per-ton price quote for operating costs and

applied a discount rate of 11% to calculate the net present value. He did

not adjust the price of aggregate or the operating costs for inflation and

did not account for any startup expenses.

Dr. Capps determined that the market for each of the proposed

mines encompassed an area within a 50-mile radius of the mines. He

20 In his reports, Dr. Capps erroneously used the terms “mineral reserve” and

“mineral resource” to describe the Subject Properties’ aggregate. Both terms have

special meanings in the mining industry, and both a mineral reserve and a mineral

resource must be identified through a feasibility study. As discussed below, the drilling

and testing that NOVA and GeoTesting conducted do not satisfy the industry

guidelines for a feasibility study that is required to declare either a mineral resource

or a mineral reserve. Thus, it was inappropriate for Dr. Capps to use these terms to

refer to the Subject Properties’ aggregate according to industry standards. We find that

these mistakes go to the reliability of his reports and the reports of petitioners’ other

experts that relied on Dr. Capps’s opinions.

[*20] explained that the demand for aggregate is highly dependent on

population growth and construction activity. He estimated that for each

mine, the 50-mile radius market area had an annual demand for

5.1 million tons of aggregate and the proposed mine could capture at

least 5% of the market. He determined that, over the life of each mine,

the market would support his full production projection of about 400,000

tons annually.

As discussed above, the Capps Reports are dated December 2016;

however, they were not finalized until April 2017. The Capps Reports

included cost information from Mr. Colwell that was not provided to

Dr. Capps until March 2017.

The Capps Reports were shared with petitioners’ appraisal

experts, Mr. Hayter and Mr. Edwards. Mr. Hayter reviewed the

information in Dr. Capps’s reports in preparing his appraisal.

III.

Jones County

Location, Population, and Aggregate

Jones County is in central Georgia, approximately 10 miles north

of Macon and 70 miles south of Atlanta’s Central Business District. It is

one of five counties that make up the Macon Metropolitan Statistical

Area (Macon MSA). The northern end of Jones County is primarily

rural, and the central and southern areas are primarily suburban.

The Subject Properties are zoned AG–1, Agricultural District.

Permitted uses include (1) single-family dwellings, (2) public and private

schools, (3) agricultural, forestry, livestock, and poultry production,

(4) tenant dwellings for farm workers when located on the same lot or

tract as a principal residence, (5) Type A manufactured homes, and

(6) accessory buildings, structures, and uses customarily incidental to

any use allowed as permitted or conditional use and located on the same

lot as the principal structure or use. To open an aggregate mine in

Georgia, the mine’s operator must have an approved surface mining

permit from the Georgia Department of Natural Resources

Environmental Protection Division (EPD). The LLCs would have been

required to obtain EPD permits including permits relating to

stormwater and wastewater discharge, surface and ground water

withdrawal, and air quality before they could operate mines.

Aggregate is abundant in Jones County and in this part of

Georgia. The Subject Properties are situated on the granite bedrock side

[*21] of the Piedmont “Fall Line,” which is a boundary line where the

general geology for the region changes from granite bedrock to a clay

and sand base.

Aggregate is a heavy, low cost per ton product, and therefore haul

distance generally controls the price of aggregate. Because of the high

cost of transportation, almost all aggregate produced in Georgia is used

in Georgia and the market for aggregate with respect to a Georgia mine

is generally limited to the area that is 40 to 50 miles around the mine.

Demand for aggregate is driven by population, population growth,

and construction activity. The Subject Properties are near various cities

in Georgia: approximately 9 miles west of Gray (i.e., the county seat of

Jones County), 11 miles northwest of Macon, 90 miles south of Atlanta,

85 miles south of Athens, 100 miles east of Columbus, and 130 miles

west of Augusta. The Subject Properties are in central Jones County just

east of neighboring Monroe County. In 2016, Jones County had a

population of approximately 28,500. From 2010 through 2015, Jones

County’s population decreased by 0.6%. In 2016, the population within

a 25-mile and a 50-mile radius of the Subject Properties was

approximately 280,000 and 1,100,000, respectively.

Jones County Zoning

Jones County Zoning Ordinance

The proposed aggregate mines would not have been permitted on

the Subject Properties under the existing zoning regulations without a

rezoning of, and issuance of a conditional use permit for, the Subject

Properties to M–1, Light Industrial.

The Comprehensive Land Development Resolution for the

Unincorporated Area of Jones County (Zoning Ordinance) establishes

permitted uses and conditional uses within each zoning district. Jones

County adopted its first zoning ordinance in 1970. Tim Pitrowski has

been the Jones County zoning director since 1996 and is responsible for

monitoring compliance with zoning requirements and issuing permits

for development. In 2016 and 2017, Mr. Pitrowski reviewed permit

applications and wrote staff reports related to rezoning and conditional

use permit requests that were submitted to the Jones County Planning

and Zoning Department (Zoning Department) and the Jones County

Commission for consideration. The staff reports written by

[*22] Mr. Pitrowski included his recommendations for whether the

rezoning and/or conditional use permit should be granted or denied. 21

Permitted uses for each zoning district are established in the

Zoning Ordinance and allow a property owner to use the real property

without having to receive the approval of the Jones County Commission.

Conditional uses for a particular zoning district are established in the

Zoning Ordinance and may be exercised by a property owner only after

receiving the permission of the Jones County Commission. In 2016 and

2017, mining was a conditional use in two zoning districts, neither of

which included the Subject Properties.

During 2016 and 2017, to obtain a rezoning or a conditional use

permit, first, an application would be submitted to the Zoning

Department. Next, a hearing would be held before the Jones County

Planning and Zoning Commission (Zoning Commission), which would

provide a recommendation to be forwarded to the Jones County

Commission. Finally, the Jones County Commission would vote on

whether to approve or deny the rezoning and/or conditional use permit

application. The Jones County Commission is composed of five members

who are elected officials.

The Zoning Ordinance requires a Plan of Development to be

submitted with any zoning permit application regarding a proposed

mine. In 2016 and 2017, mining was not a permitted use or a conditional

use in the AG–1 zoning district, in which the Subject Properties were

zoned. As discussed, to operate the proposed mines on the Subject

Properties the landowner would need approval from the Jones County

Commission to rezone the property and for a conditional use permit.

Rezoning Application Standards

The Zoning Ordinance establishes six standards by which the

Zoning Commission and the Jones County Commission evaluate a

rezoning request. 22 The standards have been the same since at least

2006. In 2016 and 2017, Mr. Pitrowski applied these standards when

21 Mr. Pitrowski guessed that 90 to 95% of zoning applications applied for in

Jones County are approved.

22 The Zoning Ordinance also establishes five standards by which the Zoning

Commission and the Jones County Commission evaluate a conditional use permit

request. The conditional use permit standards are the same as the rezoning standards

except that they do not consider the reasonable economic use of the property as

currently zoned.

[*23] preparing his staff reports and recommendations on approval or

denial of rezoning applications. The standards are whether:

The proposed zoning decision will permit a use of property

that is suitable in view of the use and development of

adjacent and nearby property (Suitable Use Standard 23);

The proposed zoning decision will adversely affect the

existing use or usability of adjacent or nearby property

(Adverse Effect Standard 24);

The property to be affected by the proposed zoning decision

has a reasonable economic use as currently zoned

(Reasonable Economic Use Standard);

The proposed zoning decision will result in a use which will

or could cause an excessive or burdensome use of existing

streets, transportation facilities, utilities, or schools

(Negative Infrastructure Impacts Standard 25);

The proposed zoning decision is in conformity with the

policy and intent of the land use plan (Future Land Use

Plan Standard) as set forth in the Future Land Use Map

(FLU Map); and

There are other existing or changing conditions affecting

the use and development of the property which give

supporting grounds for either approval or disapproval of

23 During 2016 and 2017, when determining whether a proposed rezoning use

was suitable, the uses of property surrounding the subject property were evaluated to

determine whether the proposed rezoning use was compatible with surrounding

property uses.

24 The Adverse Effect Standard considered whether the proposed rezoning use

would harm nearby properties. Potential adverse effects on nearby properties from a

granite mine include noise, vibrations, dust, excessive light, increased truck traffic,

and negative impacts on water wells. Mr. Pitrowski considered these potential adverse

effects when making staff recommendations to the Jones County Commission related

to rezonings and conditional use permit applications related to granite mines.

25 Granite mines have negative impacts on infrastructure, including increased

wear and tear on roads from increased truck traffic and on ground water levels, which

may necessitate public water access to offset impacts on ground water and wells.

Mr. Pitrowski considered such negative infrastructure impacts when making staff

recommendations to the Jones County Commission related to rezonings and

conditional use permit applications related to granite mines.

[*24]

the proposed zoning decision (Changing Conditions

Standard).

Below, we briefly discuss Jones County’s comprehensive land use

strategy as reflected in its comprehensive planning and FLU Map.

Jones County’s Comprehensive Land Use Strategy

The Jones County Commission has adopted comprehensive plans

and FLU Maps to intentionally guide land uses within the county. The

Jones County FLU Map is a planning document used in rezoning

decisions to guide potential land use changes over time. The Jones

County FLU Map is a component of a larger Jones County

comprehensive plan. The Jones County Commission adopted a

comprehensive plan in 2007 (2007 Comprehensive Plan) that was used

from 2007 through mid-2017. Similarly, the Jones County Commission

adopted an FLU Map in 2007 (2007 FLU Map) that was used from 2007

through mid-2017.

On the 2007 FLU Map, the JSS Property was categorized as Rural

Residential. The 2007 Comprehensive Plan listed recommended land

uses for the categories listed on the 2007 FLU Map. The 2007

Comprehensive Plan listed site-built dwellings and manufactured

homes on individual lots (with a two-acre minimum), agricultural and

forestry uses, and light commercial uses as recommended uses for

property in the Rural Residential category on the 2007 FLU Map. A

granite mine was not a recommended land use in the Rural Residential

category on the 2007 FLU Map.

On the 2007 FLU Map, the JSN Property was categorized as

Agricultural Forestry. The 2007 Comprehensive Plan listed land

dedicated to farming, agriculture, commercial timber, or pulpwood

harvesting uses as recommended uses for property located in the

Agricultural Forestry category on the 2007 FLU Map.

In mid-2017, the Jones County Commission adopted a new

comprehensive plan (2017 Comprehensive Plan) and FLU Map (2017

FLU Map). The JSS Property was again categorized as Rural

Residential, and the JSN Property was categorized as Agricultural

Forestry, on the 2017 FLU Map. There was community input when the

2007 Comprehensive Plan, 2007 FLU Map, 2017 Comprehensive Plan,

and 2017 FLU Map were created.

[*25] The 2017 Comprehensive Plan included a Short-Term Work

Program, which was a statement of needs, projects, and goals that the

Jones County government wanted to accomplish in the following five

years. Work began on the Short-Term Work Program in 2016. The

“Economic Development” section of the Short-Term Work Program did

not list mining nor mineral extraction. The “Economic Development”

section of the Short-Term Work Program explicitly called for the

development of a targeted tourism strategy that promotes the ecological

assets of Jones County. Paragraph 5 of the “Land Use” section of the

Short-Term Work Program included a goal of preventing “the intrusion

of incompatible development” along the periphery of national and state

forests, wildlife management areas, and public lands in Jones County.

The goal of preventing development intrusion along the periphery of

public lands was to protect public lands. The effect of this goal was to

give additional weight and consideration to the negative impact of

development on public lands.

During 2016 and 2017, Mr. Pitrowski gave significant weight to

the FLU Map when making staff report recommendations to the Jones

County Commission regarding proposed rezonings and conditional use

permit applications.

Granite Mining in Jones County

Rezoning Applications and Conditional Use

Requests for New Granite Mines in Jones

County

Since at least 1996, no rezonings have been applied for or

approved in Jones County for a proposed new granite mine. Since at

least 1996, only one conditional use permit has been applied for in Jones

County for a proposed new granite mine. That application was

submitted by A Mining Group, LLC (A Mining Group), in 2006. The

Jones County Commission denied A Mining Group’s application for a

conditional use permit. In Jones County and Monroe County it was more

difficult to obtain a rezoning for a new mine as opposed to an existing

mine that sought to expand.

Rezoning Applications Related to Mining

Since 2000, the Zoning Department has received three

applications for rezoning related to mining. It recommended approval of

the applications. Two of the applications were for the storage of

overburden, and the other application was a rezoning request to expand

[*26] an already existing granite mine. As discussed above, the Zoning

Department did not recommend approval for any new granite mines.

Denial of A Mining Group’s Application

Like the Subject Properties, the property for which

A Mining Group sought a conditional use permit to operate a granite

mine was zoned AG–1. Jones County residents broadly opposed

A Mining Group’s application. They expressed concerns about increased

truck traffic, rail traffic, and dust resulting from the proposed granite

mine. The Zoning Department’s staff report regarding the A Mining

Group’s conditional use permit identified several factors that led to the

denial including negative effects on infrastructure, inconsistency of a

granite mine with the FLU Map, and mismatch of a granite mine with

nearby properties. The proximity of the Big O Ranch property, owned by

one of Otis Redding’s relatives, to the proposed mine was not a factor

and did not affect Mr. Pitrowski’s staff report recommending that A

Mining Group’s conditional use permit be denied. A Mining Group

unsuccessfully appealed the Jones County Commission’s denial of a

conditional use permit to operate a granite mine.

Community Opposition to Granite Mines

On May 2, 2006, the Jones County Commission amended the

Zoning Ordinance by a unanimous vote, to remove mining as a

conditional use in the AG–1 zoning district. Members of the general

public filed the application for an amendment to the Zoning Ordinance

to remove mining as a conditional use in the AG–1 zoning district.

Residents who lived near the Subject Properties, including in the closeby Tumbling Shoals residential neighborhood, would have been publicly

opposed to a granite mine being built on the Subject Properties. They

were concerned about dust, noise, the lights at nighttime, and increased

heavy truck traffic on nearby roads, including Highway 18 West. These

residents would have spoken in opposition to a granite mine at a public

meeting.

Other Granite Mines in Jones County

During 2015 and 2016, the Zoning Department did not receive

any applications to rezone, or for a conditional use permit for, the

Subject Properties. Similarly, it did not receive any Plan of Development

for a proposed granite mine on the Subject Properties. In 2016, there

were two active operating granite mines in Jones County. Martin

Marietta Materials, Inc. (Martin Marietta), operated one of the mines

[*27] (Martin Ruby) and Vulcan operated the other (Vulcan Postell or

Lite-n-Tie). Both began operations before Jones County adopted its first

zoning ordinance in 1970. These two granite mines were actively

operating in Jones County in 2016 and were located in southern Jones

County. In 2016 and 2017, industrial land uses were also concentrated

in southern Jones County.

IV.

Easement Transactions

Marketing

As discussed supra Findings of Fact Part I.D.1 and E.1, JSS and

JSN were formed on May 23, 2016. After the JS Investments Share

Purchase Agreement and the JN Investments Share Purchase

Agreement, each of JS Investments and JN Investments held 95% of the

membership units in JSS and JSN, respectively. Mr. Jackson,

Mrs. Jackson, and their children held the remaining 5% of the

membership units in JSS and JSN. Mr. Wingate and his associates,

including Bo Schill and Michael Dean, actively marketed the

conservation easement transactions with respect to JSS and JSN to

CPAs, financial advisors, and potential investors, seeking investment in

JS Investments and JN Investments in exchange for membership units

in the same. As early as September 2016, nine months before Mr. Hayter

and five months before Mr. Edwards issued their respective appraisals

of the Subject Properties, and continuing through December 2016,

Mr. Wingate and his associates marketed the investment as a naturalresource-based conservation easement producing a deduction of 4.5 to 1

on the potential investors’ investments.

Third-Party Investments

Mr. Winders of Fisher Broyles 26 prepared the Confidential

Private Offering Summaries (Private Placement Memorandum or PPM),

tax opinion letters, 27 deed transfers, legal structures, formation of

investment companies, and other legal documents for JS Investments

2016.

26 Mr. Winders was involved in at least ten easement projects with WCS in

27 The tax opinion letters warned prospective investors: “PARTICIPANTS IN

THE PROPOSED TRANSACTION WILL NOT BE ABLE TO RELY ON THIS

OPINION TO ESTABLISH A REASONABLE BELIEF THAT THE TAX

TREATMENT OF THE PROPOSED [JSS/JSN CONSERVATION EASEMENT]

TRANSACTION WAS PROPER OR FOR ANY OTHER PENALTY PROTECTION

PURPOSES.”

[*28] and JN Investments. Mr. Wingate and his associates distributed

the JS Investments PPM and the JN Investments PPM (together with

the JS Investments PPM, PPMs) to prospective investors.

The JS Investments PPM offered 9,500 units ($4,000,555

rounded) in JS Investments for $421.11 per unit with a minimum

subscription per investor of $50,000. The JN Investments PPM offered

9,500 units ($4,110,270) in JN Investments for $432.66 per unit with a

minimum subscription per investor of $50,000. Both offerings were fully

subscribed and closed on December 13, 2016.

The PPMs state that JSS’s and JSN’s sole assets are their

respective easement properties and propose two uses for the land:

(1) holding the property for investment, which could include mining the

property for granite or selling the property in the future, or (2) granting

a conservation easement. Either option had to be approved by a vote of

the majority percentage of the holders of shares in each of JSS or JSN.

The PPMs also warn investors that the primary purpose of the

investments “may not be to maximize profits for members.”

The JS Investments PPM states that, based on Mr. Hayter’s

preliminary appraisal, the conservation easement option would

generate a charitable contribution deduction of $18,950,000, which

would inure to the members according to their relative ownership

percentages in JS Investments. Similarly, the JN Investments PPM

states that, based on Mr. Hayter’s preliminary appraisal, the

conservation easement option would generate a charitable contribution

deduction of $19,470,000, which would inure to the members according

to their relative ownership percentages in JN Investments. Each of the

PPMs dedicates 19 pages to discussing the tax implications of a

conservation easement. As discussed supra Findings of Fact Part I.D.2

and E.2, after the offerings closed on December 13, 2016, JS Investments

and JN Investments purchased 95% of the units of JSS and JSN,

respectively, and 9,500 units in each of JSS and JSN were transferred

to the new investors.

Execution of Conservation Easement Deeds

Shortly thereafter, shareholders of JSS and JSN approved the

conservation easement options, and Mr. Wingate and Mr. Jackson

placed Conservation Easements on the Subject Properties by executing

easement deeds. On December 15, 2016 (Donation Date), JSS conveyed

a conservation easement to ORLT over 288.08 acres of the JSS Property

[*29] (JSS Easement Property) via a Deed of Conservation Easement

(JSS Easement Deed). On the same day, JSN conveyed a conservation

easement to ORLT over 252.92 acres of the JSN Property (JSN

Easement Property, and together with the JSS Easement Property,

Easement Properties) via a Deed of Conservation Easement (JSN

Easement Deed, together with the JSS Easement Deed, Easement

Deeds). ORLT is a qualified organization as defined in section

170(h)(3). 28 The Easement Deeds were recorded with the Jones County

Clerk of the Court on December 16, 2016.

The Easement Deeds state two conservation purposes: first, the

“protection of a relatively natural habitat of fish, wildlife, or plants, or

similar ecosystem” under section 170(h)(4)(A)(ii); and second, the

“preservation of open space” that is pursuant to a clearly delineated

governmental conservation policy and “will yield a significant public

benefit” under section 170(h)(4)(A)(iii)(II). The specific provision of the

JSN Easement Deed that address the open space conservation purpose

states that the JSN Conservation Easement ensures the preservation of

open space pursuant to the Georgia Conservation Tax Credit Program

(GCTCP) and the Georgia Conservation Tax Assessment (GCTA)

program. JSN did not apply for, and therefore did not participate in, the

GCTCP. The JSN Easement Property was not enrolled in the GCTA

program.

The JSS Easement Deed permitted (1) general vegetation

management; (2) forest management including herbicide application,

planting, burning, thinning and harvesting of trees, and other activities

necessary for the sale, trade, or removal of forest products;

(3) maintenance and use of existing fields, or conducting agricultural

activities including planting and cultivating any crop(s), operating a

livestock grazing operation in the fields, and boring or drilling wells for

water to be used to support agricultural activities on the property;

(4) maintenance of existing unpaved roads and construction of

additional unpaved roads if approved by ORLT; (5) maintenance, repair,

or replacement of existing structures and creation of one new residential

envelope no greater than two acres within which the grantor can

construct, maintain, repair, remove, or replace one residential dwelling;

(6) construction and maintenance of pedestrian, equestrian, and bicycle

trails for nonmotorized and educational purposes; (7) installation,

maintenance, and replacement of any fences; (8) shielded outdoor

2016.

28 WCS worked on at least 11 conservation easement projects with ORLT in

[*30] lighting; (9) construction, maintenance, and replacement of

utilities including power, water, septic systems and communication to

support approved structures or uses on the property; (10) use of the

property for scientific and environmental education of the public;

(11) use of the property for recreational purposes including bird

watching, hunting, fishing, swimming, equestrian use, bicycling, hiking,

and the use of off-road and all-terrain vehicles; (12) maintenance and

repair of the existing lake and pond dam, including dredging; and

(13) construction and maintenance of a waterfowl impoundment no

greater than two acres in area. The JSN Easement Deed included all of

the reserved rights listed above except for item (12).

JSN Baseline Report 29

Luke Rushing holds a master of landscape architecture degree

and a bachelor of science in environmental design from Auburn

University. At the time of trial in these cases, he had worked at

Williamson Landscape Architecture, formerly the Jaeger Co., since 2003

and had extensive experience in land conservation and land

management. Mr. Rushing wrote the baseline reports for JSS and JSN

to establish the conditions of the Easement Properties at the time of the

donations.

On September 13, 2016, Mr. Rushing visited the JSN Easement

Property. In the JSN Baseline JSN and ORLT acknowledge that the

“report is an accurate representation of the property as of the date of the

conveyance of the conservation easement referenced in this report by the

landowner (‘Grantor’) to the Oconee River Land Trust, Inc. (‘Grantee’).”

Mr. Jackson signed the JSN Baseline as the managing member of JSN

and Smith Wilson signed it as the chair of ORLT. JSN attached the JSN

Baseline to its 2016 Form 1065, U.S. Return of Partnership Income, to

establish the condition of the JSN Easement Property at the time of the

donation.

The JSN Baseline states that Mr. Rushing observed only common

wildlife species from the Piedmont Ecoregion of Georgia (Piedmont

Ecoregion) on the JSN Easement Property during his site visit.

Additionally, the JSN Baseline identifies five land cover types on the

JSN Easement Property: (1) open fields, (2) mesic hardwood forest,

(3) bottomland hardwood forest, (4) planted pine forest, and

29 The findings of fact in this Part IV.D are limited to the JSN baseline report

dated October 14, 2016 (JSN Baseline), and do not address the JSS baseline report

because facts about the latter are not necessary to decide these cases.

[*31] (5) oak-hickory-pine forests. It separates the JSN Easement

Property into four sections: (1) a 200' riparian buffer, (2) special natural

areas, (3) forestry envelopes, and (4) fields. The JSN Baseline states that

the following land cover types, amounts, and percentage of the overall

acreage occur on the JSN Easement Property: (1) 100.9 acres of oakhickory-pine forest that cover 39.8%, (2) 73.16 acres of planted pine

forest that cover 28.9%, (3) 37.46 acres of bottomland hardwood forest

that cover 14.8%, (4) 24.59 acres of mesic hardwood forest that cover

9.8%, and (5) 16.81 acres of open fields that cover 6.7%. These habitat

and land cover types were also identified in the ecological features map

included as Attachment 10 to the JSN Baseline.

Mr. Rushing created multiple drafts of the JSN Baseline and

shared them with Laura Hall, a representative of ORLT. Mr. Rushing

and Ms. Hall exchanged several emails regarding Ms. Hall’s proposed

revisions to the JSN Baseline. An ecological features map dated

September 22, 2016, in a draft JSN Baseline did not reference any mesic

hardwood forest on the JSN Easement Property. Instead, the ecological

features map in the draft JSN Baseline indicated that the property had

four land types: (1) bottomland hardwood forest, (2) oak-hickory-pine

forest, (3) planted pine forest, and (4) open fields. 30 Additionally, the

photographs that were included in that draft report did not include any

captions about the existence of mesic hardwood forest.

In October 2016, Ms. Hall provided Mr. Rushing feedback on a

draft baseline report. 31 She directed him to change the bottomland

hardwood forest that was described in the draft report to a mesic

hardwood forest because some of the species described in the draft were

not typical of bottomland hardwood forests and, in Ms. Hall’s view, the

30 We note that mesic hardwood forest was also absent from the types of forest

stands listed in the Georgia Forestry Commission’s 2010 Forest Stewardship Plan for

the land that became the JSN Easement Property and the 2021 Forest Stewardship

Plan for the JSN Easement Property. The Georgia Forestry Commission can provide a

landowner a forest management plan to manage forestland for timber, wildlife habitat,

recreational opportunities, aesthetics, and soil and water conservation. The 2010

Forest Stewardship Plan stand map listed four types of forest stands on what became

the JSN Easement Property: (1) mature planted pine, (2) planted pine, (3) hardwood,

and (4) wildlife openings. Similarly, the 2021 Forest Stewardship Plan stand map

listed four types of forest stands on the JSN Easement Property: (1) 1970 planted pine,

(2) 1988 planted pine, (3) bottomland hardwood, and (4) fields/wildlife openings.

31 Ms. Hall’s feedback consisted of a list of 20 items to be modified or clarified.

It ranged from substantive items such as changing the identification and description

of certain habitats and types of vegetation to nonsubstantive items such as enlarging

the appearance and borders on maps.

[*32] topography of the land suggested that it was mesic hardwood

forest. She also provided him with photos from the JSN Easement

Property that Mr. Schill had sent to her of supposed bottomland forest

and directed him to other pictures that she indicated were of mesic

hardwood forest. She directed Mr. Rushing to include these photos in

the draft report and to change the captions for certain photos. The

changes to the captions were to state that picture 17 on page 36 of the

JSN Baseline is a view of a mesic hardwood forest and that pictures 15

and 16 on page 35 of the JSN Baseline are of a future duck impoundment

location in bottomland forest.

In December 2016, Mr. Jackson communicated to ORLT that the

special natural areas listed in the JSN Baseline were inaccurate. The

areas in question were delineated as special natural areas and oakhickory-pine forest, but Mr. Jackson informed ORLT that the areas were

actually pine forests. On December 16, 2016, ORLT raised this

discrepancy about the special natural areas and pine forests with

Mr. Rushing. Mr. Rushing agreed that he had made a mistake in the

JSN Baseline about the distribution of the special natural areas and

pine forest on the JSN Easement Property. He also acknowledged to

ORLT that the JSN Baseline should be revised for Mr. Jackson’s

corrections. Nonetheless, the JSN Baseline was not corrected, and the

errors remained in the final version.

Appraisals

Hayter Appraisals

In 2016, Mr. Wingate hired Mr. Hayter, with whom he had

worked previously, 32 to value the Conservation Easements. Mr. Hayter

is the owner of Independent Appraisals, LLC, and regularly performed

real estate appraisals. Mr. Hayter had more than 25 years of experience

as an appraiser and is licensed in the State of Georgia. He is a member

32 In 2016, Mr. Hayter performed 12 appraisals for Mr. Wingate, and from 2014

through 2018 he performed approximately 20 appraisals for Mr. Wingate. All 12 of the

2016 appraisals had an HBU of mining. According to Mr. Hayter, all 12 appraisals

“likely” had reports from Dr. Capps and NOVA. All of the appraisals that Mr. Hayter

had performed since 2013 likely used the DCF approach for the before value.

Generally, the DCF approach estimates the future cashflows from a business and

discounts those cashflows to present value.

[*33] of the Appraisal Institute, holds its MAI designation, 33 and has

the appraisal review designation for commercial properties.

Before Mr. Hayter performed his appraisals, Mr. Wingate sent

him the NOVA Reports; and he later sent him the Capps Reports.

Mr. Hayter’s appraisal notes state that 20 acres (in total) are excluded

from the area over which the Conservation Easements were to be

granted. The excluded parcels run along Highway 18 West and are

composed of woodlands that are a mix of pines and hardwoods of

moderate maturity. Each excluded parcel is contiguous to its respective

Easement Property.

Mr. Hayter performed appraisals for both Subject Properties for

the purpose of determining the FMVs of the Conservation Easements

(Hayter Appraisals). The Hayter Appraisals include descriptions of the

Subject Properties that have sufficient detail for a person unfamiliar

with the types of property to ascertain that the Subject Properties that

were appraised were the Subject Properties that were contributed. They

include the date of contribution of the Conservation Easements. The

Hayter Appraisals also include Mr. Hayter’s name, address, identifying

number, and qualifications. Finally, the Hayter Appraisals include

statements that they were prepared for income tax purposes.

In preparing his appraisals 34 he determined that a mine

operation was the HBU of the Subject Properties. 35 Mr. Hayter, relying

on the Capps Reports, estimated that annual demand for aggregate was

5,085,423 tons based on a population of 1,130,094 and a per capita

33 MAI membership requires certification as a general real property appraiser;

a four-year bachelor’s degree; completing courses on valuation standards, fair housing,

business practices, and ethics; a passing grade on advanced income capitalization,

advanced market analysis and highest and best use, advanced concepts and case

studies, quantitative analysis, and the Appraisal Institute’s general comprehensive

exam; and a minimum of 4,500 hours of specialized work. See

https://www.appraisalinstitute.org/why-join/pursue-a-designation/mai-designation

(last visited July 2, 2025) (providing MAI designation requirements).

34 Mr. Winders, the attorney for JS Investments and JN Investments, provided

advice on the issue of zoning to Mr. Hayter as Mr. Hayter prepared the Hayter

Appraisals. Mr. Hayter also contacted Mr. Winders to discuss other legal issues as he

prepared the Hayter Appraisals.

35 Mr. Hayter considered other financially feasible uses of the property and

excluded single-family residential use on the Subject Properties because “it is not likely

to be financially viable due to very limited demand.” He further stated that his

observation of the surrounding area found “virtually no residential subdivision

development.”

[*34] demand rate of 4.5 tons. He did not perform an analysis to

estimate supply in the primary market area.

Mr. Hayter estimated that a hypothetical mine on each of the

Subject Properties should sell about 500,000 tons of commercial grade

granite aggregate and 100,000 tons of specialty product per year on a

stabilized basis. 36 Mr. Hayter’s DCF analysis projected that, over the life

of the mine (LOM), each mine would produce an estimated 13,135,793

tons of aggregate. This estimate was based on two studies of other

mines. The first study was of four aggregate mines in the eastern I–20

corridor that sold in the range of 450,000 to 550,000 tons per mine per

year. The second study was of aggregate sales at several mines in north

and central Georgia. Based on the second study, he estimated that each

of the Subject Properties would sell about 450,000 to 800,000 tons once

they reached stabilized operations. He also considered Dr. Capps’s

estimate that a hypothetical mine on each of the Subject Properties

would sell 300,000 tons per year. After considering these estimates,

Mr. Hayter concluded that a hypothetical mine on each of the Subject

Properties would sell about 500,000 tons of aggregate and 100,000 tons

of specialty products per year.

For each of the Easement Properties, Mr. Hayter prepared a DCF

analysis estimating future income from a hypothetical mine operation,

using various assumptions about recoverable volumes of aggregate,

future pricing of aggregate, capital expenses, ordinary business

expenses, discount rates, and so on.

Mr. Hayter also performed a sales comparison analysis from four

mining properties that he deemed comparable to the Easement

Properties. Three of the comparables were in Clayton County and Hall

County, Georgia, and one was in Talladega County, Alabama. All of the

selected comparable mining properties were either working mines with

long operating histories, or in one case, an expansion purchase of

property that was adjacent to a working mine that had a long operating

history. The range of prices per acre for the comparable sales was

$12,575 to $133,929 per acre.

On the basis of the DCF analysis, Mr. Hayter concluded that the

FMV of the JSS Easement Property before the granting of the easement

was $19,840,000 (or $68,870 per acre). Additionally, he determined that

36 The Hayter Appraisals explain that “stabilized basis” refers to the mine’s

having successfully obtained a sustained customer base and a reputation for quality

stone products at reasonable prices.

[*35] the value of the excluded ten-acre parcel before the granting of the

easement was $32,000. In total, he determined that the FMV of the JSS

Property before the granting of the easement was $19,872,000 (or

$66,667 per acre). He determined that the FMV of the JSS Easement

Property after the granting of the easement was $345,000 rounded (or

approximately $1,200 per acre). Additionally, he determined that the

value of the excluded 10-acre parcel after the granting of the easement

was $46,000. In total, he determined that the FMV of the JSS Property

after the granting of the easement was $391,000 (or $1,312 per acre).

Subtracting the “after” value from the “before” value, he determined

that the rounded and concluded 37 FMV of the JSS Conservation

Easement was $19,480,000.

Similarly, Mr. Hayter concluded that the FMV of the JSN

Easement Property before the granting of the easement was $19,360,000

(or $76,545 per acre). Additionally, he determined that the value of the

excluded ten-acre parcel before the granting of the easement was

$30,000. In total, he determined that the FMV of the JSN Property

before the granting of the easement was $19,390,000 (or $73,749 per

acre). He determined that the FMV of the JSN Easement Property after

the granting of the easement was $300,000 rounded (or approximately

$1,200 per acre). Additionally, he determined that the value of the

excluded ten-acre parcel after the granting of the easement was $46,000.

In total, he determined that the FMV of the JSN Property after the

granting of the easement was $346,000 (or $1,316 per acre). Subtracting

the “after” value from the “before” value, he determined that the

rounded and concluded FMV of the JSN Conservation Easement was

$19,044,000.

The appraisals for JSS and JSN each valued the Conservation

Easements as of December 15, 2016. The JSS report was dated June 16,

2017, and the JSN report was dated June 17, 2017. Additionally, the

Hayter Appraisals stated:

Employment of the appraiser was not conditional upon the

appraiser producing a specific value or a value within a

given range, or a result that is favorable to the client.

Future employment prospects are not dependent upon the

37 Mr. Hayter noted that the indicated value of the easement after subtracting

the “after” value from the “before” value was $19,481,000 but he rounded that amount

to $19,480,000. Even though Mr. Hayter’s appraisal for JSS concluded that the FMV

of the easement was $19,480,000, JSS claimed a deduction of only $19,044,000 on the

2016 Form 1065.

[*36] appraiser producing a specified value or a result that

favors the client. Employment of the appraiser and

payment of the fee are not based upon the outcome of a loan

application, upon the completion of a purchase/sale

transaction, or any outcome that favors the client, or any

future event.

The Hayter Appraisals also stated that “[n]o portion of the appraisal fee

was based on a percentage of the appraised value of the property or the

amount allowed as a deduction.” Finally, the Hayter Appraisals stated

that Mr. Hayter had no current or prospective interest in the Subject

Properties or the parties involved. JSS and JSN attached the Hayter

Appraisals to their 2016 Forms 1065.

Edwards Appraisals

Mr. Wingate also hired Chad Edwards to value the Conservation

Easements. Like Mr. Hayter, Mr. Edwards had previously worked with

WCS on conservation easement transactions. Mr. Schill described the

nature of the project and the scope of work to Mr. Edwards. From that

description Mr. Edwards understood that he was to determine whether

use of each of the Subject Properties as a mine was a viable HBU. When

Mr. Edwards accepted the assignment, Mr. Wingate and Mr. Schill

referred to his appraisals as second appraisals, and Mr. Edwards was

aware that other appraisals were being performed. Before completing

his appraisals, Mr. Edwards was provided with a copy of Mr. Hayter’s

preliminary appraisal, the NOVA Reports, and the Capps Reports.

Mr. Edwards also prepared a DCF analysis to determine the FMV

of the Subject Properties. Mr. Edwards’s appraisal reports (Edwards

Appraisals) determined that the before values of the JSS Property and

the JSN Property were each $20,752,000. However, he did not believe

that someone would pay $20,752,000 for either of the Subject Properties.

He also determined that the FMV of the charitable contributions for the

JSS Property and the JSN Property were $20,195,000, and $20,259,000,

respectively. The Edwards Appraisals were dated January 30, 2017;

however, Mr. Edwards was still finalizing his reports as late as March

2017. Even though the Edwards Appraisals were higher, WCS used the

Hayter Appraisals for purposes of tax return reporting.

[*37] VI.

Tax Returns and Notices

Administrative Adjustment

Final

Partnership

JSS and JSN each filed Forms 1065 for their short tax year

ending December 31, 2016. 38 JSS and JSN attached Forms 8283,

Noncash Charitable Contributions, to their Forms 1065. JSS’s Form

8283 stated that the basis of the contributed property was $192,500.

JSN’s Form 8283 stated that the basis of the contributed property was

$857,000. On each of JSS’s and JSN’s Forms 8283, Mr. Hayter signed

Section B, Part III, Declaration of Appraiser, and Steffney Thompson

signed Section B, Part IV, Donee Acknowledgment, for ORLT. On the

returns, JSS and JSN each claimed charitable contribution deductions

of $19,044,000 for donating the Conservation Easements over the JSS

Easement Property and the JSN Easement Property, respectively, to

ORLT. The total deductions claimed by JSS and JSN for the

Conservation Easements were based on their alleged “before” FMVs, as

determined by Mr. Hayter.

On July 9, 2020, respondent issued the FPAAs to the TMPs of JSS

and JSN, disallowing the charitable contribution deductions and

asserting penalties.

VII.

Expert Testimony

Petitioners’ Experts

Petitioners did not support the “before” values that Mr. Hayter

determined in the Hayter Appraisals for the Subject Properties using a

sales comparison approach. Rather, petitioners argue that, consistent

with Mr. Hayter’s approach in the Hayter Appraisals, the “before”

values of the Subject Properties should be determined by hypothesizing

the creation of a commercial granite aggregate business on each of the

Subject Properties, estimating the future cashflow from each business,

and discounting those cashflows to present value. As discussed supra

note 32, this methodology is commonly referred to as a “discounted cash

flow” or DCF approach. As discussed above, petitioners hired

Mr. Stanish to opine as to the amounts of resources and reserves on the

Subject Properties, Mr. Wick to opine as to the associated values of the

mineral reserves underlying the Subject Properties, and Benjamin

Black to opine on whether the prospective mines were legally

permissible (i.e., that the Subject Properties would have received

38 Mr. Wingate engaged Nichols, Cauley & Associates and Robins, Eskew,

Smith & Jordan (Robins Eskew) to prepare the returns for JSS and JSN, respectively.

[*38] rezoning and conditional use permits) in Jones County.

Petitioners hired James C. Clanton to prepare a retrospective appraisal

report for the Easement Properties (Clanton Reports). The Clanton

Reports address the HBU of the Easement Properties and the “after”

value of the Easement Properties and the non-Easement Properties.

Petitioners also hired Stephen Lee Echols, Jr., to render an opinion on

the conservation values of the JSN Property 39 and the extent to which

the JSN Conservation Easement and other supporting documentation

protects those values in perpetuity. We discuss each of these experts

below starting with Mr. Echols.

Stephen Lee Echols, Jr.

Mr. Echols is a consulting biologist with Southern Ecological

Surveys, LLC. Mr. Echols holds a master of science in plant biology from

the University of Georgia and a bachelor of science in ecology and

environmental biology from Appalachian State University. He was also

the director of conservation from 2020 to 2022, and a senior conservation

biologist from 2007 to 2019, for the North American Land Trust. He has

specialized knowledge in the fields of botany and ecology, and regularly

performs ecological surveys in the southeast United States. We

recognized him as an expert in ecology and conservation.

Mr. Echols prepared a report (Echols Report) presenting the

conservation values that make the JSN property ecologically significant

and determining the extent to which the recorded conservation

easement and supporting documentation adequately protect those

features in perpetuity. In preparing his report, Mr. Echols reviewed

(1) an article about priority bird species in the Piedmont Conservation

Region, (2) integrated geologic map databases for Georgia from the U.S.

Geological Survey, (3) Mr. Jackson’s forest stewardship plan, (4) an

online database of bird distribution and abundance, (5) the Georgia

State Wildlife Action Plan (Georgia SWAP), (6) the Georgia State

Wildlife Georgia Biodiversity Portal, (7) information from the U.S.

Geological Survey on the ecoregions of Alabama and Georgia, (8) the

Forest Legacy Program Assessment of Needs for the State of Georgia by

the Georgia Forestry Commission, (9) NatureServe Explorer, (10) the

JSN Easement Deed, (11) the JSN Baseline, (12) Birds of Conservation

Concern 2021 published by the U.S. Fish and Wildlife Service, and

(13) certain other databases. Mr. Echols also visited the JSN Easement

39 Respondent did not challenge the declared conservation purposes of the JSS

Conservation Easement.

[*39] Property nine times throughout late summer and early fall of 2022

and during late 2022 into 2023. In total, he spent between 27 and 54

hours on the JSN Easement Property.

In his report, Mr. Echols created a list titled “Table 2. Potentially

Occurring Rare Species within the Conservation Area” of 25 animals

and plants that he characterized as “species of conservation concern”

that potentially occurred within the property. The phrase “species of

conservation concern” as used by Mr. Echols included any rare,

threatened, or endangered species tracked by the State of Georgia that

had the potential to occur on the JSN Easement Property. He initially

developed this list using habitat data that was in the JSN Baseline and

then further refined it based on his site visits. He noted that some of the

species on the list are not rare and instead are common, but that they

are experiencing significant enough population declines that they are of

conservation concern. However, Mr. Echols did not state in his report

that he observed or heard any species on the list of species of

conservation concern, or any rare, threatened, or endangered species,

while he was on the JSN Easement Property.

The Echols Report states that he observed five habitats that the

Georgia SWAP designates as “high priority wildlife habitats.” These

were (1) bottomland hardwood forest, (2) canebrake, (3) mesic hardwood

forest, 40 (4) oak-hickory-pine forest, 41 and (5) streams. For each of these

habitats, his report discussed potentially occurring bird species of

conservation concern that are known to breed within Jones County.

Mr. Echols stated that he observed a G1 habitat, a G2 habitat, and a G3

habitat on the JSN Easement Property. 42 His report does not include a

Mr. Echols stated that he observed mesic hardwood forest on the JSN

Easement Property but that it is more limited in extent than as described in the JSN

Baseline. He also stated that the mesic hardwood forest was adjacent to Buttlers Creek

but did not pinpoint it on a map in his report.

41 In his report, Mr. Echols stated that he observed an oak-hickory-pine forest

on the side slopes adjacent to bottomland forest within the southeast corner of the JSN

Easement Property. However, he did not pinpoint it on a map in the report.

42 G1, G2, and G3 habitats refer to definitions from NatureServe Conservation

status ranks. NatureServe is a large, umbrella conservation group that relies on

reports from biologists around the world to classify natural communities and to track

species of conservation concern. A ranking of G1, Globally Critically Imperiled, means

that there are five or fewer instances of it worldwide. A ranking of G2, Globally

Imperiled, means there are 6–20 instances of it worldwide. A ranking of G3, Globally

Vulnerable, means there are 20–80 instances of it worldwide.

[*40] map indicating where the G1, G2, or G3 habitat occurs. 43 The

Echols Report does not include any photographs of the G1, G2, or G3

habitat on the JSN Easement Property. 44 Mr. Echols did not report his

G2 or G3 habitat findings to the EPD or any other reporting body. 45

Gregory Stanish

Mr. Stanish is director of geological services for John T. Boyd Co.

(Boyd), a U.S. and international consultancy that specializes in miningrelated technical, financial, and environmental projects. Mr. Stanish is

a licensed geologist in the State of New York with over 16 years of

experience in the mining industry. We recognized him as an expert in

identification and quantification of mineral resources and reserves,

especially construction aggregates.

In August 2022, petitioners hired Mr. Stanish and Boyd to

determine the amounts of resources and reserves 46 on the Subject

Properties. Mr. Stanish reviewed “existing project source data”

including (1) the NOVA Reports, (2) the Capps Reports, (3) a survey for

each of the properties, and (4) publicly available geologic and miningrelated information for the region. Mr. Stanish collaborated with

Michael Wick, petitioners’ expert in valuation of minerals and mineral

real estate, to reach his conclusions in written reports (Stanish Reports)

regarding amounts of resources and reserves on the Subject Properties.

43 At trial, Mr. Echols was shown a map of the JSN Property, and he stated

that he observed mesic hardwood forest on the JSN Property near the Piedmont

Refuge. Mesic hardwood forest is classified as a G2 habitat.

44 The parties dispute whether the Echols Report contained photos of a mesic

hardwood forest, a G2 habitat. As discussed further infra Opinion Part II.B.5, we find

that mesic hardwood forest did not exist on the JSN Property.

45 There was no testimony on whether Mr. Echols reported the existence of a

purported G1 habitat on the JSN Easement Property to the EPD or any other reporting

body.

46 There is an important distinction between a “mineral resource” and a

“mineral reserve” that is relevant to understanding Mr. Stanish’s and Mr. Wick’s

reports. A mineral resource is a concentration or occurrence of solid material of

economic interest in or on the Earth’s crust in such form, grade, or quality and quantity

that there are reasonable prospects for its eventual extraction. Mineral resources can

be classified as Inferred, Indicated, or Measured, with an increase in confidence being

the differences between those classifications. A mineral reserve is the economically

minable part of a measured and/or indicated mineral resource. A mineral reserve

includes diluting materials and allowances for losses, which may occur when the

material is mined or extracted. Modifying factors that include the variables about how

the resource will be mined are applied to convert a mineral resource to a mineral

reserve.

[*41] Mr. Stanish and Mr. Wick collaborated as a team in an iterative

process.

Mr. Stanish relied on Mr. Wick to obtain some of the inputs

necessary to develop a geologic computer model for the prospective

mines, and in turn, the amounts of resources and reserves in the

prospective mines. For instance, Mr. Wick determined areas of the

Subject Properties that were set aside for placement of a processing

plant and overburden. Mr. Wick also provided mining engineering

parameters (pit slopes, mining bench height, safety bench width). With

these inputs from Mr. Wick, Mr. Stanish was able to determine the total

amounts of minable material in the ground on each of the Subject

Properties. Mr. Wick then provided Mr. Stanish with an input for

acceptable in-pit losses based on the type of material being considered.

After applying an in-pit loss amount, Mr. Stanish determined a run-ofmine (ROM) 47 total number of granite tons that may be excavated from

the defined pit and brought to a processing plant. Mr. Wick used the

ROM amount to conduct an economic market study on what could

physically be mined and processed. Mr. Wick’s economic market study

demonstrated economic viability of the Subject Properties as mines.

Using that determination and the other information in the Stanish

Reports, Mr. Stanish estimated that there are approximately 23.3

million ROM tons of probable granite reserves present on the JSS

Property, and 22.6 million ROM tons of probable granite reserves

present on the JSN Property.

Michael Wick

Mr. Wick is Boyd’s director of industrial minerals and a vice

president of the company. Mr. Wick has over 38 years of experience in

engineering, operations, management, and consulting of which 25 years

have included exploration, operations, and valuation/business

development roles for operating mining companies. We recognized him

as an expert in the valuation of minerals and mineral real estate.

In August 2022, petitioners hired Mr. Wick and Boyd to complete

an independent expert study of the mineral resources underlying the

Subject Properties and their associated values. As part of his scope of

work, Mr. Wick reviewed (1) the Stanish Reports, (2) available market

information and granite stone pricing, volumes, and growth projections

47 ROM tons are the recoverable portion of the minable material that is

expected to be removed from the pit and crushed for sale, i.e., the salable product.

[*42] for the Macon MSA and surrounding areas as of 2016, (3) market

reports, (4) the Hayter Appraisals, (5) the Capps Reports, (6) U.S.

Geological Survey Minerals Yearbook 2015 through 2017 for crushed

stone pricing and consumption, (7) census data from the U.S. Census

Bureau, (8) Mine Safety and Health Administration information,

(9) Universal Appraisal Standards for Federal Land Acquisitions 2016,

(10) certain public company websites for financial information to

estimate the weighted average cost of capital, (11) Aggflow Stone

Processing simulation software, (12) equipment pricing guides, (13) the

SME 48 Guide for Reporting Results, Mineral Resources, and Mineral

Reserves, (14) the Uniform Appraisal Standards for Federal Land

Acquisitions, and (15) Google Earth. Mr. Wick’s reports stated that their

respective conclusions relied upon information in Appendix B of the

reports, which included items (4) through (15) above.

Mr. Wick collaborated with Mr. Stanish by providing him with

certain inputs to determine the mineral reserves for the Stanish Report,

and Mr. Wick relied on the Stanish Reports in preparing his written

valuation opinion for the minerals and the mineral real estate on the

JSS Property (Wick JSS Report) and the JSN Property (Wick JSN

Report, and together, Wick Reports).

Wick JSS Report

Mr. Wick performed a DCF analysis for the JSS Property in which

he determined that as of the Donation Date, the net present value of the

mineral reserves underlying the JSS Property that would be extracted

from a mine operating on the JSS Property for 30 years is $18.5 million.

He posited that the HBU for the JSS Property was mining. He

determined that, from the 23.3 million ROM tons of probable granite

reserves present on the JSS Property and after reduction for processing

losses and waste, the JSS Property could produce 20,513,000 ROM tons

of aggregate granite over 30 years. He priced the aggregate using an

average sale price of all salable products that would be produced by the

mine and determined that it would sell for $13.50 per ton. 49 He

48 SME refers to the Society for Metallurgy and Mineral Exploration.

49 Mr. Wick acknowledged that the $13.50-per-ton average base price is

“considerably below market” but that it would “enable the operation to quickly gain

market share.” Mr. Wick’s view that the $13.50-per-ton average base price was

considerably below market is supported by other data cited in his report. The crushed

granite average market price for 2016 for the State of Georgia in the U.S. Geological

Survey’s 2016 Minerals Yearbook was $14.50 per ton freight on board (FOB) quarry

[*43] estimated average sales of 250,000 tons beginning in year 2,

increasing to 350,000 tons in year 3, 500,000 tons in year 4, 600,000 tons

in year 5, and subsequent average sales increasing by 1.7% annually to

correlate with GDOT’s 2010 through 2040 yearly population growth

projection for the market. 50

Mr. Wick posited that the primary competitors of a hypothetical

mine on the JSS Property are mines operated by Vulcan and Martin

Marietta. Vulcan operates four of the six mines in the area. He opined

that JSS, as a truck-only local supplier, would capture 15% of the target

local market over five years and that most of its tonnage would displace

that of Vulcan Postell and Martin Ruby. The Wick JSS Report stated

that a hypothetical mine on the JSS Property would have an advantage

over the large rail mines of Vulcan Postell and Martin Ruby for the

Forsyth to McDonough I–75 growth corridor. Moreover, it posited that,

because Vulcan Postell and Martin Ruby are predominantly rail focused,

they would just ship their tonnage to Florida and markets to the south

instead of selling it locally.

For his cost analysis, Mr. Wick assumed that JSS would incur

initial capital expenses of $13.4 million, including $5.9 million for a

processing plant, $3.9 million for mining equipment, $1.2 million to

purchase the existing home and property on the JSS Property, and $1

million for initial overburden stripping and site preparation.

Additionally, he estimated that the mine would require $8.1 million of

additional sustaining capital expenditures over the 30-year life of the

project. He also estimated that the mine would have LOM average cost

of goods sold of $5.70 per ton. This figure included $4.85 per ton in LOM

operating costs, $0.10 per ton in LOM land reclamation costs, and $0.58

cents per ton in LOM overhead costs. He applied a discount rate of 12%

to determine the net present value on a pretax, constant dollar basis.

(i.e., the sale price does not include transportation and handling). Mr. Wick also

reviewed the pricing estimates in the Capps Reports and compared the pricing from

two quarries that were in the defined market area whose pricing represented the high

and low range of pricing. Mr. Wick averaged the two competitors’ weighted average

sale prices. The result was an average sale price of $18.14 per ton FOB in 2016.

50 Mr. Wick relied on the GDOT, Office of Planning, I–75 South Corridor and

Subarea Master Planning Study dated June 30, 2015, for population projections in the

market. GDOT projected that from 2010 through 2014, the population in Bibb County

(the county adjacent to and southwest of Jones County) and Jones County would

increase by 9% from 168,657 to 184,037.

[*44]

Wick JSN Report 51

Mr. Wick performed a DCF analysis for the JSN Property in

which he determined that, as of the Donation Date, the net present

value of the mineral reserves underlying the JSN Property that would

be extracted from a mine operating on the JSN Property for 30 years is

$20.5 million. He determined that from the 22.6 million ROM tons 52 of

probable granite reserves present on the JSN Property and after

reduction for processing losses and waste, the JSN Property could

produce 20,513,000 tons of aggregate granite over 30 years. Mr. Wick

used the same average sale price and estimated average sales (in tons)

as in the Wick JSS Report. For his cost analysis, Mr. Wick assumed that

JSN would incur initial capital expenses of $11.6 million, including $5.9

million for a processing plant, $3.9 million for mining equipment, and

$600,000 for initial overburden stripping and site preparation. The

remaining inputs for his cost analysis were the same as those used in

the Wick JSS Report. Again, he applied a discount rate of 12% to

determine the net present value on a pretax, constant dollar basis.

Benjamin Black

Mr. Black is a principal engineering geologist for GeoLogic, LLC.

He is a professional geologist and a professional engineer. He has over

25 years of experience in geological, hydrogeological, and geotechnical

analysis and design. He holds licenses for both disciplines in various

states. He is a registered member of SME. We recognized him as an

expert in mining feasibility analysis.

51 The determinations in the Wick JSN Report are largely the same as those in

the Wick JSS Report. For simplicity, we discuss only those items that differ in the Wick

JSN Report.

52 The Wick JSN Report states inconsistent figures for the granite reserves on

the JSN Property. Page 31 of the Wick JSN Report states that, based on the Stanish

Report, the granite reserves are estimated to be 23.3 million ROM tons; however, page

33 states that the granite reserves are estimated to be 22.6 million ROM tons. The

reference to 23.3 million ROM tons on page 31 appears to be a typographical error, as

the Stanish Report states that the granite reserves for the JSN Property were

estimated to be 22.6 million ROM tons. It is not clear to the Court whether this

typographical error had cascading effects on the DCF analysis, but we note that the

production figure of 20,513,000 ROM tons for the JSN Property is the same figure as

that for the JSS Property even though Mr. Wick estimated that the JSS Property had

23.3 million ROM tons of probable granite reserves while the JSN Property had only

22.6 million ROM tons.

[*45] Petitioners engaged Mr. Black to conduct a mining feasibility

analysis of the potential for permit approvals necessary to allow

quarrying of crushed stone aggregate at the Subject Properties (Black

Reports). In preparing the Black Reports, Mr. Black reviewed the NOVA

Reports, the Capps Reports, and the survey plats for JSS and JSN.

Based on interviews with a current geologist and a former manager of

the EPD Surface Mining Unit (SMU), Mr. Black concluded that the

LLCs would have received a permit for surface mining from the SMU

provided that all of the applicable rules and regulations were followed. 53

Similarly, Mr. Black concluded that the LLCs’ rezoning applications and

conditional use permits likely would have been approved based on

(1) interviews he conducted with a former Jones County commissioner

(who served on the Jones County board of commissioners from 1984

through 2004) and a current member of the Jones County commission

(who was not a commissioner in 2016) and (2) his experience rezoning

property in neighboring counties.

Mr. Black did not communicate with any other current or former

Jones County employees in preparing his reports. Nor did he share the

specific location of either of the Subject Properties with the current and

former Jones County commissioners, even though he testified that the

specific location of a property is an important consideration when a

county commission is weighing whether to grant a rezoning or

conditional use permit. He did not communicate with Mr. Pitrowski, the

Jones County planning and zoning director, in preparing his reports.

Nor did he communicate with any residents who lived on Highway 18

West near the Subject Properties or in the Tumbling Shoals residential

neighborhood, which is close to the Subject Properties. In 2006, the

Jones County Commission denied a conditional use permit for a

proposed granite mine. Mr. Black was aware of this denial but did not

include it in the Black Reports. Mr. Black does not have experience with

rezoning property in Jones County but has experience with rezoning and

surface mine permitting in nearby counties.

53 Jamie Lancaster, a representative of the SMU, testified that the SMU

reviews 40 to 60 surface mining permit applications in a typical year. The SMU has

never expressly denied a surface mining permit application; however, not all surface

mining applications receive approval and sometimes the SMU requests additional

information before a plan can be approved. The fact that the SMU has never expressly

denied a surface mining permit application does not mean that every surface mining

application is approved.

[*46]

James C. Clanton

James C. Clanton is a founding member of MVC Consulting, Inc.

He is a licensed real property appraiser in the State of Georgia. He is a

member of the Appraisal Institute and holds its MAI designation. He

has experience performing valuations of vacant land, conservation

easements, and quarries, among other types of property. We recognized

him as an expert in real estate appraisals.

Petitioners engaged Mr. Clanton to prepare a retrospective

appraisal of the “after” FMV of the Easement Properties and the “after”

value of the excluded tracts from the Easement Properties as of the

Donation Date. In preparing the Clanton Reports, Mr. Clanton reviewed

(1) tax cards and tax bills, (2) a boundary survey, (3) the Easement

Deeds, (4) the baseline reports, (5) a FEMA map of Jones County, (6) the

Jones County zoning ordinance Article VII Use Requirements by

District, and (7) information on the demographics of Jones County.

Mr. Clanton performed an HBU analysis of the Easement

Properties and the excluded tracts from the Easement Properties after

the granting of the Conservation Easements. After evaluating the

physically possible, legally permissible, financially feasible, and

maximally productive uses of each of the Easement Properties and the

excluded tracts, he concluded that the HBU of the Easement Properties

after granting the conservation easement was light recreational and

forestry purposes. 54 He further concluded that the HBU of the excluded

tracts was to hold the tracts vacant under the same ownership as the

Easement Properties.

Mr. Clanton applied the sales comparison approach to determine

the FMV of the Easement Properties and the excluded tracts. He

identified sales of similar encumbered land for comparison with the

Easement Properties. He stated that these types of properties are rare

and so he included properties that were outside of the Easement

Properties’ “immediate neighborhood” but had been transferred in the

last 40 months before the effective date of the Clanton Reports and were

restricted by similar encumbrances. Mr. Clanton made qualitative

adjustments for the percentage interest conveyed, financing, conditions

of sale, market conditions, location/visibility, size, zoning, and site

conditions, among others. Because of the lack of transfers of perpetually

54 For the JSN Easement Property, Mr. Clanton also determined that the HBU

included agriculture.

[*47] encumbered land in the local market, he also compared the

Easement Properties to large, unencumbered properties in the local

market and then applied an implied discount to the sales of the

comparables. The range of the implied discount was 67% to 82%.

Comparable land sale 1 involved 63 acres of rural/agricultural

land in Walker County, Georgia, that sold for $1,283 per acre in

February 2014. Comparable land sale 2 involved 254 acres of

rural/agricultural land in Chatham County, Georgia, that sold for

$2,249 per acre in April 2015. Comparable land sale 3 involved 135 acres

of rural/agricultural land in Jackson County, Georgia, that sold for $866

per acre in April 2014. Comparable land sale 4 involved 210 acres of

rural/agricultural land in Elbert County, Georgia, that sold for $843 per

acre in August 2013. Comparable land sale 5 involved 105 acres of

rural/agricultural land in Morgan County, Georgia, that sold for $1,350

per acre in February 2015. Mr. Clanton applied adjusted value

indications and opined that the rounded per-acre values of the JSS

Easement Property and the JSN Easement Property were $1,389 per

acre and $1,265 per acre, respectively. He then applied an implied sale

discount based on the sale of local unencumbered land in Jones County

to reach a reconciled rounded FMV of the JSS Easement Property and

the JSN Easement Property of $370,000, or $1,284 per acre, and

$300,000, or $1,186 per acre, respectively, as of the Donation Date.

Mr. Clanton also applied the sales comparison approach to

determine the FMV of the excluded tracts. He identified sales of similar

unencumbered land in Jones County for comparison to the excluded

tracts.

Comparable land sale 1 involved 20 acres of agricultural/rural

land in Jones County that sold for $3,546 per acre in December 2016.

Comparable land sale 2 involved 13 acres of agricultural/rural land in

Jones County that sold for $3,704 per acre in January 2016. Comparable

land sale 3 involved 20 acres of agricultural/rural land in Jones County

that sold for $3,500 per acre in April 2016. Comparable land sale 4

involved 23 acres of agricultural/rural land in Jones County that sold for

$3,277 per acre in February 2015. Mr. Clanton made adjustments for

interest conveyed, financing, condition of sale, expenditure after sale,

time/market conditions, location, size, zoning, and other factors. After

applying the adjustments, he opined that the excluded tract from the

JSS Easement Property, and the excluded tract from the JSN Easement

Property, each had a rounded FMV of $50,000, or $5,000 per acre, as of

the Donation Date.

[*48] B.

Respondent’s Experts

Respondent’s expert Michael J. Chamberlain prepared a report

(Chamberlain Report) evaluating whether the JSN Conservation

Easement provides for the protection of a significant, relatively natural

habitat for fish, wildlife, or plants. Raymond H. Krasinski prepared a

Uniform Standards of Professional Appraisal Practice (USPAP)

compliance review of the Hayter Appraisals (Krasinski Review Reports).

The Krasinski Review Reports address aspects of the Hayter Appraisals

that Mr. Krasinski asserts were not in conformity with USPAP and that,

in Mr. Krasinski’s opinion, render the Hayter Appraisals’ analyses and

conclusions not credible. Matthew Sullivan prepared mineral economist

rebuttal reports to the Capps Reports (Sullivan Reports). Finally, Andy

D. Sheppard prepared retrospective appraisal reports for the Subject

Properties (Sheppard Reports). The Sheppard Reports address the HBU

of the Subject Properties and the “before” and “after” values of the

Subject Properties. We discuss each of these experts below.

Michael J. Chamberlain 55

Dr. Chamberlain is the Terrell Distinguished Professor of Wildlife

Ecology and Management at the University of Georgia’s Warnell School

of Forestry and Natural Resources. He holds a Ph.D. in forest resources

with a major in wildlife ecology from Mississippi State University. He is

also an adjunct professor at Louisiana State University and the

University of Tennessee. We recognized him as an expert in wildlife

ecology and conservation.

Dr. Chamberlain’s scope of work for his report was to evaluate

whether the JSN Conservation Easement that is described in the JSN

Easement Deed (1) provides a habitat for threatened or endangered

species of plants and animals, (2) provides protection of a significant,

relatively natural habitat, (3) contributes to the ecological viability of a

local, state, or national park, nature preserve, wildlife refuge,

wilderness area, or other similar area, (4) has reserved rights that are

consistent with the conservation purposes of the conservation easement,

and (5) contributes a significant public benefit. In preparing the

Chamberlain Report, Dr. Chamberlain reviewed (1) the JSN Easement

Deed, (2) the JSN Baseline, (3) an excerpt from an article on high

55 As discussed supra Findings of Fact Part VII.A, because respondent did not

challenge the declared conservation purposes for the JSS Conservation Easement, our

findings of fact with respect to Dr. Chamberlain’s expert report will address only the

JSN Conservation Easement.

[*49] priority habitats in Georgia from the Georgia Department of

Natural Resources, (4) information from the U.S. Geological Survey on

watersheds in the South Atlantic Gulf Region, (5) information from the

U.S. Fish and Wildlife Service on the Piedmont Refuge, (6) articles on

red cockaded woodpeckers and their use of pines for foraging, (7) the JSS

and JSN Forest Land Management Plans, (8) the Georgia Biodiversity

Portal, (9) an article on pine plantations and wildlife in the southeastern

United States, (10) an article on open forest structural characteristics

for high conservation priority wildlife species in southeastern United

States pine plantations, (11) an article on soil ecology, (12) an article on

simulating the consequences of roads for wildlife population dynamics,

and (13) Georgia biodiversity conservation data. Dr. Chamberlain

visited the JSN Easement Property on September 21, 2022.

In the Chamberlain Report, Dr. Chamberlain determined that the

land cover types delineated in the JSN Baseline were inaccurate. He

stated that there is neither evidence of, nor suitable habitat for, state or

federally listed threatened and endangered species. Specifically, after

touring the JSN Easement Property, Dr. Chamberlain determined that

it supported only three terrestrial land cover types: (1) pine-dominated

forest, (2) bottomland hardwood forest, and (3) open fields. He also

visited the approximate areas documented as photo locations in the JSN

Baseline to verify the land cover types and habitats that were asserted

in the JSN Baseline. After visiting the photo locations in the JSN

Baseline for the mesic hardwood forest, oak-hickory-pine forest, and

pine forest, Dr. Chamberlain concluded that the mesic hardwood forest

and the oak-hickory-pine forest described in the JSN Baseline did not

exist. Instead, the mesic hardwood forest and oak-hickory-pine forest

were pine plantations that had been thinned and contained pines of

varying ages. Dr. Chamberlain stated that pine forests and pine

plantations are readily found in the Piedmont Ecoregion and in the

southeastern United States and provide only a minimal contribution to

generalist species adapted to using pine forests and pine plantations. He

noted that the plant communities (overstory and understory of the trees)

in the photo locations were similar, and he “failed to find any evidence

that either oak-hickory-pine and/or mesic hardwood forest existed

anywhere on the conservation easement.” 56 Accordingly, he opined that

“78.5% of the conservation easement is pine plantation and pine forest

that are softwoods, rather than hardwood forests.” As discussed infra

Opinion Part II.B.5, we find as fact that mesic hardwood forests did not

56 Dr. Chamberlain did not observe a G1, G2, or G3 habitat on the JSN

Conservation Easement.

[*50] exist on the JSN Easement Property. Thus, we find that the JSN

Easement Property is 14.8% bottomland hardwood forest and 78.5%

pine forest and manmade pine plantation.

Dr. Chamberlain investigated the potential for state and federally

listed threatened and endangered plants and animals to occur on the

JSN Easement Property and reviewed rare species and species of

conservation concern documented in the Piedmont Ecoregion via the

Georgia Biodiversity Portal maintained by the Georgia Department of

Natural Resources – Wildlife Resources Division. He found no records

documenting high priority species on the JSN Conservation Easement

and found no evidence during his site visit and subsequent research that

any rare, threatened, or endangered species occurred on the JSN

Conservation Easement. In the Chamberlain Report, he opined that the

JSN Conservation Easement does not provide a habitat for threatened

or protected species, but instead provides land cover types used by

generalist species that are common throughout the Piedmont Ecoregion

and the southeastern United States.

Additionally, Dr. Chamberlain concluded that the JSN Easement

Property did not provide a significant, relatively natural habitat for two

nonmutually exclusive reasons. First, the JSN Baseline was inaccurate

regarding the delineation of primary habitats and land cover types; and

second, the actual observed habitats and land cover types on the JSN

Conservation Easement were pine-dominated forests and pine

plantations that have been thinned and which are common in the

Piedmont Ecoregion and the southeastern United States. He noted that,

because pine plantations are planted in a way that does not mimic

natural forest regeneration and succession, they are not significant

natural habitats or land cover types. Dr. Chamberlain agreed with the

JSN Baseline that the JSN Conservation Easement contains

bottomland hardwood forests along Buttlers Creek. However, he stated

that the value of the bottomland hardwood forests along Buttlers Creek

was “greatly marginalized” because they are surrounded by areas of pine

plantation and poorly managed pine forest. 57 Thus, “the wildlife species

57 Dr. Chamberlain explained that pine forests and pine plantations can be

beneficial to certain wildlife species if they are managed properly. Generally, this is

accomplished with prescribed fire to maintain understory vegetation (vegetation that

is beneath the tree canopy), which provides quality early successional vegetation

(grasses and forbs) that is valuable to many wildlife species. He noted that two of the

eight locations that he visited in the pine-dominated land cover types were managed

with prescribed fire intensely enough to create quality early successional vegetation

[*51] that use pine forests and pine plantations such as those that

dominate the conservation easement are ubiquitous to nearly every land

cover type found in the Piedmont Ecoregion.” Dr. Chamberlain thus

concluded that the bottomland hardwood forests did not constitute a

significant, relatively natural habitat.

Similarly, Dr. Chamberlain opined that the JSN Conservation

Easement did not contribute to the ecological viability of other

conservation lands, such as the Piedmont Refuge, because it provided

only modest value to the generalist species that use the JSN

Conservation Easement. He also noted that the value of the JSN

Conservation Easement is diminished by the fact that, except for the

bottomland hardwood forests and the streams, the property contains

only pine-dominated forests and nonmanaged open areas that could just

as easily be found on other properties that border the Piedmont Refuge

and throughout the Piedmont Ecoregion. Dr. Chamberlain conducted

research in the Piedmont Ecoregion for 11 years, on public and private

lands that border the Piedmont Refuge and the other nearby state and

federal lands, and concluded that pine-dominated forests and open areas

similar to those on the JSN Easement Property are common on

properties surrounding the Piedmont Refuge and throughout the

Piedmont Ecoregion.

Finally, Dr. Chamberlain concluded that the JSN Conservation

Easement provides only marginal contributions to public benefit

because the land cover types and recreational activities that occur on

the property are consistent with other private conservation programs in

the area. He further stated that recreational hunting and timber

harvesting are common in these private conservation programs. Lastly,

he concluded that the property is not unique to the area and the general

public has little opportunity to view the property with the exception of

approximately 600 feet on Highway 18 West, and no opportunity to use

it.

Raymond H. Krasinski

Mr. Krasinski is the lead appraiser for the Internal Revenue

Service (IRS). He oversees and is the technical lead for other appraisers

but that the remaining locations were dominated by woody vegetation that is less

valuable to wildlife species that use early successional vegetation. His report also

stated that because of poor management, the pine forest had woody understory

vegetation or dense pine regeneration, with midstories that were dominated by

sweetgum, poplar, and dogwood.

[*52] in the IRS in all appraisal matters. He is familiar with generally

accepted appraisal standards, including SME, USPAP, and the

International Valuation Standards, and how the appraisal standards

work together. Mr. Krasinski is a State Certified General Real Estate

Appraiser and a General Appraisal Instructor in the State of Florida.

We recognized him as an expert in real property appraisal, appraisal

review, and USPAP.

Mr. Krasinski does not offer independent appraisals of the

Subject Properties; rather, the scope of work for his appraisal review

was to provide an opinion on whether the Hayter Appraisals’ valuations

and assignments comply with USPAP. The scope of work for the

Krasinski Review Reports was also to provide the IRS with data and

analysis to help determine the reasonableness and credibility of

assignment results and conclusions in the Hayter Appraisals regarding

the HBU conclusion and the data used to establish the Subject

Properties’ “before” values. In preparing the Krasinski Review Reports,

Mr. Krasinski (1) reviewed the Hayter Appraisals, (2) researched

specific supply and demand factors such as competitive similar land

sales and offerings in the area, (3) researched population data and

market dynamics, geographic constraints, and other market factors

related to the HBU conclusion, and (4) viewed the Subject Properties

using Google Earth and through available satellite, aerial, and surface

photography.

The Krasinski Review Reports identified what Mr. Krasinski

determined to be flaws in the Hayter Appraisals and stated that,

because of these flaws, the Hayter Appraisals did not comply with

USPAP. Mr. Krasinski noted that the Hayter Appraisals failed to

compare the Subject Properties against comparable land sales of vacant

land with similar geology in the local market. Mr. Krasinski also stated

that the DCF valuation was flawed because it was not supported by

valid comparable land sales. Finally, Mr. Krasinski stated that the

Hayter Appraisals’ DCF inputs were overstated in the case of aggregate

production and understated in the case of cost inputs, which resulted in

an inflated valuation of the proposed quarries.

The Krasinski Review Reports found what they described as

significant errors in the Hayter Appraisals and concluded that the

Hayter Appraisals did not comply with generally accepted appraisal

standards of appraisal practice. At the outset, the Krasinski Review

Reports described the Subject Properties in their existing conditions,

each as “a large vacant land parcel with a claimed mineral asset,” rather

[*53] than as an operating mine. Mr. Krasinski stated that the former

is how a market participant would view the Subject Properties. Mr.

Krasinski noted that the Hayter Appraisals relied on the Capps Reports

for market parameters and data that it should have independently

developed and/or verified.

He noted that there are multiple sales of comparable land with

similar geology in the local market and that the prices at which those

properties sold are contrary to the Hayter Appraisals’ value conclusions.

Rather than rely on these comparable land sales, the Hayter Appraisals

inferred that a market participant would value the property based on its

possible potential future cashflow if it were to operate for 26 years as a

quarry. Mr. Krasinski opined that the four properties described in the

Hayter Appraisals were not representative of the Subject Properties at

the time of valuation. He noted that, unlike the Subject Properties, the

four comparables in the Hayter Appraisals involved working quarries

that had long operating histories or, in one case, an expansion purchase

of property that was adjacent to a working quarry that had a long

operating history. When the Subject Properties are weighed against

comparable land with similar geology in the local market, the Hayter

Appraisals’ value conclusions are more than 25 times, in the case of JSS,

and 28 times, in the case of JSN, higher than the indication of similar

local market sales data. Moreover, there were no sales of similar vacant

land in the local market that sold for the value suggested by the Hayter

Appraisals.

Mr. Krasinski researched sales in the local market area and found

25 recent sales of similar vacant land primarily located on the same

geologic formation as the Subject Properties. 58 Of the 25 sales, 23 of the

properties were located on the same biotite granite gneiss formation as

the Subject Properties and the other two were located on top of a less

ubiquitous type of granite, igneous granite. 59 The values ranged from

$985 per acre to $4,283 per acre, with the average sale price of $2,637

per acre, and the median sales price of $2,350 per acre. Mr. Krasinski

stated that Mr. Hayter should have investigated local sales in Jones

County as part of his analysis because, if Mr. Hayter had done so, the

observed lack of market sales at the unit value that was indicated by the

58 Mr. Krasinski limited his search and analysis to property sales that involved

over 30 acres and that occurred within Jones County over the two years directly

preceding the valuation date.

59 Mr. Krasinski noted that the “granite formation underlying this part of

Georgia is fairly ubiquitous.”

[*54] Capps Reports would have been an indication that the market

does not treat the Subject Properties as different from other vacant land

with similar attributes in the local area and that a DCF analysis may

not have been the correct model in these cases.

Mr. Krasinski also noted that the disparity between the price per

acre for the comparable land sales and the unit value indicated by the

Capps Reports should have signaled the need to further investigate

supply and demand of the aggregate. He continued that significant

issues with both the Hayter Appraisals and the Capps Reports were that

they are based primarily on supply side data and the subject market

area is not analyzed for supply and demand quantification for aggregate.

Mr. Krasinski explained that these errors give the impression to a user

of the Hayter Appraisals that the Subject Properties are unique when

they are, in fact, nonunique properties for which substitutes are readily

available.

Additionally, Mr. Krasinski criticized the use of a DCF analysis

for the Subject Properties because it “results in an isolated analysis and

business and investment value that is not directly connected to

demonstrated actions of buyers and sellers of vacant land in the local

market.” He continued that the underlying premise of using the DCF

analysis is that the Subject Properties will be used as mines, even

though no mines existed when the Subject Properties were valued. He

noted that Mr. Hayter’s use of a DCF analysis suggests that market

participants will value vacant land based on the present value of future

mineral sales of an underlying mineral asset. Mr. Krasinski stated that

the 25 sales of comparable land that he researched do not support that

view. He determined that, if the underlying mineral was actually in

demand, the market sales would demonstrate a premium for vacant

land with an underlying mineral asset. Since there was no such market

demand, he concluded that the HBU for the Subject Properties is not

aggregate mines.

Mr. Krasinski also asserted errors in the DCF analysis. He stated

that the Hayter Appraisals superseded the Capps Reports estimated

production figures of 10,524,358 tons of production over a 25-year period

and instead increased the estimated production figure by over 40% to

14,931,000 tons over a 26-year period. Additionally, Mr. Krasinski noted

that the Hayter Appraisals superseded Dr. Capps’s $8.75-per-ton cost

for rock crushing, which was based on the quoted rate from Colwell, and

[*55] reduced it to $7 per ton with an annual inflation rate of 2%. 60

Mr. Krasinski stated that, although Mr. Hayter noted that the Colwell

quote did not include additional costs for washing and finishing (which

Mr. Colwell offered to provide for an additional $1.75 per ton) nor

drilling and shooting (which Mr. Colwell offered to provide for an

average cost of $1.60 per ton), neither did Mr. Hayter include these

additional costs in the DCF. Instead, Mr. Hayter included only a $0.50per-ton allowance for washing and finishing without discussing why this

cost was reduced by $1.25 per ton from the Colwell quote, and did not

include an allowance for drilling and shooting. Finally, Mr. Krasinski

noted that Mr. Hayter used a below-average 2% inflation rate for the

entire project. According to Mr. Krasinski, the result of these

adjustments is a production cost that is 30% lower than the production

cost that the Colwell quote should yield and the production cost quoted

by Dr. Capps. He explained that this resulted in a $42 million lower

production cost over 26 years. Mr. Krasinski observed that, if an $8.75

cost of harvest (as determined by Dr. Capps) is used in the Hayter DCF,

the net present value for each Subject Property would decrease by $10

million. 61

As discussed supra, Mr. Krasinski faulted the Hayter Appraisals

for failing to quantify supply and demand in the 50-mile radius of the

Subject Properties. Mr. Krasinski defined the primary market for a JSS

Property mining operation as a radius of no more than 50, and the

secondary market for the JSS Property as a radius over 50, miles. He

estimated that annual demand for aggregate was 6,065,139 tons, which

was based on a population of 1,161,904 and a per capita demand rate of

5.22 tons. In addition, he estimated that the primary market area had a

primary supply of aggregate of 10,830,602 tons and a secondary market

supply of 5,844,781 tons resulting in a total estimated supply of

16,675,383 tons. Mr. Krasinski’s demand analysis indicated that the

subject market had a significant level of existing supply; and, when

60 Mr. Krasinski noted that, even though the Hayter Appraisals’ stated

assumption for rock crushing cost was $7 per ton with an annual inflation rate of 2%,

the Hayter Appraisals’ DCF applied a cost of $6.75 per ton in year 2 (first year of

production), then decreased it to $6.50 per ton for years 3 and 4, then increased it to

$6.75 in year 5, and to $7 in year 6. Only after year 6 was the rate increased at about

2% per year from $7. This methodology resulted in $1.7 million lower production costs

in the DCF calculations than what is disclosed to the reader based on the stated

assumption.

61 We adopt the phrase “cost of harvest” from the Krasinski Review Reports to

describe the costs associated with rock crushing, washing and finishing, and drilling

and shooting.

[*56] primary and secondary supplies 62 were considered, there was an

oversupply of 10,610,244 tons. 63

Mr. Krasinski opined that the Hayter Appraisals’ conclusion that

rezoning is reasonably probable was flawed and that it required a

greater degree of analysis and discussion of the risks inherent in that

process. For instance, Mr. Krasinski highlighted that rezoning is only

the first hurdle and that, because mineral extraction is a conditional

use, it requires an additional permit to be authorized by the Jones

County government. Additional steps, meetings, and public notice are

required to secure a conditional use permit. Moreover, a conditional use

permit is not a guaranteed right and may be revoked. Mr. Krasinski

opined that it was inappropriate for Mr. Hayter to ignore these issues

and their potential impact on his value determinations for the Subject

Properties. Finally, Mr. Krasinski stated that the four comparable

properties that Mr. Hayter relied on to support his DCF analysis were

not appropriate comparables because, unlike the Subject Properties,

they were each working mines that had long operating histories or, in

one case, an expansion purchase of property that was adjacent to a

working mine that had a long operating history.

Matthew Sullivan

Mr. Sullivan is a principal consultant in mining economics with

SRK Consulting, Inc. He has spent the past 13 years as a senior

participant analyzing, optimizing, and valuing mining operations. He

has two undergraduate degrees from the Colorado School of Mines: the

first in metallurgical and materials engineering and the second in

economics and business. He also has a certificate in financial

management from Cornell University. Mr. Sullivan has experience

related to granite and granite aggregate, mineral reserve reconciliation,

and finance related to mining including due diligence exploration stage

analysis. He is a registered member of SME. We recognized him as an

expert in real estate appraisals, with specialized expertise in

conservation easement appraisals and appraising land containing

mineral deposits, including granite.

62 The Krasinski Review Reports defined the primary supply as the competitive

mines inside the 50-mile market radius, and the secondary supply as the competitive

mines with market overlap in the 50-mile radius of the Subject Properties.

63 Even if only primary supply from the nine quarries operating inside a 50mile radius of the Subject Properties was considered, Mr. Krasinski determined the

subject market was oversupplied by nearly 4.8 million tons.

[*57] Mr. Sullivan’s scope of work for his mineral expert reports was to

provide an opinion on (1) what processes should be followed to assess

whether a proposed mine project should be pursued and what data or

analysis is necessary to evaluate the economic feasibility of a potential

mine operation, and (2) whether the proposed mines were legally,

physically, and economically feasible. In preparing the Sullivan Reports,

Mr. Sullivan reviewed the Easement Deeds, the baseline reports, and

the NOVA Reports. Additionally, he reviewed and relied on certain other

documents including the (1) U.S. Geological Survey 2016 Minerals

Yearbook, (2) Canadian Institute of Mining Definition Standards of

Mineral Resources and Mineral Reserves, (3) SME Mining Reference

Handbook, (4) Georgia Environmental Protection Division’s Permitted

Surface Mining Facilities, (5) Georgia Surface Mining Act of 1968, Ga.

Code Ann. §§ 12-4-40 through 12-4-84 (2016), as amended, and Rules &

Regulations for Surface Mining, and (6) Jones County Ordinance

Appendix A—Comprehensive Land Development. He also visited the

Subject Properties in September 2022.

Mr. Sullivan provided information about the mining industry’s

process and standards that are applicable for evaluating whether a

mining project is feasible. This evaluation requires considering whether

the mining project is legally, physically, and economically feasible.

Mr. Sullivan was also asked to evaluate technical feasibility. In the

mining industry, the conclusions of a feasibility analysis are presented

in the form of a declaration of resources and reserves.

Mr. Sullivan concluded that, with the limited information that

was available to him, it was impossible to determine whether the

proposed mines were physically, legally, or economically feasible. With

respect to legal feasibility, and specifically permitting, Mr. Sullivan

explained that the mine operator would have to file an application that

included a surface mining land use plan for a surface mining permit

from the EPD. Additionally, he noted that the mine operator would need

to apply to Jones County to rezone the Subject Properties for industrial

use. Importantly, he stated that acquiring a state mining permit from

EPD does not guarantee that Jones County will rezone the Subject

Properties for industrial use and there are various reasons rezoning

might be denied including incompatibility with surrounding land uses,

groundwater impacts to adjacent or nearby water wells, visual impacts

to scenic byways or nearby historical features, and significant impacts

to noise, traffic, and air quality.

[*58] In Mr. Sullivan’s opinion, other issues with respect to mining

development on the JSS Property included that electrical transmission

lines and power lines traverse the property, and additional permits may

be required relating to existing drainage and watersheds. With respect

to the JSN Property, Mr. Sullivan noted that it may be more challenging

to acquire a permit as an aggregate mine because it is adjacent to the

Piedmont Refuge.

Next Mr. Sullivan evaluated the geology component of technical

feasibility of a mine on the Subject Properties. After reviewing the

NOVA Reports, he concluded that the Subject Properties have high

potential to contain rock acceptable for use as construction aggregate

but that the drilling and geologic site assessment work that was

conducted was limited and preliminary. Significant additional work

would be required to assess the project as a potential source of

construction aggregate. Ultimately, he concluded that the information

available for review did not constitute a mineral resources declaration.

Mr. Sullivan also evaluated mining as a component of technical

feasibility. After making assumptions regarding the amount of minable

material present, mining rates, operating days per year, specifics

regarding the size and shape of the mine pit, and the market for the

material, he created a conceptual mine scoping exercise suggesting that

it was possible to exploit the resources in a cost-effective manner. He

evaluated processing as a component of technical feasibility and opined

that each Subject Property would have an equipment cost of $2.2 million

(in 2016 dollars) and would cost $1.98 per ton to operate (in 2016

dollars).

Finally, he evaluated the markets for the aggregate as part of the

technical and economic feasibility of the projects. He stated that the

average FOB price of crushed stone was $12.30 per ton. At the time of

the Sullivan Reports, Mr. Sullivan noted that the presence of three

permitted surface mining facilities in Jones County (two of which are

the previously discussed large operations operated by Martin Marietta

and Vulcan) and other operations in surrounding counties is problematic

for the projects at issue. The fact that these mining facilities are likely

balancing the supply and demand of the local aggregate market would

make it challenging for a new producer to enter the market and capture

market share. He opined that the two major markets for the aggregate

are Macon and Atlanta. He concluded that the cost to transport the

aggregate by truck to Macon is approximately $0.96 per ton and the cost

of delivering the aggregate to Atlanta is approximately $5.18 per ton.

[*59] Mr. Sullivan concluded that the cost of transporting aggregate to

Atlanta represented approximately 42% of the average selling price per

ton of the aggregates, which is a very substantial cost, and that there

are better located mines in the Atlanta market that would have a

material delivered price advantage over the Subject Properties. 64

Andy D. Sheppard

Mr. Sheppard is a principal and chief financial officer of Pritchett,

Ball & Wise, Inc. He is a licensed real property appraiser in the State of

Georgia and several other states. He is a member of the Appraisal

Institute and holds its MAI designation. He has experience appraising

various types of property including vacant land conservation easements

and has experience performing market analysis impact studies

involving commercial and residential values affected by quarries. We

recognized him as an expert in real estate appraisals, with specialized

expertise in conservation easement appraisals and appraising land

containing mineral deposits, including granite.

Mr. Sheppard’s scope of work was to prepare retrospective

appraisals of the FMVs of the JSS Easement Property and the JSN

Easement Property as of the Donation Date. In preparing the Sheppard

Reports, Mr. Sheppard reviewed (1) the NOVA Reports, (2) the baseline

reports, (3) the Easement Deeds, and (4) other information.

Mr. Sheppard performed an HBU analysis of the Subject

Properties before the granting of the Conservation Easements. After

evaluating the physically possible, legally permissible, financially

feasible, and maximally productive uses of the Subject Properties, he

concluded that the HBU before the granting of the conservation

easements was continued agricultural/residential/recreational use with

knowledge of mineral on the site and opportunity to seek entitlements

allowing mining. He noted that if either the JSS Property or the JSN

Property were offered for sale before the granting of the easement, it

should be marketed as an “exploratory stage” mineral property.

Mr. Sheppard opined that the JSS Property was an exploratory stage 65

Mr. Sullivan also noted that existing road access was not sufficient for

receiving or shipping large volumes of material and that significant infrastructure

improvements in the form of road access development and turnout development may

be required.

65 The Sheppard Reports explain that mineral properties can be categorized in

descending order of risk and ascending order of value as exploration stage, entitlement

[*60] mineral property because of the limited drilling and testing on the

property, lack of mining entitlements (i.e., rezoning, conditional use

permit, state mining permits), his observance of rock outcroppings on

the property, and its proximity to an existing mine. Exploratory stage

mineral properties are high risk. Mr. Sheppard explained that “as

evidence of feasibility increases, risks decrease, and value subsequently

increases.” Mr. Sheppard opined that it is inappropriate to appraise an

exploratory stage mineral property, such as the Subject Properties,

using a going-concern value such as a DCF analysis, because no business

exists on the property. 66

The Sheppard Reports included information from the U.S.

Geological Survey that indicates that aggregate is abundant in Jones

County and in this part of Georgia. The Sheppard Reports analyzed

surrounding land uses within the Subject Properties’ primary market

area, 67 which he found were rural, residential, agricultural, and

recreational. Mr. Sheppard also considered population data, the location

of existing mineral suppliers that were near the hypothetical mines on

the Subject Properties, aggregate demand from new housing

stage, pre-mining development stage, or mining stage. Mr. Sheppard’s reports explain

that, as a landowner discovers information about the mineral quantity and quality and

market demand, and then seeks mining entitlements (zoning approvals and permits),

the overall risk decreases and value increases.

Mr. Sheppard analogized using a DCF analysis to value a hypothetical

quarry on the JSS Property as follows:

[C]onsider a “$50,000” residential lot being considered for

encumbrance with a Conservation Easement deed prohibiting

residential development. Suppose that this residential lot has the

potential to host a “$400,000” house and the owner will net “$100,000”

in profit following the construction and sale of the home. The

“$400,000” home price less “$100,000” in profit (“$300,000”)

encapsulates the value of the lot ($50,000) and the cost of materials

and skilled labor needed to construct the home ($250,000). The

“$400,000” home price less “$300,000” in costs (“$100,000”) reflects the

coordination of labor and materials, time, and risk expressed or

commonly referred to as profit or incentivization. If the owner of the

lot wished to donate the “$50,000” lot, the donation is simply “$50,000.”

The donation is neither “$400,000” (home price) nor “$150,000”

(“$50,000” lot plus “$100,000” in profit the Donor could have made from

building on the lot), but simply and logically “$50,000.” Conversely, no

buyer would pay “$150,000” (lot cost + potential or foregone profit) to

obtain a “$50,000” lot.

67 Mr. Sheppard defined the primary market area as the area within a fivemile radius of the Subject Properties. He considered the area within a 15-mile distance

as the maximum hauling distance by mineral operators.

[*61] construction in the Macon MSA, and demand from major

infrastructure projects. In analyzing each of these items, he concluded

that there was no market demand for increased aggregate supply and

that any increases in demand would most likely have been met by the

existing suppliers that were locationally advantaged over a hypothetical

aggregate mine on either of the Subject Properties.

Mr. Sheppard observed that a hypothetical aggregate mine on

either of the Subject Properties would appear to be locationally

disadvantaged relative to other existing mines that were closer to

demand sources. One of their potential competitors, Vulcan Florida Rock

Industries’ Macon Quarry (Vulcan Macon), is five miles closer to I–75,

has a more direct route to I–75, and has rail service. Another competitor,

the Hanson-Monroe Quarry, is also very close to I–75 and supplies

material to Bolingbrooke and Forsyth in Monroe County (which is

adjacent to Jones County) and Macon in Bibb County (which is

immediately south of Jones County). Because they are closer to I–75,

both of these mines would have a locational advantage over a

hypothetical aggregate quarry on either of the Subject Properties.

Vulcan also operates two relevant mines, one in Henry County (which is

north of Butts County and Monroe County, and northwest of Jones

County) and another in Spalding County (which is west of Butts County,

and southwest of McDonough, Georgia) that would be locationally

advantaged over hypothetical quarries on the Subject Properties with

respect to McDonough and the I–75 corridor south of McDonough

towards Forsyth. Moreover, most of the housing and commercial

development in the Macon area is closer to both the Martin Ruby mine

and the Vulcan Postell mine. Mr. Sheppard analyzed the location of a

hypothetical mine on the Subject Properties relative to existing mines

and used an aggregation database 68 to calculate and map the 15-mile

driving range from each of the existing mines that are near the Subject

Properties. He paired this analysis with population and employment

center data, as well as known or pending construction projects, to

understand whether the market was served or underserved. His

analysis indicated that most of the population centers were already

served by existing supply and the unserved areas including the area to

the north of the JSS Property (i.e., the Piedmont Refuge) did not need

aggregate products. He concluded that, because of the Subject

Properties’ locational disadvantage relative to competitor mines, a buyer

68 Mr. Sheppard reviewed data from the Site to Do Business, which is a

subscription-based aggregator of historic and projected population estimates, as well

as income and housing data throughout the United States.

[*62] of each of the Subject Properties would anticipate capturing less

than a pro rata share of the area’s static demand.

Mr. Sheppard applied the sales comparison approach to

determine the FMVs of the JSS Easement Property and the JSN

Easement Property. 69 He searched for sales of relatively similar sites in

Jones, Monroe, and Bibb counties whose primary use would be

agricultural/residential/recreational with knowledge of mineral on the

site and opportunity to seek entitlements allowing mining.

Mr. Sheppard analyzed over 420 tax parcel transactions in Jones,

Monroe, and Bibb counties, where properties greater than 25 acres sold

between January 2015 and December 2017. Mr. Sheppard identified

three properties as comparable, 70 one in Jones County and two in

Monroe County. The sales occurred between March 2 and August 8,

2016, and involved properties ranging between 69 and 124 acres. 71 They

were similar to the before-easement Subject Properties in their legal,

locational, and physical characteristics. The most a known mineral

operator paid for a property greater than 25 acres with an operating

mine, between January 1, 2015, and December 31, 2017, in the threecounty area was $4,738 72 per acre. 73

Comparable land sale 1 is 69 acres of rural land in Monroe County

that sold for $3,691 per acre in August 2016. Comparable land sale 2 is

69 Mr. Sheppard concluded that the income-based approach to valuation was

not appropriate because there was not enough objective information about either of the

Subject Properties’ mineral potential and because neither property was an operating

mine as of the Donation Date.

Mr. Sheppard defined “comparable” sales as a narrowed subset of

transactions which both are market based and mirror the physical and legal

characteristics of the Subject Properties.

There were many reasons Mr. Sheppard did not consider the other

transactions as comparable to those involving the Subject Properties including that

they were potentially nonmarket transactions, government transactions, foreclosures,

or liquidation or estate transactions, or because they lacked characteristics similar to

those of the Subject Properties.

72 As part of a 31-facility transaction, Vulcan purchased from Aggregates USA

a 573-acre operating mine for $4,738 per acre. However, Mr. Sheppard did not consider

the transaction a comparable to the Subject Properties because of the timing of the

sale, the size and scale of the property, different zoning, and different HBU.

73 The most a property greater than 25 acres sold for between January 1, 2015,

and December 31, 2017, in the three-county area was $31,607 per acre. This property

was purchased for development of an apartment community. Mr. Sheppard excluded

it as an outlier because the 21 other examples of properties greater than 25 acres that

were sold in this timeframe and were also residential development land transactions

averaged $3,934 per acre.

[*63] 101 acres of rural land in Jones County that sold for $3,974 per

acre in April 2016. Comparable land sale 3 is 124 acres of rural land in

Monroe County that sold for $3,439 per acre in March 2016. All three

properties are irregularly shaped, with similar zoning and current use,

and near an existing aggregate mine.

For these comparable land sales, Mr. Sheppard analyzed various

characteristics of the properties sold, including parcel size, shape,

location, natural amenities, zoning, access and visibility to roads and

highways, positive or negative surrounding land uses and

characteristics, floodplain areas on the parcel, differences in topography

and grading, access to utilities, easements or restrictions, existing

infrastructure or improvements contributing towards the sites’ HBU,

contamination, and existing known, proven, and marketable mineral

reserves. He made adjustments for differences in access, natural

amenities, and residential use considerations. On the basis of a

qualitative analysis, he classified each property as inferior, similar, or

superior to the Easement Properties.

Mr. Sheppard ranked the Comparables #1 and #3 as similar and

Comparable #2 as superior to the Easement Properties. He concluded

that Comparable #1 and Comparable #3 did not require any adjustments

but that the market value of Comparable #2 required a downward

adjustment of 10% because it was superior to the Subject Properties.

After he made an adjustment to Comparable #2, the sales data indicated

that each Easement Property had a range of $3,439 to $3,691 per acre.

In addition, Mr. Sheppard considered other transactions that he

categorized as noncomparable and noted that many of the categories of

these noncomparable properties exhibited sales per acre averages that

affirm the comparables’ price range. He noted that, while not

comparable to the Easement Properties, this data reflected graduated

per-acre rates being paid for land that was of increasing quality,

location, zoning, and HBU.

Within the three-county area, he considered the only two known

transactions that included a known mineral operator as the buyer or

seller. Those properties sold for $2,563 per acre for a depleted mineral

site, and $4,738 per acre for a 573-acre operating mine that Vulcan

purchased from Aggregates USA as part of a 31-facility transaction. He

further noted that there were two older sales in Jones County involving

172 and 609 acres of land with a similar level of exploratory information,

without mining entitlements, and without rail, that were purchased in

[*64] December 2013 and December 2010 for $2,619 and $3,000 per

acre, respectively.

Outside the three-county region, he examined a November 2018

transaction in Butts County, which is northwest of Jones County and

immediately north of Monroe County. The property was a large

agriculturally zoned site that lacked rail but was proposed for mining

that sold for $2,100 per acre. Mr. Sheppard noted that this property was

larger than each Easement Property, and farther from the interstate,

but that it had a lower overburden removal cost, and lacked the

Easement Properties’ nearby competitive supply. Mr. Sheppard noted

that despite better overall market conditions in 2018, and large obvious

rock outcroppings indicating potential subsurface minerals, the

property transacted for only $2,100 per acre.

Based on these sales of comparable land, Mr. Sheppard

determined the rounded FMV of the JSS Easement Property before the

easement was $3,500 per acre, or $1,010,000. Additionally, he

determined that the rounded FMV of the JSN Easement Property before

the easement was $3,500 per acre, or $885,000.

Mr. Sheppard identified three sales of encumbered land with

similar reserved rights to determine the FMV of each Easement

Property after the granting of the easement. 74 Comparable “after” land

sale 1 involved 261.05 acres in rural Jones County that sold for $1,915

per acre in July 2017. Comparable “after” land sale 2 involved 1,192.4

acres in rural Jefferson County that sold for $1,650 per acre in

September 2014. Comparable “after” land sale 3 involved 186.2 acres in

rural Bryan County that sold for $1,208 per acre in September

74 Mr. Sheppard did not opine as to the “after” value of the excluded tracts from

the Easement Properties. Additionally, he noted that there was no reliable market

evidence that supported a value enhancement for the excluded tracts as a result of the

Conservation Easements. He analyzed several hundred transactions in the threecounty region and did not find any clear evidence that the excluded tracts would benefit

from the donations of the Easement Properties. Additionally, he noted that the Subject

Properties are already near a large, protected area to the north (i.e., the Piedmont

Refuge), and the excluded tracts are large enough to provide the flexibility of where to

host one or two homes to mitigate views of neighboring homes. In other words, in his

view, the before and after values of the excluded tracts did not change, and thus would

not affect the before and after values of the Easement Properties. We find as a fact that

the before and after values of the excluded tracts did not change, and thus they would

not affect the before and after values of the Easement Properties.

[*65] 2011. 75 All three properties are irregularly shaped, with similar

zoning, current use, easement restrictions, reserved rights, and HBU.

Based on these sales of comparable land, Mr. Sheppard

determined that the rounded FMV of the JSS Easement Property after

the easement was $1,900 per acre, or $550,000. Additionally, he

determined that the rounded FMV of the JSN Easement Property after

the easement was also $1,900 per acre, or $480,000.

OPINION

Burden of Proof

Ordinarily, the taxpayer bears the burden of proving that the

Commissioner’s determinations are erroneous. 76 Rule 142(a); Welch v.

Helvering, 290 U.S. 111, 115 (1933); Crescent Holdings, LLC v.

Commissioner, 141 T.C. 477, 485 (2013). That burden includes proving

entitlement to any deductions claimed. See INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering,

292 U.S. 435, 440 (1934). A taxpayer therefore generally bears the

burden of proving its entitlement to the charitable contribution

deduction for qualified conservation contributions under the applicable

provisions of section 170, as well as the burden of proving the value of a

conservation easement. See Buckelew Farm, LLC v. Commissioner, T.C.

Memo. 2024-52, at *39, aff’d, No. 24-13268, 2025 WL 2502669 (11th Cir.

Sept. 2, 2025); Mill Road 36 Henry, LLC v. Commissioner, T.C. Memo.

2023-129, at *26.

In order to establish each partnership’s entitlement to the

charitable contribution deduction it claimed, each petitioner must show

(1) that the LLC made a qualifying contribution, (2) that it satisfied (or

is excused from) the substantiation requirements for such a

75 Jefferson County, Georgia, is several counties east of Jones County and

southwest of Augusta, Georgia. Bryan County, Georgia, is along Georgia’s Atlantic

coast and southwest of Savannah, Georgia.

76 As to the burden of production, section 7491(c) provides that the

Commissioner “shall have the burden of production in any court proceeding with

respect to the liability of any individual for any penalty, addition to tax, or additional

amount.” However, section 7491(c) does not apply to TEFRA partnership-level

proceedings, such as these cases. See Dynamo Holdings Ltd. P’ship v. Commissioner,

150 T.C. 224, 234 (2018). Therefore, petitioners bear the burden of proof, including the

burden of production, as to every item at issue except for respondent’s arguments

regarding section 170(e) discussed infra Opinion Part V, which are “new matter.” See

Rule 142(a)(1).

[*66] contribution, and (3) the value of the contribution. See Mill Road,

T.C. Memo. 2023-129, at *26–27; Murfam Enters. LLC v. Commissioner,

T.C. Memo. 2023-73, at *15.

II.

Charitable Contribution Deduction

Section 170(a)(1) allows a deduction for any charitable

contribution made within the tax year. The Code generally restricts a

taxpayer’s charitable contribution deduction for donations of “an

interest in property which consists of less than the taxpayer’s entire

interest in such property.” § 170(f)(3)(A). That is, someone who owns

property and donates to charity only a partial interest in that property

may not claim a charitable contribution deduction for that donation.

However, the statute provides an exception—and allows a deduction—

for a “qualified conservation contribution.” § 170(f)(3)(B)(iii). Section

170(h)(1) defines a “qualified conservation contribution” to be (1) the

contribution of a “qualified real property interest” (2) to a “qualified

organization” (3) “exclusively for conservation purposes.” 77

As a threshold matter, respondent argues that the LLCs’

charitable contribution deductions should be denied in their entirety

because the LLCs lacked the donative intent requisite to a “charitable

contribution” within the meaning of section 170(a)(1) and (c).

Additionally, respondent argues that the JSN charitable contribution

deduction should be denied in its entirety because the JSN Conservation

Easement failed the requirement in section 170(h)(1)(C) to be

exclusively for conservation purposes as defined in section 170(h)(4).

Finally, respondent argues that JSN’s Baseline Report is inaccurate and

therefore fails to protect a conservation purpose where the taxpayer has

reserved rights as required under Treasury Regulation § 1.170A14(g)(5). Accordingly, we address whether (1) the LLCs had the donative

intent to make charitable contributions under section 170(a)(1) and (c),

(2) the JSN Conservation Easement satisfies one of the conservation

purposes under sec

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