Ecologists May Hit Pay Dirt in S&L; Crisis : Environment: The pending sale of failed thrifts’ real estate may allow the preservation of sensitive lands at devaluated prices. It’s being called a ‘debt-for-nature’ swap.

Bill Bunch, an Austin, Tex., attorney, wasn’t the only one to realize last spring that the federal government was about to become the biggest real estate operator in history.

Congress was then setting up the mechanism to seize the assets of hundreds of shipwrecked savings and loans. Yet Bunch, two fellow lawyers, a Colorado senator and a few others also saw the opportunity for getting a precise inventory of as much as 2 million acres of U.S. land.

At a minimum, they want conservation groups and government agencies alerted to any promising real estate to give them at least a crack at preserving watersheds, animal habitat or even property that could be converted into urban recreation areas. Under the least ambitious scenario, such groups could then bid on the land along with real estate developers or anyone else.

But Bunch and his fellow attorneys would like to go further and exclude developers from bidding on environmentally valuable property, giving local, state and federal agencies--and perhaps private conservation groups--first refusal.

“The taxpayers are putting out a whole lot of money,” says Rick Lowerre, one of the Texas lawyers, “so let’s find a way to give them some return.”

And he means more than just the opportunity to set aside wetlands. “Especially in Texas,” he notes, “there are a lot of towns in dire need of local parks.”

However, protecting endangered species or potential picnic areas is a low priority at the moment for the Resolution Trust Corp., or RTC, the agency created to receive and resell assets of the failed savings and loans.

The RTC is already hard-pressed for staff and money to engineer such rescues as its “shotgun weddings” between sick and healthy savings and loans, let alone to sort through the world’s largest mountain of good and bad mortgages, fraudulent investments and half-finished developments.

Lowerre and others say their hope lies in a one-paragraph amendment to the law governing the RTC. The amendment, sponsored by conservation-minded Sen. Tim Wirth (D-Colo.) and tacked onto the law only after considerable political infighting, requires an inventory by Jan. 1 to identify properties with “natural, cultural, recreational, or scientific values of special significance.”

Environmentalists also point out that a substantial body of law already regulates how the government is supposed to dispose of its own resources. The Bush Presidential Wetlands Executive Order, for example, is designed to halt further loss of waterfowl habitat and has been used by the U.S. Fish and Wildlife Service to place conservation easements on lands acquired by the federal Farmers Home Administration from delinquent loans. Before that agency can resell its lands, any endangered species habitat or wetlands discovered on them must be preserved by an easement, much like those used to protect rights-of-way for power lines and roads.

And so, in quiet negotiations, Sen. Wirth and others are discussing with RTC just how this environmental window shopping will be carried out. And public and private conservation groups--not least the three lawyers from Austin--are coming up with their own plans.

“This whole project,” says Lowerre, “came out of basically a lawyer here (Bunch) saying that if debt-for-nature is good for Latin America, isn’t it good here in the United States too?”

Lowerre, Bunch and David Frederick, on contract to the Texas Center for Policy Studies, learned of the Wirth amendment as they looked for opportunities for environmentalists in the S&L; bailout.

They believe that more than half the property under the RTC’s jurisdiction is rural, undeveloped land that might have conservation value. Environmental groups annually spend millions of dollars searching out and buying such land.

As their studies have continued, Lowerre and the others have seen an even larger goal.

“The environmental community has a real opportunity to go beyond the bailout and open up the financial agencies to the requirements of the federal environmental laws,” they wrote in a recent letter seeking financing for their study. “Our federal banking policies affect our natural resource as surely as our international loans affect the world’s rain forests.”

The lawyers also made the rounds of environmental groups with their ideas.

“I must say we were impressed,” says Michael McCloskey, chairman of the Sierra Club. “We said we would help plug them in around the country.”

McCloskey is especially pleased that the plan wasn’t meant to hold up the efficient sale of the land, but merely to screen it for environmental values before the government let go of it.

Lowerre expects surviving savings and loans in Texas to be equally enthusiastic. Many are teetering on the brink of insolvency as it is, and a flood of real estate back on the already depressed market would only make matters worse.

“Whenever you can limit the amount of land that will be dumped on the market it may be beneficial, especially during the transition period of dealing with all this real estate,” agrees Commissioner James L. Pledger of the Texas Savings and Loan Department, the state agency overseeing savings and loans.

“We have so much land,” sighs Tom King, president of the Texas Savings and Loan League, which represents the industry. “I’m sure if the environmentalists wanted to buy it for the swamp it was, to keep turtles and some other things alive, it would be available. I’m being a little bit facetious, but I’m sure there is an unprecedented opportunity for these people to acquire land now at devaluated prices that may never occur again.”

The beleaguered examiners at RTC, however, are not likely to greet the idea as warmly. They have looming deadlines and numerous congressionally mandated goals, one of which is to sell the assets at no less than 95% of fair market value. Attaching an environmental easement to land, for instance, almost always lowers its value. And narrowing the market to keep out developers could restrict the bidding as well.

“You can’t say you’re going to totally dedicate all the resources that could possibly be utilized for public purpose, and exclude them to a big part of the market that might pay a higher price,” says Steve Fritts of RTC, “when one of the primary functions of RTC is to generate the maximum cash flow to repay these bonds and the taxpayers that are funding this resolution.” Fritts is acting deputy regional director for asset and real estate management in the Dallas office of RTC.

Fritts hasn’t yet heard of the ideas of Lowerre and his cohorts, who plan to submit their written proposal to RTC next week as part of the current 30-day public comment period. Meanwhile, driven by the Jan. 1 deadline, Fritts is using existing electronic data describing the property to complete the first inventory.

“It’s quite a monumental task,” says Fritts, noting that it will cover more than 20,000 parcels of real estate in Texas alone. He sees no way for on-site inspections.

Meanwhile, the U.S. Fish and Wildlife Service is discussing a proposal to undertake its own inventory, much as it did with the Farmers Home Administration. Sen. Wirth continues his negotiations with RTC’s Oversight Board. And Lowerre and his fellow attorneys work on their own proposal.

“We’re looking into California next,” he says.