After almost 20 years and hundreds of Coloradans denied state tax credits for land they donated, a working group that met Tuesday may finally be on the way to a solution for the state's troubled conservation easement program.
Among the provisions of the 2019 session's House Bill 1264: an eight-member working group, appointed by the majority and minority leaders of the House and Senate, that would take on the task for figuring out how to repay or refund tax credits stripped from many Coloradans who donated their lands to land trusts.
The group also is charged with looking at alternative methods for determining the value of an appraisal that leads to tax credits, and what to do about so-called "orphan" easements. Those are easements donated to land trusts that later go out of business.
According to testimony on the bill during this year's legislative session, there have been several instances where land trusts have closed shop but the easements, which are granted in perpetuity, remain and don't go back to the landowner.
Under a conservation easement, a landowner either sells or donates development rights for a property in the form of an easement to a government or nonprofit entity, frequently a land trust. The owner retains the land but the easement holder keeps the acreage from being developed.
In the case of a donation of an easement, the landowner can be eligible for state tax credits and a federal tax deduction.
But between 2000, when the program began, and 2013, when legislation took the state Department of Revenue out of the program, tax credits for more than 800 easements were rejected by the DOR. That's out of a total of about 4,000 easements.
Critics of the program say it created financial hardship for many landowners, with most of the problem easements located along Colorado's Eastern Plains. One estimate, from 2016 legislation, placed the cost of repaying those credits plus penalties and interest charged by DOR at $117.6 million.
The landowners who were later denied the tax credits had to pay them back, with penalties and interest, and it forced some farmers and ranchers into bankruptcy and foreclosures.
Three members of the eight-member working group are those aggrieved landowners.
The working group on Tuesday selected Erik Glenn of the Colorado Cattlemen's Association Land Trust and landowner Alan Gentz of Sterling as co-chairs. Gentz has been one of the program's fiercest critics.
Alan and Julie Gentz were provided with $500,000 in state tax credits for donating 70 acres of his farm -- on the outskirts of Sterling -- to Logan County in 2006 and 2007. Despite numerous appraisals that showed the land valuation was worth the tax credits, almost five years later, the Department of Revenue rejected the tax credits. Logan County got to keep the donated land, although the Gentzs still hold title to the property. But they can't develop it, which was what they had wanted to do originally.
It's stories like the Gentzs' that have made it increasingly difficult for land trusts to persuade landowners to participate in the easement program. That's where HB-1264 came in, and the working group that hopes to finally put to rest years of problems.
Glenn told Colorado Politics in April that his trust does not hold any of the affected easements, but the problems affect his organization anyway because it affects the program’s reputation. People can’t tell the difference between one land trust or another, he said.
“That’s why we have to solve this issue," he said. "But it won’t be solved through [the Department of] Revenue or the executive branch. It will come through the legislature.”
The appointees from Republican lawmakers, in addition to Gentz, include Jillian Hixson of Lamar and former commissioner of agriculture Don Brown of Yuma, both who have had problems with the easement program; and Belinda Groener of Lamar, representing landowners who may have considered but never participated in the easement program.
Also appointed to the working group by Democrats, in addition to Glenn: Melissa Daruna of Keep It Colorado, formerly the Colorado Coalition of Land Trusts; Jessica Jay, a conservation attorney; and Jay Fetcher of Clark, who has participated in the easement program without issue.
The working group was not alone; the audience included many others involved in the easement issue over the years, including appraisers, representatives of the Department of Regulatory Agencies (which includes the Division of Conservation Easements) and the state Division of Parks and Wildlife, and several other landowners who have complained of being cheated out of tax credits over the years.
State Sens. Jerry Sonnenberg of Sterling and Larry Crowder of Alamosa also attended, but are not part of the working group.
None of the four lawmakers who sponsored the legislation -- Democratic Sens. Faith Winter of Westminster, Kerry Donovan of Vail, Democratic Rep. Dylan Roberts of Eagle and Republican Rep. Jim Wilson of Salida -- attended, although Wilson was in the state Capitol for a meeting on school finance. Republican Rep. Kimmi Lewis of Kim, who has sponsored legislation intended to reform the program, also did not attend. She voted against the 2019 bill.
"This has been a corrupt situation from day one," Crowder said. "We all agree that conservation easements are important to us all, but it hasn’t been done in a way that is beneficial to all."
Glenn pledged the group would have an "inclusive and transparent process, one that will lead us to bring forward good recommendations for legislation and to once and for all put this issue to bed." Added Gentz, "we want this over and done with."
Most of the work in the coming months will come through three issue committees focused on the three subject areas, and while many of the members of those issue committees signed up on Tuesday, Glenn (email address attached) and Gentz made it clear that they want input from anyone who wants to participate.
The working group meets again on July 23 at the Gentz farm in Sterling.