CONSERVATION EASEMENT Prairie Canyon Ranch

Prairie Canyon Ranch is one of the ranches in the Interstate 25 corridor in Douglas County protected by a conservation easement. More than 35,000 acres have been protected between Castle Rock and the El Paso County line. (Ford McClave for The Gazette)

House Bill 1264, which intends to put more transparency into the Colorado's beleaguered conservation easement program, won preliminary approval from the Senate Wednesday.

That approval was accompanied by an amendment from one of the program's chief critics to ensure that a working group attached to the bill actually meets.

Under the conservation easement program, development rights to a piece of agricultural land or open space typically are donated to a land trust or other authorized entity, including local governments, while the landowner retains title. The easement holder limits development of the property. In exchange, the landowner receives a state and federal tax credit.

But some landowners who get tax credits complain that those credits are later taken away, yet they still have no control over development of their land.

There's more information about the program and its problems at the end of this story.

Among its provisions, House Bill 1264 includes the formation of a working group, to be set up by the state's Conservation Easement Program, that will look at how to repay some of those who say they have lost as much as hundreds of thousands of dollars in tax credits denied by the Department of Revenue during the program's first 15 years of operation.

The working group got very specific as the bill went through both the House and Senate, and that's by design, said Sen. Jerry Sonnenberg, R-Sterling.

As amended, the working group will consist of eight members, two each appointed by the Senate president, Senate minority leader, speaker of the House and House minority leader, all by June 1.

The appointments should take into consideration those who have had conservation easements and gotten tax credits (although the bill doesn't say that those who were denied tax credits must be included) as well as conservation appraisers and attorneys.

The working group's first meeting will be on June 25 at 9 a.m. at the state Capitol, according to another amendment added Wednesday by Sonnenberg and agreed to by the bill's sponsors. House sponsor Democratic Rep. Dylan Roberts of Eagle told Colorado Politics he's OK with it, too.

Sonnenberg's reason for being so specific is to address concerns he had about how the director of the Division of Conservation Easements handled a working group, also ordered in statute, last year. 

Last year's legislation -- which was intended to reauthorize the program -- included a requirement for a working group that was intended to come up with recommendations on how to terminate an easement and a process on retroactive tax credits. 

In December, division Director Mark Weston turned in a 900-page report that didn't include recommendations for either of those requirements, instead indicating the status quo was fine. And many who were denied tax credits claimed he never convened the working group, although Weston told Colorado Politics in a statement that the group convened in October.

Weston also sent out a survey to about 300 people, although few denied tax credits said they saw it. They also pointed out that more than 800 people have been denied tax credits and that the Department of Revenue has an email address or other contact information for every one of them.

That's not going to happen again, Sonnenberg told Colorado Politics. "Last year we had a working group that did nothing. I saw the same type of scenario happening this year and I don't want nothing to be done. We need to solve this."

So he added the amendment to put the group's first meeting in statute. "I specified [the date] so that this will not be left untethered," he said.

The bill now heads to a final vote in the Senate and then back to the House for a review of Senate amendments.

BACKGROUND

Under the conservation easement program, development rights to a piece of agricultural land or open space typically are donated to a land trust or other authorized entity, including local governments, while the landowner retains title. The easement holder limits development of the property. In exchange, the landowner receives a state and federal tax credit.

The landowner, such as a farmer or rancher, can still use the land under limited circumstances, but control of the land remains in the hands of the easement holder in perpetuity. The only time that can be reversed is if both parties agree to terminate the easement and obtain a court order.

The program has been around since 1999 and is credited with protecting vast rural landscapes from development. About 2.5 million acres across Colorado are held under some form of conservation easement, according to a 2017 Colorado State University study.

Depending on the easement’s value, as determined by appraisers certified by the state and often recommended by the program, the landowner could get hundreds of thousands of dollars in tax credits. Most of the time it’s a larger credit than a landowner owes in taxes, so those credits are sold, often through brokers, for a percentage. The landowner gets the cash and can use it for retirement, for their kids’ college funds, to pay off mortgages or farm equipment, or to make improvements on the farm or ranch.

This applies only to the state tax credits; federal credits cannot be sold. And the federal government, according to those who have been denied state tax credits, has never revoked its tax credits for the easements.

Groups like the Colorado Cattlemen’s Agricultural Land Trust point to the hundreds of thousands of acres they’ve helped to conserve, with success stories from around the state.

Under the program’s rules, and up until 2014, the Colorado Department of Revenue had a four-year statute of limitations to decide whether those state tax credits were valid. In 2014, the department’s authority over the program was terminated by the General Assembly in the wake of dozens of complaints over the department's denial of credits, as well as for allegedly bullying landowners into paying the credits back.

Many landowners who had sold their state credits not only had to pay them back, but also had to pay back those who bought the credits. That's led to bankruptcies, foreclosures and farmers losing their farms, including one last week in Prowers County, according to Republican Rep. Kimmi Lewis of Kim.

The problem is that over the years, those who received the state tax credits have said the department often waited until the last minute to deny the credits. The department would then come after the landowners for those state tax credits plus penalties and interest, sometimes as high as 300%.

The department denied state tax credits for more than 800 easements, about 20 percent of the total number of easements granted, records show. The department claimed in some instances that the appraisals for the easements were fraudulent. But only six were actually determined to be fraudulent, according to witnesses at various hearings on the matter, and only one person has ever been prosecuted for abusing the program in its 20-year history.

=

=

=

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.