The legislation that truly launched the Colorado conservation easement program is 20 years old this year. It’s time to see how it’s working.
The program allows landholders, usually farmers and ranchers, to place property into non-development status in perpetuity. In return, landholders receive a tax credit that they can sell to anyone who wants to reduce their state income taxes.
It would be great if everything worked smoothly, but that’s not exactly what happened. For a hile, there was no dollar cap on how many tax credits the state gave out. Millions of dollars in tax credits for easements reduced state coffers during the heart of the Great Recession, exacerbating that pain. Then the IRS kicked back some of the easements.
The state Department of Revenue followed suit. The state disallowed about 700 easements. Well over $100 million in income tax credits were withdrawn. But the horse was already out of the barn. The easement holders had sold the credits, the tax credits were redeemed, but now the taxes had to be repaid. Farmers and ranchers were suddenly in collection status for back taxes plus interest that accumulated even as the state slow-walked resolving cases.
The state has been in ongoing litigation to claw over $100 million back. The region of the state hit hardest with rejected easements was southeast Colorado.
Right now, the state has about 5.5 percent of privately held land under easement, or over 2 million acres. That’s about $1.1 billion worth of property in nonprofit land trusts, as of 2017. Land trust properties remain in the hands of the owners, so these are not public lands accessible to the public even though owners have received public funds in return for the easements.
It’s impossible for state residents to find out where the easements are located. There’s no state easement map. It’s also unlikely that any state residents other than the landholder and the land trust know whether easements are properly maintained. It’s pretty much an honor system.
A Great Outdoors Colorado report from 2016 says there are orphan easements, or easements that are no longer in trust. The land trust community, according to its lobbyist Ben Waters, says they’re working on it. He also testified in a recent House committee hearing that there will be legislation to fund a mapping program available to the public. That bill hasn’t shown up yet.
Once a property is put into an easement with a land trust, it must retain easement status in perpetuity, according to Erik Glenn, executive director of the Colorado Cattlemen’s Agricultural Land Trust. This is true even when the landowner pays back the tax credit.
But the Nature Conservancy, a nonprofit committed to preserving lands, has found an “in perpetuity” bypass. The Medano Zapata Ranch abuts Great Sand Dunes National Park. Great Outdoors Colorado (GOCO) helped the Nature Conservancy buy 30,000 acres of the ranch in 2003.
According to a GOCO memo, when the Nature Conservancy bought the land, it expected to sell sections of the property to federal agencies knowing that the feds won’t buy land encumbered by a conservation easement. Any such transaction would result in an extinguished easement. A federal government agency could then potentially allow some kinds of development.
Further, while the land was bought at easement prices, it would be sold to the U.S. government at the higher, non-easement value. The Conservancy and GOCO would pocket the difference. The details of the transaction are spelled out in a 2011 memo from the Conservancy to GOCO.
The results are that the Conservancy and GOCO have used public funds and the conservation easement program to reduce their purchase cost of the land until federal agencies can get their funding together to buy their sections and eliminate the easement. A portion of the land sale has been completed, with more to follow.
The Medano Zapata Ranch is accessible to anyone with the money to use its conference center and ranch-style lodging. The rest of us can enjoy looking at the ranch’s bison while driving by on state highway 150. Bring binoculars.
Paula Noonan owns Colorado Capitol Watch, the state’s premier legislature tracking platform.