April is the cruelest month, said T.S. Eliot in his historic poem “The Waste Land.” He was referring to April 15, when the nation’s tax bills come due.
Some taxpayers catch a break on Tax Day. Farmers and ranchers who put some portion of their land under conservation easement can get tax credits against their federal and state income taxes, often in the hundreds of thousands, even millions of dollars. Since these men and women of the earth often don’t have enough income tax to use the credits, they can sell them to those who can, usually at about 80 percent of their value.
April 15 is also when House Bill 1264, Conservation Easement Tax Credit Modifications, is currently scheduled for its next committee hearing in the House Finance Committee. This bill has bipartisan sponsorship. It attempts to address some of the controversies and historic problems attending the conservation easement program since 1999, when easements became a big deal in the state.
Off the top, the bill supports mapping easements using COMaP, an application developed by Colorado State University. The devil is in the details. According to Rep. Kimmi Lewis, R-HD64, the current COMaP easement mapping is inaccurate, so those issues need checking and fixing. Transparency should also require publicly documenting through COMaPs which land trusts hold the easements. As it is, the public has to go to county offices or check land trust websites to figure out what’s going on with the millions of dollars used to set aside millions of acres in perpetuity.
In perpetuity is the biggest term in the conservation business, especially when tax credits provide the incentive to create the conservation easements. The bill will raise the amount of land appraisal dollars available for tax credits to 90 percent, a large bump up from current statute.
Three elements need to be in place for the “in perpetuity” element to exist, in reality, in perpetuity. The landholder with the conservation easement and all future landholders on the easement land cannot violate the easement’s terms, ever. The land trusts holding the easements must stay in business and monitor and protect the easements forever. And the state of Colorado, and often counties where easements are located, must have the means and the commitment to make sure that the landowners and the land trusts are living by the deals.
Other entities, particularly Great Outdoors Colorado (GOCO), also have responsibility for ensuring the “in perpetuity” in perpetuity. GOCO has invested millions of dollars in lottery revenue in securing easements, distributing large sums to farmers and ranchers who place land with high value wildlife, water, wetlands and endangered species under protection.
A big project in Moffat County brought a $2,025,000 GOCO grant to The Nature Conservancy for a 25,735 acre conservation easement on the Visintainer Ranch. It’s unknown how many dollars in state tax credits added to the land owners’ revenues. The ranch participates in the Colorado Parks and Wildlife program that supports large game hunting under supervision of RTS Hunting. Hunters pay $3,000 to $10,000 to hunt the elk, deer and pronghorn antelope on the property. The ranch also supports endangered sage grouse.
It’s this combination of elements that makes the conservation easement program complicated. One of GOCO’s missions is to secure open space for Coloradans. State conservation easement tax credits support ranchers, ranches and “ranching values.”
But often, the most direct beneficiaries of the program are wealthy Coloradans who use easement tax credits to reduce their state income tax payments; large landowners who, in some instances, may receive millions of dollars to conserve land that would never be developed; land trusts whom the state relies on to keep landowners in compliance with easements in perpetuity, and hunters willing to pay significant sums for trophy animals. And endangered fish, sage grouse, and other wild life.
Paula Noonan owns Colorado Capitol Watch, the state’s premier legislature tracking platform.