Legislators hear ‘horror stories’ about problems with Colorado’s conservation easement program
What is a conservation easement?
According to Legacy Landtrust, a conservation easement is a “voluntary deed restriction that protects the land forever by limiting or prohibiting certain uses.” The easements will then protect the property’s specific resources no matter who owns the land. Conservation easements are intended to protect the natural, agricultural and scenic value of the land.
Furthermore, tax credits are available to landowners for intentionally and in perpetuity devaluing their land.
Government on a local and federal level encourages the preservation of open space. For landowners, this means turning away developers interested in their property even in instances of severe drought or changes in ownership.
The tax credit afforded to the landowner is supposed to make up the difference between value of the developed versus undeveloped land.
Farmers and ranchers put their land into easements to maintain the integrity of the land even after they’re gone.
Farmers and ranchers packed into room 356 at the Colorado State Capitol Aug. 5, to share their testimonies and listen to the stories of others.
For more than 700 landowners in Colorado, 2008 marked the beginning of the devastating problems.
Landowners who donate their property to a nonprofit organization, for example, instead of developing it can receive a tax credit as part of a conservation easement. That credit compensates the owners for the money they would have received through development.
But more than 700 land owners have challenged the Colorado Department in the past seven years over its decision to reject appraised values and revoke already-issued tax credits. In response, state legislators held the fact-finding hearing.
Several who gave testimony went as far as to say the department committed extortion and fraud, especially as many of the rule changes were put into effect after landowners were bound by contract.
With tax credits disallowed, landowners were left with an easement in place — permanently unable to develop the land they tried to save — and unable to receive any financial benefit from the intentional devaluation of their land.
Sen. Jerry Sonnenberg, R-Sterling, was present at the hearing. Sonnenberg’s Senate District 1 includes a large swath of Weld County.
“Part of the issues is we did something then made it retroactive, which created heartburn,” Sonnenberg said. “To run another bill to change it, to go retroactive again, I don’t know what the ramifications and the unintended consequences are for that type of legislation. That’s why I say we’re going to have to sort through this and figure it out. We need to figure out how we wronged some people and how to fix it.”
John Vercchiarelli, director of taxation, gave limited statements on behalf of the Department of Revenue. He was advised not to elaborate as there is pending litigation.
“The Attorney General has suggested we not even attend this hearing,” Vercchiarelli said.
There have been 719 complaints and 648 of them have been settled and closed, Vercchiarelli said.
“The backlog is almost completely resolved,” Vercchiarelli said.
Alan Gentz, a landowner who is currently in litigation with the Department of Revenue, said the strategy is to run farmers and ranchers out of money so they can’t afford keep fighting back.
Gentz had a total of five appraisals — at a cost of $35,000 — done by state licensed appraisers on two conservation easements when he heard rumblings of problems to come. Despite all the appraisals being well within the range of each other, the department deemed the value of his land was zero.
Rick Markus, another land owner, said legal and travel fees cost him $80,000. To pay the bills during a legal battle with the department, he had to sell most of his cattle herd. Markus challenged the department on a violation of statue of limitations. After about six months and a trip to the appeals court, Markus won the case.
The department denies this set a precedent.
Sonnenberg said the next step is for the legislators present at the hearing to have a conversation.
“I think that this process has damaged the entire conservation easement process,” Sonnenberg said. “After hearing these horror stories, who would even want to start the process and spend the money to do this type of thing?” ❖