New conservation easement lawsuit, legislation in works to address Colorado conservation easement scandal
Alan and Julie Gentz of Sterling, Colo. ramped up their ongoing legal battle with the Colorado Department of Revenue last month, targeting another man in particular. On Jan. 13, the Gentzes filed their second lawsuit in the 13th Judicial District Court against Mark Weston.
The Gentzes accused Weston, a real estate appraiser and former member of the Conservation Easement Oversight Committee, of intentional deceit which lead to a mess of other legal issues.
It began in 2008 when Alan Gentz received a letter from the Colorado Department of Revenue saying his easement, already in effect, was denied. He petitioned for a hearing in 2008. Seven years later, the Department of Revenue had not responded to that petition. Furthermore, the Department of Revenue is demanding the Gentz family, along with over 700 others who put their land into conservation, repay the tax credits awarded to them plus penalties and interest through 2015.
For the Gentz family, that comes to $700,000.
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After gaining traction with their initial lawsuit, the Gentzes set their sights on Weston.
In 2004, the Gentzes sought Weston for a consultation. He was a partner with Hunsperger & Weston, Ltd., of Greenwood Village and the Gentzes were looking into putting an easement on their land.
Weston affirmed there was development potential and putting and easement on the land would drastically lower the value.
To qualify for tax credits on an easement, landowners must be devaluing their land.
According to the lawsuit, Weston wrote a letter to Brian Smith of Legendary Properties in Longmont.
He wrote “because of the significant development potential, encumbering the property with a conservation easement is likely to reduce its fair market value. The more restrictive the easement, the greater the reduction property value.”
The Gentzes paid Weston $2,500 for the consultation but decided to get an appraisal from another source, as Weston’s appraisal fee was quoted at $20,000.
The Gentzes got five separate appraisals done on their property, all of which placed roughly the same value on the land.
They moved forward, putting easements on two parts of their land in 2006 and 2007 respectively.
The Colorado Conservation Easement Oversight Commission was established in 2008 to monitor easement holders, such as Nature Conservancy and Aspen Valley Landtrust, to help curb some instances of fraud within the system. As a member of the CEOC, Weston voted on the validity of conservation easements.
According to the CEOC minutes, on Jan. 24, 2011, Weston voted against the Gentz conservation easement credits, despite a conflict of interest and despite having given contradictory advice.
The Department of Revenue now demands a tax credit repayment from the Gentzes plus penalties and interest through 2015. The total comes to $700,000.
Weston declined to comment.
William Boortz, vice chair of the CEOC also declined to comment.
The Gentzes expect to file at least one additional lawsuit at the end of February.
Sen. Jerry Sonnenberg, R-Sterling, and Rep. Jon Becker, R-Fort Morgan, are working to introduce legislation to help landowners in conflict with the state. Sonnenberg recently introduced Senate Bill 44, to be heard on Feb. 9, on contested conservation easement tax credit claims.
“It says that unless there is a competing appraisal by the Department of Revenue that was in conflict with appraisals presented in part of conservation easement application, the (Department of Revenue) will honor those past conservation easements,” Sonnenberg said. “This isn’t whether or not you believe conservation easements are good or bad, this is to make right a contract between the state of Colorado and the people of Colorado.”
Becker is working on a House Bill also aimed at making the state honor its contract. It will involve landowners who have not yet settled with the state, including families like the Gentzes.
“Alan Gentz is the one I point to to say, ‘look how hard it is to go after the state,’” Becker said. “It’s an unfair fight. Alan is the perfect example of why we’re trying to pass these bills.” ❖
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