Colorado’s conservation easement program started as a good idea. Then it became a big mess. Now, it’s essentially functioning as it should, but there’s still one big problem in need of a solution.
But before we tell you what the remaining problem is and which of the two bills in this year’s Colorado General Assembly offers the best solution, it’s a good idea to back up and explain what the program is all about.
Conservation easements are basically agreements between the government and landowners. Landowners put their property into conservation, which forever restricts development and ensures the land is used for specific purposes such as farming or wildlife habitat. The agreements are intended to protect the natural, agricultural and scenic value of the land.
By accepting the easement agreement and putting the land into conservation forever, the landowners agree to effectively devalue their land. They could make far more with it, if they sold it to developers for strip malls, apartment complexes and other vestiges of urban sprawl. We all benefit when open space is preserved, which is why local and federal governments are right to encourage the conservation. The tax credits are supposed to make up the difference between value of the developed compared to undeveloped land for the landowner. The easement is then considered a permanent, binding contract.
Before 2007, though, there wasn’t much oversight in Colorado, and the program was abused. Appraisers inflated land values and easements were granted that strained credulity and did little to preserve open space. Then, the state cracked down, creating another problem with the overcorrection.
As part of the overcorrection, tax credits were disallowed on 719 easements, leaving landowners – mostly farmers – with land they couldn’t develop, but for which they weren’t receiving the tax credit they’d signed up for. They also had little legal recourse if they believed the tax credits had been disallowed erroneously. In fact, 648 of the cases were settled, leading to landowners paying large tax bills.
Sen. Jerry Sonnenberg, R-Sterling, is behind one measure aimed at redressing the wrong for landowners who were unfairly caught up in the state’s crackdown. It would stop the Department of Revenue from rejecting easement credit claims unless the easement’s appraiser was convicted of fraud in connection with that appraisal. The bill also would reinstate easement values that were rejected without cause. The other bill wouldn’t go quite as far, but also would right a wrong for landowners. The measure, sponsored by Rep. Jon Becker, R-Fort Morgan, would involve landowners who donated easements prior to 2008, were caught up in the crackdown and who have not yet settled with the state. If the bill passes, landowners with open cases would essentially get to keep their money, unless there is clear evidence of wrongdoing or the appraiser is convicted of fraud.
We’re glad this issue is getting attention from the Legislature. It’s important. Conservation easements benefit all of us, and landowners should be encouraged to preserve some of their land for open space. Those landowners who suffered because they were unduly caught up in the state’s dragnet deserve redress. Still, our preference is Becker’s bill. We worry that Sonnenberg’s bill goes too far because it completely ties the hands of the Department of Revenue unless there’s a criminal conviction. Legislation passed in 2011 has already fixed many of the problems with the state’s overzealous crackdown, and we’re not sure more is needed. But we do think those landowners who still haven’t settled their cases deserve some closure.
— The Tribune Editorial Board
