Will $147M in reparations finally become a reality for landowners?

The first step toward millions of dollars in reparations for landowners who claim they were cheated out of tax credits by the state Department of Revenue took place during a recent joint meeting of the House and Senate agriculture committees.

Those lawmakers include two who are likely to sponsor the legislation that would make those reparations a reality.

The reparations — estimated at $147 million — are recommended by a task force on conservation easements that met last year and was appointed under House Bill 19-1264. The task force was charged with coming up with a way to pay reparations, how to deal with orphan easements and whether an alternative valuation method for easements should be considered.

Conservation easements work like this: A landowner donates a portion of his/her land to a land trust, a county or other nonprofit that is allowed to accept that donation. The land’s title remains in the hands of the original owner, but the easement is in perpetuity. That means it can’t be developed by the landowner. It can be sold, but the easement stays with the land, meaning the new owner has to abide by that previous agreement.

In exchange, at least in principle, the Department of Revenue and the Internal Revenue Service would grant a state tax credit and federal tax deduction, sometimes worth hundreds of thousands of dollars or more.

The state has so far granted tax credits on more than 4,200 conservation easements, but about 800 were denied, mostly in southeastern Colorado. The Department of Revenue claimed, and landowners say that claim was arbitrary, that the land in question had no value. The IRS, however, has never denied a tax deduction for an easement, according to landowners.

The program has been in place since 2000. Problems started to surface around 2003 and continued into 2014, when the General Assembly took the Department of Revenue out of the decision-making process regarding land valuations. It still, however, has the right to issue about $45 million per year in tax credits for conservation easements.

That’s the source of the reparations, based on the task force’s recommendations. The group met throughout the summer and fall, traveling to Sterling, Steamboat Springs and Lamar to view some of the success stories and those that weren’t.

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