Surprise conservation easement bill leads to rift among working group
The fragile peace between land trusts that hold conservation easements and landowners cheated out of state tax credits is teetering on the brink, after a second bill not authorized by a 2019 working committee surfaced in the state House.
Conservation easements have been a tool for preserving undeveloped lands that the state believes should be left wild. The state has granted more than 4,000 such easements over the last 20 years. An easement basically goes under a land trust or a county for preservation. The property owner retains title to the land, in exchange for tax credits.
But tax credits for about 800 of those easements were denied by the Department of Revenue. Frequently, the department claimed the land had no value, despite numerous real estate appraisals to the contrary. About $149 million in tax credits were denied, forcing some landowners into bankruptcy and foreclosure. Most of the 800 denied credits were for farmland in southeastern Colorado.
Even though the tax credits were denied, the easements still became the property of the land trusts and counties that accepted them, meaning the landowners got no tax credits and lost the right to develop their lands in perpetuity.
The 2019 working group, led by Erik Glenn, executive director of the Colorado Cattlemen’s Agricultural Land Trust and Alan Gentz of Sterling, recommended reparations, to be paid for with the annual tax credits held by the Colorado Department of Revenue. Two other issues, on how to deal with “orphan” easements that have been abandoned by land trusts and a new way to value those easements, also were part of the recommendations.
The first bill to be introduced was Senate Bill 33, sponsored by Sen. Jerry Sonnenberg, R-Sterling, and the working group.
Under Senate Bill 33, a landowner can claim a tax credit for each conservation easement donated between Jan. 1, 2000, and Dec. 31, 2013, that was denied by the Department of Revenue. The rejected donation must have qualified for the federal tax deduction as allowed by the Internal Revenue Service.
Under the bill, the Department of Revenue has until Aug. 15 of this year to post information online that those denied tax credits may be eligible to apply for a new one. Taxpayers then have until Sept. 30, 2022, to submit a claim to the Division of Conservation in the Department of Regulatory Agencies.
The revenue department, under existing state law, has about $45 million per year to award in tax credits. The bill’s fiscal analysis estimates that about $8 million of that would be claimed in 2020-21, with $17 million per year claimed in the next two years.
The bill went through its first hearing on March 8 in the Senate Finance Committee, and all appeared to be going well. Sen. Pete Lee, D-Colorado Springs, hearing about the conservation easement issue for the first time, said he was appalled by the way landowners had been treated by the state and pledged his support.
But near the end of the hearing, Democratic lawmakers began talking about a second bill in the works. That bill was an attempt to find a reparations solution with a dollar figure more palatable to Democratic lawmakers.
The hearing ended without a vote, to allow Sonnenberg, who was furious and said he was unaware of the second bill, time to work with the sponsors of the other bill.
That bill has led to a rift among the working group, as evidenced by emails in the past two weeks, with accusations of bad faith flying back and forth.
House Bill 1233 is backed by Keep It Colorado, formerly the Colorado Coalition of Land Trusts. The measure is sponsored by Reps. Dylan Roberts, D-Eagle, and Perry Will, R-New Castle, and Sens. Faith Winter, D-Westminster, and Kerry Donovan, D-Vail. Roberts and Sonnenberg sponsored the 2020 legislation that failed to make it out of the pandemic-shortened session.
The bill does not propose reparations for those denied state tax credits and deals primarily with sweetening the deal for landowners who enter into conservation easements after Jan. 1, 2021. Current law caps the state tax credit to 50% of the land’s value; under HB 1233, that cap is raised to 90%.
Land trusts have claimed that years of lawsuits, complaints and bad publicity over the conservation easement program have led Coloradans to avoid donating land to easements.
HB 1233 is scheduled for its first hearing on April 5. As to the reparations bill, SB 33, it’s on hold with no follow-up hearing yet on the calendar.
Livestock bill getting closer to governor’s desk
One committee hearing is all that stands between a bill putting into law the practice of selling shares of livestock directly to consumers.
Senate Bill 79, sponsored by Sonnenberg and Rep. Rod Pelton, R-Cheyenne Wells, won unanimous approval on March 24 from the House. But an amendment tacked on by the bill’s Democratic co-sponsor, Rep. Jeni Arndt of Fort Collins, meant the bill had to head back to the Senate. The amendment required that a consumer signed a disclaimer at the point of sale.
Sonnenberg said that could require a consumer to make an extra trip to the producer that shouldn’t be necessary, and he won approval to reject the amendment and work out the differences in a conference committee. Sonnenberg told this reporter that Arndt is willing to drop the amendment; once that happens, the bill will be reconfirmed by both chambers and then should head to the governor for signing.
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