Columnist: Transparency welcome on open space tax credits
Executive Director, Eagle Valley Land Trust
Legislation designed to add an extra layer of accountability for state conservation easement tax credits was introduced recently by House Majority Leader Alice Madden. House Bill 08-1353 builds upon changes enacted last year in HB 07-1361, which increased the standards, transparency and accountability for the tax credits.
The legislation was prompted by recent investigations by the Colorado Department of Regulatory Agencies (DORA) and the Department of Revenue into possible abuses of the tax credit program. In the State of Colorado, tax credits are available to property owners who voluntarily donate a conservation easement on their land to a not-for-profit land trust or government agency. Property owners receive a credit of up to $350,000 that can be used against their Colorado income tax liability or sold at a discount price to individuals/businesses that can use them.
The Eagle Valley Land Trust, which serves as the local resource for property owners interested in conservation options, heartily endorses this legislation. While there are a small number of easement transactions that have unquestionably abused the tax credit program, there are hundreds of good conservation easements done every year ” including here in Eagle County ” that protect working ranches, scenic landscapes and views, and wildlife habitat. This bill ensures that this good work will continue while making sure the bad actors can no longer abuse the tax-credit program.
HB 1353 has five main components:
1. Increased easement appraisal accountability ” The bill will require appraisers to file conservation easement appraisals with the Colorado Division of Real Estate, which will review the information. If wrongdoing is found, the Board of Real Estate Appraisers may impose suspensions or other penalties. These appraisers also will face education and experience requirements. The Eagle Valley Land Trust believes this step goes to the heart of recent abuses, which rely on inflated appraisals to set the value of donated easements. Because of the importance of appraisals, EVLT encourages its easement donors to retain appraisers known for their solid work by organizations such as Great Outdoors Colorado and the United States Forest Service.
Last year, Dave Peterson, the appraiser for the Gates Ranch project in Eagle County was turned in to the Division of Real Estate by a local resident who disagreed with the value he set for the project. He was subsequently exonerated of these charges. Additionally, his appraisal of the Ranch was reviewed by a Great Outdoors Colorado review appraiser, who also substantiated his work. While this kind of scrutiny may be onerous for some appraisers and time-consuming for others, it nevertheless validates that good appraisers do good work for good projects throughout the state. Such transparency should also give easement donors increased confidence in the process and assurances that their contribution value will be substantiated.
2. Conservation easement holder certification ” A state certification program for groups that hold conservation easements will be established by the Division of Real Estate and the Conservation Easement Oversight Commission. This program will establish minimum qualifications for these groups, looking at their process for reviewing selecting and approving potential conservation easements, their stewardship capacity including ability to maintain, monitor and defend the purposes of the easement, their governance and ethics, and their financial capacity and integrity. Only landowners who work with certified groups will qualify for the tax credit. This program will complement a national accreditation effort now underway by the Washington, D.C.-based Land Trust Alliance, which represents the country’s 1,600-plus land trusts.
The Board of Directors of the Eagle Valley Land Trust has long championed a national accreditation/certification program. The Trust was selected by the Alliance as one of 22 land trusts in the country to pilot the national accreditation program, results of which will be announced this year.
3. More effective oversight ” The Department of Revenue will be allowed to share information with other state agencies, and the Conservation Easement Oversight Commission, to ensure it can address concerns about information contained in a tax credit application.
4. Conservation Easement Oversight Commission ” This new commission will advise the Division of Real Estate and Department of Revenue. This nine-member group will be composed of a representative from Great Outdoors Colorado, a representative of the Department of Natural Resources, a representative from the Department of Agriculture, and appointees from a local land trust, a statewide or national land trust, a local government open space or land conservation agency, an historic preservation organization, an appraiser, and a landowner who has donated an easement.
5. One-year holding requirement ” The bill limits conservation contributions for properties held less than one year. While easements certainly can be placed on recently purchased properties, the value of easement donations will be determined by the cost basis of the property rather than the sale price.
The Eagle Valley Land Trust applauds this legislation as a positive means of strengthening accountability throughout the land conservation community. Conservation easements are a critical tool to preserve Colorado’s working lands, diverse natural areas and vital community open space.
The tax credit program provides huge land conservation benefits to Colorado at a fraction of the cost of buying these lands outright. If the tax credit program is to effectively achieve its intent of encouraging conservation through the donation of easements, then it must be able to withstand scrutiny and demonstrate that it is effective and cost-efficient. This legislation is a big step in the right direction.
Cindy Cohagen is Executive Director of the Eagle Valley Land Trust
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