Conservation easement solution is in trouble
The long-awaited solution to the state’s troubled conservation easement program is itself in trouble, after concerns over its cost nearly derailed the bill on Feb. 27.
Senate Bill 135, sponsored by Sens. Jerry Sonnenberg, R-Sterling, and Kerry Donovan, D-Vail, got a tough reception from the Senate Finance Committee, which decided to postpone action on the bill to give its sponsors a little more time to find a path forward.
The bill has been the subject of hard negotiations over how the state will compensate landowners who donated land to the easement program only to see the Department of Revenue revoke tax credits tied to those donations.
A working group, led by Alan Gentz of Sterling and Erik Glenn, executive director of the Colorado Cattlemen’s Agricultural Land Trust, came up with the reparations plan in 2019.
Its initial cost of $157 million included an estimate by the Department of Revenue that it would need nearly 22 additional staff to manage the reparations program. But the fiscal analyst who compiled that estimate said the bill’s requirement that tax refunds be handed out within 30 days of the department receiving applications is completely undoable, he said Thursday. It’s more likely that it could take up to two years, and that it should be done through tax credits, not tax refunds.
Sonnenberg, Donovan and the working group co-chairs worked on two amendments to address those concerns prior to Thursday’s hearing. The most substantial one rewrote the bill’s section on reparations and put the management into the hands of the Division of Conservation rather than the Department of Revenue.
Fiscal analyst Josh Abrams told the committee that he believes the conservation division could handle the reparations more efficiently, and that could reduce the bill’s overall cost, although not by any significant amount.
As introduced, the bill attempted to go after tax credits available under the program that hadn’t been used in the past several years. The program has had $45 million available per year since 2013 but in some years awarded only about $3 million to $4 million. However, that turned out not to be workable; those credits weren’t set aside for future use and don’t exist.
The amendment introduced Thursday would tap 50% of the annual $45 million tax credit in the first year, 40% in the second year and 30% in third and subsequent years until repayments are completed.
The issue of who would be eligible also is something of a sticking point in the bill. Appraiser Bill Boortz told the committee that there were a lot of overvalued appraisals, that appraisers had gone to jail (only one did) and that some people bought land at $400 per acre in order to tap into the program and then turned around several months later and claimed the land was valued at $5,000 per acre. He also told the committee that using an IRS form, known as an 8283 form, was not appropriate and “proves nothing.”
However, Boortz failed to tell the committee that the easement program was initially based on the IRS model for conservation easements when it was created in 1999, and that was the standard under the law until the General Assembly created the Conservation Easement Oversight Commission in 2011.
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