We value our wonderful open spaces and natural landscapes, but they are also our most endangered legacy, with development destroying scenic vistas we cherish. An estimated 2.2 million acres of natural lands were replaced by development in the U.S. last year, or 6,000 acres a day. Drive around Colorado and see great swaths of bucolic landscape erased before your eyes.
The conservation easement program was crafted in 1976 to aid farmers and ranchers who are stewards of these irreplaceable open spaces and productive food sources. The agricultural lands are their livelihoods, and give us all the blessing of wide open space.
But “land rich, cash poor” is too often the plight of ag families. So the siren song of developers offering big money can be a strong temptation, even if they hate the idea of their land being built upon.
Colorado has about 1,500 conservation easements for 1.12 million acres, totaling about $270 million in tax credits.
In the conservation easement program, if a ranch or farm has value in remaining as ag land, providing open space where it otherwise is threatened, the rancher pledges that the land, or a certain portion of it, will not be developed. The land value is reduced because in our strange tax views, the most valuable land is developed, or developable.
The easement is deeded with a recognized conservation group or land trust. In Colorado, the most active in the easement program are the Colorado Cattlemen’s Agricultural Land Trust, Colorado Open Lands and The Nature Conservancy, as well as more than 40 local and statewide land trusts, and 14 local government open-space programs.
By pledging to conserve the land, there is a federal charitable donation, such as our gifts to charities. The donation is the difference between the value of ag land and the higher value of the land if it were developed.
In Colorado, there is an additional benefit with a state income tax credit, passed in 1999. These credits may be used by the land owner or sold for use to other taxpayers. This incentive has made possible many good land-protection transactions.
But it’s also been abused, by a few appraisers who have given highly inflated valuations. In 2003, the IRS inspected Colorado’s conservation easement program and determined that most of 290 cases had too high an appraisal value. It was a nightmare for honest ranchers who were trying to keep their land, not sell it for development.
The Colorado Department of Regulatory Affairs is investigating some 30 people for $12.2 million in questionable deals, based on possibly inflated appraisals on the conservation easements.
“We thought when the IRS came in that it was the solution, that they would clean up the inflated appraisals, but instead they made life miserable for many hard-working, honest ranch families,” recalls Dan Pike, director of Colorado Open Lands. “Without the conservation easement program, some families will probably have to sell the ranch, because they can’t make it on what the land produces.”
“The real message is that only a small percentage of the appraisals have been abused.”
He’s looking forward to a law effective Jan. 1, which requires much better record-keeping of the conservation easements in the state. For Colorado, the conservation easement program is a significant and visionary way to help our farmers and ranchers stay on the land. Let’s not let the tax people “throw out the baby with the bath water.”
Joanne Ditmer’s column on environmental and urban issues began in 1962 and now appears once a month.
