Over several decades, Colorado has built one of the nation’s most effective land-conservation systems to protect its diverse and dramatic landscapes. Local governments, nonprofit land trusts, and citizens’ groups pioneered public open- space funding and developed innovative financial incentives that, together with philanthropic contributions, have protected more than 2 million acres of private lands with important conservation values. Only California and Maine have protected more land.
However, regulators and the media have questioned whether in some cases, the public conservation benefits justify lost revenue from Colorado’s tax- credit program. State agencies are investigating whether tax credits were claimed to protect lands possessing few conservation values or where tax savings may have been based on inflated appraisals. And the Internal Revenue Service is auditing close to 300 tax returns with federal conservation-easement deductions.
Central to these inquiries are conservation easements, voluntary legal agreements that allow property owners to donate all or part of the development value of their lands to nonprofit land trusts or government agencies while retaining private ownership. Conservation easements typically limit future development and subdivision of the land, thereby permanently preserving its important natural features. The easements are particularly useful in protecting Colorado’s working farms and ranches, which comprise almost 80 percent of private lands statewide.
Substantial state and federal tax benefits were created to recognize the public benefits of property owners voluntarily restricting the future development potential of their land through conservation easements. In return, land trusts and government agencies that hold these easements promise to protect these lands forever.
Unfortunately, some opportunistic individuals appear to have viewed these tax incentives as a way of profiting at taxpayers’ expense without providing lasting conservation benefits in return.
Colorado’s conservation community welcomes the state inquiry to investigate potential fraud. The Colorado Conservation Trust issued a report in 2005 calling on the state Department of Revenue to provide more oversight and enforcement of the state tax credit program. Thankfully, Gov. Bill Ritter is now bringing abuses to light and addressing them.
We also must avoid harassing landowners who have played by the rules and not make the system too cumbersome for legitimate conservation-easement transactions to occur. Many easements being audited involve partnerships with city, county, state and federal land-protection agencies, where easement value was purchased by Great Outdoors Colorado, the Colorado Division of Wildlife, or federal conservation programs. The conservation purposes and assessed values of these transactions received significant analysis and oversight, as well as funding, from government land-protection programs.
The land trust community understands the need to maintain the integrity of our conservation organizations and practices. Conservation leaders worked last session with Rep. Alice Madden and Sen. Jim Isgar to pass legislation improving reporting requirements and clarifying public benefits for easement-protected lands, and are active participants in a task force to develop for future reforms.
We must tighten standards so that tax credits are awarded only for fairly valued conservation easements offering substantial public values on lands that will be monitored by capable conservation organizations. But time is running short for us to protect our most important natural lands.
Michael Dowling is a founder and the current chairman of the Colorado Conservation Trust. Doug Robotham is deputy director for programs and policy at the Colorado Conservation Trust.
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