The Colorado Division of Real Estate is investigating five conservation-easement deals with connections to attorney Rodney Atherton after suspect appraisals were submitted to the agency.
The five appraisals were conducted by two appraisers, and the easements were donated to the Colorado Natural Land Trust. Three of the properties were deeded from Water Renewal Resources LLC to various limited-liability companies, which then donated the easements to the land trust.
Atherton is the registered agent for Water Renewal Resources. He could not be reached for comment.
A state grand jury is investigating previous conservation-easement deals crafted by Atherton, and he is the subject of an ethics complaint filed by Erin Toll, director of the Division of Real Estate, with the Colorado Supreme Court. He was sued this month by former clients who had to give up gains from their easement deals.
“We have met with the appraisers, and they are aware of our investigation,” Toll said. “They have been very cooperative. It appears they may not have understood what they were getting into.”
Paul Geer, president of Colorado Natural Land Trust, said he is unaware of the investigation and that the organization does not select the appraisers.
“The landowner hires the appraiser,” said Geer, who referred further questions to land trust attorney Sheldon Smith. Smith said he was unaware of the investigation.
“LLCs . . . a red flag”
The conservation-easement program allows landowners to get tax deductions and earn tax credits they can sell for cash in exchange for restricting development on their land. Abuse can occur when landowners get excessively high appraisals for large tracts of land, then slice them up into smaller tracts for investors to buy and place into easements.
The easement deals the Division of Real Estate is scrutinizing are structured in a way Toll said she had not seen previously. The properties, all in Adams County near Strasburg, were divided, and limited-liability companies were created for each easement.
“Whenever you see there are LLCs buying and selling these properties, it’s a red flag for us because you can’t see who the real owners and purchasers are,” Toll said.
The investigation shows that the new law, passed this year, will stem abuses of the program, Toll said. The law requires appraisals for conservation easements to be submitted to the Division of Real Estate for review.
“We’re catching the appraisals before the tax credit is given,” Toll said. “We’re catching the abuses as they come in the door, rather than way down the road where a taxpayer has already sold their tax credit.”
Restoring confidence
Since the law has gone into effect, the Division of Real Estate has received 75 appraisals. Eighteen had minor problems and were sent back to the appraiser to correct. In addition to the five under investigation, two appraisals that were reviewed were determined to be unacceptable.
The new law also has given potential easement donors confidence to participate in the program again, said Jill Ozarski, executive director of the Colorado Coalition of Land Trusts. Easement donations had dropped after the state launched its initial investigation into conservation easements organized by Atherton.
“There are at least 50 good easements that total well over 10,000 acres across the state that are closing this month, and the land will be permanently protected,” Ozarski said. “The confidence in the system is growing.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
