Just as some momentum was gathering behind an effort to overhaul an overly broad exemption to Colorado’s tax code, we find that our incoming governor benefits from a variation of the exemption.
Gov.-elect John Hickenlooper saves roughly $15,000 a year in taxes for land he owns in Park County because of an agricultural tax designation. He pays a relatively piddling $330.31 annually because of the exemption, raising questions about whether he will support a reform effort.
Hickenlooper has yet to answer questions about the state’s ag exemption and his spokesman said the governor-elect would need to see specific legislation on reform before he would comment. But the outgoing Denver mayor should have little to fear in addressing the issue, particularly since details of his tax rates strike us as legitimate.
The exemption — first reported by the Face the State website — that Hickenlooper employs is different than the agricultural exemption that has come under recent scrutiny.
Last month, a legislative committee outlined the range of interpretations of that exemption, and suggested that legislation be crafted to tighten the loopholes.
Briefly, an exemption meant to aid farmers and ranchers has been co-opted by many residential owners of mountain estates who pretend to engage in agriculture by growing a little hay or merely having goats graze on their estate for a day or so.
Hickenlooper’s arrangement is more complex and isn’t analogous to the abuses outlined by the legislature’s committee.
In the governor-elect’s case, 260 acres of forestland in Park County were placed permanently into a conservation easement. Though Hickenlooper has the option to build three houses on a small section of the property, so far the land sits vacant.
Yet in the first year after Hickenlooper deeded the land into permanent conservation, he got a state tax bill that charged the full price of developable land.
The logic of a conservation easement, however, is to provide an economic incentive to protect pristine or natural areas and preserve Colorado’s scenic legacy. It would seem to lessen the chance that anyone would turn marketable land into a conservation easement if they knew they would be taxed year after year at the same rate as land that remained open for development.
Instead, working with a Forest Service plan, Hickenlooper essentially rents the land to an individual who thins trees and who then profits from the wood products. The minimal tree-farming that results is meant to help keep the land healthy and lower the risk of wildfire, and the Forest Service regularly evaluates the practice.
Meanwhile, should Hickenlooper exercise his option to build a house on the property, he would face traditional property tax rates for the structure or structures, as he should.
We urge the incoming governor to make use of his expertise and help craft reform that allows for genuine agricultural uses while weeding out unrealistic opportunistic uses.
A line needs to be drawn between legitimate users and those who simply run a pair of goats across their land twice a year to claim agricultural exemptions.
