Colorado clamping down on tax credits for land conservation |

Colorado clamping down on tax credits for land conservation

Janet Urquhart
The Aspen Times
Aspen, CO Colorado

ASPEN – Colorado is poised to clamp down on how much tax revenue it is willing to forego to facilitate the conservation of land, and the move is getting close scrutiny from both the Aspen Valley Land Trust and the Pitkin County Open Space and Trails program.

However, representatives of both entities anticipate they can work within the tighter fiscal framework that has been proposed.

Legislation was approved in the Colorado House Friday that caps the overall amount of tax credits that can be claimed for setting aside land at $26 million annually for three years. The bill, a response to the state’s financial crunch, now heads to the Senate.

The program provides an income-tax credit for Colorado landowners who give up development rights on their property by placing it under a conservation easement. The credits can also be transferred or sold by landowners who don’t need the write-off.

Pitkin County’s program, funded by a dedicated property tax, doesn’t depend heavily on the tax credit program because it has funds to purchase land or conservation easements outright. Tax credits are, however, sometimes a component of a deal with a landowner, according to Dale Will, program director.

Entities such as the Aspen Valley Land Trust and Colorado Cattlemen’s Agricultural Land Trust, however, hold conservation easements that are frequently arranged solely through the use of tax credits.

In Garfield County, where there is no tax-supported open space program, the AVLT has conserved 14,992 acres from development, including 13,807 through tax credits alone, according to Martha Cochran, the trust’s executive director.

The $26 million cap constitutes half of the $52 million in tax credit transactions that occurred during the 2008-09 fiscal year, but Cochran said she doesn’t believe the legislation will have a detrimental effect on the AVLT’s efforts.

Organizations that hold conservation easements are now subject to a state certification process – the result of concerns that tax credits were being claimed based on appraisals that overvalued the land being conserved. AVLT and other land trusts and nonprofits were certified in 2009; governmental entities that hold conservation easements, including the Pitkin County program, will be audited this year.

The certification process has already reduced the number of entities that are able to hold land under conservation easements, which should reduce the demand for tax credit deals, Cochran reasoned.

Will, however, wonders if there will be a rush for tax credits among landowners if the program is capped.

“My worry is there’s sort of a horse race to be the first one in the door,” he said. “Do you say it’s first come, first served? Does that allocate the $26 million as strategically as it should be?”

Nonetheless, Will understands the state’s current reluctance to allow unlimited tax write-offs, even for what he considers the worthy goal of land conservation.

“Now that the state is in this fiscal crisis, it’s understandable that they would want to put a cap on it,” he said. “The $26 million is still a very significant investment in conservation.”

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