Official wants to keep program but halt abuses

By John Rebchook, Rocky Mountain News (Contact)

Published December 8, 2007 at 12:30 a.m.

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Toll says easements are "an excellent program."

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When Erin Toll was named director of the Colorado Division of Real Estate a year ago, she told her staff to "triage" the huge backlog of cases.

At the top of the list was the state's record foreclosure rate, which quickly led her to appraisers who were inflating home values.

Earlier, as the state's deputy insurance commissioner, she cleaned up a national mess involving kickbacks in the title insurance agency, which included her testifying before Congress.

Now, Toll is targeting appraisers who may be inflating the value of conservation easements in Colorado. An over-appraised easement can give the landowner a bigger tax break than deserved. Colorado also allows landowners to sell their conservation easement tax credits, immediately putting cash in landowner's pockets.

"We've added protection of the conservation easements to our highest level of triage," Toll said this week.

Toll, who holds a law degree from the University of Virginia, reached a settlement Thursday afternoon with Julie O'Gorman, a Loveland appraiser who got Toll started on conservation credits. O'Gorman had assessed an easement near Walsenburg at $650,000 - a number so high it raised eyebrows.

"Frankly, I didn't know what a conservation easement was at first," Toll said.

But now she's a big fan.

"It is an excellent program," Toll said. "I live here because of the things they are trying to protect. When I drive from here to Steamboat Springs along U.S. 40, I'm starting to see rooftops where there used to be ranches. A lot of ranch owners have had their property for three or four generations, sometimes going back to homesteading days. They're cash poor and land rich. Without this program, their only option would be to sell it to a developer."

But she doesn't want to see the program abused. One simple remedy, she said, would be to require that appraisals be filed with her office and other agencies.

"Right now, the appraisals are hidden," Toll said. "We have to subpoena people to get the appraisals. I would have to believe that people would think twice about over-appraising a conservation easement if they knew we're going to scrutinize it."

Under O'Gorman's settlement, she was assessed a fine of $25,000. She has to pay $10,000 to the Colorado State Board of Real Estate Appraisers, and if she violates the terms of her stipulation order, she will be assessed the additional $15,000.

Dan Foster, O'Gorman's lawyer, said his client spent nearly her entire life savings defending herself.

Foster said that he couldn't comment on Toll's investigation, but he knows the state must go after bad appraisers and mortgage brokers.

"They just need to be mindful that there are good people who are caught up in this in their quest to find a scapegoat," he said. "Certainly, in Julie's case, they wanted the headlines."

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