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Policing conservation tax credits

Governor urges closer scrutiny to prevent abuse

By Jerd Smith, Rocky Mountain News

Published February 27, 2008 at 5:48 p.m.
Updated February 27, 2008 at 11:13 p.m.

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Colorado must step up efforts to police an innovative conservation tax-credit program to ensure that questionable deals are stopped and that the public interest is protected, Gov. Bill Ritter said Wednesday.

"We do not stop programs we have helping us protect land in this state," Ritter told a packed room of open-space officials. "At the same time, we have to assure people there is not fraud and abuse."

The program gives lucrative state income tax credits to landowners who agree to prohibit development on their properties using legal tools known as conservation easements. The tax credits then can be sold for cash.

Investigations by the Colorado Division of Real Estate and the Department of Revenue are likely to be handed over to the Colorado attorney general and could result in criminal and civil prosecutions by the state, Ritter and other state officials said.

Colorado has protected 1.2 million acres of privately held land using conservation easements, more than any other state except Maine. As an incentive, it offers tax credits - worth as much as $375,000 - to help compensate landowners who agree to forever protect their lands.

The 7-year-old program was intended to protect large legacy landscapes and historic working ranches from being destroyed by development. But it has come under fire in the past year because of concerns that inflated appraisals have been used to boost the tax credits improperly, and in many cases, because lands were accepted into the program that have questionable public value.

A Rocky Mountain News investigation found that dozens of tiny parcels of land were protected and generated hundreds of thousands of dollars in tax credits. In addition, lands that allowed oil and gas development and wind farms were accepted, as were golf courses and small lots in gated communities. All generated generous tax credits.

No single state agency oversees the program, which relies instead on nonprofit land trusts to police the transactions and ensure that the land is protected in the future.

The law, one of only three in the country granting these types of credits, has been amended at least five times. This year lawmakers again are trying to close loopholes in the program.

In addition, the state Department of Revenue is seeking repayment of at least $15 million and is reviewing nearly 10,000 tax returns in one of the largest investigations it has ever undertaken.

The Division of Real Estate also is reviewing transactions and has suspended the license of one appraiser, sanctioned another and has subpoenaed the records of two land trusts. Director Erin Toll said she expected to hand over her investigation to the attorney general's office.

Comments

  • February 28, 2008

    9:25 a.m.

    Suggest removal

    DougH writes:

    Kudos to the Rocky for bringing this abuse out in the open. The program may have had good intentions, but it was turned into a giant scam by people in the know. It would have been nice if the Republicans who set up this tax giveaway gave as much attention to the fradulent activity as they do school test scores.
    But then they wouldn't be Republicans.