Little-known tribe taps big tax credits in Colorado
By Jerd Smith, Rocky Mountain News
Published June 14, 2008 at 12:05 a.m.
Photo by Ken Papaleo / The Rocky
An Oregon Indian tribe is holding 11 conservation easements on lands in Jackson County. The assessor says a locked gate and boulders are preventing access.
CORRECTION: A previous version of this story misspelled the last name of Colorado Attorney General John Suthers. This error was corrected.
It was this simple: During 2005 and 2006, a little-known Indian tribe from southwestern Oregon mailed 11 one-page documents to the Jackson County clerk and recorder's office placing conservation easements on 11 small parcels of North Park scrubland.
Since then, Colorado has issued $2.85 million of state income tax credits for the easements, under the stipulations of a state law designed to encourage landowners to protect scenic lands from development.
Conservation easements legally prohibit development while allowing private ownership to be maintained. The tax credits compensate for the loss of development rights and can be sold for cash by the landowner.
The original owner of record in this case, Alan Deatley, a hard-to-contact Oregon businessman, incorporated at least 15 companies in Nevada, Oregon, Washington and Colorado, and a different Deatley company is listed as owner on each of the 11 Jackson County easements.
Typically, dozens of pages of complex public documents are filed in counties where the easements are being created.
But at the historic courthouse here in Walden, no paperwork exists beyond the one-page listings.
Jackson County Assessor Kerry Moran said she was shocked that the Deatley properties generated such enormous tax credits. The credits are based on appraised land values, including the value of any future development that might occur.
"That's amazing," Moran said. "The land up here, if it's an incredibly scenic 40 acres, might sell for $225,000, or about $5,000 an acre. But you're looking at vacant land here. The highest I've ever seen it sell for is $3,000 an acre."
Tax credit experts said Deatley's land would have to be worth far more - at least $25,000 an acre - to qualify for a single $260,000 credit, the maximum allowed under the law during 2005-06. The cap is now $375,000 per easement.
Combined, Deatley's 506.37 acres in Jackson County have been valued by the assessor at $202,020. It's not clear how much of the total acreage is dedicated in the 11 easements. The $2.85 million of tax credits are listed in a new Department of Revenue database.
Deatley's companies and the tribe that granted the easements have post office boxes in Medford, Ore., but any connection isn't known. Any nonprofit whose stated purpose is conservation can hold an easement under Colorado's law.
One issue is whether the Oregon- based Latgawa Tribe has the resources to hold the easements and protect them in perpetuity, as the law requires.
There is also an issue of whether the Latgawa are actually a tribe.
According to the U.S. Bureau of Indian Affairs, the Latgawa are not recognized by the federal government. In 2007, the tribe sent a letter saying it intended to petition for recognition. "But they have not submitted any documentation since then," said Nedra Darling, spokeswoman for the bureau.
Aimed at protecting land
The idea behind Colorado's nationally recognized conservation easement program is to protect privately owned scenic tracts and working ranches.
But an investigation by the Rocky Mountain News earlier this year found that tax credits have been claimed on lots in pricey gated subdivisions, on golf courses, on small parcels with little environmental importance and on those that also allowed oil and gas development.
Colorado has one of the most aggressive easement programs in the country. About 1.2 million acres of land have been protected since the program began seven years ago, with the state issuing more than $274 million in tax credits.
Until this year, however, no state agency had oversight of the tax credits or the land trusts and nonprofits charged with executing the easements. And important documents, such as real estate appraisals, were not reviewed before easements were finalized or tax credits granted.
In the wake of publicity about questionable easement deals, the state has assigned the Division of Real Estate to track them down. The Department of Revenue is already seeking to reclaim $19.2 million in tax credits that officials believe were based on grossly inflated appraisals or otherwise improper easements. That effort is ongoing and the figure is expected to grow.
Of the more than 3,000 easements granted under the program, the state now says about half are being reviewed.
The legislature passed and Gov. Bill Ritter recently signed a major reform law designed to prevent future abuses of the troubled program.
The new law creates a nine-member commission to evaluate each deal, and requires that all appraisals be filed with the Division of Real Estate. It also requires that nonprofits be certified before they're allowed to hold easements, and to demonstrate that they have the resources and expertise to protect the easements from development.
Erin Toll, director of the Division of Real Estate, said she had not heard of the Latgawa's granting of easements on the Deatley tract until she was contacted by the Rocky.
But she said they follow a pattern - dividing a single tract into multiple tracts under multiple ownerships to maximize tax credits - that her agency has found troubling in other cases.
"Typically, people who want to scam the system will form multiple companies to hide the true nature of the transactions," Toll said.
No report since 2001
Nonprofit organizations play a critical role in the Colorado conservation effort because they are charged with reviewing each easement and authorizing the donation that generates the tax credits. In addition, they must guarantee that they will protect the lands in question from legal challenges and future development.
Most nonprofits involved in Colorado conservation easements are land trusts, groups that claim land protection as their primary mission.
Nonprofits with more than $25,000 in annual revenue must file annual reports with the IRS known as "990s."
But the Latgawa Tribe, whose nonprofit arm is called the Confederated Tribes-Rogue-Table Rock & Associated Tribes, Inc., hasn't filed a 990 report since 2001, according to Guidestar Inc., which provides the forms to the public.
John Grey Eagle Newkirk, president of the Latgawa, said his tribe hasn't filed because it doesn't have enough revenue to report. He referred all questions about the tribe's conservation easements to Rick Davis. Davis did not return phone calls left at the tribal office.
A Rick Davis also is listed as an officer on some of the companies incorporated by Deatley.
In a letter to the Rocky, Newkirk said tribal members needed to be contacted by e-mail because "we're busy working in the fields."
But the tribe did not reply to questions sent via e-mail by the Rocky.
How many conservation easements the tribe is involved with isn't clear. According to the Central Point, Ore., police department, Newkirk was investigated in 2006 for forgery and fraud for offering the tribe as a sovereign nation.
"We did conduct a criminal investigation," said Chuck Newell, one of the Oregon officers who investigated Newkirk two years ago.
"In June of 2006, Mr. Newkirk started an Internet deal where he started to ask people to become a part of the Latgawa Tribe. If you were a member of the tribe you had certain privileges: insurance for your car issued by the tribe; a driver's license issued by the tribe; car registration issued by the tribe.
"But the federal government has not recognized the Latgawa Tribe," Newell said.
"Newkirk's house is his tribal office and tribal court. He rents it from a very nice lady. When you drive by there are two Crown Victoria patrol cars that are parked out in front and he has a big sign out there saying 'Warning, this is sovereign Indian territory,' " Newell said.
No charges were filed against Newkirk because he stopped issuing documents when the investigation began, Newell said. However, the tribe's Web site still boasts of sovereign-nation status.
Land conservation expert Ariel Steele, a tax credit broker who has handled easements in Jackson County, said the Latgawa-Deatley easements are also noteworthy because they are small. Most easements in the sparsely populated Jackson County cover hundreds of acres of land.
The parcel size "is concerning," she said. "In Jackson County 20 to 40 acres is very small. Depending on the terms of the easements there may be nothing protected here whatsoever. And what's in the easement? If it's only one page, I'm hesitant to believe it could contain the required information necessary to create a qualified easement. In order for an easement to be valid, the actual easement needs to be recorded."
Jackson County Assessor Moran said her office hasn't fully inspected Deatley's land because access is blocked by locked gates and boulders.
According to the county clerk and recorder's office, Deatley paid the $892.68 property tax bill on the parcels in March of this year through one of his companies, N.A.P.I LLC.
Deatley could not be reached for comment, despite attempts to find phone numbers and home addresses in the states in which he has incorporated companies. Calls to a Deatley company in Nevada were not returned.
Several phone numbers for Deatley found through public records searches have been disconnected.
An expired pilot's license on file with the Federal Aviation Administration lists a home address for Deatley at 68 Golden Eagle Lane in Coalmont, Colo.
But the assessor's office and the building department said such an address doesn't exist. Another phone number for a different address in Jackson County also has been disconnected.
Complicated transactions
In the Capitol, state officials are hopeful the new reform measures will halt future problems with the conservation easement tax credit program.
In the meantime, Roxy Huber, executive director of the Colorado Department of Revenue, said the list of bad tax credits already identified is likely to grow as her department continues its review of more than 10,000 tax returns taking the credits.
Those credits represent money not coming into the state treasury, and Huber said examining the claimed credits is the largest investigation the department has undertaken.
Citing confidentiality rules, she declined to discuss any specific transactions or individuals.
"The challenge in all of these is to trace them from beginning to end," Huber said. "They are complicated transactions."
The state attorney general's office has acknowledged it is pursuing a criminal investigation into several easement transactions referred to it by the division of real estate.
No charges have been filed yet, according to Nate Strauch, a spokesman for Colorado Attorney General John Suthers.
Even with all the official inquiries, it's open speculation as to how much revenue the state has given up to those who've abused the conservation easement program, and just how much can be reclaimed.
"It's a question everybody is asking," said the real estate division's Toll. "It's just sad that the state lost so much money."
Reporter Burt Hubbard contributed to this report.
Why use tax credits to protect land?
* Easements allow land to be protected at roughly half the price that an outright purchase would cost. It also means fewer responsibilities for managing the land than direct ownership.
* Easements supposedly protect the land's scenic qualities forever, while allowing the original owner, such as a rancher, to continue ranching.
* Colorado has one of the most aggressive conservation easement programs in the country, allowing one credit per easement, up to a maximum value of $375,000.
* Colorado also allows the tax credits to be sold. The rationale: For example, a cash-poor rancher who has little tax liability could sell the credit to someone else with a large tax bill. This gives the rancher more cash and an added incentive to protect land from development.
Colorado Conservation Tax Credit Program
3,000-plus easements are in place.
1.2 million acres are protected.
$274 million of tax credits have been issued.
$19.2 million sought by the Colorado Department of Revenue in repayments.
1,500 easements are being review by the state.
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June 14, 2008
2:41 a.m.
Suggest removal
clyde writes:
Another loophole, another scam, another ripoff. It seems that the "legislators" write these bills in order to provide these loopholes that unscrupulous scam artists take advantage of. Could it be intentional? Could a lobbyist influence a legislator with money?
It's gotten to the point that the wholesale whoring of our politicians is not only blatant, but confrontational. "So what do you intend to do about it? Vote for the other SOB that is just as corrupt?" They as much as dare you to take them on.
The taxpayer has been milked to an extent that King George would have envied back in the 1700's. He got himself a revolution over taxes on tea. He would positively wet his pants over the taxes on gasoline. A "free" people have sold themselves into slavery to an extent that would have been unthinkable just a few decades ago. They have subjugated to taskmasters that are neither civil nor wise. The "people" expect the government to provide all, when in fact, it intends to provide nothing.
Where do I lay the fault? I lay it at the feet of the public schools that neither provide an education, nor teach any common sense. They teach unthinking alleigance to the liberal mantras, which are far too many to list here. Independent thought and personal responsibility has done the way of the Dodo Bird. Individual thought has been replace by lemming-think.
I thank God that I am old and am ready to leave this world. I dread what will come after, I fear for my children, and I know that the slavemasters will never cease their agenda. God save those that can think.
June 14, 2008
6:23 a.m.
Suggest removal
roger44 writes:
State of Colorado dropped the ball again. Native American my rear end, they came over from Mongolia, no more native than anyone else, still migrants. DNA has proven that. This Government will chase you down for 20 bucks in taxes, but let these people get away with millions, go figure. Changing the law is like closing the gate after the cows get out, day late and dollar short.
June 14, 2008
9:19 a.m.
Suggest removal
stanwelton1 writes:
The sad news is not as stated "that the state lost so much money" the sad part is that the people paid to protect us are not doing their job. This program should never have gotten as far as it did. If the state is going to pay for this then the people of Colorado need to have full access to this land. As it is this is a case of some state officals and rich landowners working out a deal that allows the rich to get paid from the state to protect the views from their large homes. The people of Colorado do not see any benifit from this.
Now the Colorado tax payers will end up paying to recover money that should never have been paid in the first place. Everyone involved in this from the start needs to be held accountable including the paid state employees that let this happen. They are paid to protect our tax dollars. In this case they did not do their job. When you have an employee not performing what do you do?
June 14, 2008
9:20 a.m.
Suggest removal
rickg19611 writes:
What an idiotic policy.... allowing private groups to make their own decision on what tax credits the government should issue?
What next? State officials deciding to let prisoners decide how to guard themselves?
"Nonprofit organizations play a critical role in the Colorado conservation effort because they are charged with reviewing each easement and authorizing the donation that generates the tax credits. "
June 14, 2008
10:01 a.m.
Suggest removal
BO writes:
Rog44-
So, did they come from Mongolia before or after the Europeans?
June 14, 2008
10:27 a.m.
Suggest removal
jbowen43 writes:
Go back and do a little research. This program was being abused from the outset by billionaire cable magnates and GOCO Colorado to subsidize land deals that only benefited the buyers and sellers and gave the Colorado taxpayer the shaft. Just another one of those laws enacted by the republicans to enrich their cronies and impoverish the average citizen of the state. They were good at it and that's why we lead the nation in child poverty,put the least amount into education funding, and have led in home foreclosures.
June 14, 2008
11 a.m.
Suggest removal
DougH writes:
Eight years of Owens and the Republicans runnning the state and this is what we get. The Conversation Credits are nothing but the biggest rip off to ever hit the state. I quite sure that many Republicans in the state knew this is exactly how this would come out as they wrote the legislation.
The Republicans that put this in owe the taxpayers an apology and a refund. So much for the "we know how to run things better" and cut out the waist in government crowd, whatever they find they will just give away to their buddies.
June 14, 2008
1:02 p.m.
Suggest removal
Konyok writes:
These tradeable conservation easements are another example of an idea that sounds great in concept but stinks in execution. Others include light rail in Denver and "cap and trade" carbon credits.
June 14, 2008
1:33 p.m.
Suggest removal
Retread writes:
Ah HAH! I can claim my inheritance as a member of the Fucarwhee tribe!
June 14, 2008
2:02 p.m.
Suggest removal
Andy writes:
roger44:
"Native American my rear end, they came over from Mongolia, no more native than anyone else, still migrants. DNA has proven that."
Dude, that was 30,000 years ago! Are you serious?
Hey, why not go back a little further and declare that we're all Africans?
June 14, 2008
3:21 p.m.
Suggest removal
nuclied writes:
Hey Andy, why not declare that we are all Africans and stop the potential abuses made by playing a race card. Lets put us all on an equal footing, sound fair?
June 14, 2008
8:13 p.m.
Suggest removal
Andy writes:
nuclied:
I'm not sure of the tone of your post. Care to clarify?
June 14, 2008
10:46 p.m.
Suggest removal
Retread writes:
I'm Neanderthal and I'm proud!