Tears flow over a weakened conservation easement bill

A conservation easement tax credit is causing strife across Colorado as the Department of Revenue refuses to honor claimed tax credits and dozens lose money.

Jiliane Hixson, who has spent hundreds of thousands of dollars fighting over conservation easement tax credits with the Department of Revenue, left the Statehouse in tears last week. Lawmakers had watered down a bill she hoped would help her recoup some of her money.

Thirteen years ago, Hixson converted parts of her Lamar farm into a conservation easement, what should have been a win-win deal.

Colorado’s conservation easement program works like this: Landowners create a contract with a land trust. The land trust holds the deed to the property and blocks housing projects, oil and gas wells, solar or wind power farms or any other kind of development. The landowner gets a hefty tax credit and still owns the land: Farmers continue to grow crops, ranchers keep grazing cattle, and homeowners keep living there.

At least, that’s how the programs are supposed to work.

But four years after entering into an agreement, the Department of Revenue rejected Hixson’s tax credits. She still does not have control of her land and has agreed to a settlement with the Department of Revenue. She will be paying back those tax credits for the next 20 years.

Hundreds of other Coloradans, like Hixson, have been fighting the Department of Revenue over those tax credits.

A bill in the House was originally going to set a January 1, 2016 deadline for the Department of Revenue to resolve the conservation-easement tax credit disputes that still plague roughly 55 families. For those families whose property is now controlled by land trusts, if the Department of Revenue rejected those tax credits, the easement would be canceled and the deed to the land would return to the homeowner.

The Department has a four-year statute of limitations to accept or deny tax credits issued on the conservation easements.

But the department has ignored the four-year limit, fighting with hundreds of landowners over the tax credits, some from more than 13 years ago.

It has cost 800 Colorado families, many of whom are farmers and ranchers, tax credits totalling in the millions of dollars. Some have declared bankruptcy after fighting the department, which has alleged some appraisals were overvalued by incompetent appraisers or property owners who committed fraud.

The Department of Revenue’s spurious allegations of mass fraud have not been substantiated in the courts. Only one case has been prosecuted in the program’s 16-year history.

The measure, House Bill 16-1174, sponsored by Republican Rep. Jon Becker of Fort Morgan, thinly skated out of the House State, Veterans and Military Affairs Committee a month ago. It won the support of one Democrat on the committee, Rep. Max Tyler of Lakewood, who said the discussion on the issue must continue.

Last week, the House Finance Committee, which deals with bills about tax issues, took up the bill, which by then had garnered opposition from the governor. That put Becker to work with Democrats to save the bill.

Becker reached an eleventh hour deal Tuesday with Democrats to completely rewrite the bill. The new version substantially reduced the cost from its initial $11 million price tag. But more importantly, it took out the language that would have given Hixson and hundreds like her control of their land.

The rewritten bill only applies to those 55 cases still in dispute, and only cancels out any further interest or penalties on the tax credits while the cases are being settled.

Becker put the Department of Revenue and the Attorney General’s office that has backed the Department on notice during the hearing, warning if they don’t speedily resolve the remaining cases, he’ll be back next year and “It won’t be nice…Moving forward shows the departments we are serious.”

The decision to gut the bill was clearly emotional for Becker. “Fighting the state shouldn’t come to the point where families are destroyed,” he told the committee.

Lawmakers aren’t supposed to become too emotionally vested in their bills, but that has been the case for Becker with HB 1174. He pledged to keep the issue in the public eye and said he will continue to try to find solutions to help people like Hixson, who won’t be aided by the revised bill.

The bill now goes to the full House for debate, and if successful, to the Senate. Another bill to address the conservation easement issue, sponsored by Sen. Jerry Sonnenberg of Sterling, was killed by the Senate Finance Committee two weeks ago. Sonnenberg requested the action, stating he knew the bill would not have been passed by the committee.

Photo credit: Loco Steve, Creative Commons, Flickr

has been a political journalist since 1998. She covered the state capitol for the Silver & Gold Record from 1998 to 2009 and for The Colorado Statesman in 2010-11 and 2013-14. Since 2010 she also has covered the General Assembly for newspapers in northeastern Colorado. She was recognized with awards from the Colorado Press Association for feature writing and informational graphics for her work with the Statesman in 2012.