Conservation Easement Working Group Proposals
A working group was convened over the 2019 interim pursuant to House Bill 19-1264 to develop proposed statutes to address certain issues affecting the creation, valuation, tax treatment, and stewardship of conservation easements in the state. The bill implements the recommendations of the working group as follows:
- Section 1 of the bill modifies the method of calculating the amount of the state income tax credit that may be claimed for the donation of a conservation easement. The section also clarifies the manner in which certain business entities claim the credit.
- Section 2 requires the state to provide compensation for certain taxpayers who were denied state income tax credits for conservation easements donated between 2000 and 2013 if the federal internal revenue service allowed a federal income tax deduction for the same donation. The amount of the compensation is based upon the amount of the credit that could have been claimed at the time of the original donation based upon the value of the donation accepted by the internal revenue service. The amount of compensation is reduced by any amount that was allowed to be claimed against Colorado income tax or otherwise reinstated to the claimant of the compensation. Where a tax credit was transferred to another taxpayer as transferee, the bill provides a process for all parties to the transaction to submit a mutual application for compensation or, if there is objection, a process to resolve disputes about the distribution of compensation. The total amount of compensation to be paid to all claimants is limited to the amount of unused conservation easement tax credits that could have been claimed between 2013 and 2019 under an existing statutory cap amount, but were not claimed. If the unclaimed amounts are not sufficient to satisfy all claims, then any unsatisfied claims would be paid in future years. The cap for each future year would be reduced by the amount of claims paid; except that the total amount of claims paid in a year could not exceed 50% of the amount of the cap for that year.
- Section 3 requires the director of the division of conservation to designated an ombudsman to assist in resolving certain disputes related to conservation easements.
- Section 3 also addresses the abandonment of conservation easements, which occurs when the holder of an easement no longer fulfills its stewardship obligations with respect to the easement. The division of conservation is required to investigate potential abandoned easements, make findings regarding each easement, and report its findings to the conservation easement oversight commission (commission). The commission then conducts a public hearing on the easement and, if it determines that an easement is abandoned, appoints a receiver to monitor the easement. Receivership for an abandoned easement is limited to 5 years, during which time the commission reviews the easement and attempts to identify options to reform the easement, have it assigned to another holder, or extinguish the easement. A stewardship account is established to provide for the cost of carrying out the stewardship obligations resulting from abandoned easements. A specified amount of money is appropriated to the stewardship account for the 2020-21 fiscal year, with a corresponding reduction in the amount of conservation easement tax credits that can be claimed for one year.
(Note: This summary applies to this bill as introduced.)