Land trust execs discuss Wyo easementsWritten by Jennifer Womack
Casper – Wyoming land trust executives say there is a distinct difference between conservation easements written in the state and those now under scrutiny in Colorado.
Coloradans who entered conservation easements in recent years did so for not only the federal tax benefits and, in most cases, the desire to preserve open space, but also state tax credits and the right to sell those tax credits to a third party or to the state itself.
“Colorado has a state income tax,” says Wyoming Stock Growers Agricultural Land Trust (WSGALT) Executive Director Pam Dewell, “and passed a law in 2000 allowing landowners who couldn’t use the entire donation value of an easement on their state returns to sell the balance as a state tax credit.” Dewell says some people took advantage of the system and some used it to take advantage of landowners. “As with any profession there are some bad apples,” she says.
According to an Oct. 28 news article appearing the Rocky Mountain News, beginning next year land trusts in Colorado will have to be state certified to continue accepting lands. “Beginning Jan. 1,” says the article, “the Colorado Conservation Easement Oversight Commission will begin reviewing dozens of nonprofit trusts to ensure they are qualified to monitor the lands and have the financial resources to defend the easements against development or misuse.” According to Rocky Mountain News, the coalition was formed after numerous abuses of the “landmark easement program were uncovered.”
The newspaper says easements were being written on tiny parcels instead of the large-scale ranches where they were intended to prevent development. Dewell says there were also scenarios where easements were grossly overvalued. About 3,000 easements have been put in place since the program began in 2000. Rocky Mountain News says $274 million in state income tax credits have been claimed to date, far surpassing the anticipated level.
“Land trusts were supposed to function as gatekeepers, ensuring appropriate lands were being protected and fairly valued,” says Rocky Mountain News. “But some were apparently formed fraudulently and others simply weren’t clear on their obligations under the law and the IRS code governing donations of scenic lands.”
Dewell says 290 tax returns including conservation easements are amidst audits in Colorado, with the vast majority dating back to 2002 and 2003. “About 100 of those are held by bona fide land trusts and they’re sound easements,” says Dewell, noting that it’s too bad the IRS isn’t making the distinction. Of the remaining income tax audits where easements are involved, she adds, “Some are clearly not good easements. In Colorado there were a number of businesspeople who came out of the woodwork and used this system to their advantage and in doing so hurt some landowners.” The issue itself, she says, is not new. Colorado’s efforts to seek out a solution have, however, brought the situation to the public forefront.
“About three years ago,” says Wyoming Chapter of The Nature Conservancy (TNC) State Director Andrea Erickson-Quiroz of conservation easement valuation, “TNC decided we were concerned about this issue.” She says there’s an “IRS 8283” form submitted upon an easement’s finalization. Carrying the appraised valuation, she says TNC won’t finalize an easement until they’ve seen the form and won’t sign off on the document if the appraisal is “out of line.” She says it’s important the appraisals meet TNC and IRS requirements.
“Colorado’s tax credit for conservation had some unfortunate unintended consequences, creating an environment where dollars brought out the worst in people,” says Dewell. “There were some very extreme appraisals.” Dewell says it’s important to point out that appraisers are hired by the landowner. WSGALT stresses the importance of due diligence to landowners and urges ranchers considering the placement of an easement on their property to hire professional swho have experience and a sound track record. “If an appraisal looks too good to be true, it probably is,” says Dewell.
“Conservation easements are a choice for landowners, who bear responsibility for meeting the legal and financial obligations of the decision,” says Jordan Vana, Land Program Director for the Pinedale-based Green River Valley Land Trust. “GRVLT has not, and will not, promote or make any assurances regarding financial benefits.”
Vana continues, “GRVLT doesn’t get involved in appraisal matters. That’s between an easement donor and their appraiser. GRVLT does get its own appraisals to support easement purchases and only works with reputable firms.”
Dewell also says it’s important to work with a land trust that is a known entity and belongs to a professional trade organization such as the national Land Trust Alliance or the western-based Partnership for Rangeland Trusts (PORT). Membership in PORT requires that a land trust be affiliated with an agricultural organization such as the Wyoming Stock Growers Association. “PORT members are land trusts sanctioned by agricultural entities within our respective states and are committed to working landscapes and the people who steward them. Our goal is to provide easement options with the landowner’s interests and values in mind.”
“Easements are a valuable tool that should not be dismissed because some bad apples used the tool incorrectly,” says Dewell.
“Our land trusts in this state have already taken important steps,” says Erickson-Quiroz, “and we don’t have a program like the tax credit that is complex and needed better oversight from the beginning.”
“GRVLT, and other land trusts in Wyoming, follow the Land Trust Alliance’s Standards and Practices, which describe how an ethical and professional land trust should operate,” says Vana. “GRVLT recently became accredited through the independent Land Trust Accreditation Commission and stands as the only land trust in Wyoming to earn this distinction to date.”