The second of two conservation easement bills working their way through the General Assembly won an 8-3 bipartisan vote from the House Finance Committee on Thursday, although the sweetened incentive in House Bill 1233 gave at least one prominent Democrat pause.

As introduced, HB 1233 would boost the incentive to landowners who are considering a conservation easement from 50% of the easement value to 90%.

That’s too much, according to Speaker Pro tem Adrienne Benavidez, D-Adams County, who told Colorado Politics after Thursday’s committee hearing that 60% should be enough. However, Benavidez, who voted against the bill, said she isn’t interested in working on an amendment to bring that percentage down and for now will continue to vote against the bill. 

The state’s conservation easement program began in 2000, and through 2013 was a nightmare for landowners who were denied tax credits in exchange for donating a portion of their land to land trusts or counties for preservation purposes. Out of the 4,000 easements granted between 2000 and 2013, about 800 were denied tax credits, forcing some landowners into foreclosures, bankruptcies, divorces and a couple of suicides, according to witness testimony in legislative hearings over the past several years. 

The years of bad publicity over the program took its toll: while the state has made available $45 million in tax credits for new easements since 2014, it’s had few takers, leaving as much as $35 million in some years available for tax credits that went unclaimed.

In 2019, a working group formed under House Bill 19-1264 looked at several problems in the program, including reparations, abandoned easements and new ways to value easement land. The working group’s recommendations on reparations became part of Senate Bill 21-033, which won unanimous approval last week from the Senate Finance Committee. Under that bill, $15 million per year in 2021 and 2022 would come out of that $45 million tax credit pool to jump-start the reparations process. While the total amount of tax credits denied is unknown — that’s tied up in confidential tax returns — one estimate pegged it at $145 million, although members of the working group, including landowners deprived of their tax credits, believe the total will be substantially less than that. 

Conservation easement reparations bill wins unanimous support from Senate Finance Committee

That tax credit pool is also at the heart of HB 1233. Tax credits for both reparations and new easements would come out of that pool, according to Greg Sobetski, a fiscal analyst with the nonpartisan Legislative Council. 

The HB 19-1264 working group did not endorse House Bill 1233, although the 90% value was among their recommendations. The bill also deals with the abandoned easement issue, which is when an easement holder, such as a land trust, goes out of business and the easement is no longer maintained by that entity. Under the bill, abandoned easements will be handled by the state’s Division of Conservation, within the Department of Regulatory Agencies. 

Rep. Dylan Roberts, D-Eagle, told the finance committee that the bill will clean up and enhance the conservation easement program. Easements yield a 12:1 return on investment to the state in economic impact, he said. “The bill builds on a successful program as well as making changes needed.”

The vast number of conservation easements have been beneficial to the state, although he also acknowledged the past “bad experiences” landowners had with the program. Most of the problem easements were on the Eastern Plains, primarily in southeastern Colorado.

Co-sponsor Rep. Perry Will, R-New Castle, said conservation easements keep ranchers ranching and in the business. “It’s cows versus condos,” Will said, explaining that easements keep conserved lands out of development. “This is a private property rights issue to me,” Will said.

HB 1233 also expands who can get claim tax credits from easements, such as nonprofits and other “government entities.”

Benavidez has long advocated for means-testing in tax credits, and suggested that large corporations, such as corporate farms, could go after tax credits under the bill.

HB 1233 is the brainchild of Keep It Colorado, formerly the Colorado Association of Land Trusts. Melissa Daruna, Keep It’s executive director, told the committee they “chose to raise the incentive to 90% based on landowner feedback and conservation easement data from land trust members over a number of years.”

Increasing the incentive will provide flexibility to landowners as well as incentivizing more conservation, Durana said.

“Investing in conservation has vast public benefits: clean water, clean air, local food, open spaces, protected wildlife habitat” and access to the great outdoors, she said, and it also drives the economy, especially in rural economies, by allowing farmers and ranchers to stay in production.

The land trusts and their partners, which include some counties, have conserved more than 3 million acres, according to Daruna. She claimed that has helped individual landowners and communities recover from prior recessions while making a lasting investment in a more sustainable future. 

Terry Fankhauser, executive vice president of the Colorado Cattlemen’s Association, which is tied to the Colorado Cattlemen’s Agricultural Land Trusts,  also spoke in support of the bill. “It’s been a good asset to landowners” when it comes to conserving cherished elements of the state, he said. He also pointed out that conservation attention is turning toward shortgrass prairies, largely found on the Eastern Plains, because of the diversity of flora and fauna they support.

“This will ramp up” that attention in a beneficial way, he said.

Both HB 1233 and SB 33 are critical to bringing trust back to the program, according to Austin Vincent of Colorado Farm Bureau, who also spoke in support: “This bill will further fix problems in the program and make changes to incentives to make sure the state’s conservation goals are met.”

Among the Eastern Plains landowners with successful easements, Jim Yahn, manager of the North Sterling Irrigation District and a fourth-generation farmer and rancher, said he has had easements for the last six or seven years. He spoke to the value of easement in avoiding “buy and dry,” the practice of municipalities buying up farmland for their water rights.

His easements allow for municipalities to occasionally lease his water as insurance against drought, through what’s known as an agricultural transfer mechanism. “There’s a lot of pressure on the South Platte” from municipalities, he explained. For some farmers, the only option is to sell those water rights, but easements allow them to realize some of that monetary value and keep farming the land. 

The bill now heads to the House Appropriations Committee.