Conservation Easements Protect Working Ranches, Open Space
Certain Colorado landowners, including those with working ranches, can receive help from conservation easements. The program is a work in progress. Recently, Colorado House Bill 1233 expanded donations and improved the tax credits. It is worth studying the conservation easement programs as notable Western ranches could benefit.
Other states also offer conservation easement agreements. Wyoming, Montana, New Mexico, Utah, and Idaho have similar programs.
What are Conservation Easements?
Conservation easements are unique legal agreements between landowners and the government. They fit the needs and goals of the landowner. At the same time, conservation easements intend to protect natural spaces and agricultural operations. Landowners can enjoy financial savings through lower taxes.
Family farms and ranches, wetlands, pastures, and forest areas may benefit. Parts of large farms and ranches may be open spaces or critical habitats. Conservation easements can protect them from development. Besides, conservation easements and protect the agricultural values and traditional uses of vast properties. The farming, ranching, and timber harvesting continues.
Benefits from Conservation Easements
Landowners may decide whether the benefits of signing conservation easements outweigh the restrictions or the encroachments on future freedom to use the land. The agreements can be complex. Main benefits include:
- State tax benefits.
- Federal tax benefits.
- When donated to nonprofits, charitable income tax deductions.
- Protected intentions that preserve land into posterity.
- Estate taxes are lower as property market value decreases.
Working Ranches Can Benefit
Working ranches in Colorado are receiving help from the latest conservation easement bill. HB 1233 encourages conservation of Colorado farms and ranch land. Financial benefits aid these farmers and ranchers. Monies pay down debt, diversify revenue streams, and expand operations. With the state’s improved approach, this law helps working ranches achieve their goals.
The Colorado Cattlemen’s Agricultural Land Trust (CCALT) along with almost 400 families have put over 700,000 acres of Colorado ranch land into conservation during the past 27 years. Moreover, an added 100,000 acres of easements are in process.
Cultural and Recreational Protections
Another aspect of land protection has to do with safeguarding important parts large properties. Ranches may feature important structures or historical event markers. Other areas may be unique for their biodiversity, outdoor recreation, or education. Conservation easement agreements protect these resources.
Alternatives
Alternatives agreements may best achieve a landowner’s desires:
- Short term habitat restoration agreements can help with restoration projects. Stream renovation or prairie restoration could help carry out conservation goals. They may take two or three decades.
- Permanent preserves come from land donations and government agencies receive land donations.
- Donors may sign life income agreements: charitable gift annuities and charitable remainder unitrusts.
HISTORY – Colorado Conservation Easements
In Colorado, conservation easement agreements often pull together complicated nuances. Over the past 20 years, needed improvements help landowners and real estate agents to navigate the legal requirements and ramifications. It helps to understand a little about how the conservation easement program got going.
Launch in 2000
In 2000, the state of Colorado began its program for conservation easements. The purpose was to protect open space, working ranches, and areas important for ecology. Also, the program sought financial gain for landowners who signed conservation easements.
While the program meant to protect land, it met problems. Based on incorrect valuations, 20 percent of landowners never received tax credits. Landowners denied tax credits often faced foreclosure or bankruptcy. Colorado has set aside $45 million a year for conservation easements. Landowners claimed only 20 percent of the tax credits.
Fixes in 2018
After 18 years, the State of Colorado created the Division of Conservation. The purpose was to regulate conservation easements. Unfortunately, the earlier culture of abuse and added regulations impaired the program. Throughout the United States, 4200 acres of farmland goes into development daily. The need to protect land became more urgent.
Legislation in 2021
Enter Colorado House Bill 1233 which was passed in 2021. Nonprofit conservation organizations in Colorado pushed for these improvements. This new bill took on important initiatives. It further encouraged landowners to protect open space, sensitive ecology, and working agricultural operations.
A sampling of the provisions include:
- Specific types of eligible entities, i.e., water, are eligible as donations.
- Donors can receive up to 90 percent of their easement in tax credits.
- Colorado Department of Revenue promises efficient tracking and verification of tax credit certificates and an effective process for landowners.
HB 1233 sparked renewed interest in the Colorado conservation easement program. It enables Colorado taxpayers to conserve land and water. It also reduces more of the income tax expense. Remember that Colorado budgets $45 million a year to fund the tax credits? In 2021, landowners claimed all the money!
Is Money Still Available in 2022?
A part of the monies reserved from the 2021 donations can be claimed in 2022. If you are a landowner, consider the conservation easement program. It could help you diversify a Colorado farm or buy a large Colorado ranch for sale.
Colorado Ranch Brokers
Call Harrigan Land Company at 303-908-1101. Dave Harrigan and Hunter Harrigan bring decades of experience buying and selling large properties.
