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Conservation easements, such as those that protect the Trinchera Blanca Ranch in southern Colorado, are intended to protect open space valuable for wildlife habitat or scenery. A conservation easement of 81,400 acres on the ranch protects the western slope of the Sangre de Cristo range between La Veta and Fort Garland, including Mount Lindsey and Mount Blanca. (John McEvoy, Special to The Colorado Sun)

Colorado Democrats killed a conservation easement tax credit reparations bill on a party-line vote in the House Appropriations Committee Monday evening, apparently reneging on what Republicans assumed was a pact to support Senate Bill 33 and a related easement measure in the House. 

Senate Bill 33, which already passed the Senate, was approved 7-4 earlier Monday in the House Finance Committee. Rural Republican sponsors and supporters of the bill expected it to win final passage and move on to the governor after they helped push a companion piece of legislation, House Bill 1233, which expands future easement possibilities. 

But lawmakers on the House Appropriations Committee voted down the reparations half of the pairing 7-4, doing exactly what senators in an earlier discussion had warned might happen, by “pulling the football” away from an assumed agreement. (In “Peanuts” cartoons, Lucy repeatedly promises to hold the football for Charlie Brown to kick, only to pull it away at the last second and leave him splayed on the ground.)

House Bill 1233 passed on final reading in the Senate earlier Monday, 27-6. 

Sen. Jerry Sonnenberg, the Sterling Republican who has been trying for years to win reparations for rural tax credit holders denied their claims nearly a decade ago, said his “lack of trust” that allies would pass both bills was “well-founded.” 

“I obviously am disappointed. After my years of work on this issue we had the opportunity to help fix the damage state government thrust on unsuspecting land owners,” Sonnenberg said, after the committee killed Senate Bill 33.

The tax credits were sought by landowners who donated development rights on their properties — conservation groups keep the easements to protect open lands, and in exchange the landowner gets either the credit or cash payments by investors who buy them. 

Opponents of the reparations bill applauded its failure Monday night. 

“It was a bad bill,” said Bill Boortz, an appraiser who reviewed many of the rejected land valuations as part of an oversight commission he served on years ago. “I hope that if this issue is revisited in the future there will be a way to differentiate between the fraud and the legitimate farmers and ranchers who got bad advice. In my opinion that is what this bill lacked: proper gatekeeping.”

Senate Bill 33 would have set aside up to $149 million from the state treasury to pay out conservation easement tax credits the state Department of Revenue had rejected before 2013, because revenue officials said the land was overvalued by initial appraisals. While family farmers and ranchers have said they followed all the rules and needed the tax credits to keep their farms going, investigations have found some of the land valuations were inflated or even fraudulent

When donating a conservation easement, a landowner is agreeing to give up future development rights to a conservation group that will preserve it as open space or farmland. In exchange for not turning the land into a subdivision or a gravel pit or a mine, the landowner receives lucrative tax credits from the IRS and the state. The state tax credits can also be sold for cash to investors who need tax write-offs. 

The Legislature has argued about reparations for years, after finally making fixes to the easement program in 2013 that supporters say have made current and future valuations and credits fair. There are up to 800 landowners or tax credit investors from before 2013 who claim they should be paid for tax credits that were denied and often clawed back by the state. 

Past efforts to make the reparations failed, in part because some appraisers said landowners did not deserve the payments, and in part because tight state budgets made it hard to give up revenue as tax credits. A working group appointed by legislators in 2018 recommended no reparations.

A new working group was appointed for 2019 that put three aggrieved landowners in the mix, including former state Agriculture Commissioner Don Brown. Some of Brown’s family members were among those who bought Arkansas Valley land at cheap prices and received appraisals at much higher valuations for potential gravel pit operations. The 2019 group recommended reparations, but their proposal died in the pandemic-shortened 2020 session. 

Sonnenberg had high hopes for this year’s version, Senate Bill 33. The state budget improved despite the pandemic, and additional federal stimulus dollars are available for other long-delayed projects. Sonnenberg and others also thought they had found legislative allies by supporting the House bill, which raises future credits from 75% of land valuations to 90% and expands the kinds of conservation groups who can benefit from the easements. 

In earlier public debate on the bills Monday, Sonnenberg said he feared a coming double-cross but that he would continue to battle for his bill as a “naive, optimistic farm boy from northeastern Colorado.” 

After his bill died Monday evening, Sonnenberg fumed in a text message, “after the land trusts got House Bill 1233 to the governor’s desk, all of a sudden the actual working group bill dies on a party-line vote.” 

Colorado appraiser Mark Weston is among those glad to see Senate Bill 33 fail. He reviewed many of the denied easement claims as the first director of the state Division of Conservation, created to sort out the mess.

“I am gratified that reason won out over the misrepresentations of a few,” Weston wrote in a Monday night email. “Until the next legislative session, maybe longer, those who gamed the system more than a decade ago will have to consider the wisdom of trying yet again. I feel badly for those who may have been duped by unscrupulous promoters. The promised deals were in fact too good to be true.” 

Michael Booth is a Colorado Sun reporter covering health, health policy and the environment. Email: Twitter: @MBoothDenver