The long-awaited solution to the State’s troubled conservation easement program is itself in trouble, after concerns over its cost nearly derailed the bill on Feb. 27.

Senate Bill 135, sponsored by Senators Jerry Sonnenberg, R-Sterling and Kerry Donovan, D-Vail, got a tough reception from the Senate Finance Committee, which decided to postpone action on the bill to give its sponsors a little more time to find a path forward.

The bill has been the subject of hard negotiations over how the State will compensate landowners who donated land to the easement program only to see the Department of Revenue revoke tax credits tied to those donations.

A working group, led by Alan Gentz of Sterling and Erik Glenn, Executive Director of the Colorado Cattlemen’s Agricultural Land Trust, came up with the reparations plan in 2019.

Its initial cost of $157 million included an estimate by the Department of Revenue that it would need nearly 22 additional staff to manage the reparations program. But the fiscal analyst who compiled that estimate said the bill’s requirement that tax refunds be handed out within 30 days of the department receiving applications is completely undoable, he said Thursday. It’s more likely that it could take up to two years, and that it should be done through tax credits, not tax refunds. 

Sonnenberg, Donovan and the working group co-chairs worked on two amendments to address those concerns prior to Thursday’s hearing. The most substantial one rewrote the bill’s section on reparations and put the management into the hands of the Division of Conservation rather than the Department of Revenue. Fiscal analyst Josh Abrams told the committee that he believes the conservation division could handle the reparations more efficiently, and that could reduce the bill’s overall cost, although not by any significant amount.

As introduced, the bill attempted to go after tax credits available under the program that hadn’t been used in the past several years. The program has had $45 million available per year since 2013 but in some years awarded only about $3 million to $4 million. However, that turned out not to be workable; those credits weren’t set aside for future use and don’t exist.

The amendment introduced Thursday would tap 50 percent of the annual $45 million tax credit in the first year, 40 percent in the second year and 30 percent in third and subsequent years until repayments are completed.

The issue of who would be eligible also is something of a sticking point in the bill. Appraiser Bill Boortz told the committee that there were a lot of overvalued appraisals, that appraisers had gone to jail (only one did) and that some people bought land at $400 per acre in order to tap into the program and then turned around several months later and claimed the land was valued at $5,000 per acre. He also told the committee that using an IRS form, known as an 8283 form, was not appropriate and “proves nothing.” However, Boortz failed to tell the committee that the easement program was initially based on the IRS model for conservation easements when it was created in 1999 and that was the standard under the law until the General Assembly created the Conservation Easement Oversight Commission in 2011.

As to his other claims about overvalued appraisals, the committee heard from Jillane Hixson, a long-time advocate for reparations, who pointed out that the Department of Revenue didn’t accept those overvalued appraisals and, in most cases, said those easements had no value at all. She also told the committee that those who acted fraudulently are unlikely to apply for reinstatement of tax credits. In addition, the bill requires those applying for reinstatement must own their land for at least three years prior to entering into the easement program.

“What happens if we don’t do this?” asked Sen. Paul Lundeen, R-Monument. Glenn said that the bill is not just about tax credits; that it also deals with what’s known as orphan easements. That’s when a land trust or other entity accepts easements but later goes out of business or is no longer able to maintain the property. This would cause significant harm to the public, which has put a lot of money into those easements, Glenn said. 

If the bill fails, he added, the lack of reparations for landowners denied tax credits will be a continued problem, one that won’t go away and could result in the end of the program.

Finance committee members said they appreciated how much the working group put into its recommendations and cited it as part of the reason that they would allow the bill’s sponsors more time to figure out how to reduce the cost. Should the committee approve the bill, its next step would be the Senate Appropriations Committee, where it would sit for at least a month until after the General Assembly works on the 2020-21 State budget.

House Bill 1019, which deals with private prisons, passed the Senate on Feb. 24, but with “no” votes from a host of rural lawmakers, including Sonnenberg and Sen. Larry Crowder, R-Alamosa. 

The bill is now on its way to the Governor, after the House signed off on Senate amendments on Feb. 27

During the bill’s final discussions in the Senate, Minority Leader Chris Holbert, R-Parker, complimented the bill’s Senate sponsor, Sen. Julie Gonzales, as well as the Senate President, Majority Leader and the Senate Judiciary Committee chairs for their efforts to come up with a better bill that addressed the concerns of rural counties and communities, including Burlington and Bent and Crowley counties.

House Bill 1019 started out as funding to reopen Centennial South, a shuttered solitary confinement prison in Fremont County and to task the Department of Corrections with a study on how to close the State’s last two private prisons in Bent and Crowley. When it was in the House Judiciary Committee, the House sponsor, Representative Leslie Herod, D-Denver, added an amendment intended to allow the Governor to block approval for out-of-state inmates to be housed in Colorado. That’s tied to a pending deal between the State of Idaho and CoreCivic, which owns the Kit Carson prison. 

But the Senate Judiciary Committee and Gonzales spent long hours working with those impacted by the bill, moving to the study to the Department of Local Affairs and changing its focus to deal with prison bed capacity rather than looking only at the private prison issue. The committee also amended the bill to keep the permission issue the way it had operated for years, which is to allow the head of DOC to make that decision, one that could not be “unreasonably withheld.”

Crowder, whose district includes Bent and Crowley, questioned the need for the study, noting that they already know what the economic impacts would be: 54 percent loss of property tax revenue in Crowley; 25 percent of the same revenues in Bent. He also said the State also knows what the impacts are from closing private prisons in Huerfano and Kit Carson counties. 

“We know what happens to communities when we take prisons, jobs and industry away from communities,” Sonnenberg told the Senate on Feb. 21. He said he was glad that there is now an appearance of balance in the study, rather than a “tilted railroad running downhill” to a specific outcome. 

DOC is calling the situation a crisis, Sonnenberg said, one created when the Governor and Democratic lawmakers said they wanted to close private prisons. The GEO Group took that to heart and gave the state 60 days to move its 642 inmates out of the company's private Cheyenne Mountain Re-Entry Center in Colorado Springs. 

It will cost the State $20 million to do the shuffling of inmates within the State prisons, moving high-security inmates to Centennial South, according to the bill’s fiscal analysis. Sonnenberg alleged the crisis is one created by DOC “to force us into a box so that we have to spend taxpayer dollars, taking away from education and highways, to put toward [State] prisons that are not as efficient as private prisons.”

The bill passed the Senate on a 21 to 10 vote.