Path to Conservation

The path a landowner needs to take in order to place a conservation easement on his land doesn't need to be painful or intimidating or bewildering. It should be fun and educational and a landowner should fully understand and be satisfied with the conservation easement that the process yields. The secret to a good experience is threefold: Team, Process and Costs. If you are knowledgeable and prepared in all three areas, the conservation easement process will run as smooth as water off a duck's back. BCRLT staff is always ready to help you understand and prepare your own path to conservation.

Team

Although a Conservation Easement is an agreement between a Landowner and a Land Trust, it takes a few more people to make it all happen on the front end. Typically, Landowners assemble a team that looks something like this in order to create an effective Conservation Easement:

1. BCRLT

A local land trust certified in state and federal incentive programs and accredited by the Land Trust Alliance. BCRLT will accept, hold and monitor the Conservation Easement in perpetuity.

2. Real Estate Appraiser

A real estate appraiser qualified under all applicable state and federal requirements to appraise Conservation Easements in southwest Colorado. The qualified appraiser will prepare an appraisal of the value of the Conservation Easement for use by the Landowner in state and federal tax incentive programs, such as the Colorado Conservation Tax Credit Program and available IRS tax deductions.

3. Baseline Conditions Consultant

A Baseline Conditions Report will be prepared for all new Conservation Easement properties. The report is usually completed by a consulting biologist or similar professional. If mineral rights have been severed from the land, the Baseline Report will include a Minerals Report prepared by a geologist as well.

4. Accountant/Financial Advisor

Typically, Landowners turn to their own accountants or financial advisors to give them advice necessary to make financial decisions associated with the Conservation Easement.

5. Tax Credit Broker

Most Landowners choose to work with a professional tax credit broker for the sale of their state tax credits.

For a list of conservation easement professionals working in your area, and statewide, visit our Landowner Links page.

Process

Most Conservation Easements follow a very similar path from concept to creation involving the following:

Landowner Proposal

It begins with a Landowner expressing to BCRLT what he or she has in mind in terms of land conservation. Getting to that point might take a few discussions with Land Trust staff and will always include at least one site visit. Ultimately, a proposal that meets the needs of both Landowner and BCRLT will emerge and the process of creation begins. Occasionally, we discover that for one reason or another, a Landowner and BCRLT are unable to agree on a Conservation Easement proposal. That is rare, however, and we can usually structure an agreement that meets all of BCRLT’s requirements and achieves the Landowner’s goals as well.

Appraisal and Baseline Reports

Once the Landowner and BCRLT have agreed on the primary terms of a Conservation Easement, the Landowner’s real estate appraiser and baseline report consultant will begin to collect data and prepare their reports. This process usually takes a few months including field work and completion of summary reports.

Conservation Easement Drafting

While the appraisal and baseline reports are being completed, BCRLT staff will order and review a title commitment and draft a Deed of Conservation Easement In Gross (Deed) for review by Landowner and his/her legal counsel. There are other bells and whistles that become necessary and will need attention and BCRLT will be working on those during this period as well.

Signing and Recording a Conservation Easement

When the Appraisal Report and Baseline/Minerals Reports are finished and when the Landowner and BCRLT are satisfied with the terms of the draft Conservation Easement, a final Deed of Conservation Easement will be signed by both parties and recorded in the County where the property is located.

State of Colorado Appraisal and Project Review Process

New in 2014, the State of Colorado requires all Colorado Tax Credit-seeking donations to be reviewed for accuracy and legitimacy by the CO Department of Regulatory Agencies (DORA). This new step in the conservation easement donation process totally eliminates the risk of IRS audit to landowners and appraisers, and ensures conservation donations in Colorado meet statewide standards.

Colorado Conservation Tax Credit Sale

Upon completion of the DORA review process, landowners will be issued a certificate for CO State Tax Credits. A Landowner can sell her Colorado Conservation Tax Credits, earned in compensation for the Conservation Easement donation. Further, the Landowner will likely be working with his or her accountant and financial advisors to take advantage of other federal tax incentives that are available following donation of a Conservation Easement.