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RECOMMENDATION: STRENGTHEN THE CONSERVATION EASEMENT TAX CREDIT . In today'!; real estate market, Colorado's land Is seUing at top dollar In many communities. Faced with low commodity prices. farmers and ranchers near urban areas are all tOO often forced to sell their land to developers_ State law provides tax IncentIves for landowners v,.-ho donate conservation easements. which permanently prohibit development of their land. to government entitles or charitable organizatiOns. However. these Incentives are capped at S 100,000. and often pale in campar. Ison to the land's market value. In addition. landO\l"T1ers often face financial hurdles to putting an easement on theIr prOp€ny. Farmers and ranchers must work with la.....yers. estate planners. surveyors and assessors to create the easement. ,..'hile also meeting 1 R.$. requirements for the recognitiOn of the easement The Comml~ion believes that the legislature should enhance the value of state conser,ration incenUves to provide a greater reason for landov.-ners to preserve their land Current state ]aw allows landowners to sell their conservation easement tax credits. giving farmers and ranchers \\1th little tax liability a cash incemi\e to preserve their land The impacts of this market for credits are nOt known. In pan because no Information exchange has emerged 10 link sellers of a tax credit with buyers of the credit, In addition. state Jaw prohibits an Indl\1dual taxpayer from purchasing more than one credit. further stifling a liquid market. The Commission believes that minor legislative changes will encourage the development of a market These changes should Include allowing corporate and Indh.1dual taxpayers to purchase more than one credit. directing the Department of Revenue to create a transferable ceruncale of value and directing Revenue to publish an annual report that tracks the use of the credits, For instance. a rancher places a conser....atlon easement on his land and receh'es a corresponding tax credit worth 550.000 However. if cattle prices are low and the ranch generates no taxable income. then the tax credit Is \vonhless to the ,~ .. , rancher. But a different local business may face a 5300.000 tax liability and want to purchase the rancher's tax credit at a discount rate. The rancher might sell his S50.OOO tax credit for 540.000, The business would purchase S300,000 worth of tax credits for S240,000. thus saving S60.OOO. The rancher receives cash benefit.s for permanently preserving his land: the business benefits by reducing Its !ax Ilablllty and: the state beneflts by protecting ranch land. . The Commission recommends that: The value of the conservation easement tax credit/refund should be increased to 5500,000 Landowners should be allowed to include a reasonable portion of their transaction costs In their conservation easement credits A corporate or individual taxpayer should be permitted to purchase more than one easement tax credit The Depanment of Revenue and Depanment of :\atural Resources create a cenlflcate of value for the ta>; credit and compile an annual report detailmg the amount of credits used and the acres preserved ... .