Tax Credits Foster Preservation for Ranches

By: Pat Hill

A tour of three ranches in Teller County protected from development emphasized the economic advantages of preserving land. Since 1994, the state has invested $511 million, $138 million through Great Outdoors Colorado and $373 million through the tax credit program, to place endangered lands in conservation easements. As a result, 1.4 million acres have been saved from development, enhancing tourism and preserving Colorado’s heritage.

The Palmer Land Trust sponsored an Aug. 20 bus tour along the Pikes Peak Conservation Corridor and the Gold Belt National Scenic Byway.

“One of the key elements of Colorado’s byways is the authenticity of the area. The reason tourism works is because people are experiencing authentic vistas, places that are real and unique, different from where they come from,” said Scott Campbell, executive director of the land trust. “So preserving land is preserving culture as well as our historic resource.”

With Colorado legislators prepared to axe another $500 million to $1 billion from the 2011-2012 budget the tax credit program could be in jeopardy.

The tour included representatives of organizations that fund, or have an interest in, conservation easements. In addition to the land trust, this included Colorado Lottery, Colorado Conservation Land Trust, Colorado Department of Transportation and the scenic byway in Teller County.

“If we don’t save the open space, visitors aren’t going to come here,” said Charlotte Bumgarner, executive director of the Gold Belt Byway.

Two of the three ranches visited are held in conservation-easement agreements by the Palmer Land Trust, the other is in the process of placing 4,200 acres with the Colorado Cattlemen’s Agricultural Land Trust.

The Stone Ranch

In a time when big money tempts land-rich Colorado ranchers, Howard and Barbara Stone endured economic devastation to preserve their ranch through conservation easements.

Howard Stone was born on the ranch, 3,000 acres rimmed by mountains, where rolling hills provide refuge for elk, deer, bears, badgers, bobcats and Bighorn sheep.

“It was Howard’s and my dream to save the entire land; we didn’t quite get that done but we saved a good portion of it,” Barbara Stone said.

The Stones currently own one-fifth of the original ranch, their portion of the family’s inheritance. Along with the land, they own the water rights from the creek that runs through the property. “A lifesaver,” said Harold Stone.

Like other ranchers in Colorado, the Stones’ way of life was threatened with the death of their elders. “We thought we were going to have to leave. When the ranch got split up among the siblings, we didn’t think we could make it,” Barbara Stone said. “Howard and I sold two-thirds of our cattle and our income went splat!”

Faced with insolvency, the Stones put the ranch up for sale. “It was a little scary there for awhile. We thought ‘what are we going to do?’ We’ve worked the ranch all of our lives; our roots went really deep,” she said. “Our income was gone, four-fifths of the ranch was gone. It was hard, it hurt bad. But those things happen.”

Rescued by the sale of 200 acres, the Stones invested the money in income property and along the way learned about the tax credits for conservation easements.

Passed by the Colorado legislature in 1999, the program gives the landowner a transferable income-tax credit for 50 percent of the fair market value of the easement to a maximum amount of $375,000.

“It’s a worthwhile investment,” Barbara Stone said. “Most people don’t realize, they just take this land for granted, don’t know there’s a movement out there to try to save these places.”

The Stones received financial backing for the easement from GOCO, Natural Resources Conservation Service and the Gold Belt Byway. Howard’s sister, Mary Collins, has preserved her portion of the ranch, on the adjoining property.

The Green Ranch

Part of a homestead along the byway on High Park Road, the Green Ranch is 4,200 acres plus another 11,000 acres of leased land.

The Green family is still in the process of preserving the third phase of their easement. “The biggest decision was to make the land inheritable,” said Virginia Green Haynes, a fourth generation owner of the ranch, which is worth around $10 million. “With the inheritance tax on that, you can imagine how many 35-acre parcels you’d end up with,” she said.

With the easement, the value decreases from an appraised $2,200 to $1,600 per acre. In addition to the decrease on the property taxes, the Greens get a financial infusion via the tax credits.

“We invested close to $250,000 back into the ranch, for the tax credits on the first two phases,” she said. “The credits are a big deal; I don’t have to worry about how to pay the bills. It’s been a big God-send.”

With talk of the Colorado legislature taking away the tax credits for conservation easements, Green is nervous. “Every year, feed goes up $1,000. Agriculture is such a gamble. If you really want to take a chance on losing money, go into agriculture,” she said.

Green-Haynes lives in Cañon City, works a 40-hour week at the prison and drives daily to the ranch, no matter what the weather. For her, the hardship is worth the price.

“Ranching is my passion; I work at the prison to afford my passion,” she said.

Broken Wagon Ranch

Located on U.S. 24 between Woodland Park and Divide, the third ranch visited was one of the first properties in Teller County saved from development, with a subsequent decrease in value.

“In the late ‘80s my dad was starting to think about what could be done to ensure the protection of this property. And at the same time, there was the consideration of estate taxes,” said Al Hagedorn, who spent his youth on the ranch his parents bought in 1960.

Unopposed to development in certain areas, the elder Hagedorn built 120 homes on the north side of the highway but preserved 1,320 acres across the road.

“My dad always felt that this side, with the view of the Peak, was the critical side,” Hagedorn said.

At the time, the conservation-easement movement in Colorado was relatively new and ranchers remained skeptical, particularly over the legal details.

“After several years of ‘lawyering,’ a time when he was about to give up on the whole thing, my dad donated the land in an easement with the Palmer Land Trust in 1992,” Hagedorn said. “We were financially fortunate to not need the tax credits but my dad saw the importance of land preservation.”

Before donating the land, the elder Hagedorn secured the support of the adjoining landowners, the late Glen Johnston and Bob Markus as well as Ric Hermann.

“I think it speaks to the way folks in Teller County and ranchers think of the importance of keeping operating and functioning properties intact,” Hagedorn said. “All of the three families have gone on to place easements on their properties.”

The Markus family expects to conclude the conservation efforts to preserve 1,027 acres in 2011.

In addition, the Larsen and Hatton ranches, both on the Gold Belt Byway, have preserved 153 acres and 1,095 acres, respectively.

“I’m quite sure that the landowners who sold their development rights would not have done so in the absence of those tax credits,” Hagedorn said
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Tax Credits Foster Preservation for Ranches