More cash in on land_ tax deal by jianghongl

 - BUSINESS                                                                                   Page 1 of 5

                                                                        Monday, November 17, 2003

                                                                                Denver, CO

                                 EMAIL ARTICLE      LINK TO ARTICLE   PRINT ARTICLE          OTHER BUSINESS
    Al Lewis           Article Published: Sunday, November 16, 2003                             STORIES
    Special Reports
    Wall St. Journal
                       More cash in on land, tax                                               11/17/2003
                                                                                        - EyeToy puts players in
  FRONT PAGE           deal                                                             the picture
                                                                                        - NEW: Business
  LOCAL NEWS                                                                            inventories rise
  OBITUARIES           Preserving open space a key goal                                 - Biotechs map out next
  SEASON TO SHARE                                                                       boom
  SPECIAL REPORTS      By Jeff Thomas                                                   - Mutual fund woes
  WEATHER                                                                               widespread
                       Special to The Denver Post
                                                                                        - People on the move
  BOOKS                As much as $15 million in state tax credits may be               - Smaller hills grab a niche
  ENTERTAINMENT        brokered this year under a program that preserves                - Air of anxiety
  HEALTH               open spaces by swapping development rights for                   - Ski-war venue begins to
  LIFESTYLES           lesser tax liabilities.
  MOVIES                                                                                - Home movie theaters put
  TRAVEL                                                                                viewer in middle
  TV LISTINGS          The 4-year-old Colorado Conservation Tax Exchange                - Business calendar
                       Program gives state income tax credits to property               - All 9 area Cub stores
  OPINION              owners for donating development rights to a land                 close
  COLUMNISTS           trust. In cases where the landowner can't use the                - StorageTek leads Colo.
  LETTERS              entire credit, it may be transferred to a brokerage or           gainers
  PERSPECTIVE          sold directly to individuals or corporations with heavy          - Hoover waives hearing in
                       tax liabilities.                                                 investor fraud case

  AVALANCHE / NHL      Buyers of the credit save at least 10 percent on their
  BRONCOS / NFL        state income tax bills, and along the way help to
  COLUMNISTS           preserve open space, often in areas under heavy
  NUGGETS / NBA        development pressure.
  ROCKIES / MLB        "It's pretty flawless," said Scott Raderstorf of
                       Boulder, who used the program for his 2002 personal
                       income taxes, after he and six partners sold their
                       software company, Eclipse Inc., to Intuit for $88
  ARCHIVES             million.
  SUBSCRIBE                                   Instead of writing a tax payment
                                              check that went straight into the
  ADVERTISING                                 state's general fund, Raderstorf's
  HOMES                                       check went to a rancher in
  JOBS                                        southern Colorado, who had
  MARKETPLACE                                 donated development rights to a
  NEWSPAPER ADS                               local conservation trust. The deal
  WEDDINGS                                    was brokered by the Conservation
                                              Resource Center in Boulder.
                       Advertisement,1413,36~33~1767936,00.html                                              11/17/2003 - BUSINESS                                                    Page 2 of 5

  SEARCH                               "It took me about half an hour for
                                       the whole process," he said. "I
                                       wrote my check and they did all
                                       the intermediary work."

                                       Raderstorf's story is typical
                                       among clients of the Conservation
                                       Resource Center, a nonprofit
                                       organization that has specialized
                                       in brokering land conservation tax
                                       credits since the program became
                                       law in 1999.

                                       The center negotiated $700,000
                                       in tax credit exchanges for the
                                       2001 tax year and $3.3 million in
                                       2002; the total is expected to
                                       reach $10 million for the 2003 tax
                                       year, center director Mike Strugar

                                       "Typically, it's some rich, green
                                       guy who approaches us," Strugar
                                       said. However, once financial
                                       planners and accountants see how
                                       the program works, they usually
                                       are instrumental in bringing in
                                       more clients, he said.

                                       The Conservation Resource Center
                                       was pivotal in establishing the
                                       process and establishing a market
                                       for the tax credits.

                                        Landowners are credited 80
                                        percent of the value of the
                                        conservation easement. Buyers
                                        pay 90 percent of the easement's
                   value to the broker. The 10 percent gap covers the
                   cost of title transactions, other legal preparations
                   and broker operations.

                   There are now at least four companies or nonprofit
                   agencies that broker conservation tax credits,
                   including Colorado Conservation Connections in
                   Denver, Carl Spina of Spina Enterprises in Fort
                   Collins, and Boulder conservation attorney Ruth

                   Colorado was the first state to create a transferable
                   tax credit, and so far only Virginia has followed suit.

                   With a minimum purchase requirement of $20,000,
                   the program essentially focuses on relatively wealthy
                   individuals or on corporations. For instance, to have
                   a state tax bill of at least $20,000 requires an annual,1413,36~33~1767936,00.html               11/17/2003 - BUSINESS                                                     Page 3 of 5

                   income in excess of $430,000.

                   Targeting only wealthy taxpayers for tax credits did
                   lead to some early opposition of the program by the
                   Colorado Union of Taxpayers.

                   Union president Penn Pfiffner said the group's board
                   made no recommendation when the bill was offered
                   by Rep. Lola Spradley, R-Beulah. At the time, Pfiffner
                   was a state representative from House District 32
                   and opposed it.

                   "It would have been better to give this to everyone
                   through a reduction in the income tax rate, rather
                   than a tax credit that legislatures give to preferred
                   interests," Pfiffner said last week.

                   Although there is no central accounting of the
                   program by the state, brokers estimate that the pool
                   of available tax credits could reach $15 million for
                   the 2003 tax year. Potential buyers have until Dec.
                   31 to get into the 2003 pool.

                   The rapid expansion of the credit pool has been
                   driven largely by national, state and local
                   conservation trusts that promote and end up holding
                   the conservation easements. But allowing the credits
                   to be sold, and extending the program to include
                   development rights valued as high as $500,000
                   triggered a major surge.

                   Before the state began authorizing the transfer of tax
                   credits, landowners could use up to $100,000 of their
                   credits to pay their state tax bills over a period of 20
                   years. During surplus years in the state budget
                   designated by the Taxpayer's Bill of Rights,
                   landowners also could receive cash payments of up
                   to $50,000 a year.

                   Under the exchange law, landowners get tax credits
                   on a dollar-for-dollar basis up to the first $100,000
                   worth of development rights donated, then 40 cents
                   on the dollar up to $260,000 in credits.

                   "There's no question that most of them (easement
                   donations) will come in at the $260,000 range," said
                   Will Shafroth, executive director of the Colorado
                   Conservation Trust.

                   During the mid-1990s, Spradley and Shafroth, who
                   was then the executive director of Great Outdoors
                   Colorado, or GOCO, developed the idea for the
                   transferable credits. The program, he said, is
                   working exactly as they envisioned.,1413,36~33~1767936,00.html                11/17/2003 - BUSINESS                                                  Page 4 of 5

                   For conservation trusts ranging from the national
                   Nature Conservancy, to the Colorado Cattlemen's
                   Land Trust and even local organizations such as the
                   Black Canyon Regional Land Trust and the Animas
                   Conservancy, the program rapidly is becoming a
                   mainstay of conservation work in Colorado.

                   Shafroth estimates there are about 38 land trusts
                   operating in Colorado, and says most are using the
                   transfer program.

                   Land trusts typically pick the properties they deem
                   most viable for conservation and work directly with
                   landowners, using the tax credit as a carrot.

                   "In many cases they have been working with these
                   landowners for years, when suddenly they had a
                   vehicle to use to get landowner participation,"
                   Shafroth said.

                   He said 2003 might be the top of the curve for
                   program participation, because many farmers and
                   ranchers have been involved in negotiations for
                   several years but hung onto their development rights
                   until the program criteria firmly were established.

                   Ranches in Spradley's home district, in the Wet
                   Mountain area southwest of Pueblo, are participating
                   in the program. These are properties with scenic and
                   wildlife values that are square in the sights of
                   development interests.

                   For lands with less development potential, the tax
                   credits are lower. But such groups as the Colorado
                   Cattlemen's Agricultural Land Trust say maintaining
                   farm and ranch land is important, even if it's not
                   targeted by development.

                   "It helps preserve rural economies," said Lynne
                   Sherrod, the trust's executive director. "When
                   important agricultural lands are saved, it makes it
                   more viable for all the neighbors to stay in the
                   business - you retain the tractor and parts sales

                   The Cattlemen's Trust was established in 1995 solely
                   to provide a way for farmers and ranchers to sell or
                   donate conservation easements. The trust now is
                   using the transferable credits in most of their
                   acquisition deals.

                   "We think this legislation is the best thing that has
                   ever happened to agricultural land owners," Sherrod
                   said. "Now landowners can keep their property in
                   production and hand it down to their families.",1413,36~33~1767936,00.html             11/17/2003 - BUSINESS                                                                 Page 5 of 5

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