text: Atherton has handled easement deals for other landowners and sold the tax credits as investments. (Craig F. Walker, The Denver Post)Related StoriesOct 16:Colorado auditor says conservation easement program riddled with problemsMar 27:State wary of IRS request to certify fed appraisersAug 7:Probe shaves interest in conservation easement creditsMar 21:Colo. ranches preserved on filmMar 2:Unease over easementsJan 29:Forum to offer tips on conservation easementsDec 20:Certification plan likely for state's easement programDec 16:IRS multiplies easements' pitfallsDec 13:Measure to target easement abusesDec 7:Conservation tax breaks used to fund luxuries for richParceling out land is better, attorney saysDec 6:Panel: Revamp appraisal filingsNov 29:IRS finds a third of easements in probe are faultyFor Eugenia "Bini" Abbott and her husband, Meade, it was never about the money. The conservation easement placed on their land in 2004 was about preserving pristine ground that decades ago held winter wheat along Stanley Lake's western shore in Arvada. The easement was to prevent the houses creeping over the southern hill from reaching their back door. "We didn't want the kids to have to sell half of it to keep half of it," Bini Abbott, 76, said of her decision in 2004 to conserve a 5-acre piece of their 85-acre ranch. "We wanted them to always have it." But the Abbotts never took their parcel's tax credits — the state giveback to a landowner who protects property from development through an easement — preferring to let someone else handle it.Bini Abbott, above, and her husband, Meade, sold 5 acres of land that was taken over by a holding company whose principals are hidden from public view. (Craig F. Walker, The Denver Post) Instead, the credits went to a land holding company set up by Denver tax lawyer Rodney Atherton, who handled the easement deal for the Abbotts. In the end, the principals of the company — people unknown even to the Abbotts — could have pocketed nearly $60,000 in profit, records show. "I just didn't want to be bothered," Bini Abbott said of the tax credits. "I cared about the conservation first." The easement was among the earliest handled by Atherton, whose approach to such proceedings has grown increasingly sophisticated. Clients who have worked with Atherton have capitalized on Colorado's forward-looking conservation-easement laws, which offer some of the most generous tax credits in the nation aimed at preserving scenic views, wildlife and habitat.Advertisement In all, easements Atherton helped create have diverted about $37 million from the state treasury since 2002 — money that went instead to landowners and investors. Starting in 2002 with a simple land-for-conservation proposition, Atherton has turned easements into a diverse and complex array of can't-miss investment opportunities ranging from private hunt clubs to telecommunication franchises and vacation-club memberships.Bini Abbott enters a field that is part of the 5-acre conservation easement that Denver tax lawyer Rodney Atherton helped them set up. The ranch is home to Bini's passion, Rocky Mountain Horse Rescue; eventually, she says, all 85 acres of it will be under easement. (Craig F. Walker, The Denver Post) Along the way, the deals — stretching from the mountains to the plains — caught the eye of Colorado's real-estate regulators and have fallen under intense scrutiny by the IRS and now a state grand jury. "The laws were meant to help ranchers and farmers keep their land, not to allow the wealthy to become more wealthy at the expense of the state," Colorado House Majority Leader Alice Madden of Boulder said. Atherton has benefited as an investor and engineer on some of the projects. He insists that the easements will withstand scrutiny. "It's easy to scream abuse, but the federal government gave us the rules and Colorado hopped on board," he said. "It's legal." And it all started outside Atherton's front door. From kids' farm to investment Established as a means to mentor troubled youth, Noah's Crib wasn't intended to be a nonprofit set up to administer conservation easements. The idea was to bring kids to open spaces and show them life can be more than a city street. Board member Atherton turned the nonprofit from its initial calling — helping kids — into a land trust in 2002. That was about the same time that Atherton and a partner bought 30-plus acres just south of Stanley Lake and in the footprint of housing growth. But then the partners paused in their housing-development plans. Their land — just a quarter mile south of the Abbott ranch — has some of the best views of Stanley Lake.Click on image to enlarge "We decided it was actually better to live there ourselves," Atherton said. "We had a desire to build there and get some open space around us." Across from where Atherton would build his home at the end of West 87th Avenue, just east of Alkire Street, another acre of land was up for sale by a neighbor. Atherton said it was destined to hold a house that would have stared smack into his front window. "There's a view shed from that land, and it would be better to keep it open than let it develop," he said. Atherton bought the acre for $180,000 and quickly dropped it into a conservation easement worth $100,000 in tax credits in 2002 — the maximum allowed by law at the time — and used Noah's Crib as the land trustee, records show. "It took some of the sting out of the purchase price," he said about the tax credits. Noah's Crib was finding a new life in land conservation with Atherton serving as its board chairman. Soon, he placed a 2-acre chunk of the original 30-acre piece that he and his partner had hoped to develop into another conservation easement, this one worth $216,000. Again, Noah was the easement trustee, this time as Noah Land Conservation. "It's exactly what the statute was designed to do: conserve land," Atherton said of the easements. The 1-acre plot that would have had a view into his house today holds a small number of llamas that Atherton and his wife, Ellyn, shear for wool products they make and sell. Underprivileged youth have never set foot on the land, he said, though groups such as the Boy Scouts of America — to which his son belongs — have used it. "Things fell apart for Noah's Crib, and kids never went out there," he said of the nonprofit's initial goal. Preservation as their motivation The 85-acre Abbott ranch is home to Rocky Mountain Horse Rescue, Bini Abbott's personal passion. In the shadow of Rocky Flats to the northwest, the Abbott ranch got its start in 1960 when Bini and Meade Abbott bought 18 acres they chose by standing on a box and scanning the horizon for the best views from their future living room. "It was breathtaking," the Milwaukee native said. The ranch grew, and in time, so did the family's concern over southern encroachment as one development after the next crept closer. "I don't want those houses here," she said. That's when Atherton approached her about putting the land into an easement, which the Abbotts had already discussed. Though Meade Abbott is a certified public accountant, Bini cared little for the tax credits the 5 acres would garner. That value had gone up to a maximum of $260,000 after the law increased the value from $100,000 in 2003. A state legislative change, also in 2003, allowed tax credits from conservation easements to be sold, creating a lucrative market. If the $260,000 in tax credits on the Abbott property were sold at the going rate of about 80 cents on the dollar, it would mean about $208,000 in cash. So the Abbotts sold the 5 acres for $150,000 — $30,000 an acre — to Abbott Land Holdings II Inc., which Atherton had formed for them. Their ownership interest was taken over by Autumn Investment and Conservancy, whose principals remain hidden from public documents, records show. The manager of Abbott Land Holdings II, however, was not Randall Atherton, Rodney's brother in Texas. "I never did meet him," Bini said of Randall. Once the tax credits were claimed by Autumn Investment, the Abbotts bought their land back from the holding group for $1,000, records show. If Autumn Investment took the maximum tax credits available at the time and sold those credits for 80 cents on the dollar, its take after factoring in the sale to the Abbotts would have been about $58,000. Citing attorney-client confidentiality, Atherton would not say who profited, or how much they profited, from the tax-credit deal on the Abbotts' property. The evolution of easement deals Other conservation-easement deals Atherton was involved in around that time became more creative. Vail entrepreneur Scott Somes and his wife, Christie, bought Eagle Rock Lakes, a fishing resort just east of Yampa in Routt County. The area is home to pristine pieces of mountain land, this one with a lake nestled in a part of Colorado many consider an outdoorsman's paradise. That's about when Atherton and Noah Land Conservation, the successor to Noah's Crib, factored in. The Someses chose to conserve some of the property by way of easement, but not in the most typical manner. The family did not return calls seeking comment. Easements on mountain properties often are single donations of land, generally in vast acreages, whose purposes have less to do with money than conservation. But breaking large tracts of land into smaller pieces — known as "piding" — means landowners can acquire more tax credits if each is valued at the maximum. So a 100-acre parcel that alone would generate a $100,000 tax credit could instead become five 20-acre tracts, each qualifying for the $100,000 credit. Since a donor is limited each year in the dollar amount of tax credits that can be claimed, landowners often either sell the tracts to investors or divvy them up among family members. It has become one of Atherton's trademarks. But the method depends on the smaller tracts being appraised at hefty values. The tax credits gained by landowners can be applied to their income-tax obligations or sold for cash. Easement values are based on the valuations of a licensed appraiser. If the appraisals are inaccurate or intentionally inflated, landowners can benefit unfairly. At least three appraisers who valued property for Noah easements or those of another successor, Colorado Natural Land Trust, have been stripped of their state license to practice. The Somes family broke their lake ranch property into 10 smaller 35-acre chunks — each eligible to receive the maximum tax credit at the time of $260,000 — and divided ownership among themselves, their three children or a combination of them, records show. Each parcel was placed into a conservation easement granted to Noah Land Conservation. In this way, the family maximized its potential tax credits: Each child gets the credits, and, if sold, the funds could be held in trust or in an annuity. More important, Eagle Rock Ranch remains available for its clients to romp in the outdoors as before, regardless of the easement. The only difference is the family cashed in on the value of the property and protected it from any future developer's shovel. "From a family standpoint, it's how to take advantage of the tax benefits the government has provided," Atherton said, though he would not comment specifically about the Somes transactions. "Many times, families will ask me what's the best way to do that. This is one way." Divide land, multiply credits Another way is millionaire investor F. O'Neill Griffin's method: Take a sizable hunk of land, carve it into smaller chunks, and turn each into an annual tax credit worth $260,000 or more. Griffin is the former chairman of Mountain Banks Ltd. in Denver and left in 1982 for Texas. A philanthropist with vast land holdings in Colorado, he's known for sizable contributions to the University of Texas, the most recent a $3 million gift to its cancer center in 2007. But he remains active here as a developer. He could not be reached for comment. Fronted by Alkire Street with a view of Stanley Lake to the east, Griffin's roughly 45-acre tract in Arvada is owned by his firm, Alkire Investments. It would be appealing to any luxury- home developer — except for the large sewage lift station on its eastern border. Home to prairie dogs and scrub brush, the acreage surrounds the lift station built by the city of Arvada in 2006. With Atherton's help, Alkire sectioned the scrub land into 13 parcels of about 3 or 4 acres each starting in 2005. To date, three conservation easements have been recorded around the lift station — one each for 2005, 2006 and 2007, all with Noah Land Conservation and its latest morphism, Colorado Natural Land Trust. Plat maps show all 13 parcels are slated to become easements. For Alkire Investments, it's a recurring tax credit that will run until 2012 as each parcel is claimed. "The tax law allows landowners to phase their property into conservation easements in this manner," Atherton said. A long way from farm roots Farmers in eastern Colorado were a key factor in conservation-easement laws. The easements allow families that are often land-rich but cash-poor to continue generations of farming and ranching without giving up the land to developers — no matter how distant civilization appears to be at the time. "Farm families are tied to their land emotionally," Atherton said. "Many would like to see it stay the same for 100 years from now." And the Denver lawyer saw an opportunity in 2006 to turn conservation easements into much more than just a financial return on the protected land. He devised a way to turn easement credits into a bona fide investment opportunity. That was the case for the MacLennan family near Byers in rural Adams County. The family conserved more than 2,000 acres of property — much of it prime pheasant and deer habitat — in a deal Atherton engineered that brought such private investors to the table as former Denver Broncos linebacker Bill Romanowski. The concept was straightforward: Buyers purchased a piece of the Mac Lennan ranch, placed it into a conservation easement with Noah, then cashed in the resulting tax credits. Part of the investment also included membership in a vacation club that offered trips to exotic locations worldwide. In the meantime, the MacLennans continued to run their private hunt-club business on the property. Russell MacLennan has said he got thousands of dollars from selling off the family-owned ranch in parcels and used the proceeds to pay down debt. "Some of us like to pheasant hunt, and they have great ground," Atherton has said about the MacLennan ranch easement. "We thought it should be protected." Another easement investment deal began evolving soon after. Called Rural Broadband Solutions, it involved an equestrian center, luxury homes buffered by large easements and ownership interests in franchises of RidgeviewTel, a wireless Internet provider in Longmont — all of it on farmland. To be built in rural Adams County, 16 investors each would pony up $300,000, according to copies of the prospectus obtained by The Denver Post. Each investor's money would buy a 67-acre parcel — 60 acres of which would be placed into a conservation easement and the remainder of the land used for a high-end home site. It also covered the buy-in to the franchises and any future water rights. Tax credits from the 60-acre easements would net each investor enough money to offset the buy-in, the proposal shows, essentially making the franchise purchase a free deal. The Internet franchise would service all the homes, including a second housing development to be built nearby. The projected return to each investor, according to Atherton's proposal: $1.18 million. David Migoya: 303-954-1506 or dmigoya@denverpost.com
  What's a conservation easement? Conservation easements are permanent restrictions on land uses that typically prevent development or subdivision of a property. The aim is to preserve open space, scenic vistas, wildlife and habitat. In Colorado, the program allows landowners to either use the tax credits earned from donating a conservation easement or to sell them to someone else. That incentive, in addition to generous federal tax deductions that can be redeemed over 20 years, provide opportunities for big payoffs for land set-asides.Print Email Font ResizeReturn to Top Videos you may be interested in:
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