Why is it that when someone says, “Don’t worry,” we worry more?
I began to feel a little uneasy about the situation because of the extreme animosity I had sensed at Julie’s hearing, especially directed at our attorney Todd by the State’s people. The tone of voice when questions were asked, the insinuations, all indicated that the State’s counsel thought we, and especially Todd, were scum bags. I knew we had scrupulously followed the law, so I was having a hard time reconciling all this conflicting data, but, on paper, and in the law, everything looked fine.
Just to be cautious, both Stan and I went to see Todd to quiz him about the program again. He was as upbeat and enthusiastic as ever, and as a result of our meeting with him, Stan wanted to do even more C.E.’s if possible – to accelerate the number of donations if possible. Here’s an excerpt from a letter to our partners dated 9.17.2007 that explains why:
“After consulting with our attorney, we want to assure you that conditions remain positive, and, in fact, we have decided that it would benefit all the partners to proceed with attempting to donate as many tracts as we can this year – possibly finishing the project.
According to Todd, the market for tax credits is very strong and Todd has ‘no doubt’ that he can place all that we have available. We pressed Todd very hard about any downside and he sees none. He re-investigated all the legal ramifications of these transactions this summer and feels confident that everything we are doing is proper and correct.
In addition, as we communicated previously, both federal and state laws have been enacted which provide even more beneficial treatment for these transactions than we were receiving.
Result? The combination of the strong market and sympathetic laws makes us believe it is prudent to do as many as possible while these favorable conditions exist.”
My gut told me not to move forward with more C.E.’s, and I tried to convince Stan not to do so. But, how do you explain a gut instinct when there was nothing specific to point to? We were divided: I felt we had an obligation to our partners to not cause any damage, even though none had been caused so far except for delays. Stan felt we had an obligation to our partners to press forward (as described in the letter above) and maximize their return on investment.
So, we proceeded and bled money all fall trying to establish nine new conservation easements and to get all the paperwork ready to donate them before the end of the year.
The Shocking Phone Call
Then, on December 5, 2007, I received a shocking phone call from Todd. He abruptly informed me that he would not be able to sell any of the tax credits (clearly a complete reversal of what he had told us in September). He told me a series of wicked newspaper articles had been published about the conservation easement program, and all the tax credit buyers were too nervous. (It’s important to note that we lived in the boonies in southern CO, and did not receive a newspaper, did not get Denver news on TV, and were not highly connected on social media in 2007, so we had not seen any of these articles.)
We had worked so hard to create these new conservation easements, and spent so much money, and now it was unraveling. I couldn’t believe my ears. “Don’t worry,” Todd assured me. “This will blow over and all the work we did won’t be lost. We’ll just donate them next year when all this dies down.” He then sent me all the attached newspaper articles to support what he was saying to me. Why is it that when someone says, “Don’t worry,” we worry more?
Avalanche of Articles
Here’s a quick summary of the articles, most of which contain vast amounts of factual errors and misinformation. This constant misinformation is what has prompted me to write this blog as my way of “setting the record straight.” I hope many other landowners will chime in to support what I say. And, if you’ll hang in there with me in this blog, you’ll discover that even the newspaper reporters eventually changed their tone and stories.
On November 4, 2007, The Denver Post reported “Ranchers rush to secure conservation easements.” This article mentions the increased state and federal benefits, with no hint at a problem.
On November 10, 2007, The Denver Post reported, “Ranch easements culled.” “The conservation easements ranchers use to cut taxes and protect land are being scrutinized by the Colorado Division of Real Estate, Colorado Department of Revenue and the Internal Revenue Service because of allegedly inflated appraisals.” (Reminder, we were constantly baffled by the accusations of “inflated” appraisals throughout this ordeal, since we would have made so much more money if we had continued the development than was actually stated in the appraisal. Honestly, all these years later, we’re still baffled.)
Then, on November 20, The Denver Post reported that “Subpoenas put conservation easement program ‘in jeopardy’.” The article goes on to say, “The Department of Regulatory Agencies has issued 30 subpoenas as part of a statewide investigation into Colorado's conservation-easement program. Issued over the past two days, the subpoenas will be used to gain information about appraisals that may have been overvalued and sales of unregulated securities. ‘This could place the entire conservation-easement program in jeopardy,’ said Rico Munn, DORA's executive director. ‘Coloradans value this program, and we hope to save this program.’”
The Cortez Journal, via the AP reported “Subpoenas issued in probe allege abuse of conservation easements.” Much to our relief, it also said, “Landowners themselves are not the targets. Many farmers and ranchers don't make enough to even claim the credits.” (To see this article, download the .pdf below.)
On November 24, 2007, the Denver Post wrote “Easement deals lead to inquiry.” “A state investigation into possible abuses of the conservation easement program is focusing on deals involving five ranches and an Arvada land trust…. Documents obtained by The Denver Post show the investigation involves transactions in which Noah Land Conservation, based in Arvada, and Denver tax attorney Rodney Atherton were participants. Of the five ranches, two are in Adams County, and the other three are in Arapahoe, Elbert and Huerfano counties.”
On November 29, 2007, the Denver Post reported, “IRS finds a third of easements in probe are faulty.”
As you can see, this thing unraveled from everything being peachy on November 4, 2007 to subpoenas being issued by the State on November 20, 2007, to the whole thing being catapulted to the federal level by the IRS “finding fault” on November 29, 2007.
And, we didn’t know anything about it. But, as we reviewed the articles, we felt relieved. They weren’t talking about us. We were 100% confident our appraisals were not inflated. © Sharon Cairns Mann.