2016 Colorado Revised Statutes
Title 12 - Professions and Occupations
General - Continued
Article 61 - Real Estate
Part 7 - Real Estate Appraisers
§ 12-61-727. Conservation easement tax credit certificate application process - conservation easement tax credit certificate review fund - created - definitions - rules

(1) For purposes of this section:

(a) "Application" means an application for a tax credit certificate submitted pursuant to section 12-61-726 or this section.

(b) "Conservation purpose" means conservation purpose as defined in section 170 (h) of the federal "Internal Revenue Code of 1986", as amended, and any federal regulations promulgated in connection with such section.

(c) "Credibility" means the results are worthy of belief and are supported by relevant evidence and logic to the degree necessary for the intended use.

(d) "Deficiency" means noncompliance with a requirement for obtaining a tax credit certificate that, unless such noncompliance is remedied, is grounds for the denial of a tax credit certificate application submitted pursuant to this section.

(e) "Director" means the director of the division of real estate or his or her designee.

(f) "Landowner" means the record owner of the surface of the land and, if applicable, owner of the water or water rights beneficially used thereon who creates a conservation easement in gross pursuant to section 38-30.5-104, C.R.S.

(g) "Tax credit certificate" means the conservation easement tax credit certificate issued pursuant to section 12-61-726 and this section.

(2) (a) The division shall establish and administer a process by which a landowner seeking to claim an income tax credit for any conservation easement donation made on or after January 1, 2014, must apply for a tax credit certificate as required by section 39-22-522 (2.5) and (2.7), C.R.S. The purpose of the application process is to determine whether a conservation easement donation for which a tax credit will be claimed:

(I) Is a contribution of a qualified real property interest to a qualified organization to be used exclusively for a conservation purpose;

(II) Is substantiated with a qualified appraisal prepared by a qualified appraiser in accordance with the uniform standards of professional appraisal practice; and

(III) Complies with the requirements of this section.

(b) The landowner has the burden of proof regarding compliance with all applicable laws, rules, and regulations.

(3) For the purpose of reviewing applications and making determinations regarding the issuance of tax credit certificates, including the dollar amount of the tax credit certificate to be issued:

(a) Division staff shall review each application and advise and make recommendations to the director and the commission regarding the application;

(b) The director has authority and responsibility to determine the credibility of the appraisal. In determining credibility, the director shall consider, at a minimum, compliance with the following requirements:

(I) The appraisal for a conservation easement donation for which a tax credit is claimed pursuant to section 39-22-522, C.R.S., is a qualified appraisal from a qualified appraiser, as defined in section 170 (f) of the federal "Internal Revenue Code of 1986", as amended, and any federal regulations promulgated in connection with such section;

(II) The appraisal conforms with the uniform standards of professional appraisal practice promulgated by the appraisal standards board of the appraisal foundation and any other provision of law;

(III) The appraiser holds a valid license as a certified general appraiser in accordance with this part 7; and

(IV) The appraiser meets any education and experience requirements established by the board of real estate appraisers in accordance with section 12-61-704 (1) (k).

(c) The director has the authority and responsibility to determine compliance with the requirements of section 12-61-724.

(d) The commission has the authority and responsibility to determine whether a conservation easement donation for which a tax credit is claimed pursuant to section 39-22-522, C.R.S., is a qualified conservation contribution as defined in section 170 (h) of the federal "Internal Revenue Code of 1986", as amended, and any federal regulations promulgated in connection with such section.

(4) The department of revenue is not authorized to disallow a conservation easement tax credit based on any requirements that are under the jurisdiction of the division, the director, or the commission pursuant to this section.

(5) A complete tax credit certificate application must be made by the landowner to the division and must include:

(a) A copy of the final conservation easement appraisal;

(b) A copy of the recorded deed granting the conservation easement;

(c) Documentation supporting the conservation purpose of the easement;

(d) Any other information or documentation the director or the commission deems necessary to make a final determination regarding the application; and

(e) The fee required pursuant to subsection (6) of this section.

(6) A landowner submitting an application for a tax credit certificate pursuant to this section or an application for an optional preliminary advisory opinion pursuant to subsection (14) of this section shall pay the division a fee as prescribed by the division. The application fee for an optional preliminary advisory opinion may be a different dollar amount than the application fee for a tax credit certificate. The fees must cover the costs of the division and the commission in administering the requirements of this section. The state treasurer shall credit the fees collected pursuant to this subsection (6) to the conservation easement tax credit certificate review fund, which fund is hereby created in the state treasury. The general assembly shall annually appropriate moneys in the fund to the division for the purposes of implementing and administering this section. The moneys shall not revert to the general fund at the end of any fiscal year. The fund shall be maintained in accordance with section 24-75-402, C.R.S. On or before January 1, 2014, and on or before each January 1 thereafter, the division shall certify to the general assembly the amount of any fees prescribed by the division pursuant to this subsection (6).

(7) (a) If, during the review of an application for a tax credit certificate, the director or the commission identifies any potential deficiencies, the director or commission shall document the potential deficiencies in a letter sent to the landowner by first class mail. The division shall send letters documenting potential deficiencies to landowners in a timely manner so that the average number of days between the date a completed application is received by the division and the mailing date of the division's letter to the landowner does not exceed one hundred twenty days.

(b) The landowner has sixty days after the mailing date of the division's letter to address the potential deficiencies identified by the director and the commission and provide additional information or documentation that the director or the commission deems necessary to make a final determination regarding the application.

(c) The director and the commission have ninety days after the date of receipt of any additional information or documentation provided by the landowner to review the information and documentation and make a final determination regarding the application.

(d) The deadlines prescribed by this subsection (7) may be extended upon mutual agreement between the director and the commission and the landowner.

(8) The director or the commission may deny an application if the landowner:

(a) Has not demonstrated to the satisfaction of the director or the commission that the application complies with any requirement of this part 7;

(b) Does not provide the information and documentation required pursuant to this part 7; or

(c) Fails to timely respond to any written request or notice from the division, the director, or the commission.

(9) If the director reasonably believes that any appraisal submitted in accordance with this section is not credible, the director, after consultation with the commission, may require the landowner, at the landowner's expense, to obtain either a revised appraisal or a second appraisal from an appraiser who meets the requirements of this part 7 and is in good standing with the board before making a final determination regarding the application.

(10) If the director and the commission do not identify any potential deficiencies with an application, the director and the commission shall approve the application, and the division shall issue a tax credit certificate to the landowner pursuant to section 12-61-726 in a timely manner so that the average number of days between the date a completed application is received by the division and the date the tax credit certificate is issued does not exceed one hundred twenty days. Once a tax credit certificate is issued, the landowner may claim and use the tax credit subject to any other applicable procedures and requirements under title 39, C.R.S.

(11) (a) If all potential deficiencies that have been identified are subsequently addressed to the satisfaction of the director and the commission, the director and the commission shall approve the application, and the division shall issue a tax credit certificate to the landowner pursuant to section 12-61-726. Once a tax credit certificate is issued, the landowner may claim and use the tax credit subject to any other applicable procedures and requirements under title 39, C.R.S.

(b) If any potential deficiencies that have been identified are not subsequently addressed to the satisfaction of the director and the commission, the division shall issue a written denial of the application to the landowner documenting those deficiencies that were the specific basis for the denial. The division shall date the written denial and send it by first class mail to the landowner at the address provided by the landowner on the application. The director may act on behalf of the commission for purposes of administering the process for issuing approvals and denials of applications and for administering subsection (12) of this section.

(12) (a) The landowner may appeal to the director either the director's or the commission's denial of an application, in writing, within thirty days after the issuance of the denial. This written appeal constitutes a request for an administrative hearing.

(b) If the landowner fails to appeal the denial of an application within thirty days after the issuance of the denial, the denial becomes final, and the division shall not issue a tax credit certificate to the landowner.

(c) Administrative hearings must be conducted in accordance with section 24-4-105, C.R.S. At the discretion of the director, hearings may be conducted by an authorized representative of the director or the commission or an administrative law judge from the office of administrative courts in the department of personnel. All hearings must be held in the county where the division is located unless the director designates otherwise. The decision of the director or the commission is subject to judicial review by the court of appeals and is subject to the provisions of section 24-4-106, C.R.S.

(d) In conducting settlement discussions with a landowner, the director and the commission may compromise on any of the deficiencies identified in the application and supporting documentation, including the dollar amount of the tax credit certificate to be issued. The director shall place on file in the division a record of any compromise and the reasons for the compromise.

(e) The director may promulgate rules pursuant to article 4 of title 24, C.R.S., to effectuate the purposes of this subsection (12).

(13) (a) Commencing with the 2014 calendar year, and for each calendar year thereafter, the division shall create a report, which shall be made available to the public, containing the following aggregate information:

(I) The total number of tax credit certificate applications received, approved, and denied in accordance with this section, along with average processing times;

(II) For applications approved in accordance with this section:

(A) The total acreage under easement summarized by the allowable conservation purposes as defined in section 170 (h) of the federal "Internal Revenue Code of 1986", as amended, and any federal regulations promulgated in connection with such section;

(B) The total appraised value of the easements;

(C) The total donated value of the easements; and

(D) The total dollar amount of tax credit certificates issued.

(b) The division may include additional easement-specific information in the public report that, notwithstanding the provisions of this part 7 or any other law to the contrary, would otherwise be publicly available.

(14) (a) In addition to the tax credit certificate application process set forth in this section, a landowner may submit a proposed conservation easement donation to the division to obtain an optional preliminary advisory opinion regarding the transaction. The opinion may address the proposed deed of conservation easement, appraisal, conservation purpose, or other relevant aspect of the transaction.

(b) The division, the director, and the commission shall review the information and documentation provided in a manner consistent with the scope of their authority and responsibilities for reviewing tax credit certificate applications as outlined in subsection (3) of this section and issue either a favorable opinion or a nonfavorable opinion.

(c) The director or the commission may request that the landowner submit additional information or documentation that the director or the commission deems necessary to complete the review and issue an opinion.

(d) A nonfavorable opinion shall set forth any potential deficiencies identified by the director or the commission and that fall within the scope of the director's and the commission's review of the conservation easement transaction. The preliminary opinion is advisory only and is not binding for any purpose upon the division, the director, the commission, or the department of revenue.

(15) The division may promulgate rules to effectuate the purpose, implementation, and administration of this section pursuant to article 4 of title 24, C.R.S. The authority to promulgate rules includes the authority to define further in rule the administrative processes and requirements, including application processing and review time frames, for obtaining and issuing an optional preliminary advisory opinion pursuant to subsection (14) of this section.

(16) Notwithstanding the provisions of the "Colorado Open Records Act", part 2 of article 72 of title 24, C.R.S., the division, the director, and the commission shall deny the right of public inspection of any documentation or other record related to information obtained as part of an individual landowner's application for a tax credit certificate or an optional preliminary advisory opinion pursuant to the requirements of this section, including documentation or other records related to administrative hearings and settlement discussions held pursuant to subsection (12) of this section. The division, the director, and the commission may share documentation or other records related to information obtained pursuant to this section with the department of revenue.

(17) Nothing in this section affects any tax credit that is claimed or used pursuant to section 39-22-522, C.R.S., for conservation easement donations occurring prior to January 1, 2014.