From the High Country News (Jennie Lay):

Perched at the podium during a Colorado Coalition of Land Trusts gathering, Erin Toll wears a poker face, a smart black pencil skirt and sassy Jimmy Choos. Among the jeans-and-hiking-boot-clad crowd attending, this wry New York transplant seems an unlikely hero. As recently as last fall, Toll, director of the Colorado Division of Real Estate, had no idea what a conservation easement was. But now, she says, protecting the integrity of land conservation is her number-one priority – and she’s cracking down on crooked deals with a vengeance.

Toll’s new enthusiasm for conservation easements, which offer landowners tax breaks in exchange for accepting limits on their right to develop, couldn’t come at a better time for Colorado’s land trusts. The state has seen some of the fastest-paced land conservation in the country, driven by a boom in both land trusts – the nonprofit organizations that hold easements – and in government open-space programs. Coloradans have protected nearly 1.8 million acres with conservation easements, much of it fueled by innovative tools, including a lottery-funded land protection program and a transferable state income tax credit.

Unfortunately, though, tax benefits sometimes breed abuses. And questionable conservation deals are drawing intense scrutiny – including Toll’s investigation into inflated real estate appraisals in Colorado and an ongoing Internal Revenue Service audit of hundreds of tax returns nationwide claiming federal tax breaks for donated easements. While state investigation and reform is moving swiftly, the federal audits have dragged on, frustrating landowners and creating confusion about easement appraisals.

The legal and financial complexities of conservation easements have reached a crossroads in Colorado. “What happens in Colorado could bleed out to the rest of the country,” says Lynne Sherrod, Western policy manager for the national Land Trust Alliance.

To help ferret out abusers, Toll has issued 30 subpoenas since November. So far, she’s suspended two appraisers who inflated appraisal values on more than 35 conservation easements. (She’s still wading through 44 boxes of evidence and says, “Every day we find more.”) The jacked-up appraisal values exploit a state program that offers landowners up to $375,000 in transferable tax credits for conservation easement donations. Land-conservation professionals say the program has been critical in protecting more than a million acres (at a cost of about $274 million) across the state since it took effect in 2000.

Although the majority of the state’s conservation easements are rock-solid, Toll rolls her eyes as she reveals some of the more outrageous exceptions. In a sampling of conservation easements from one group, Noah Land Conservation (also known as Colorado Natural Land Conservation), Toll found gross overvaluations of 111 easements on the eastern plains. The scheme involved 6,100 acres valued at $76.5 million (hence eligible for $37 million in state tax credits) by a mere three appraisers, on parcels that were meticulously subdivided so they could slip past county and state laws regarding acreage or subdivision development. In one particularly egregious example, the appraised value of a single 640-acre ranch leaped more than $14 million in a matter of days. Toll’s investigation is ongoing, but she’s narrowed the state’s spoilers down to about eight appraisers (including the two she’s already sanctioned), a couple of attorneys and a promoter or two – and their offenses, including possible securities fraud, could spread into the realm of other government agencies.

More conservation easement coverage here and here.