From The Pueblo Chieftain (Chris Woodka):
The value of the water used on farms can increase exponentially if its use is changed to municipal or industrial, creating a dilemma for assessors, headaches for property owners and trouble for conservation easement sponsors in the past. So the Lower Arkansas Valley Water Conservancy District will present a test case to the state Division of Real Estate by claiming conservation easements on properties it owns on four ditch systems – the Bessemer Ditch, High Line Canal, Rocky Ford Ditch and Holbrook Canal. The easements are among nine the Lower Ark board voted to complete on Wednesday, bringing the total held by the district to about 60 easements. The district will present the ditch properties with easements that tie the water rights to the land, yet allow part of the water from those rights to be sold on an annual basis – or leased. The concept is central to the Super Ditch, a water leasing program supported by the district. It will also get two appraisals on each property in an attempt to determine the value of the water, and then ask the Division of Real Estate to verify the value of water, said Executive Director Jay Winner.
Because the district owns the properties, there won’t be the same liability a private landowner would face with any tax credits claimed in the transaction. The State Department of Revenue and Internal Revenue Service have raised questions about easements in Colorado in recent years, after many property owners took advantage of state tax laws meant to encourage easements. A state commission was set up and is working to certify trusts and governments that hold easements.
More conservation easement coverage here.