Statement of Basis and Purpose
Pursuant to section
12-15-104, C.R.S., the Division of
Conservation, in consultation with the Conservation Easement Oversight
Commission, establishes minimum qualifications for organizations that hold
conservation easements as described and defined at rule 1.1 to encourage
professionalism and stability.
2.1
Qualifications for certification of qualified organizations that intend to
accept and hold new conservation easements
The Division may deny, refuse to renew, suspend or revoke the
certification of a conservation easement holder who fails to meet the following
minimum qualifications:
A.
Organization
The conservation easement holder:
1. pursuant to sections
12-15-104(5) and
(7)(a), C.R.S., is accredited by a national
land conservation organization broadly accepted by the conservation industry;
or
2. meets the requirements of a
qualified organization under section
12-15-104, C.R.S. and the
qualifications in section
38-30.5-104(2),
C.R.S., to hold a conservation easement; and
3. has the capacity to accomplish the work of
the holder including, but not limited to
a. a
board of sufficient size, skills, backgrounds and experience,
b. a sufficient number of staff and/or
volunteers; and
4. if a
non-governmental entity, the holder must be in good standing with the Colorado
Secretary of State.
B.
Conservation Easement Selection, Review and Approval
1. The conservation easement holder has and
follows reasonable written policies and procedures for selecting conservation
easements. These must include, but are not limited to
a. establishing and following selection
criteria to identify conservation easements with at least one conservation
purpose as defined in section
12-15-106(1)(b),
C.R.S.;
b. documenting the
conservation purpose(s);
c. working
with the conservation easement grantor on an individual basis to identify and
design the permitted uses, reserved rights, and prohibited uses intended to be
memorialized in the conservation easement;
d. establishing and following a written
policy for accepting phased conservation easements as defined at rule 1.3 such
that each proposed conservation easement of a phased project has at least one
conservation purpose;
e. advising
potential conservation easement grantors in writing that
i. they should seek their own legal,
financial and tax advice
ii. the
holder does not provide legal, financial or tax advice;
iii. there may be adverse legal and other
consequences if grantor terminates a conservation easement; and
iv. the holder neither promises nor
guarantees that the proposed conservation easement qualifies for state income
tax credit purposes.
2. The conservation easement holder has and
follows reasonable written policies and procedures for reviewing proposed
conservation easements. These must include, but are not limited to:
a. Declining projects that i. do not have at
least one conservation purpose, or ii. do not appear to have the necessary
donative intent, or iii. are potentially fraudulent or abusive.
b. Prior to accepting the donation, having a
title company or competent attorney investigate and report on the property's
title and, when appropriate, engaging such professionals as may be necessary to
evaluate the property's water and mineral rights;
c. Evaluating title exceptions and, prior to
accepting the donation, documenting how grantee addressed severed minerals or
other exceptions to title so that they will not result in extinguishment or
undermining of the expressed conservation purpose(s);
d. Ensuring that, prior to accepting the
donation, any liens or encumbrances are released, subordinated or addressed so
that the conservation purpose(s) of the easement is protected in
perpetuity;
e. Providing sufficient
information to the board of the holder, a qualified committee or other designee
for review before a conservation easement is approved.
f. Receiving, reviewing and acknowledging,
prior to accepting the donation, a baseline documentation report for the
conservation easement prepared pursuant to section
12-15-106(5) I,
C.R.S. The review shall assess, at a minimum, that:
i. The report documents the physical
condition of the property at the time of the gift. Such documentation may
include:
A. Appropriate survey maps from the
USGS showing the property line and other contiguous or nearby protected
area;
B. A scale map of the area
showing all existing man-made improvements or incursions (such as roads,
buildings, fences or gravel pits), vegetation and identification of flora and
fauna (including, for example, rare species locations, animal breeding an
roosting areas, and migration routes), land use history (including present uses
and recent past disturbances), and distinct natural features (such as large
trees and aquatic areas);
C. An
aerial photograph of the property at an appropriate scale taken as close as
possible to the date the donation is made; and
D. On-site photographs taken at appropriate
locations on the property ii. The report documents accurately the conservation
purposes of the easement; and iii. The report, including the maps and
photographs, must be accompanied by a statement, signed and dated by its
author(s), the easement grantor and the easement grantee, in substance saying
"This natural resources inventory is an accurate representation of [the
protected property] at the time of the donation of the conservation
easement."
g.
If a prior baseline documentation report is updated for use in connection with
the second or subsequent phase of a conservation project, the update shall be a
separate document preserved in the conservation easement holder's records,
along with the original report.
h.
Receiving and reviewing, before the donor submits a tax credit application
pursuant to sections
12-15-105 and
12-15-106, C.R.S., a paper or
electronic copy of the signed qualified appraisal prepared by one or more
qualified appraisers for all conservation easements. The holder's review shall
assess, at a minimum, that:
i. The physical
aspects and legal description of the property that was appraised are the same
as those described in the conservation easement;
ii. The conservation easement that was
appraised is like, in every material aspect, the conservation easement that was
recorded;
iii. The ownership of the
property that was appraised is identical to the grantor of the easement;
and
iv. The appraisal appears to be
a qualified appraisal prepared by a qualified appraiser in compliance with
section 12-15-106(3)(b)(I)
-(III), C.R.S.
3. Having the board of the holder approve all
conservation easement donations, or establishing policies delegating the
authority to approve transactions to a qualified committee or other designee;
i. Such review and approval must be
documented; and
ii. If an entity
other than the holder performs the due diligence and analysis described in
parts 2., b., c., and d. of this section B., the holder must review the
transaction and document that the project is consistent with its policies and
procedures.
C. Stewardship and Enforcement: Practices and
Capacity
1. The conservation easement holder
has the following written practices, policies and procedures to ensure the
fulfillment of the perpetual stewardship responsibilities of each of its
conservation easements including, but not limited to:
a. Monitoring all conservation easements no
less than annually, using at least one of the following methods:
i. On-the-ground physical inspection of the
property; or
ii. aerial inspection
of the property using manned or unmanned aircraft, or other methods in general
use by other holders that monitor easements encumbering similar properties; and
iii. if aerial or other methods are
used, conducting on-the-ground monitoring at least every five years.
b. Monitoring is documented in
writing, and the documentation is reviewed by either the board of the holder, a
qualified committee, or other designee;
c. Enforcing every conservation easement
deed, including violations;
d.
Reviewing proposed amendments to conservation easement deeds to confirm they
i. do not result in a net loss of
conservation value, and
ii. do not
create any non-incidental benefits serving the interests of grantor
(impermissible private benefit).
e. Preserving important records, such as but
not limited to, deeds, baseline documentation reports, monitoring reports and
appraisals, in a safe and secure manner.
2. The conservation easement holder has the
capacity to maintain, monitor and defend the purposes of its easements. If a
non-governmental entity, these written policies must include, but not be
limited to:
a. The holder maintains dedicated
funds for the stewardship and legal defense of every conservation easement
held. The funds must be managed in conformance with a financial plan, which may
consider the value of insurance policies. The plan shall:
i. Ensure the longevity of the dedicated
stewardship and enforcement funds;
ii. Determine the amount of stewardship and
legal defense funds that will be needed. Minimum requirements are:
A. For stewardship, maintain a minimum fund
balance of $3,500 per conservation easement, and
B. For legal defense, maintain a minimum fund
balance of $100,000, or
C. For
holders lacking sufficient money, provide a detailed plan with specific funding
targets and timelines to achieve the minimum requirements in no more than two
years.
b.
Ensure that the dedicated funds for stewardship- and enforcement-related
purposes are used only for these purposes or, as established through written
policies, other allowable uses.
c.
If a government entity, sufficient funds must be allocated in the budget to
steward and enforce conservation easements. Funds are not required to be held
in a dedicated stewardship fund.
D. Finance
The conservation easement holder has and follows reasonable
written fiscal policies and procedures to ensure the transparent and
responsible management of its assets. These must include, but are not limited
to:
1. Having the board of the holder
review and/or regularly assess the holder's financial status, including the
annual budget and any financial changes that have occurred; and
2. Having a financial evaluation conducted on
an annual basis by an independent qualified accountant who has no financial or
other interest in the holder. The level of evaluation is determined by the
holder's total annual operating revenue, not including the cost or value of
conservation easements or fee-owned properties:
a. Less than $100,000 requires an annual
compilation;
b. $100,000-$500,000
requires an annual financial review; and
c. More than $500,000 requires an annual
financial audit.
E. Governance
The conservation easement holder has and follows reasonable
written policies and procedures to ensure responsible management. These must
include, but are not limited to:
1.
The holder has board meetings;
2.
The holder has a written conflict of interest policy; and
3. Conservation easements and financial
transactions with insiders must be documented and must demonstrate that there
is no private inurement.
2.2 Qualifications for certification of
qualified holders that do not intend to accept new conservation easements
Pursuant to
12-15-104(7)(b),
the Division shall offer a streamlined and lower-cost process for conservation
easement holders that do not intend to accept new donations of conservation
easements.
The Division may deny, refuse to renew, suspend or revoke the
certification of a conservation easement holder who fails to meet any of the
following minimum qualifications:
A.
Organization
The conservation easement holder:
1. pursuant to sections
12-15-104(5) and
(7)(a), C.R.S., is accredited by a national
land conservation organization broadly accepted by the conservation industry;
or
2. meets the requirements of a
qualified organization under section
12-15-104, C.R.S. and the
qualifications in section
38-30.5-104(2),
C.R.S., to hold a conservation easement; and
3. has the capacity to accomplish the work of
the holder including, but not limited to
a. a
board of sufficient size, skills, backgrounds and experience,
b. a sufficient number of staff and/or
volunteers; and
4. if a
non-governmental entity, the holder must be in good standing with the Colorado
Secretary of State.
B.
Stewardship and Enforcement: Practices and Capacity
1. The conservation easement holder has the
following written practices, policies and procedures to ensure the fulfillment
of the perpetual stewardship responsibilities of each of its conservation
easements including, but not limited to:
a.
Monitoring all conservation easements no less than annually, using at least one
of the following methods:
i. On-the-ground
physical inspection of the property; or
ii. aerial inspection of the property using
manned or unmanned aircraft, or other methods in general use by other holders
that monitor easements encumbering similar properties; and
iii. if aerial or other methods are used,
conducting on-the-ground monitoring at least every five years.
b. Monitoring is documented in
writing, and the documentation is reviewed by either the board of the holder, a
qualified committee, or other designee;
c. Enforcing every conservation easement
deed, including violations;
d.
Reviewing proposed amendments to conservation easement deeds to confirm they
i. do not result in a net loss of
conservation value,
ii. do not
create any non-incidental benefits serving the interests of grantor
(impermissible private benefit).
e. Preserving original and duplicate copies
of necessary and important records, such as deeds, baseline documentation
reports, monitoring reports and appraisals, in a safe and secure
manner.
2. The
conservation easement holder has the capacity to maintain, monitor and defend
the purposes of its easements. If a non-governmental entity, these written
policies must include, but not be limited to:
a. The holder maintains dedicated funds for
the stewardship and legal defense of every conservation easement held. The
funds must be managed in conformance with a financial plan, which may consider
the value of insurance policies. The plan shall:
i. Ensure the longevity of the dedicated
stewardship and enforcement funds;
ii. Determine the amount of stewardship and
legal defense funds that will be needed. Minimum requirements are:
A. For stewardship, maintain a minimum fund
balance of $3,500 per conservation easement, and
B. For legal defense, maintain a minimum fund
balance of $100,000, or
C. For
holders lacking sufficient money, provide a detailed plan with specific funding
targets and timelines to achieve the minimum requirements in no more than two
years.
b.
Ensure that the dedicated funds for stewardship- and enforcement-related
purposes are used only for these purposes or, as established through written
policies, other allowable uses.
c.
If a government entity, sufficient funds must be allocated in the budget to
steward and enforce conservation easements. Funds are not required to be held
in a dedicated stewardship fund.
C. Finance
The conservation easement holder has and follows reasonable
written fiscal policies and procedures to ensure the transparent and
responsible management of its assets. These must include, but are not limited
to:
1. Having the board review and/or
regularly assess the holder's financial status, including the annual budget and
any financial changes that have occurred; and
2. Having a financial evaluation conducted on
an annual basis by an independent qualified accountant who has no financial or
other interest in the holder. The level of evaluation is determined by the
holder's total annual operating revenue, not including the cost or value of
conservation easements or fee-owned properties:
a. Less than $100,000 requires an annual
compilation;
b. $100,000-$500,000
requires an annual financial review; and
c. More than $500,000 requires an annual
financial audit.
D. Governance
The conservation easement holder has and follows reasonable
written policies and procedures to ensure responsible management. These must
include, but are not limited to:
1.
The holder has board meetings;
2.
The holder has a written conflict of interest policy;
3. Conservation easements and financial
transactions with insiders must be documented to show that there is no private
inurement; and
4. The holder
advises grantors of amended conservation easements that the holder is not
certified to hold conservation easements where grantor intends to apply for a
state income tax credit.
2.3 Expiration Date for Certification
Certification for a conservation easement holder expires on
December 31 following the date of issuance, or on the date set forth on the
next year's renewal application provided by the Division, whichever is
later.
2.4 Eligibility for
Conservation Easement Holders After Revocation
A conservation easement holder whose certification to hold a
conservation easement has been revoked is not eligible to re-apply for
certification until more than two years have elapsed from the date of
certification revocation. Any re-application after such two-year period is
required to be submitted on a new application.
2.5 Certification Renewal
Renewal of a conservation easement holder certification shall
be executed only with the renewal application provided by the Division,
submitted and accompanied by the prescribed non-refundable fee prior to the
expiration date of certification.
2.6 Reinstatement of Certification After
Expiration
An expired certification may be reinstated within one year
after the date of expiration if the holder meets all the requirements in
section 12-15-104, C.R.S. and rules 2.1 or
2.2 . A complete renewal application and the prescribed non-refundable renewal
fee must be submitted to the Division for reinstatement. Certification is
effective on the date reinstatement is issued and shall not be effective
retroactively. Any certification that has been expired for more than one year
shall not be reinstated.
2.7 Disciplinary Action
The Director may impose an administrative fine not to exceed
two thousand five hundred dollars ($2,500) for each separate offense, as
defined in subparagraphs A-E, below; and may revoke, suspend, or refuse to
renew the certification of any conservation easement holder if, after an
investigation and notice, and subject to the right to a hearing pursuant to the
provisions of sections
24-4-104 and
24-4-105, C.R.S., the Director
determines that the conservation easement holder:
A. Has made false or misleading statements or
material omission in their application for certification;
B. Has misrepresented or concealed any
material fact from a conservation easement grantor;
C. Has employed any device, scheme, or
artifice with intent to defraud a conservation easement grantor or any
government agency;
D. Has failed to
comply with any stipulation or agreement made with the Director; or
E. Has failed to comply with any of the
certification requirements, or any lawful rule or regulation promulgated by the
Director.
2.8
Information Request
A conservation easement holder must furnish to the Director
such information or documentation as the Director in her/his sole discretion
deems reasonably necessary for the enforcement of
12-15-104, C.R.S. or any rules
enacted by the Division. If information or documentation is required, the
Director must give written notice, in detail, of the information so required
and must allow the holder an additional twenty-one (21) days from delivery to
present such material, which period may be extended only upon showing of good
cause. Written notice may be hand-delivered or mailed by regular first-class
mail, postage pre-paid, to the party entitled thereto. If hand-delivered, said
notice is deemed delivered upon hand delivery. If mailed, said notice is deemed
delivered as of the date of mailing.
2.9 Cease and Desist
If the Division has reasonable cause to believe any public or
private holder is not in compliance with section
38-30.5-104(2),
C.R.S. and section
12-15-104, C.R.S., the Director
may issue an order requiring such organization to cease and desist from holding
a conservation easement.
2.10 Transferring Conservation Easements to
Non-Certified Entities
A. A conservation
easement holder must not assign or otherwise transfer any interest in a
conservation easement to a non-certified holder.
B. A non-certified entity must not accept an
assigned or otherwise transferred interest in a conservation
easement.
C. Governmental entities
transferring a partial interest in a conservation easement to another
governmental entity in accordance with an established written agreement are
exempt from this prohibition on transferring a partial interest in a
conservation easement.
D. All
certified holders retaining any interest in a conservation easement must remain
responsible for stewardship and defense of the conservation easement.
2.11 Courtesy Filing
A certified conservation easement holder must notify the
Division within 30 days of a substantive change in:
A. Physical or mailing address of the
holder,
B. Authorized contact
person,
C. Holder name,
D. Holder mission, or
E. Holder structure.
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