DEPARTMENT OF REGULATORY AGENCIES
DIVISION OF REAL ESTATE
CONSERVATION EASEMENTS

RULE C.  regarding Application for a tax credit certificate,
 application review, and tax credit certificate issuance  

Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S. as amended, notice of proposed rulemaking is hereby given, including notice to the Attorney General of the State of Colorado and to all persons who have requested to be advised of the intention of the Colorado Department of Regulatory Agencies and the Division of Real Estate to promulgate rules, or to amend, repeal or repeal and re-enact the present rules related to conservation easements.

STATEMENT OF BASIS

The statutory basis for the rules titled Conservation Easements is Chapter 7 of Title 12, Article 61, Colorado Revised Statutes, as amended.  

STATEMENT OF PURPOSE

The purpose of this rule is to effectuate the legislative directive to promulgate necessary and appropriate rules in conformity with the Colorado Revised Statute.

SPECIFIC PURPOSE OF THIS RULEMAKING

The specific purpose of this rule is to define the requirements and procedures to submit an application for a tax credit certificate.

Proposed New, Amended and Repealed Rules

[Deleted material showed struck through, new material shown ALL CAPS. Rules, or portions of rules, which are unaffected are reproduced.  Readers are advised to obtain a copy of the complete rules of the Division at http://www.sos.state.co.us]

C-1.	Submission of a Tax Credit Certificate Claim for Donations Made on or After January 1, 2011, but Prior to January 1, 2014.
1.	A valid Deed of Conservation Easement must be recorded before a claim can be submitted and a tax credit certificate issued.
2.	A claim for a tax credit certificate must include the following:
a.	a signed and completed form entitled: “Application for a Conservation Easement Tax Credit Certificate,” approved by the Division of Real Estate;
b.	a signed  and completed form entitled: “Affidavit for Conservation Easement Appraisals,” approved by the Colorado Board of Real Estate Appraisers; and
c.	a copy of the Recorded Deed of Conservation Easement.
3.	A taxpayer who submits a claim for a tax credit certificate to the Division of Real Estate shall pay the Division a fee as prescribed by the Division.
4.	An alternative document may be substituted for the copy of the recorded Deed of Conservation Easement as evidence a conservation easement was conveyed.  The alternative document must originate from the county or counties in which the conservation easement was recorded and disclose the following:
a.	the reception number;
b.	a description of the property;
c.	the date and time which the easement was recorded; and
d.	the name of the grantor and grantee.
5.	A claim for a tax credit certificate is deemed received by the Division of Real Estate for purposes of Section 39-22-522 (2.5), C.R.S. when the application and all other required documents are signed and initialed, properly filled out, and date-stamped by the Division of Real Estate upon receipt. The Division of Real Estate is not responsible for any claims not received.  Only after the claim is deemed to be received will the claim be applied towards the limit for the applicable year.
6.	The taxpayer must sign, understand, and adhere to all disclosures listed in part three of the form entitled: “Application for a Conservation Easement Tax Credit Certificate,” in the form approved by the Division of Real Estate at the time the claim is made.
7.	After the tax credit certificate has been issued, the Department of Revenue has the authority to determine if the conservation easement tax credit does not comply with statutory and regulatory requirements.  The Division of Real Estate is not responsible should the Department of Revenue determine a conservation easement tax credit does not comply with statutory and regulatory requirements.
8.	A claim for a tax credit certificate is ineligible to receive a tax credit certificate and shall not be applied towards the limit for the applicable year if it is based on a conservation easement donation where:
a.	The appraiser associated with the claim does not hold a valid license as a certified general appraiser or fails to meet all of the education and experience requirements established in accordance with Section 12-61-719 (7), C.R.S.; or
b.	The conservation easement holder is not certified by the Division of Real Estate at the time of the donation or fails to comply with Section 24-33-112, C.R.S.
9.	A tax credit certificate may not be used to claim an income tax credit with the Department of Revenue prior to the year for which the tax credit certificate is issued by the Division of Real Estate.
10.	If more than one claim is submitted to the Division of Real Estate on the same day, the tax credit certificates with respect to those claims will be issued in the order that conservation easement donations were first recorded with the appropriate county or counties.
11.	In the event a portion of a claim does not qualify under the aggregate limit for 2011 or 2012, a second certificate will be issued for the remaining tax credit amount for the subsequent year.
12.	In the event a tax credit certificate has been issued for a conservation easement donation and the donation value increases pursuant to a revised appraisal, the taxpayer may submit a second claim to the Division of Real Estate for the increased amount. A second claim must be submitted to the Division of Real Estate in accordance with this rule and will be assigned a tax credit certificate in the order received among all other claims submitted to the Division of Real Estate. A second tax credit certificate for a second claim may be issued for a different year.
13.	The Division of Real Estate may consult with the taxpayer, a taxpayer’s Authorized Representative, the conservation easement holder, appraiser, the Conservation Easement Oversight Commission and the Department of Revenue regarding a claim for a tax credit certificate.
14.	In the event the aggregate limit for a given calendar year is not exceeded and the Division receives and approves a complete application for a tax credit certificate for a conservation easement donated within that year, the Division may issue a tax credit certificate from the remaining limit. Issuance of the tax credit certificate in this circumstance can only occur if the conservation easement donation was recorded during the year in which the aggregate limit was not reached.
C-2.	Definitions
1.	Assignment of a Tax Credit Certificate: occurs when the application is deemed complete and the requested dollar amount from the tax credit certificate application is encumbered for the Landowner and the cap is credited the encumbered amount.
2.	Authorized Representative:  means the individual designated in writing by the Landowner on the applications prescribed by the Division. An Authorized Representative is the primary individual for the application that Division will contact.  
3.	Commission: means the Conservation Easement Oversight Commission created by Section 12-61-721, C.R.S.
4.	Days: means calendar days for the purposes of implementing Section 12-61-723, C.R.S.
5.	Deemed Complete: means the application is date stamped by the Division and the application package includes, at a minimum, the final appraisal, the recorded conservation easement deed, baseline document report and fee. Once deemed complete, there is an assignment of the tax credit certificate.
6.	Examination: means the review conducted by the Division and preparation of a report to be presented to the Director and Commission.
7.	Final Determination: means the final decision by the Director and/or the Commission to approve or deny a tax credit certificate application.  A negative Final Determination triggers the 30 day period the Landowner has to request a hearing.
8.	Issuance of a Tax Credit Certificate: occurs after the Director and the Commission have made the Final Determination to approve the application. The tax credit certificate for the assigned amount is mailed to the Landowner.
9.	Settlement: means an official agreement intended to compromise on any deficiencies identified in the application and any supporting documentation, including the dollar amount of the tax credit certificate to be issued by the Division.
C-3.	Application Submission and Review for Donations Made on or After January 1, 2014.
1.	An application is deemed complete by the Division of the Real Estate (“Division”) in accordance with Section 12-61-723, C.R.S. when the application and all other required documents are signed and initialed, properly filled out, and date-stamped by the Division upon receipt. The Division is not responsible for any application not received.  Only after the application is deemed complete will the application be reviewed.
2.	For an application to be deemed complete and a tax credit certificate to be assigned in accordance with C-4, the application must include the documentation and fee as required in Section 12-61-723 (5), C.R.S., and also provide a signed and completed form entitled: “Application for a Conservation Easement Tax Credit Certificate,” approved by the Division. The fee is nonrefundable.
3.	Upon the application being deemed complete, the Director or Commission may request other information or documentation necessary to make a final determination regarding the application.
4.	The Landowner or the signatory designated to sign on behalf of the Landowner must sign, understand, and adhere to all disclosures listed in the “Application for a Conservation Easement Tax Credit Certificate,” in the form approved by the Division at the time the application is made. The signatory for the application must be authorized as described in this sub paragraph 4.
a.	If the Landowner is a corporation, the individual applying on behalf of the corporation must be an officer or director to apply on behalf of the corporation;
b.	If the Landowner is a partnership, one of the general partners of the partnership must apply on behalf of the partnership;
c.	If the Landowner is a joint owner, such individual may apply on behalf of all joint owners;
d.	If the Landowner is a limited liability company, one of the managers or member-managers must apply on behalf of the company;
e.	If the Landowner is a trust, one of the trustees must apply on behalf of the trust; 
f.	If the Landowner is a S corporation, one of the shareholders must apply on behalf of the S corporation; and
g.	If the Landowner is an estate, one of the personal representatives must apply on behalf of the estate.
5.	A tax credit certificate application is ineligible and will not be applied towards the limit for the applicable year if it is based on a conservation easement donation in which:
a.	The appraiser who conducted the appraisal submitted with the application does not hold a valid license as a certified general appraiser or fails to meet all of the education and experience requirements established in accordance with Section 12-61-719 (7), C.R.S.; or
b.	The conservation easement holder is not certified by the Division at the time of the donation.
6.	Submission of an application does not guarantee issuance of a tax credit certificate.
7.	The Director or Commission may consult with the Landowner, a Landowner’s Authorized Representative, the conservation easement holder, the appraiser, the Department of Revenue and any other entity or individual deemed necessary to review an application for a tax credit certificate.
8.	Any extensions of deadlines in accordance with Section 12-61-723 (7)(d), C.R.S., must be agreed to in writing.
9.	The Director has the authority, in accordance with Section 12-61-723 (9), C.R.S., to request a second appraisal if the Commission and the Director determine the original appraisal is not credible. The second appraisal must be conducted by a certified general appraiser in good standing and not affiliated with the first appraiser. The request for a second appraisal may include a new appraisal or a USPAP Standard 3 Review with an opinion of value. 
C-4.	Assignment and Issuance of a Tax Credit Certificate for Donations Made on or After January 1, 2014.
1.	Once an application is deemed complete, the dollar amount applied for in the application will be assigned to the Landowner and applied toward the aggregate annual cap in the order the application is deemed complete. The amount applied toward the aggregate annual cap will not be available to any subsequent application.  
2.	If more than one application is deemed complete by the Division on the same day, the amount applied for will be applied toward the aggregate annual cap in the order that the conservation easements were recorded with the respective counties.
3.	A tax credit certificate will only be issued in whole dollar amounts.
4.	A tax credit certificate may not be used to claim an income tax credit with the Department of Revenue prior to the year for which the tax credit certificate is issued by the Division.
5.	In the event a portion of an approved tax credit certificate application cannot be issued under the available tax credit cap for any given year, a second certificate will be issued for the remaining tax credit amount for the subsequent year subject to the fifteen million dollar waitlist limit set forth in Section 39-22-522 (2.5), C.R.S.
6.	In the event that all or a portion of an approved tax credit certificate application cannot be issued under the available fifteen million dollar waitlist limit for the following calendar year, the remaining amount will be issued a tax credit certificate in the next available calendar year.
7.	In the event the aggregate limit for a given calendar year is not exceeded and the Division receives and approves a complete application for a tax credit certificate for a conservation easement donated within that year, the Division may issue a tax credit certificate from the remaining limit. Issuance of the tax credit certificate in this circumstance can only occur if the conservation easement donation was recorded during the year in which the aggregate limit was not reached. 
C-5.	Application Denial and Appeal for Donations Made on or After January 1, 2014.
1.	If an application is denied, the assigned dollar amount applied toward the aggregate annual cap for that application will not be available for use by any subsequent application.
2.	The Landowner may submit a new application if the denial of the original application is final pursuant to Section 12-61-723 (12), C.R.S. The new application must be submitted pursuant to Rule C-3 and will be applied toward the aggregate annual cap in the order the new application is deemed complete. 
3.	Appeal of the Director’s or the Commission’s denial of an application must be made in writing by either the Landowner, the individual who applied on behalf of the Landowner, or the Landowner’s Authorized Representative. The written appeal of the denial must be sent by first class mail and postmarked within 30 days of the issuance of the denial.
4.	The Director and the Commission may conduct settlement discussions with the Landowner at any time during the application review process.
C-6.	Preliminary Advisory Opinion for Donations Made on or After January 1, 2014.
1.	Prior to an application for a tax credit certificate, a Landowner may request a preliminary advisory opinion regarding the issuance of a tax credit certificate. Such opinions may consider:
a.	The credibility of the appraisal pursuant to Section 12-61-723 (3)(b)(i)-(iv), C.R.S.; and/or 
b.	Whether a conservation easement donation for which a tax credit is to be claimed is a qualified conservation contribution pursuant to Section 12-61-723 (3)(d), C.R.S.
2.	A Landowner requesting such an opinion must do so in a form entitled: “Application for a Conservation Easement Tax Credit Certificate Preliminary Advisory Opinion,” approved by the Division. An application for a preliminary advisory opinion is deemed complete by the Division when the application and all other required documents are signed and initialed, properly filled out, and date-stamped by the Division upon receipt. The Division is not responsible for any applications not received.  Only after the application is deemed complete will the application be reviewed. 
3.	The Landowner or the signatory designated to sign on behalf of the Landowner must sign, understand, and adhere to all disclosures listed in the “Application for a Conservation Easement Tax Credit Certificate Preliminary Advisory Opinion,” in the form approved by the Division at the time the application is made. The signatory for the application must be authorized as described in this sub paragraph 3.
a.	If the Landowner is a corporation, the individual applying on behalf of the corporation must be an officer or director to apply on behalf of the corporation;
b.	If the Landowner is a partnership, one of the general partners of the partnership must apply on behalf of the partnership;
c.	If the Landowner is a joint owner, such individual may apply on behalf of all joint owners;
d.	if the Landowner is a limited liability company, one of the managers or member-managers must apply on behalf of the company;
e.	If the Landowner is a trust, one of the trustees must apply on behalf of the trust; 
f.	 if the Landowner is a S corporation, one of the shareholders must apply on behalf of the S corporation; and
g.	If the Landowner is an estate, one of the personal representatives must apply on behalf of the estate.
4.	A Landowner requesting a preliminary advisory opinion is not an applicant for a tax credit certificate. No tax credit certificate will be issued for a favorable preliminary advisory opinion. The issuance of either a favorable or nonfavorable preliminary advisory opinion by the Division will not act to prohibit a Landowner from submitting an application for a tax credit certificate.
5.	A request for a preliminary advisory opinion regarding the credibility of the appraisal must include:
a.	The draft or final appraisal to be considered; and
b.	Any other relevant information or documentation the Director deems necessary to make a preliminary opinion regarding the appraisal; and
c.	The required fee as prescribed by the Division. The fee is nonrefundable.
6.	A request for a preliminary advisory opinion regarding the qualification of the conservation contribution must include:
a.	The draft or recorded deed of conservation easement to be considered;
b.	Documentation supporting the conservation purpose of the easement;
c.	Any other relevant information or documentation the Commission deems necessary to make a preliminary opinion regarding the qualification of the conservation contribution; and
d.	The required fee as prescribed by the Division. The fee is nonrefundable.
7.	The Director and the Commission will review applications for preliminary advisory opinions and issue either a favorable opinion or a nonfavorable opinion within an average of 120 days.
8.	A nonfavorable opinion will include a description of any potential deficiencies identified by the Director or the Commission in writing.
9.	The issuance of a preliminary advisory opinion will not limit the authority of the Director or the Commission to make a final determination to approve or deny an   application for a tax credit certificate contrary to the preliminary advisory opinion; limit the Director’s authority to investigate a conservation easement holder; or limit the Board of Real Estate Appraisers’ authority to investigate an appraiser.
10.	The Director or Commission may consult with the Landowner, a Landowner’s Authorized Representative, the conservation easement holder, the appraiser, the Department of Revenue and any other entity or individual deemed necessary in reviewing an application for a preliminary advisory opinion.
11.	Preliminary advisory opinions are not appealable.