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HomeMy WebLinkAbout09/13/2023 - Land Conservation And Stewardship Board - Agenda - Regular MeetingLand Conservation & Stewardship Board Regular Meeting Hybrid format: In person or Zoom 1745 Hoffman Mill Road/Main Office Conference Room September 13, 2023 September 13, 2023 Participation for this Land Conservation & Stewardship Board meeting will be available online, by phone or in person. Public Participation (Online): Individuals who wish to address the Land Conservation & Stewardship Board via remote public participation can do so through Zoom, see below. The meeting will be available to join beginning at 5:30 pm, September 13, 2023. For public comments, the Chair will ask participants to click the “Raise Hand” button to indicate you would like to speak at that time. Staff will moderate the Zoom session to ensure all participants have an opportunity to address the Board. Join Zoom Meeting https://fcgov.zoom.us/j/95836874270?pwd=d3pPaTluOTBlMlVpbXpCQTFWbTZ3dz09 Meeting ID: 958 3687 4270 Passcode: 85q?8r!Y One tap mobile +17209289299,,91262842297# US (Denver) +13462487799,,91262842297# US (Houston) Dial by your location • +1 720 928 9299 US (Denver) • +1 346 248 7799 US (Houston) • +1 253 215 8782 US (Tacoma) • +1 646 558 8656 US (New York) • +1 312 626 6799 US (Chicago) Find your local number: https://fcgov.zoom.us/u/aeizWCgMH Use a laptop, computer, or internet-enabled smartphone. (Using earphones with a microphone will greatly improve your audio). You need to have access to the internet. Keep yourself on muted status. Public Participation (Phone): As listed above, the meeting will be available beginning at 5:30 pm . For public comments, the Chair will ask participants to click the “Raise Hand” button to indicate you would like to speak at that time – phone participants will need to hit *9 to do this. Staff will be moderating the Zoom session to ensure all participants have an opportunity to address the Committee. Once you join the meeting: keep yourself on muted status. Documents to Share: If residents wish to share a document or presentation, the Staff Liaison needs to receive those materials via email by 24 hours before the meeting. Individuals uncomfortable or unable to access the Zoom platform or unable to participate by phone are encouraged to participate by emailing general public comments you may have to Katie Donahue, kdonahue@fcgov.com. The Staff Liaison will ensure the Board receives your comments. If you have specific comments on any of the discussion items scheduled, please make that clear in the subject line of the email and send 24 hours prior to the meeting. Land Conservation & Stewardship Board Regular Meeting Hybrid Format: In person or Zoom September 13, 2023 September 13, 2023 15 min 30 min 5 min 10 min 1.CALL TO ORDER: 5:30 PM 2.ROLL CALL 3.AGENDA REVIEW 4.COMMUNITY PARTICIPATION 5.APPROVAL OF MINUTES 6.DISCUSSION ITEMS Poudre Flows Plan Overview of Conservation Easements 7.BOARD UPDATES BAC 8.DEPARTMENT UPDATES 9.ADJOURNMENT Bernadette Kuhn Tawnya Ernst Scott Mason Katie Donahue Land Conservation & Stewardship Board Regular Meeting | 1745 Hoffman Mill Road August 9, 2023 Members: Ross Cunniff, Chair Andrea Elson, Member Scott Mason, Vice-Chair Holger Kley, Member Elena Lopez, Member Mark Sears, Member Denise Culver, Member River Mizell, Member Joe Piesman, Member 1 1. CALL TO ORDER: Chair Cunniff called the meeting to order at 5:30 p.m. 2. ROLL CALL: Holger Kley, Ross Cunniff, Mark Sears, Andrea Elson, Denise Culver, Joe Piesman, River Mizell Excused: Scott Mason, Elena Lopez NAD Staff: Katie Donahue, NAD Director; Matt Parker, NAD Resource Management Supervisor; Kristina Ostrowski, Business Support III; Mary Boyts, Business Support III City Staff: Kirk Longstein, Sr. Environmental Planner, Community Development & Neighborhood Services 3. COMMUNITY PARTICIPANTS: none 4. AGENDA REVIEW: No changes were made to the agenda. 5. APPROVAL OF MINUTES: Member Culver made a motion to approve the July 2023 LCSB Meeting Minutes. Member Piesman seconded the motion. The motion was unanimously approved 7-0. 6. DISCUSSION ITEMS: Draft Oil and Gas Regulations Update Kirk Longstein, Sr. Environmental Planner, Community Development & Neighborhood Services, opened the discussion with a staffing update that Cassie Archuletta will be transitioning out of her position as Manager of Environmental Sustainability with the City. Mr. Longstein will be the Interim Oil and Gas contact until her position is filled and will attend the Air Quality Advisory Board meetings. Mr. Longstein began his presentation by highlighting three work streams: 1. The newly adopted Oil and Gas Regulations, which enforce location standards restricting new oil and gas facilities within City limits. 2. Ongoing operational standards efforts to collaborate with the State and County on enforcement mechanisms to ensure compliance with clean air and water quality standards. Land Conservation & Stewardship Board Regular Meeting 2 Efforts include but are not limited to policy surrounding cease-and-desist orders, pressure on Prospect Energy regarding plugging and abandoning low-producing and non-producing wells, and collaborating with State partners like the Colorado Energy and Carbon Management Commission (ECMC). 3. Reverse setback standards. Mr. Longstein proceeded with a presentation on the proposed oil and gas reverse setback requirements. He defined the difference between setbacks (defines standards for new oil and gas wells from an existing structure) and reverse setbacks (defines standards a structure needs to be from an existing oil and gas well). The City of Fort Collins code adopted a 2000- feet setback for new and existing wells; the State of Colorado has a presumptive 2000-feet setback but does not regulate surface activities and land use. A map of the active Fort Collins Field highlighting locations of oil and gas wells within the City was shared. All the wells in the active field are traditional, vertical oil-producing wells, 5000- feet in depth, that go down into an oil formation on a closed loop system. These are low producing wells, which utilize an enhanced oil recovery process that is unique compared to other injection well processes used across the State of Colorado. Most of the wells in Fort Collins are abandoned. Mr. Longstein identified two abandoned exploratory wells located in and near the Arapaho Bend Natural Area: one near Harmony Road and I-25 (this is an abandoned and not fully reclaimed well) and a well located adjacent to the archery range just outside the City’s jurisdiction (City code includes setbacks from outside our jurisdiction). These were exploratory wells that were never producing. Mr. Longstein provided an overview of the proposed reverse setback standards for wells. Mr. Longstein noted the proposed code would apply regulations to existing homes in the buffer. This will decrease density and ensure new development, existing properties, and structures are not adjacent to oil and gas wells. A summary of the buffers in the active zone were provided: 2000-feet - active wells 500-feet - inactive and not fully reclaimed 150-feet - fully reclaimed A list of reverse setbacks in surrounding municipalities and counties were shared. Broomfield and Loveland are the only other jurisdictions that have setbacks similar to the buffers being proposed. Proposed code refinements to reverse setbacks will be discussed at the September 5, 2023 City Council Meeting. Land Conservation & Stewardship Board Regular Meeting 3 Discussion Mr. Longstein noted within the last year, the City petitioned the State of Colorado to have operators update their financial assurances for plugging, abandoning, and reclaiming wells; the result requires operators to post additional bonds and financial security to cover the cost of these operations. There was further discussion around policy surrounding compliance issues within the State. Mr. Longstein clarified an operator permit that is under a cease-and-desist order, are closed- door negotiations, while the Colorado Department of Public Health and Environment (CDPHE) Air Pollution Control Division re-negotiate the terms of their permit. Mr. Longstein clarified Member Piesman’s inquiry, stating the State will post a press release on their website stating the reason for issuing a cease-and-desist order; but the re-negotiation of permit terms remains private. Mr. Longstein answered a variety of general questions from the Board: • In response to Member Kley’s inquiry, Mr. Longstein clarified a shut-in well is a well mechanically turned off and not running for a temporary period of time for a variety of reasons (e.g. safety). • Chair Cunniff expressed concern of surface spills of the operation at the surface of the injection well and suggested a provision for inspection at the injection site would be useful. Mr. Longstein responded that the literature supports the higher-level risk is at the tank and separators. • Member Kley was interested in how chemicals at the surface are monitored during operation. Mr. Longstein informed the Board the Colorado Energy and Carbon Management Commission (ECMC) annually conducts a Mechanical Integrity Test which identifies problems at the source and tank battery inspections are performed on-site to identify chemicals being used. Mr. Longstein’s understanding is there are no detailed disclosure requirements on chemical analysis performed periodically to monitor activity, but he will look further into where this information may be housed. The polymers, silicate, and other chemicals are within the 1% range, and grey water is primarily cycling through this system. • Mr. Longstein stated the operator agreement was terminated last fall now that the City has land use authority. • Member Culver inquired about the reverse setback standards for Larimer County. Mr. Longstein confirmed Larimer County’s reverse setback standard is 1000-feet. Land Conservation & Stewardship Board Regular Meeting 4 • The Board echoed Member Mizell’s concern surrounding disclosure to homeowners and renters who acquire property adjacent to reverse setbacks. Mr. Longstein stated the proposed standards would require a point-of-sale disclosure requiring the seller or lessor provide any information related to monitoring reports and disclosures related to the EPA thresholds in 14-point font. Additionally proposed, is descriptive language written into the code of the required verbiage to be stated at time of sale. Written notice is required no less than 30 days prior to closing. • Mr. Longstein stated there are no disposal wells within the City of Fort Collins. • The Board echoed Chair Cunniff’s suggestion that trailheads should be treated as a structure in the proposed reverse setback verbiage. There was mutual interest across the Board to revisit this topic of discussion, specifically regarding the two drilled and abandoned wells near Arapaho Bend Natural Area. West Nile Virus Update Matt Parker, NAD Resource Management Supervisor, provided a brief history of the City’s West Nile Virus Program, a biological overview of West Nile Virus (WNV), and an update on the City’s current disease mitigation efforts. He highlighted WNV is present year-round and the City has been actively responding to WNV for 20-years. WNV is predominant in the avian community and noted the more birds infected with the disease in a given area, the more amplified the cycle of WNV in the corresponding community. Mr. Parker shared the CDC’s infection rate map highlighting the rate of cases per 100,000 people. Through a collaboration with CSU and Vector Disease Control International (VDCI), data sets are run weekly. There are 53 traps, across four zones. The results of the most recent data set (Week 31) were shared. Current data shows a peak of over 350 culex mosquitos per trap, the historic trend is approximately 70 culex mosquitos per trap at this time of year. Mr. Parker stated when determining treatment areas for disease mitigation, the goals are to be effective, responsible and judicious with pesticides; target as small of an area as possible, and to target as early as possible to limit viral amplification. The City currently sprays for mosquitos on Sunday’s due to contractor limitations. The City of Fort Collins operates at a 0.75 Vector Index (VI) Threshold within a polygon floating zone. Historically, the eastern two quadrants of the City are generally more active than the western two quadrants. The City’s policy to spray is based on the recommendation of the Larimer County Health Department. Land Conservation & Stewardship Board Regular Meeting 5 Mr. Parker highlighted recent improvements and challenges of the WNV Program. Improvements include but are not limited to an improved map design for the public, GPS tracking data posted for up to 24 hours, the removal of the GIS heat map, and communication materials available in Spanish. Challenges include conveying complex data, comparing against the unknown outcomes if different courses of action were taken, and the inability to measure a true outcome. Discussion The Board was interested in the fact there are only 2 species of mosquitos that carry West Nile Virus (culex pipiens and culex tarsalis). These are the two-species of mosquitos the City and it’s community partners monitor for WNV mitigation response. Mr. Parker and the Board discussed variables that affect data collection, the impacts to mitigation response time and treatment effectiveness, and infection rates in mosquitos. There was further discussion around the potential risks that exist due to this variability. Member Elson asked Mr. Parker to define what the “historic” value encompasses. Mr. Parker stated the historic average of the VI values is the average of all twenty-previous years of data collection at a specific EPI-week point. The Board acknowledged the data variability that exists year-to-year. Member Piesman commented that the WNV Program has matured over time. Chair Cunniff and Member Piesman were interested in how long it takes mineral oil to degrade in the environment and the frequency of how often it is used in larval treatments. Matt Parker does not believe there is lasting impact but will follow up with a concrete response after further investigation. Chair Cunniff asked if the winter West Nile Task Force is still active. Mr. Parker confirmed the Winter WNV Advisory Committee has not been terminated. Member Elson inquired if there is data on the impact of WNV infections in humans within the City and surrounding towns. Mr. Parker stated it is difficult to gain accurate data because of how mobile people are. Chair Cunniff and Member Piesman added that statistically until the numbers get into the hundreds of cases, it is difficult to have a significant correlational value. Member Piesman echoed Chair Cunniff’s comment on the variability of humans making it very difficult to track humans infected with WNV. This led to conversations on the risk factors (e.g. age, immune-compromised, existing neurological conditions) that contribute to the chance of contracting West Nile Virus. Member Mizell expressed the importance of an accessibility review for necessary modifications to increase the visual contrast of communication materials for the public to be ADA compliant and to better address and prioritize human mitigation of WNV. Land Conservation & Stewardship Board Regular Meeting 6 7. BOARD UPDATES: Member Piesman requested a NISP update in the upcoming months. 8. DEPARTMENT UPDATES: Katie Donahue, NAD Director, provided department updates: • Soapstone Prairie Natural Area and Bobcat Ridge Natural Area will be re-opening in the coming week after closures to address damage caused from the recent flash floods. o Bobcat Ridge Natural Area trails will re-open with exception to the closure of the Ginny Trail and On the Rocks Trail. • The Kestrel Fields Grand Opening is Saturday, September 9, 2023. • The City is looking for strategic plan input from members of Boards and Commissions regarding the City’s upcoming budget cycle. Katie will follow up with the LCSB this fall. • Budget adjustments and staffing will be addressed at the 8/15/2023 Regular City Council Meeting. A request for additional appropriation funds for the Encampment Site Cleanup Pilot Project Program will be discussed. 9. ADJOURNMENT The meeting adjourned at 7:44 p.m. Ross Cunniff, Chair Date 1745 Hoffman Mill Road PO Box 580, Fort Collins, CO 80522-0580 BERNADETTE KUHN/SENIOR ENV. PLANNER/PM 970-214-4348/P bkuhn@fcgov.com /E MEMORANDUM Date: 9/13/2023 To: Land Conservation and Stewardship Board Through: Katie Donahue, Natural Areas Director Julia Feder, Environmental Program Manager Pc: Eric Potyondy, Water Attorney/Assistant City Attorney From: Bernadette Kuhn, Senior Environmental Planner/Restoration Project Manager Subject: Poudre Flows Plan Update Summary The Poudre Flows Plan (the Plan) is an innovative solution created by regional partners to address inadequate flows that are harmful to the health of the Cache la Poudre (Poudre) River. The Plan is a collaboration between the City of Fort Collins (the City); the Colorado Water Trust; City of Fort Collins; City of Greeley; City of Thornton; Northern Colorado Water Conservancy District; Cache la Poudre Water Users Association; Colorado Water Conservation Board (CWCB); Colorado Parks and Wildlife. Under the Plan, the three cities (Fort Collins, Greeley, and Thornton) have offered an initial set of augmentation water to increase protected flows in the Poudre River. For the City of Fort Collins to contribute its augmentation water, upgrades to two diversion structures are required. City staff are moving forward with the feasibility stage of determining early design concepts for upgrading these structures. Other partners are also moving forward with upgrading structures so they may comply with commitments to the Plan. Background The Plan is a collaboration between the City of Fort Collins (the City); the Colorado Water Trust; City of Fort Collins; City of Greeley; City of Thornton; Northern Colorado Water Conservancy District; Cache la Poudre Water Users Association; Colorado Water Conservation Board (CWCB); Colorado Parks and Wildlife, and others to increase and protect flows in the Poudre River between the canyon mouth and its confluence with the South Platte River near Greeley. Water developments have significantly altered the natural flow regime of the Poudre River, resulting in severely depleted flow regimes with multiple points of dry up. Proposed water development projects threaten to exacerbate this issue if actions are not taken to maintain and enhance flows. The Plan will increase flows by using existing water rights that were historically used to irrigate crops. Once added to the river, the “augmentation water” will increase flows and be protected from diversion by others until it reaches a downstream point when the augmentation water may be reused. The Plan supports City Council’s Priority to “Protect and Enhance Instream Flows”. 2 Flows The Plan contains six segments where targeted flows have been identified by the CWCB and CPW, based on the river’s geography and conditions (Attachment A). These targeted flows represent the maximum amount of flows that could be protected under the Plan. Under the Plan, flows will be augmented between an introduction point and a terminal point. Any augmentation occurrence will depend on where the augmentation water right is located, as well as where the augmentation water will be added to the stream and where it will be reused. The City, Thornton, and Greeley have offered the initial set of augmentation water, called “seed water” so that the Plan may grow into a viable program for the river. The City’s seed water will increase flows in a reach that begins at the Southside Ditches diversion structure above Lion’s Open Space in Laporte and ends at the Fossil Creek Inlet Ditch near Drake and Timberline, allowing flows to continue through the urban river reaches of Fort Collins. The City’s seed water is provided from Fort Collins Utilities’ water right shares in the New Mercer, Larimer #2, and Arthur ditches. Depending on various river conditions, the City’s seed water could contribute up to 57 cfs . Timeline Presently, the City and its partners are now seeking Water Court approval of the Plan in Case No. 2021CW3056 and beginning the feasibility and early concepts phase of implementation. The City will need to work with the Arthur Irrigation Company, New Mercer Ditch Company, and the Larimer #2 Irrigating Ditch Company to ask for approval to install bypass flow infrastructure and measurement gauges on their diversions on the Poudre River. It is hoped that the plan is operational in 2028. Table 1. Poudre Flows Plan Schedule. Poudre Flows Plan (PFP) Schedule Year Feasibility, Early Design, Cost Estimates 2023-2024 Design & Permitting 2025-2026 Construction 2027-2028 Operation 2028 Next Steps In late 2023/early 2024, staff will work with a contracted engineering firm to develop early concepts. Those concepts will be shared with Poudre Flows partners and the ditch companies for feedback. Staff will continue to keep LCSB informed on team’s progress. In early 2024, City Council will establish new priorities. Staff encourages LCSB to recommend Council maintain and extend the current priority to, “Protect and Enhance Instream Flows for the Cache la Poudre River.” This priority has been a critical tool for securing funding and support to advance this work. Poudre Flows Plan 9/2023 Senior Environmental Planner/PM Bernadette Kuhn Goals 1.Increase river flows 2.Address dry-up locations 3.Avoid injury to other water rights Seed Reaches Little Cache Diversion Arthur Diversion Timeline 6 Feasibility, Early Design, Cost Estimates 2023- 24 Design & Permitting2025- 26 Construction2027- 28 Operation2028 Request: Support Continuation of Council Priority #15 “Protect and Enhance Instream Flows”” Thank You Poudre Flows Plan 1745 Hoffman Mill Road PO Box 580, Fort Collins, CO 80522-0580 TAWNYA ERNST / LAND CONSERVATION LEAD SPECIALIST NATURAL AREAS DEPARTMENT 970-416-2940 /P ternst@fcgov.com /E MEMORANDUM Date: September 13, 2023 To: Land Conservation and Stewardship Board Through: Katie Donahue, Natural Areas Director Julia Feder, Environmental Planning Manager From: Tawnya Ernst, Land Conservation Lead Specialist Alynn Karnes, Land Conservation Specialist Subject: CEs on all Natural Areas-owned properties - Update BOTTOM LINE The purpose of this discussion item is to provide a brief overview of conservation easements (CEs) as a land protection tool and to deliver an update on city-owned conservation easements. OVERVIEW In 2021, the Land Conservation and Stewardship Board requested staff investigate the possibility of placing conservation easements (CEs) on all Natural Areas-owned property as an additional layer of protection to already conserved land. Staff presented information about this work at board meetings in May 2021 and March 2022. In September 2023, staff will provide a review of the role conservation easements play in our overall work to conserve and protect land throughout the region and provide an update on steps staff have taken during the past two years to accelerate our use of this tool and provide added protections to City-owned lands. As of August 2023, Natural Areas manages a diverse portfolio of properties protected by conservation easements. Natural Areas holds 35 conservation easements on almost 22,000 acres – this includes private lands and lands owned by Larimer County (e.g. Red Mountain Open Space) and co-holds easements on an additional 3,000+ acres. Currently, about 5,000 acres owned solely by Natural Areas are encumbered with conservation easements. An additional 1,200+ acres that are co-owned by Natural Areas and other parties are subject to CEs. This includes portions of the following natural areas: Soapstone, Cattail Chorus, McMurray, Running Deer, Crossline Canyons, Coyote Ridge, Cathy Fromme, Fossil Creek Reservoir and the Nix campus. CONSERVATION EASEMENTS A CE is a voluntary written and recorded agreement between a landowner and a qualified conservation organization that permanently restricts development and subdivision of the property for one or more conservation purposes defined by IRC § 170(h). A CE need not interfere with the landowner’s ability to continue to use the land for traditional purposes such as crop production, grazing, hunting, fishing, etc. The landowner conveys all development/subdivision rights (except those specifically retained in the written easement) and the right for the easement holder to be a party to all negotiations of third-party requests to use the land. This includes negotiations for oil and gas leases, surface use agreements, right of way agreements, etc. The easement holder must conduct annual monitoring visits to ensure the terms of the easement are being upheld and to prevent any activities that are inconsistent with the written easement. City of Fort Collins A CE’s value is the difference between the property’s fair market value without the CE and its value with the CE – as determined by an appraiser. Depending on the restrictiveness of the CE and the property location, a CE typically reduces the property value between 25% and 65%. In addition to an appraisal and a title commitment, Natural Areas conducts a significant amount of due diligence in preparation to hold a conservation easement: baseline inventory report (documents historic/current land uses, conservation values, etc.); a mineral remoteness report (to assess the likelihood of surface extraction); a phase one environmental assessment and frequently a survey. Natural Areas covers the cost of this due diligence which amounts to a total of $35,000-$70,000 depending upon the complexity of the property and the transaction. These costs are a significant consideration as staff contemplates placing CEs on city-owned land. Key considerations: •CEs cannot prevent condemnation (e.g. utility line/right of way) but it does give the CE holder a seat at the table with the landowner during negotiations and the ability to mitigate impacts to the CE. •CEs do not preclude mineral/oil and gas development. The IRS tax code prohibits surface mining (sand, gravel, etc.) but limited and localized subsurface mining (oil and gas) is permissible if it is not irremediably destructive of the conservation values. For additional information regarding CEs, please refer to Attachment 1 Conservation Easement Basics. CONSERVATION EASEMENTS ON CITY-OWNED LANDS Background Development pressures continue to rise locally and throughout the region. As a result, cities and counties are receiving increased calls, both internally and externally, to reimagine potential uses of open space. Conservation easements will not alleviate all threats to conserved, city-owned land; however, they will add increased protections against many threats. Larimer County Open Lands is contemplating a similar arrangement on their fee holdings. Since 2021, staff have been working incrementally on plans to further encumber city-owned lands using CEs. Staff have prioritized placing CEs on recently acquired, regional properties. Staff have also investigated the feasibility of encumbering previously acquired properties, including those involving partnerships between NAD and other regional agencies such as Larimer County Open Lands and the City of Loveland. NAD undertook a pilot initiative to place a CE on the entirety of Bobcat Ridge Natural Area as a part of acquiring the two parcels that make up the “Buckhorn Addition” to the property. Larimer County contributed $1,000,000 towards the purchase of the 675-acre addition in exchange for the City granting a CE over the entire property. County and City staff are finalizing the CE draft with terms expected to be finalized by the end of 2023. Efforts to finalize a prioritization matrix for existing City-owned properties are underway. Staff intend to incorporate legal guidance from the City Attorney’s Office, along with past and current input from LCSB and NAD leadership to inform a plan for encumbering city-owned lands, including city-owned natural areas and Meadow Springs Ranch. Legal Considerations Jointly Owned Properties For a property jointly owned by the City and County, the City Attorney’s Office has advised that it would probably not be possible for the City or County to hold a CE on the property. An agency or organization City of Fort Collins owning fee title to a parcel cannot hold an easement on the parcel because the fee title and easement interest in the property merge. The City co-owns all or a portion of six properties (Cathy Fromme Prairie, Coyote Ridge, Fossil Creek Reservoir Regional Open Space, Long View Farm, Soaring Vista and Prairie Ridge) with the County and/or the City of Loveland. As it stands, these co-owned properties are currently afforded extra protection since neither party can sell or encumber the property without the consent of the other party. If the City and County determine that a conservation easement is the best option for protecting these properties several options can be considered, including transferring full ownership to one agency or engaging a third party as the easement holder. Alternatively, a restrictive covenant could be employed that would record use restrictions on the property enforceable by either party. Conveyance for Fair Market Value City Council must approve the conveyance of all property rights including conservation easements – and per City Code Section 23-114 - the City must receive an amount equal to or greater than the fair market value of such interest. Unless, however, the Council could make all the necessary findings that a conveyance for less than FMV serves a bona fide public purpose: • The use to which the property will be put promotes health, safety or general welfare and benefits a significant segment of the citizens of Fort Collins; • The use to which the property will be put supports one (1) or more of the City Council's goals, adopted policies, projects or plans; • The financial support provided by the City through the below-market disposition of the property will be leveraged with other funding or assistance; • The sale or lease will not result in any direct financial benefit to any private person or entity, except to the extent such benefit is only an incidental consequence and is not substantial relative to the public purpose being served; and • Selling or leasing the property for less than fair market rent will not interfere with current City projects or work programs, hinder workload schedules or divert resources needed for primary City functions or responsibilities. Restrictions on Conveyance Proceeds On top of the requirement in Sec. 23-114, the ballot language for Open Space, Yes! requires that upon the conveyance of any interest in Natural Areas properties purchased with such funds, the proceeds must be used for land conservation activities. Potential partners Given these legal considerations, identifying the appropriate partner and terms of partnership is a critical first step to conveying a CE on any specific property. Staff are exploring which organizations might be best suited to the task of holding conservation easements on city-owned properties. NAD will need to leverage long-standing partnerships with entities such as Colorado Open Lands (COL - a nonprofit land trust), Larimer County, and the City of Loveland to meet our project goals. Staff have had multiple conversations with Larimer County Open Lands (County) staff regarding the potential for an exchange of conservation easements on each other’s respective properties. Larimer County currently holds conservation easements on a portion of five NAD-owned properties, and conservation easements have become a standard part of the pre-acquisition discussion for new properties where we could partner with Larimer County or City of Loveland. For example, the recent acquisition by Larimer County, Heaven’s Door Ranch, will have a conservation easement held by Fort Collins and Loveland. At this stage, it appears most likely that any easement exchange between the County and City will focus on larger, regional properties outside city limits that align best with County conservation priorities. Colorado Open Lands currently holds easements on seven natural areas properties. Staff will engage with COL in the coming months to discuss their interest in holding easements on additional properties City of Fort Collins within City limits and those properties in which the City/County are joint owners. Working with COL (or another nonprofit land trust) comes with additional transaction costs not associated with local governments. For example, stewardship endowment fees and the nonprofit’s legal expenses that on average range between $30,000-$60,000. In addition, land trusts do not typically own land – eliminating the potential for an easement exchange to address the City Code requirement to obtain fair market value. Finally, most land trusts have an in-house source of funding to pay for a conservation easement. Donated easements or bargain sales (in which a portion of the easement’s value is covered by a grant or some other outside funding source) are the standard. Conservation Priorities The draft conservation priority list included in this packet reflects input from the December 2021 LCSB meeting, as well as subsequent discussions by staff. Factors influencing priority ranking include: development potential, proximity to important natural resources, and whether discussion of CE conveyance is already underway. Input from Larimer County staff is also taken into account. Staff are pleased to share this progress with LCSB and welcome feedback from you as we develop our long-term plan for conservation easements. FINANCIAL / ECONOMIC IMPACT – per conservation easement Purchase price: 25% to 65% of property value. 160+/- Staff Hours $15,000+/- Average cost of Due Diligence: •Title Commitment/Policy $1,000-$4,000 •Appraisal $15,000-$30,000 •Phase 1 Environmental Assessment $3,000 - $6,000 •Survey $10,000-$25,000 •Mineral Report $1,000-$3,500 •Baseline Inventory Report $6,000-$12,000 •Stewardship contribution*$25,000+ *Legal fees**$10,000+ *A one-time fee not charged by Natural Areas, Larimer County, or the City of Loveland, but commonly charged by Land Trusts ** A one-time fee also not charged by Natural Areas, Larimer County or the City of Loveland but commonly charged by Land Trusts ENVIRONMENTAL IMPACT None. ATTACHMENTS 1.Conservation Easement Acquisition Process 2.Costs and Benefits of a Conservation Easement 3. Conservation Easement FAQs Overview • Conservation Easement basics • Encumbering City-owned lands • Key Considerations Goal: Obtain Board feedback regarding proposed next steps Conservation Easements •What they are, what they aren’t •Steps to complete a conservation easement • How and where NAD has employed this conservation method Encumbering City-owned lands •Why we’re pursuing the idea •Priorities for conservation (e.g. Meadow Springs) •Pilot properties Foothills Coyote Ridge 1 Cathy Fromme Prairie 2 Reservoir Ridge 3 Pineridge 4 Maxwell 5 Fossil Creek Fossil Creek Reservoir Regional OS 1 Fossil Creek Reservoir 2 Fossil Creek Wetlands 3 Prairie Dog Meadow 4 Colina Mariposa 5 Montane Bobcat Ridge 1 Crossline Canyons 2 Poudre River Homestead 1 Riverbend Ponds 2 Kingfisher Point 3 Williams 4 Running Deer 5 Urban Kestrel Fields 1 Cooper Slough 2 Puente Verde 3 Hammond 4 Dry Creek 5 City-owned Properties by Management Zone- Priority Ranking Mountains to Plains Meadow Springs 1 Soapstone Prairie 2 Meadow Springs Ranch Bobcat Ridge NA and Heaven’s Door Key Considerations •Potential partners •Jointly owned properties (e.g. Coyote Ridge, Cathy Fromme Prairie, Fossil Creek) •Costs •Timeline •Code and ballot requirements Questions? Questions? Conservation Easement Acquisition Process 1 Natural Areas’ staff evaluate a property’s appropriateness for conservation easement acquisition using the City’s Land Conservation and Stewardship Master plan. Staff meet with the landowner(s) and conduct a site visit of the property. If the property fits Natural Areas criteria, the proposed acquisition is then presented to the Land Conservation and Stewardship Board. City Council is notified of the project via Natural Area’s quarterly land conservation reports to Council. If the proposed acquisition is expected to involve payment exceeding $2,000,000 or if it might be deemed controversial, the acquisition will be formally reviewed by City Council. The following documentation and/or due diligence needs to be completed/obtained in order to close on a conservation easement: • Title commitment • Appraisal: Natural Areas or Natural Areas and the landowner will contract with an appraiser to assess the value of the proposed easement. • Purchase and sale agreement: Staff will draft a purchase and sale agreement in collaboration with the landowner • Mineral remoteness assessment report: IRS requirements state that if the landowner does not own all of the mineral rights associated with the property, a mineral remoteness assessment must be conducted. The report provides information about the mineral estate ownership, determines/analyzes geologic conditions and the known or potential presence of solid and fluid mineral resources/deposits and it provides a professional opinion of the potential for mineral development. • Baseline inventory report: The report provides a snapshot (in words, pictures and maps) of the present condition of the property, historic and current land uses and the conservation values that are to be protected. • Subordination agreement: If the property is subject to an existing mortgage/lien, a subordination agreement must be obtained from the lender. When a mortgage precedes an easement on a property, there is no guaranty of perpetual enforceability of the easement unless the lender signs a subordination agreement (sometimes called a ‘mortgage subordination’) that allows the easement to survive a foreclosure of the mortgage. While not easy or quick to obtain, careful preparation that addresses the concerns of the mortgage holder can expedite the process. • Survey • Phase I Environmental Assessment: The Phase I Environmental Site Assessment (Phase I ESA) is used to identify potential or existing environmental contamination liabilities. Natural Areas typically covers the cost of all the due diligence – excluding the landowner’s legal costs. Frequently, the cost of the appraisal is initially split 50/50 between the landowner and Natural Areas to ensure that both are parties to the report and vested in its results. Once a closing occurs, it has typically been Natural Areas’ practice to reimburse the landowner for the 50% of the appraisal cost the landowner contributed. Natural Areas staff, City legal counsel, the landowner(s) and landowner’s legal counsel will draft the deed of conservation easement and tailor it to the specific characteristics and conservation values of the property as well as the needs of the landowner. Once all parties are satisfied with the conservation easement language, a closing is scheduled with the title company. The signed conservation easement will be delivered to the County Clerk and Recorder to be entered into the County records. Costs & Benefits of a Conservation Easement 1 Several governmental entities (federal, state, and local) and private organizations have established financial incentives to encourage landowners to conserve their lands. These incentives include cash and various tax incentives and have been used by landowners to diversify or expand their operations, pay down debt, pay for healthcare costs, college tuition, and save for retirement. While financial incentives are an important motivator for catalyzing conservation, there are other non‐ financial benefits to conservation. Note: federal income tax deductions and state tax credits are only applicable to conservation easement transactions in which at least part of the conservation easement value is donated. Benefits – Financial There are five (5) types of financial benefits that can accompany a conservation easement, (1) federal tax deductions; (2) estate tax benefits; (3) Colorado state tax credits; (4) property tax benefits; and (5) cash. Federal Tax Deduction A conservation easement may be treated as a charitable gift, making the value of the easement tax deductible. The federal charitable tax deduction for the donation of a conservation easement is reduced by the value of any state tax credits received. After that reduction, you are allowed to deduct the donated amount up to 50% of your adjusted gross income, with a fifteen (15) year carry-forward period. Qualified farmers and ranchers are allowed to deduct the easement’s value up to 100% of their adjusted gross income with a fifteen (15) year carry-forward period. If you receive state tax credits for 90% of the donated value of the conservation easement, the federal charitable deduction may only be the remaining 10% of donated value. Estate Tax Incentive Another important tax benefit is the reduction of estate taxes. By granting away development rights, the value of the land is decreased, which lowers the value of the land for estate tax purposes, and in turn can provide a significant reduction in the estate tax burden on family members. In addition to this decrease in value, qualified conservation easements can earn an additional $500,000 estate tax exemption. Colorado State Tax Credits Donors of conservation easements are eligible for conservation easement tax credits under Colorado law if they file a Colorado income tax return. These are credits that may be used against Colorado state income taxes owed. Conservation easement tax credits may be used by the donor over a 20-year period, transferred to other Colorado taxpayers, or, in years of budget surplus, refunded by the State to the donor. Donors of conservation easements can receive tax credits for up to 90% of the donated value of the conservation easement up to a total credit amount of not more than $1.5 million per calendar year and a total transaction cap of $5 million. Credits can be sold to individuals or businesses with state tax liabilities and typically sell for between $0.83 and $0.85 per dollar. NOTE: Landowners should sell conservation easement tax credits through a reputable tax credit broker. Brokers work throughout the year to identify buyers and match them with sellers. The State of Colorado must certify all conservation easement tax credits prior to issuing the credits. Property Tax Benefits Under Colorado law, an agricultural conservation easement will lock in the property tax valuation at its agricultural value. Granting a conservation easement WILL NOT eliminate property tax burdens and the property will remain on the tax rolls. It is also important to note that the landowner retains responsibility for any property tax liabilities. Cash and/or Grant funding The City has purchased conservation easements at the full fair market value of the easement previously and will consider doing so depending upon the property and if it fits the City’s conservation priorities. Occasionally, the City will seek outside funding such as a grant from Great Outdoors Colorado or USDA NRCS to purchase a portion of a conservation easement with cash. This is known as a bargain sale conservation easement conveyance. Typically, 50% of the value of the easement is purchased in a bargain sale transaction. The remaining 50% is treated as a donation and compensated through the various tax benefits described above. Costs & Benefits of a Conservation Easement 2 Benefits – Non‐Financial Landowners have different reasons for deciding to encumber their land with a conservation easement. Many of these reasons have nothing to do with financial gain but have everything to do with a landowner ethic and desire to protect open space. Landowners consistently state that the benefits of the conservation easement extend far beyond the pocketbook. These nonfinancial benefits include, but are not limited to, the preservation of Colorado’s agricultural heritage, preservation of wildlife habitat, and preservation of water resources for agricultural purposes. Conservation easements can also eliminate future family disputes over what to do with property and in particular provide opportunities for young farmers and ranchers to get a start by allowing them to purchase land at a more affordable price. Costs – Non-Financial Conveying a conservation easement is often a long and time-consuming process that can cause stress, frustration and disagreement amongst family members. Moreover, landowners must consider that conservation easements will restrict certain uses of the property in perpetuity (forever), tie the hands of future owners, reduce the value of the property and extend the time it takes to sell the property on the open market. While both the benefits and costs are important to understand when deciding whether or not to pursue a conservation easement the decision essentially comes down to answering two questions, (1) does it make financial sense? and (2) do you believe in your heart that encumbering the property is the right thing to do? Conservation Easements 101 1 FREQUENTLY ASKED QUESTIONS ABOUT CONSERVATION EASEMENTS What is a conservation easement? Conservation easements are voluntary agreements between a landowner and a qualified conservation organization that permanently restricts development and subdivision of property. Conservation easements remain attached to a property through any and all conveyances of the property. Conservation easements are unique agreements tailored for each landowner and each specific property. They are used to preserve land in perpetuity, and they are designed specifically to protect the conservation values of a property. While conservation easements restrict development and subdivision, they do not restrict the landowner’s ability to continue to use the land for traditional uses such as crop production, grazing, hunting, fishing, etc. Conservation easements generally do not require public access. What are qualifying conservation purposes under IRS Treasury regulations § 170(h)? • Preservation of land areas of outdoor recreation for use by, or the education of, the general public; • The protection of relatively natural habitats of fish, wildlife, or plants, or similar ecosystems; • The preservation of open space – including farmland and forestland – for the scenic enjoyment of the general public, or pursuant to a clearly delineated governmental conservation policy; • The preservation of a historically important land area or a certified historic structure. What are the benefits of a conservation easement? Conservation easements permanently restrict development and subdivision, thereby ensuring the land will always be available for the values for which it was conserved. Conservation easements also devalue land which makes it easier for the next generation of farmers and ranchers to retain land. The devaluation of land can also allow families to more easily pass property from one generation to the next by reducing estate taxes. Easements also offer a way for communities to work together to preserve the natural resources, open spaces, scenery, and wildlife habitat that drive recreation and tourism dollars. Financial and Tax Incentives: Landowners who donate development rights through perpetual conservation easements may be eligible for certain financial and tax benefits through direct cash payments, federal income tax deductions, additional estate tax exemptions, and transferable state income tax credits. Proceeds from direct cash payments and/or transferable state tax credits can be used to buy out partners, reduce debt, save for retirement, pay for long-term health care or college education, or to purchase land and equipment to expand and/or diversify the agricultural operation. Note: In certain circumstances the City of Fort Collins Natural Areas Department has purchased conservation easements at 100% of the appraised conservation easement value. In these situations, no donation component is involved, and the landowner is not eligible for tax incentives. Who owns the land after a conservation easement is conveyed? The landowner retains ownership of the property after a conservation easement is conveyed. What rights are typically conveyed to the easement holder (qualified conservation organization?) Typically, the landowner conveys all development and subdivision rights (except for those specifically retained by the landowner in the deed of conservation easement) and the right for the designated conservation organization to be a party to all negotiations of third-party requests to use the land. Specifically, this relates to negotiations for oil and gas leases, surface use agreements, right-of-way agreements, etc. Conservation Easements 101 2 A conservation easement also gives the easement holder the ability to enter the land during annual “monitoring visits,” to ensure the terms of the easement are being upheld and the right to enforce restrictions on the use of the land in accordance with the terms of the conservation easement. Monitoring visits are always coordinated with the landowner and the landowner is welcome (but not required) to accompany the easement holder on the visit. How are private property rights affected by a conservation easement? With regard to land, or “real property,” private property rights include the right to reasonably develop and use the property. By placing restrictions on usage and development, a landowner is voluntarily giving up a portion of their rights. The rights given up through a conservation easement transaction are considered extinguished and can never be used, sold or transferred. Other private property rights include the right to sell or lease the property, as well as the right to exclude others from accessing the property. Typically, conservation easements do not significantly impact these other rights, and the landowner retains full title to the property and all other rights not transferred under the easement. Current use and management of the land is usually maintained, with minimal to no impact on day‐to‐day activities. Indeed, in a well‐planned document, the only rights transferred are often rights the property owner had no intention of exercising, such as the right to build a subdivision or shopping mall. In addition, conservation easements often do not limit development altogether and the property owner is able to designate areas that can be used for buildings, such as barns or other agricultural structures or home sites. What rights are typically retained by the landowner? The landowner retains ownership in the property, the right to sell, lease, convey, or otherwise transfer the property, the right to continue existing agricultural operations and customary rural enterprises (i.e. farm, ranch, graze, hunt, fish, etc.), and the right to restrict public access. Who chooses the conservation organization that will hold the conservation easement? Conservation easements are voluntary agreements that are driven by the landowner. The landowner chooses the organization that best suits his/her goals, objectives and interests; and will negotiate the specific easement terms. How long does a conservation easement encumber the property? Conservation easements are perpetual and will encumber the property forever, regardless of ownership transfers. What affect does a conservation easement have on the value of the property? A conservation easement will typically reduce the value of a property between 25% and 65% depending on the restrictiveness of the deed of conservation easement, location, and type of property. NOTE: the value of the property will continue to appreciate after the conveyance of the conservation easement. However, the appreciation of the value of the property will be on the reduced value of the property as encumbered. How is the value of a conservation easement determined? Conservation easements are valued through an appraisal of the property. A conservation easement appraisal in its simplest form is two appraisals of the property – an appraisal of the property in its current condition without an easement, and an appraisal of the property in a hypothetical restricted state. The hypothetical restricted state assumes that a deed of conservation easement restricts or eliminates certain property rights. The difference between the two appraisal values is the conservation easement value. This value is the basis for which the landowner is compensated, either through direct cash payments or tax incentives. It is important to understand that conservation easements vary in terms of their restrictions. These variances affect the value of a conservation easement and are often the determining factor in a landowner’s decision-making process. Can conservation easements prevent condemnation or mineral/oil and gas development? Condemnation/Eminent Domain: A CE cannot prevent condemnation (e.g., city utility line, CDOT right of way, etc.) Conservation Easements 101 3 However, it does give the easement holder a seat at the table with the landowner when it comes to negotiating how such condemnation action is undertaken and the mitigation to be required to restore the conservation values. CE holders receive a portion of the proceeds for the easement. CE’s typically contain a statement that specifies the percentage the CE holder will receive of the fair market value of the easement. If not, the condemning agency will be required to obtain a qualified appraisal identifying the fair market value of the conservation easement relative to the fair market value of the property as though unencumbered by the easement to establish the dollar value that would be lost to condemnation and the portion of the value going to the CE holder and to the landowner. Mineral and oil/gas development: The relationship between mineral development and conservation easements depends on who owns the mineral rights and the type of mining involved. • Surface Mining: Due to the incompatibility of surface mining and CE’s, the tax code prohibits surface mining. It is important to note that the definition of surface mining does not include oil and gas extraction. If the mineral estate is split or severed (all or a portion of the mineral rights and surface rights are owned by different parties), the owner of the mineral estate will usually have the right to reasonably use the surface to extract the minerals underneath. In some instances, involving a split estate, the surface owner may not be eligible for the tax deduction unless they can show that the probability of surface mining on their land is “so remote as to be negligible.” This determination must be made by a certified geologist, who will complete a mineral remoteness assessment (commonly called a mineral report), which will document the existence and commercial viability of any minerals present on or under the property. If the landowner owns the minerals rights, the CE donation will be eligible for tax benefits if the CE contains a provision explicitly prohibiting surface mining. NOTE: A landowner may retain rights to certain mineral extraction such as sand, gravel, rock, or soil for personal and noncommercial use, but it is important that the scope and location of the activity is limited and does not impact the conservation values of the property. • Subsurface Mining: Oil and gas development is considered subsurface mining. Oil and gas development can be compatible with CE’s if the development is “limited, localized and not irremediably destructive of the conservation values”. The easement holder will typically work with landowners to negotiate leases and surface use agreements to ensure that any oil and gas development occurs in a manner that is consistent with federal and state law. Who should a landowner consult with regarding a conservation easement? Natural Areas staff is not qualified to give tax, estate planning, real estate, legal, or accounting advice to assist a landowner in evaluating whether to proceed with a conservation easement. Landowners are strongly encouraged to seek outside professional advice.