Denver International Airport is not only the site of major development in Denver County. It is also its agricultural heartland.
More than 1,500 acres in the commercial and residential zone along Peña Boulevard south of DIA are designated as agricultural land for tax purposes. That is thanks mainly to some sickly, nonirrigated crops and even empty fields that, their owners say, are “lying fallow.”
The owners of these agricultural lands are mostly corporations based in downtown Denver or out-of-state investor consortiums that are enjoying agricultural tax rates as they wait to develop the ground.
Some owners have hired local farmers to minimally work the acres so the owners can claim agricultural status even as they put in sidewalks and gas lines.
If all those acres were taxed at the same rate as vacant neighboring lands, the taxes would amount to about $3.2 million a year, according to the Denver tax assessor’s office. As it is, the tax bill adds up to $2,500.
“When people find loopholes and ways to take advantage of it (tax regulation), that’s generally what they do,” said Keith Erffmeyer, deputy assessor and chief appraiser for Denver.
That does not happen for lack of trying on the part of the Denver assessor’s office. Like many assessors’ offices across the state, Denver’s is dealing with a state constitution and laws that favor those seeking agricultural tax breaks. When assessors fight designations on lands that do not look like true agricultural acres, they often lose on appeal.
“We look at it pretty hard, but most of the time we find ‘farming’ going on that meets the regulations,” Erffmeyer said.
Touchy issue for legislators
The laws were designed to give legitimate agricultural producers lower tax rates based on the production potential of the lands rather than on the market value. Farmland generally does not generate as much money as residential or commercial properties.
Most of the problems with perceived abuses of the agricultural tax designation have been occurring in the state’s resort counties and in rapidly growing areas like Douglas County, where former farms and ranches have been turned into high-end developments. The agricultural property tax designations can remain in place even after mansions or golf courses are built on former alfalfa fields or sheep pastures — as long as a few animals are brought in to graze for brief periods or if hay is mowed on an open field.
DIA was built on former agricultural land, so it makes sense that owners of that land also would seek agricultural tax advantages. There are true farmlands abutting DIA in nearby Adams County.
The problem of questionable agricultural tax breaks was highlighted recently in a report to the legislature by a task force made up of assessors, county commissioners and representatives of the agriculture industry. No legislators have stepped forward yet to carry any legislation that might change Colorado’s agricultural tax laws. It is a touchy issue because it could be perceived as a tax increase and because no one wants to make a change that might hurt legitimate farmers and ranchers.
“I guess there should be some type of legislation. The abuse needs to be stopped,” said Sen. Ken Kester, R-Las Animas. “This would be something that should be addressed in the next session, and I think it probably will be.”
Kester, a member of the Senate Agriculture Committee, said he has no idea how such legislation might be worded to protect farmers while cutting out opportunists.
C.P. Bedrock, a New York City-based consortium, owns 310 of the agricultural acres near DIA. C.P. Burke, one of the owners, said his company contracts with a farmer to grow wheat on that land, which has been farmed since the 1950s.
Even though it abuts some development and the farming may be marginal, he said he considers it legitimate agricultural land for soil-erosion prevention and for tax purposes.
“By and large that’s true,” Erffmeyer said. “Farming is in fact what they are doing, but would they be doing that if it didn’t mean virtually free property tax?”
Big winners on appeal
Denver turned down 30 acres of C.P. Bedrock’s land for agricultural status in 2007 when nothing was planted on the land across from Green Valley Ranch subdivision. The company took its case to the Colorado Board of Assessment Appeals, claiming the land could not be planted because a development-enhancing drainage culvert was cut through it.
The company won. As a result, C.P. Bedrock pays $50 in annual taxes on that land rather than $62,000.
Other large agricultural landholders around DIA include a Miami-based company called LNR CPI High Point, which owns more than 300 acres. A number of linked Denver-based corporations doing business under a variety of DIBC LLC names own nearly 500 farm acres.
Even the city and county of Denver owns farm ground near DIA, with 57 acres purchased for future school sites that are still designated as agricultural land. In that case, there is no tax break because the land is already tax-exempt.
Denver’s woes over agricultural taxes — an oddity in a county without land zoned agricultural — aren’t all centered on DIA.
Larry George, commercial supervisor for the assessor’s office, said some home and community gardeners in the city proper have applied for agricultural status. They have been turned down, and so far, none have appealed.
Erffmeyer pointed out that he expects a new battlefront on agricultural tax designations in and around Denver — medical-marijuana growers.
“That’s probably just around the corner. No one has tried yet, but I can see that they probably will be trying to get ag status on that,” he said
Nancy Lofholm: 970-256-1957 or nlofholm@denverpost.com
