Jack Vickers has a new interest. It's beekeeping. It's very profitable.
Vickers, who built his vast wealth by developing such projects as the exclusive Castle Pines residential area in Douglas County (the golf course there was designed by Jack Nicklaus), keeps the bees in an unlikely place. Here are the directions:

Drive south on I-25 from Denver. Exit the highway at Meadow Parkway, when you see the trendy Castle Rock factory outlet center. The beehives are directly adjacent, to the north and west, in a field between the interstate and U.S. highway 85 that's owned by Vickers's development company, Dev Vic Ltd.

So far, there have been no unfortunate shopper/bee encounters. But you might wonder why Vickers (estimated family wealth: $50 million) would lease his land to a beekeeper and risk swarms of stingers buzzing next to one of the state's busiest shopping centers. Here's a clue: It has nothing to do with honey and a lot to do with the Douglas County property-tax bills being mailed out this month.

Douglas County is the fastest-growing county in the United States, so land here can be very expensive. This is particularly true of commercial land in desirable locations--such as Vickers's property next door to the factory outlet shops. Last year the county assessor pegged its value at a fat $5.7 million. On the open market, Vickers's land could fetch even more: Two companies are in the process of bidding against each other to develop the site into more factory outlets.

High land values usually translate into high property taxes. But Colorado has a series of laws that permit landowners to earn lower property values--and thus lower tax bills--if they can prove their land is used for certain types of agriculture.

Vickers is well aware of those laws. Last year he claimed that his commercially zoned property crammed between the interstate and the shopping center was actually a ranch. He insisted that, just like a real rancher, he was keeping ten bulls on the property.

There was a problem, though: When county appraisers visited the land, they couldn't find a fence. Noting that fences to keep livestock in (and, in this case, off the interstate and away from the factory outlets) were generally considered a necessary feature of ranching, the assessor's office denied Vickers's request. Which is when Vickers appears to have become interested in beekeeping.

For years beekeepers have trooped up to the State Capitol during each legislative session. Their cause has been single-minded: To convince lawmakers that beekeeping is a genuine agricultural business and thus deserving of the property tax break. Keeping bees, they argue annually, is just like ranching very small cattle.

Every year state lawmakers ignore them. Yet the keepers have managed to convince some Douglas County officials. In August 1993 County Attorney Mark Hannen wrote to the assessor that, in his opinion, bees did have a lot in common with livestock. "They're animals--they graze the property," he explained. "They're used for producing food. And they're kept for breeding. We all know what goes on in a beehive."

More to the point for Vickers, bee wrangling doesn't involve fencing. Last summer he leased his Castle Rock land to a local beekeeper and tried again with the assessor's office, pointing out that herds of bees were now grazing his land, thus making it eligible for the agricultural tax break. Investigators were free to check it out.

They did. They remained unimpressed. The assessor's office pointed out that the legislature consistently had concluded that running a herd of bees didn't really count as ranching. (If one is smeared on a car windshield, does the beekeeper get livestock compensation?) Vickers was shot down again. Exercising his right to appeal his tax assessment, however, the developer took his case to the county Board of Equalization. And this past July, he won.

The spoils were worth the fight. In 1995, when it was assessed as commercial property, Vickers's $5.7 million worth of dirt landed him a property-tax bill of $161,000. Not this year. Because his real estate was redesignated as agricultural, it will be valued at a mere $13,199.

Vickers's tax bill, due to arrive this month, will be $371--a savings of more than $160,000.

The series of laws that provide ranchers and farmers a tax break grew out of an admission that agriculture is a fickle business. "If a person has a piece of ground and he depends on that ground to produce the revenue he'll use to pay taxes, it doesn't make sense to tax him more than he earns," explains Reeves Brown of the Colorado Cattlemen's Association. "If it didn't work that way, there'd be no farmer or rancher within fifty miles of Denver who could pay his taxes."

So legislators gave those in the business of working the land a break by valuing their property much, much lower than someone who, say, owns a piece of commercial real estate. The state agreed to value agricultural land by the amount of money earned from it. Once county assessors determine what the land is used for, they are required to assign it a set value. Depending on the county, wheat land is set at about $25 per acre, grazing land at about $16 per acre, and so on--no matter what the land is really worth on the open market.

As Colorado has grown and land prices have shot up, the gap between those agricultural assessments and a property's real worth has widened. In rapidly growing Douglas County, for instance, wheat land assessed at $28 an acre can actually sell for up to $20,000 an acre to someone who wants to develop it badly enough.

As a result, the laws that give farmers and ranchers a tax break have assumed another role: They make it feasible for agricultural landowners to resist the advances of developers who would turn the wheat and grazing fields into a Wal-Mart or more tract housing without regard for maintaining Colorado's rural character. "If we lose the ag exemption altogether, we'll lose agriculture in this state overnight," says cattleman Brown. "We'll lose open space overnight."

To those savvy enough to understand them, however, the agricultural laws signify something else entirely: an easy and lucrative tax break. This is particularly true for people who aren't in the business of making a living off the land but who own large, expensive pieces of property: a 35-acre ranchette in the foothills, or a 5-acre spread in Boulder County, or a sprawling piece of ground on the plains where they hope to build their dream home one day. In the meantime, though, they wouldn't mind saving some money.

So the number of requests for the farmer and rancher tax breaks are particularly high in formerly rural areas now being developed as bedroom communities for Denver's business centers: Douglas County to the south, Jefferson County to the west and Elbert County to the southeast.

Even assessors concede that with enough effort, an undeserving landowner can get a massive tax break. "If they play the game right," says Karen Hart, Elbert County's assessor, "they can beat me."

One reason is that the laws are loose. An owner need only prove that he used the land mainly for agriculture and that he attempted to make a profit. A couple of cows or a dozen bales of hay often are enough to do the trick. The game is made easier because assessors' offices typically have only one or two people to check out the deluge of requests for agricultural tax breaks that arrive each year. In Elbert County, that person is Mary Vote.

Vote's tiny cubicle on the second floor of the county building in Kiowa is plastered with pictures of cows and windmills. That's because, in addition to her day job, Vote is a real rancher. She lives on 700 acres homesteaded by her husband's grandfather, where the family raises wheat and about fifty head of cattle. "So it angers me when I see abuse," she says.

Unfortunately, she adds, she doesn't see it as often as it occurs. Each year Vote sends a questionnaire to every landowner in the county. If someone claims he is using his land for agricultural purposes, she generally has to take him at his word. "I'm the only inspector here, and I don't have time to look at everything," she says.

Even if an assessor turns down a person's request for agricultural status, there is no guarantee the decision will stick. Landowners have numerous levels of appeal, up to the Colorado Supreme Court. First in line is the county Board of Equalization, which typically is made up of the elected county commissioners. This can lead to appraisal decisions that seem to have less to do with the science of land valuation than with who is making the application.

When the Douglas County assessor denied Jack Vickers's request to reclassify his land from expensive commercial to inexpensive agricultural (and lower his tax bill by 98 percent), Vickers appealed to the Board of Equalization. The Douglas County commissioners ignored their own assessor's recommendation and gave Vickers--a very influential man in Douglas County--the giant tax break.

Members of the equalization board explained that in order to keep a proper distance from influential constituents appearing before them, the commissioners hire an impartial referee to judge the merits of each case.

That's true--to a point. This past summer the Douglas County Board of Equalization hired a Florida man named Peter Ehrlich to judge the Vickers case. After hearing the evidence, Ehrlich recommended against giving the developer the tax break. The commissioners ignored Ehrlich, too. Vickers got the deal.

Assessors insist that their attempts to insure that only real farmers and ranchers get the tax break are not motivated by money. Legally, they point out, their counties can collect only the amount of money they need to operate. Rather, explains Judy Pettit, Jefferson County's assessor, their concern is for how the tax bill is spread around.

As evidence, she pulls out pairs of color photographs she has collected over the years. Three months ago Pettit took pictures of two neighbors on West 82nd Avenue, where the market value of the land is just over $20,000 per acre. Both neighbors have houses on their land, for which they pay separate property taxes. On the empty land portion, however, 11581 West 82nd pays a $432 yearly tax bill. The owner of 12951 West 82nd, who raises dry wheat on his four acres, pays just $4.

"It's not about revenue," Pettit stresses. "It's that we're sick of hearing neighbors complain that their neighbor has a tax break and they can't get it."

Even more grating to assessors is that such inequity can be a subsidy for those who don't need it. The $160,000 Vickers shaved off his property-tax bill must now be made up by everyone else in Douglas County.

Three years ago legislative researchers calculated that if the agricultural tax breaks were reformed, statewide land valuation would increase by $122 million--money that would go a long way in offsetting everyone else's tax bills. But such attempts to change, or at least tighten, the laws originally intended to give bona fide farmers and ranchers a break have routinely crashed. "Every year for the past seven or eight years, there have been proposals to tighten up the laws," says Pettit, who has been Jeffco's assessor for nearly fifteen years. "Every year it fails." Farmers and ranchers themselves can't agree on how to amend the law. Two years ago, for instance, members of the state House of Representatives proposed a law that would have required landowners seeking the agricultural tax break to prove they earned at least $1,000 a year if they had a twenty-acre or larger farm or an eighty-acre or larger ranch (as is required in Nebraska and Oregon). To supporters--the ranching association--the figure seemed reasonable.

"When I was twelve years old and in 4-H, I could guarantee a $1,000 profit," says Brown. "It's just not that hard." The powerful Colorado Farm Bureau disagreed, however, and the bill died.

Last year, state senator Joan Johnson, who represents Adams County, tried again. She proposed a bill that would have required that at least the land on farms and ranches not used for agriculture be assessed at market value (as it is in Arizona and Kansas). "The last time I looked, you couldn't grow anything under a house or a swimming pool," she points out.

This time the farm bureau signed on and the ranchers didn't. The bill withered.

Even the governor has tried to tackle the problem. Several months ago Governor Roy Romer's Smart Growth and Development initiative recommended overhauling the agricultural tax breaks to cut out the undeserving. The plan suggests that landowners meet minimum income or acreage levels to earn the tax break.

Until recently, there seemed a small chance that there might be agreement. Last spring representatives of the farm bureau, the cattlemen's association, the state Department of Agriculture and the assessors' association began meeting to come up with a solution. Two months ago their attempts fell apart. "So I'm not sure anything's going to happen in the legislature this year," sighs Johnson.

Which, in a way, is good news. It appears the loose laws will remain on the books for at least another year--which means now is the time for action. Because everyone is entitled to an equal shot at tax breaks, here's a handy guide to obtaining your own:

Make Hay, or Pay Someone to Do It
"To me, hay is the cheapest way to go," says Jeffco's Pettit. "There're no fences, no vet bills--it's very low-cost."

The state laws guiding tax assessors as to who is and who isn't a wheat farmer are delightfully vague. The law doesn't say how much wheat you must raise or how much money you must earn. You don't even have to cut it yourself. Just ask Dwight Griggs.

Griggs owns eight acres on Simms Avenue in Arvada on which he raises some wheat. Although the land had been classified as agricultural for years, in 1992 the Jefferson County assessor reconsidered and deemed it residential. The assessed value jumped from less than $5,000 to what the county considered market cost, around $58,000.

Griggs appealed to the county Board of Equalization, which upheld the assessor. He appealed again to the next level, the state Board of Assessment Appeals.

In making their case against Griggs, Jeffco officials contended that he had no intention of growing wheat to make money. "We calculated that Mr. Griggs's profit is $249.20 per year, less any expenses he might have for seed or fertilizer," the assessor argued. "His tax savings from an agricultural tax classification would be $575, leading us to conclude that the primary purpose of the hay cutting is the tax savings."

The assessor pointed out that Griggs didn't even harvest his own seven acres of hay--he paid someone else to do it, at twice the going price. No matter. In 1993 the state appeals board sided with Griggs. Today his land is assessed at a low $4,880.

"It used to be, farmers were farmers and ranchers were ranchers," says John Mikus, a longtime appraiser for Jefferson County. "Now you got doctors claiming they're farmers and lawyers saying they're ranchers. I mean, this law was intended to give a break to farmers and ranchers who raise food and fiber for the population, not people who raise polo ponies."

Raise Polo Ponies
"The way we found out about this," begins Tom McNish, an assistant Douglas County attorney, "is that the assessor's staff noticed polo matches taking place on the property. Also, the grass is not your typical ranching/grazing grass. I think it's a Kentucky bluegrass/fescue mix."

McNish is referring to a 24-acre site in the eastern part of the county that had been designated agricultural. That translated into a big tax break: The owner was paying taxes on a valuation of $23 an acre, rather than the $90,000-per-acre price the assessor figured the land was really worth.

Then again, the landowner knew her stuff.
Her name is Edith Clarke; when she's not taking care of her private law practice, she works part-time as the Elbert County attorney. And when the Douglas County assessor's office in 1992 changed her polo field from agricultural to vacant land--at a vastly higher tax rate--she fought back.

Clarke lost her case at the county Board of Equalization level. But when she took it to the state Board of Assessment Appeals, she won. "She claimed to be grazing the field in the fall, when the polo season was over," says McNish. (Clarke could not be reached for comment.)

The county decided to fight. "We just felt as a matter of principle that a polo field shouldn't be given a tax break," explains Hannen, the Douglas County attorney. But thirteen months ago Clarke won another round, when the state Court of Appeals sided with the assessment board.

The county will try to collect more taxes from Clarke one final time; McNish says the state Supreme Court is expected to hear the case sometime this year. Even though the dispute is over only a single tax year, it is not inconsequential. If the county wins, Clark owes more than $63,000 in taxes for 1992. If the Elbert County attorney wins, she pays less than $20.

Raise Anything Else
If Jack Vickers can convince Douglas County commissioners that herds of bees graze on fields like cows, the definition of what constitutes a farm animal is wide open. "We have people claiming to raise llamas, bees, pheasants, emus," says John Mikus, the Jefferson County appraiser. "Do you know what an emu is?"

Douglas County assessor Ginger Chase recalls an attempt made with geese. "A few years back we had so many grasshoppers around that this guy who had geese on his land claimed he deserved the agricultural break," she says. "His thinking was that his geese ate grasshoppers, which grazed on the land." His application was denied.

Others have been more successful. James Pederson raises pheasants on 180 acres in Elbert County. But not for food, necessarily.

Rather, he allows the pheasants to eat grain off the land, which he plants on several terraces. Then he rents the property out to hunters looking for an area thick with game birds. Nothing is harvested, nothing is grazed. But Pederson has hauled in a giant tax break: His land was valued at a paltry $16 an acre.

Until this year, when the Elbert County assessor determined that pheasants weren't really grazing animals and jumped Pederson's assessment to $1,125 an acre. He will receive his new tax bill later this month.

If game birds aren't your style, try donkeys. Better yet, make them miniature donkeys. Larry Dewald did.

Dewald lives in Morrison, but he owns two forty-acre lots in north-central Elbert County. There he raises a handful of the tiny donkeys, llamas and Afghan dogs. Although he purchased the land for $38,000, the assessor was forced to value it at the going agricultural rate for grazing--$1,320.

Last year, however, investigators discovered that when Dewald claimed his animals were grazing the entire property, he was being generous. Even though Dewald received an agricultural tax break on all eighty acres, the critters actually were penned inside a less than half-acre plot. The county yanked the tax break and reassessed his property at $32,000. Dewald is currently appealing the county's decision.

And if miniature donkeys and game birds don't do it for you, there are always the traditional land animals. And you don't have to own many to qualify for the tax break.

Herbert Van Buren, of northwestern Jefferson County, raises sheep, although it's unclear whether they actually constitute a flock. There are just two.

According to Van Buren, however, the pair needs 135 acres to graze. Never mind that the vast majority of the land is heavily wooded. "There's even no real vegetation there to speak of, nothing to graze on," says one Jeffco appraiser.

Still, Van Buren had received a generous tax break for years: the 135 acres were valued at just over $2,000--$14.80 an acre. But in 1994 Jeffco repossessed the deal, and Van Buren's land was assessed at its market value, $101,000.

Last year he appealed to the county Board of Equalization, which upheld the assessor. Van Buren appealed again, to the state's Board of Assessment Appeals. The board offered a compromise: Van Buren's two sheep could legitimately graze on fifteen acres. Van Buren disagreed. He is in the process of appealing his case one more time.

Pay Someone Else to Raise Something on Your Land
This strategy can be handy if you're the owner of a new home looking to shrink your tax bill, or the developer of a vast tract of land on the edge of a metropolitan area.

Homeowners first. To see property-tax creativity in action, drive past Golden on Highway 93 and head toward Boulder. To the left, climbing into the foothills of Jefferson County, is Golden Gate Canyon, a winding road of scenic beauty and fancy homes.

Many home sites here have been sold by a man named Leon Bachman. County property records show that the 35-to-40-acre plots have fetched anywhere from $75,000 to $90,000. Yet the 40-acre plots are assessed at only $1,120. The yearly tax bill: $29.

That's because the property owners lease the land to Wayne Bauman, whose family has been running cattle in the Golden Gate area for generations. The family has never owned the land, though; they simply rent it. When Bachman divides up more of the property for sale, he transfers the Bauman lease to the new homeowner, guaranteeing that the land remains classified as agricultural, despite its high sale price and residential ownership.

"It's a real good tax break for people who aren't really farmers or ranchers," says Jeffco's Mikus. "Every four or five years a cow walks by and it's called a ranch. And the thing is, it's perfectly legal."

"The grazing isn't comparable to eastern Colorado," concedes Bauman, who says his eighty cattle are spread out over 5,000 acres in Golden Gate. "But," he warns, "you might see a cow every day."

Renting a herd of cows also makes big tax sense for developers, thanks to the giant home-building company MDC Construction.

In 1987 MDC purchased 1,200 acres of land in the town of Superior for a healthy $12,735,000. Although the property had been used for farming for decades, the town recently had zoned it for planned development. Indeed, since then the property has been developed as a residential community called Rock Creek.

Nine years ago, however, MDC simply had a piece of land and some sketches. So it leased the land to two local ranchers and claimed its use as agricultural.

In 1988 the Boulder County assessor disagreed. Noting the high price that MDC paid for the land and its non-agricultural zoning, the county designated the property as vacant/commercial, qualifying it for much higher taxes.

MDC unsuccessfully appealed the case all the way through the county Board of Equalization and then the state Board of Assessment. Finally the state Court of Appeals found in the developer's favor. And in 1992 the Colorado Supreme Court agreed. The judges reasoned that the landowner himself did not have to use the land for agricultural purposes; it was sufficient for him to lease it to someone who did.

That decision cleared the way for what has become standard operating procedure in Colorado today: A developer buys a valuable chunk of land for millions of dollars and then, while he waits for his various regulatory approvals, leases it to a genuine farmer or rancher. In this way the developer receives an enormous property tax break, regardless of how much money he paid for the land.

"Since the MDC thing, none of us has even bothered to challenge the law," says Pettit, Jeffco's assessor.

"It's now a well-established practice," adds Mary Huddleston, administrator for the state Division of Property Taxation.

Recently, the developer's loophole has gotten even larger--courtesy of one of the largest real estate developments in the Denver area, Highlands Ranch.

Developed by Mission Viejo Business Properties, Highlands Ranch tract homes now swarm along the southwestern stretch of C-470 in north-central Douglas County. In 1989, though, several large chunks of the former ranch had yet to be developed. So Mission Viejo, following MDC's lead, leased the land to real ranchers and set about enjoying the agricultural tax break.

When they investigated, however, Douglas County appraisers discovered that a relatively small piece of land, sixty acres, was not being grazed. Indeed, the developer didn't even have a grazing lease for it. So the county pulled the site's agricultural status and classified it as commercial/vacant. Instead of the 67.5 acres being valued as grazing land at $1,550, the county now pegged its worth at $5.9 million.

Mission Viejo appealed to the county equalization board. McNish, the Douglas County attorney, recalls his argument: "Our point was, hey, if you don't graze the property, you don't get the break." Mission Viejo lost.

Next the company made its case to the state Board of Assessment Appeals, arguing that the lack of a grazing lease was "an oversight" and that with such a big piece of property you couldn't expect cows to be on every parcel of land. This time the company won.

In April 1995 the Colorado Court of Appeals upheld the decision. The Supreme Court has agreed to hear the case later this year.

In the meantime, says Douglas County Attorney Hannen, in order to get the agricultural tax break, "all the developer now must prove is that he had the intent to graze the land."

Wait for the Legislature to Loosen the Law Even More
Every few years, state lawmakers can't resist the temptation to designate something else as agricultural and thus eligible for a tax break that can be sloughed off on other taxpayers. In 1990 it was Christmas trees.

More generally, all wood products, from wood shavings to pion nuts. The new law granted lower tax rates to anyone who owned at least forty acres and could prove that he produced "tangible wood products that originate from the productivity of such land for the primary purpose of obtaining a monetary profit." The landowner also had to submit a forest management plan.

Not surprisingly, it wasn't a mom-and-pop Christmas tree outfit in Lake County that tested the law first. It was a developer in the process of building some of the most expensive homes in the state.

In 1993 Anasazi Partnership, which owned a development called Reva Chase near Genesee, along the north side of I-70 in the foothills of Jefferson County, applied for an agricultural tax break under the new forest-products statute.

The company had already begun developing lots, which were being sold for as much as $120,000 apiece, for soon-to-be-built posh homes. To prepare the sites, the developer had to cut down some trees--which Anasazi claimed it was selling as firewood, making the company deserving of the new agricultural tax break.

The county assessor denied Anasazi's request, as did the Board of Equalization. And although the company filed its intent to take its case to the state Board of Assessment Appeals, it later dropped the matter.

But according to Alan Owen, who oversees the program for the state forestry service in the Golden district, since Anasazi applied for the forestry tax break, the number of people asking for and receiving lower assessments has steadily increased. Today there are thirty in his region alone.

Owen insists, however, that there is little abuse--he has denied only three requests in four years--and that the program insures responsible forest management. "My philosophy is, if you're going to avoid paying the taxes, then, by golly, you're going to cut some trees," he says.

During last year's legislative session, lawmakers added yet another way for non-farmers and ranchers to earn the agricultural tax break: a "conservation easement." The new law permits owners of large parcels of land to maintain their low taxes even if they take the land out of production. The measure was pushed by environmental groups, under the theory that it would give farmers and ranchers who have decided to stop working the land an incentive to keep the land open and undeveloped.

Ginger Chase, the Douglas County assessor, so far has received only one formal request for the new tax break. But, she says, more are almost certainly on the way.

"There are other developers starting to talk about it," she says. "So my guess is that it's going to turn into another way to develop land at a lower tax rate.


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