Long Battle for Gateway to Telluride Wraps Up

TELLURIDE – The Telluride Town Council penned the final chapter in this far-flung mountain municipality’s saga of politics, intrigue and money known as the Valley Floor acquisition on Tuesday when in a 6-0 vote with one abstention it approved the third and final reading of an ordinance authorizing the execution of a conservation easement on the property.

The easement should be recorded by the end of the week and enters the town into a binding agreement with the San Miguel Conservation Foundation, the land trust that is now charged with ensuring its terms are fulfilled.

“No matter your position related to the Valley Floor, the only position that now exists is a conservation easement that will protect its values in perpetuity,” said Fraser.

Open Space Commission Chair Roberta Peterson and Sheep Mountain Alliance Executive Director Hilary White both implored council to approve the ordinance in a unanimous vote.

Considering the time and effort the town spent fighting for its right to condemn the property – all the way to a precedent-setting lawsuit before the Colorado State Supreme Court – the vote seemed destined to fly through council with little, if any, further discussion.

But that was not the case.

According to a memo to council from Town Attorney Kevin Geiger, representatives of the town in January 2008 began receiving unsolicited emails from Walter Vaughan Davidson, a South Carolinian who traveled to Telluride to speak before council during the public discussion period of its July 14 meeting.

At that meeting Davidson suggested that the town could make millions from the Valley Floor while still protecting it under conservation easement. He proposed that the town, in essence, sell the tax deductions or credits associated with conservation easements to a group of investors.

To accomplish the task, the town would need to establish a separate corporate entity and transfer its ownership of the Valley Floor into that entity. The Valley Floor, with its alleged full market potential, would then be placed under conservation easement, thereby reducing its market value.

Investors into the new corporate entity would then take the tax credits or deductions that resulted from the reduced value, and the town would keep the proceeds.

But the deal could not be done after the conservation easement was in place, and so Davidson urged the town to delay it.

Davidson’s proposal gave some members of the community pause as they mulled its plausibility, including councilmembers David Oyster and Bob Saunders – so much so for Oyster, who abstained from the final vote, that he asked Mayor Stu Fraser to remove the item from Tuesday’s agenda.

“I don’t think that we should necessarily proceed with what has been suggested by Mr. Davidson,” he said. “But there are sufficient questions that have been brought up” to warrant a postponement of the final vote.

Saunders initially backed Oyster in his call to slow down the process by urging council to continue the vote to a future meeting.

“If any of it has credence, that could be a source of money coming into town,” he said.

“I think it would be irresponsible of us to not look as carefully as we can at these options.”

In light of Davidson’s proposal, Geiger sought analysis from attorney Melinda Beck, a conservation easement expert from Faegre and Benson, the lead litigation firm in the town’s Valley Floor acquisition efforts.

“For a number of reasons…it’s our unequivocal conclusion that this proposal is fundamentally flawed,” he said.

Geiger cited Article 11, Section 2 of the Colorado Constitution that prohibits the state and local governments and school districts from becoming shareholders or joint owners of any “person, company, or corporation, public or private, in or out of the state” except for the purpose of developing energy resources, as the primary obstacle.

But even if it the town could enter into such a partnership to donate the conservation easement, both condemnation Ordinance No. 1174 passed by the voters in 2002, and the Memorandum of Understanding the town subsequently entered into with the Valley Floor Preservation Partners for fundraising purposes, mandated the placement of the conservation easement on the Valley Floor.

“The language of the Ordinance not only shows an intent for the conveyance of a conservation easement interest on the Valley Floor, it requires it through use of the phrase ‘and shall be protected in perpetuity through a conservation easement(s),’” Beck wrote.

Because the conservation easement was required by the ordinance, it would not qualify as a charitable contribution according to Internal Revenue Service rules, she concluded. As a result, it was not eligible for any federal or state tax benefits afforded by conservation easements.

Saunders contemplated his vote up until the moment he cast it, but ultimately joined with the majority.

Oyster wondered aloud whether the implications of the document had been fully thought through as he made known his intention to abstain from the vote.

“There are a number of issues; it’s not just being able to monetize the ownership,” he said. “I don’t feel that we’ve thoroughly examined those options.”

“Every step of this journey has been taken with great care and deliberation. We have researched and overcome concerns that have gone on for decades as well as dealing with some more current issues. We are gratified that our legal counsel has provided us with the best advice and leadership available,” Fraser read from a prepared statement.

In a subsequent vote council unanimously approved a Valley Floor Management Plan recommended to it by the Open Space Commission.

The plan designates the Valley Floor into various management zones of low, medium and high values – with emphasis placed on the conservation of the most environmentally sensitive areas.

Additionally, it puts into place a host of management policies as related to wildlife management, trails and trail use, winter activities, structures, utilities, cultural and historic resources, activity permitting, and water rights among many others.

Among the most controversial topics addressed by the plan: dogs are not permitted on the Valley Floor beyond those areas where they have been allowed up until this point; and the existing prairie dog colony located east of Boomerang Road will be prevented from dispersing beyond it.

The plan will be reviewed

every four years and, unlike the

conservation easement, may be

amended.