In the latest installment of an ongoing eminent domain controversy between the City of Glendale and the owner of Authentic Persian and Oriental Rugs, the Tenth Circuit Court of Appeals ruled in favor of the landowner, holding that Glendale should have provided notice of its “blight” determination affecting the landowner’s property, even though such notice is not required under applicable state law. The feud made headlines a few years ago when the landowner, who owns six acres that have been carved out of the area contemplated for “Glendale 180” Riverwalk, accused the City of repeatedly denying redevelopment applications for its property, then creating its Downtown Development Authority to condemn the property after negotiations to purchase the property fell through.

Colorado’s urban renewal statute makes eliminating “blighted” areas a public use for which municipalities can use their power of eminent domain. Once a city has determined that a property meets at least five of the eleven statutory blight factors, the city may begin condemnation proceedings at any time within seven years from the date of the determination.

The statute also provides that property owners may challenge a blight determination within 30 days after the date of the determination by filing a civil action in district court. The statute requires that cities notify property owners (1) when the city begins a blight study, (2) when the city will hold a public hearing to regarding its intention to acquire the property through eminent domain, and (3) if the city does not find the property to be blighted. However, the statute does not require notification to the property owner when the property is found blighted. Put another way, the statute does not require notice to property owners of the date the 30-day challenge period starts ticking.

In this case, Glendale provided the notice required by clause (1) above, and also notified the landowner of the date of the public hearing to consider the blight determination. According to the opinion, however, when asked by the landowner what “blight” meant and whether the landowner should take any action in response, a city representative responded that the landowner did “not need to worry about the notice.” The landowner took no further action and did not find out about the subsequent blight determination until after the 30-day challenge window had expired.

In its decision, the Tenth Circuit determined that (1) the landowner had a protected property interest in the right to challenge the blight determination within 30 days of the decision, and (2) by failing to provide notice of the blight determination (i.e., the start of the 30-day window), Glendale effectively deprived the landowner of its right to challenge the determination, which in turn violated the landowner’s due process rights. The court limited its holding to instances where, as here, the landowner does not otherwise learn about the blight determination, leaving the responsibility with the landowner to investigate and determine which remedies may be available.

In a statement issued after the ruling was announced, Glendale noted that “although the court found that the city complied with all the procedures required by Colorado statutes, it creates a new, previously unknown procedural obligation on all Colorado cities using urban renewal,” and stressed that the ruling will have significant impacts on urban renewal projects across the state.