We are past the half-way point of the 2011 Colorado legislative session, which began in early January and ends in early May.  Several hundred bills have been proposed, and many have already been “postponed indefinitely” or voted down in committee or in a legislative chamber.  Below are summaries of certain significant bills affecting Colorado real estate law or the commercial real estate industry that continue to be debated as of the date of publication of this post.  Given the many bills under consideration, this list is not intended to be a comprehensive overview.

colorado capitol.jpgReal Estate Finance – Lenders Must Pursue Collateral First (HB 11-1139).  This bill would prohibit consumer loan creditors, credit unions, savings and loan associations, state banks, industrial banks and mortgage lenders from attempting to collect a debt from a borrower personally unless (a) the creditor first attempts to collect the debt from the collateral, and (b) the proceeds from the collateral are insufficient to pay the debt.

Ballot Measures – Constitutional Initiatives and Referenda Require 60% Voter Approval (Senate Concurrent Resolution 11-001).  This resolution would put to the voters via referendum in November 2012, a proposed amendment to the Colorado Constitution that would: (a) beginning in 2013, increase the amount of votes needed to pass a ballot measure for a Constitutional amendment from a simple majority to 60%, except as to measures that repeal Constitutional ballot measures passed prior to 2013, (b) require that a certain number of signatures for Constitutional initiatives be obtained from each congressional district in the State, and (c) increase the voting requirement in the legislature to amend or repeal a successful statutory initiative or referendum from a majority to two-thirds for a three year period after passage.  The scope of this measure clearly goes beyond real estate.  However, it may be of particular concern to the Colorado commercial real estate industry, which has had to defend against various initiatives over the years.  This referendum would make future Constitutional initiatives and referenda more difficult to pass, although it would provide greater protection to successful statutory ballot measures.  The concurrent resolution to establish this referendum has passed the House with minor modifications to the approved Senate version.  It now is back in the Senate for a vote on the modified version.  My colleague Bob Fisher provides more information about this resolution in a post below.

Agricultural Land Taxation – Split Assessment for Agricultural Land with Residence (HB 11-1146).  This bill would allow tax assessors to divide a parcel for assessment purposes into agricultural land and up to two acres of residential land unless the residence is “integral to agricultural operations.”  The phrase “integral to agricultural operations” would be defined by the Colorado property tax administrator.

Property Disclosures – Commercial Properties Must Disclose Energy Data (SB 11-130).  This bill would require owners and operators of commercial properties, defined to exclude multifamily properties sold or leased on a unit-by-unit basis, (a) to upload to the Environmental Protection Agency data necessary to generate an energy performance rating, and (b) disclose the building’s energy performance rating (if one is generated by the EPA) to a buyer, tenant, or lender at the time of conveyance and upon request by such parties.  The bill would only cover commercial buildings in excess of 50,000 square feet during 2012, but would cover all commercial buildings thereafter.

Also, a bill restricting private transfer fees is expected to be introduced this session but has not been introduced yet.  Further information on these and other bills affecting real estate may be obtained by visiting www.statebillinfo.com.

Photo by cliff1066™ (Flickr).

Last week I attended the 20th annual Rocky Mountain Land Land Use Institute conference at the University of Denver Sturm College of Law.  Nicola Villa with Cisco was the Keynote Speaker on Friday morning.  Mr. Villa works with the Connected Urban Development (“CUD”) program across the world in cities like Amsterdam, San Francisco and Seoul.

Launched in 2006, CUD was born out of the the Clinton Global initiative intended to help lower carbon emissions across the world.  CUD’s goal of reduced carbon emission is achieved through high connectivity – broadband, wireless and “smart urban structures.”  CUD works by changing how cities deliver services, how residents work and commute and how real estate resources are used and managed.

CUD continues to evolve.  Last year, the next phase of the CUD was announced at the Shanghai World Expo.  It’s called SMART 2020: Cities and Regions.  The program is administered by a non-governmental organization and seeks to help cities collaborate with each other and the business community to develop a global industry platform for information technology in the sustainable city.

At least 12 successful pilot projects in participating cities have demonstrated CUD’s potential.  One important pilot project that could have far reaching implications for urban development is called the Smart Work Center (“SWC”).  SWCs are structures located in residential areas that offer a highly connected professional work environment.  These centers are equipped with networking technology and collaboration tools, which allow users to connect to colleagues and customers.  Users from many different organizations share the SWC’s resources.  This type of office sharing arrangement could reduce the need for centralized offices and other development in the heart of downtown areas in participating CUD cities.

Action is now pending in the Colorado General Assembly to reform the State’s constitutional initiative process, which is the mechanism available to the electorate for amending the Colorado Constitution.

Under the existing constitutional structure, an initiative proposal for a constitutional amendment will be placed on the ballot for the State’s general election if the proponents can secure petition signatures from registered voters equal in number to 5% of those that cast votes at the last general election for the office of the Secretary of State (Colo. Const., Article V, Section 1(2)).  An initiative measure that reaches the general election ballot becomes law and amends the Colorado Constitution if approved by a simple majority vote (Colo. Const., Article V, Section 1(4)).

The Colorado initiative process has often come under criticism as setting too low a bar in allowing the State’s fundamental organic governing document, its Constitution, to be amended by a mere majority of voters.  Advocates of initiative reform contend that most constitutional initiative proposals would more appropriately be grist for the legislative process; while not perfect, the representative form of government arguably furnishes a policy-making filter that the existing initiative process lacks.  Supporters of the existing initiative process hold that it is a pure form of democracy, empowering the common citizen at a grassroots level.

Historically the Colorado initiative process has produced various controversial constitutional amendments (e.g., the Taxpayer Bill of Rights (TABOR); Amendment 2, which barred legislative protections based on sexual orientation and was ultimately declared unconstitutional by the U.S. Supreme Court; and authorization for medical marijuana).  In other circumstances, the constitutional initiative process has embroiled opposing factions in expensive, time-consuming political campaigns beyond those commonly entailed in legislative affairs.

Members in the two houses of the Colorado General Assembly have proposed Senate Concurrent Resolution (SCR) 11-001 to amend the constitutional initiative process.  If passed by the General Assembly, SCR 11-001 would go on the ballot for the 2012 general election.  SCR 11-001 would modify the initiative process in two significant respects:

  • The petitioning process would entail a level of geographic distribution:  initiative proponents would have to obtain signatures from each U.S. Congressional District in Colorado at least equal to 70% of the total number of required signatures divided by the total number of Congressional Districts.
  • The voting requirement for adopting a proposed amendment would be raised to 60% from the existing simple majority standard.

The 60% threshold would not apply to the repeal, in whole or in part, of initiatives previously adopted under the old initiative structure.  Instead those repeals would require only a simple majority vote, thereby preserving the same “playing field” for removing initiative measures adopted under the old structure. (Interestingly, though, it appears that the new geographic distribution standards in the petitioning process would apply to any such repeal efforts.)

It may be informative to contrast Colorado’s initiative structure with the requirements for amendment under the United States Constitution.  Any amendment to the U.S. Constitution has to be proposed by a two-thirds vote in each house of Congress, or by two-thirds of the state legislatures, and can be adopted only by ratification of three-fourths of the states (U.S. Const., Article V).  Apparently the founding fathers saw merit in imposing rigorous standards for constitutional amendment.

country road.jpgIn order to facilitate the settlement of the western United States in the nineteenth century, the federal government broke the land up into “townships” that were generally 36-square mile blocks.  Each township was then broken into “sections” of roughly one square mile, or 640 acres.  Each section was further divided into “quarter sections,” and further into “quarter quarter sections” of 40 acres each.

Sometimes when we are working on acquisitions or financings of raw land, we encounter roads that follow the section lines, usually 30 feet on either side of the line.  There is often no deed, easement or dedication for these roads, and the question comes up as to whether there is some statutory basis for these roads.  If there is no statutory basis, then we need inquire about whether there is a prescriptive easement for these roads.  (See the note below on prescriptive easements.)

So, is there statutory authority for those roads?  There isn’t now, but there used to be. 

In 1885, the Colorado General Assembly passed a law [PDF] that allowed commissioners of a county, by an order at a regular meeting, to declare any section or township line “on the public domain” to be a public highway.  As pointed out by H. Keith Corey of Grand Junction (see part (3) of his paper), this statute was repealed in 1953, but its repeal did not remove any roads that were in place prior to repeal.  Before repeal, El Paso, Weld and Mesa Counties passed resolutions pursuant to this statute.  See Book 571, Page 55[PDF] of the El Paso County real property records and Book 86, Page 273 [PDF] of the Weld County real property records.

If you are looking at land that has one of these roads located on a section line, and the county passed a resolution pursuant to the 1885 statute before 1953, then you should assume that there is a public highway for the first 30 feet inside the section line.

Thanks to Ian Cortez of Ulteig Engineers, who brought this up at a surveying seminar, and to David Knapp at Land Title for sharing his experience on this issue.

NOTE:  Generally, a prescriptive easement arises when a party adversely uses property in the same manner as if it had an easement, and such use is continuous and uninterrupted for the period of prescription.  Almost every element of a presciptive easement is loaded with specific, and sometimes controversial, meaning, so the analysis needs to handled carefully.  Note that a prescriptive easement (and its cousin, adverse possession) usually cannot be established by private parties against governmental entities, so you probably can’t make one of these public highways go away without the county’s consent.

Photo by goingslo (flickr)

Medical marijuana businesses, including grow operations and dispensaries, can now be found in many communities throughout Colorado.  The establishment and proliferation of such businesses has presented a number of issues for their neighbors. 

One issue: marijuana stinks.  It has a very strong odor, even before it is smoked. 

Odor emanating from medical marijuana businesses has led to complaints from neighbors, who are typically other businesses.  These businesses and their customers may find the strong marijuana smell that periodically permeates their neighborhoods offensive, or simply overwhelming.  The question then becomes how to deal with the problem.

Colorado’s Medical Marijuana Code, C.R.S. § 12-43.3-101 et seq. (the “Code”) does not directly address or regulate odors coming from medical marijuana businesses, and it does not appear that the proposed state regulations to implement Code will address odors either. 

Accordingly, if neighbors have complaints about odors emanating from medical marijuana businesses, they will either have to hope that local regulation addresses the issue, or be resigned to remedies under the law of nuisance. 

The Boulder Daily Camera recently ran an article addressing the City of Boulder’s regulation of odors from medical marijuana businesses. There have apparently been a number of complaints of wafting smells of marijuana, and the City is investigating.

Under Boulder’s medical marijuana regulations, “[a] medical marijuana business shall be properly ventilated to filter the odor from marijuana so that the odor cannot be detected by a person with a normal sense of smell at the exterior of the medical marijuana business or at any adjoining use or property.”  Boulder Municipal Code, § 6-14-8(h).  Violations can result in a loss of a license, and/or a fine of up to $1,000 per violation. 

According to the Daily Camera, it is difficult for medical marijuana businesses to comply with the requirement, and expensive equipment is needed to mitigate odors.  Medical marijuana businesses have also complained that the requirement is unfair, given that a great many other businesses are allowed to let odors leave their properties without consequence.  (Walking past a pizza parlor, you can often smell the umistakable mix of baking bread and garlic).  However, it appears that the City is intent on trying to enforce its requirement.  As indicated, businesses have a strong incentive to comply, as they risk having their businesses shut down if they do not.

Given Boulder’s odor regulation, neighbors of medical marijuana businesses in Boulder are probably far better off than those in other local jurisdictions that do not have similar requirements.  Without a code provision addressing odors, complaining neighbors would likely only have remedies in the law of nuisance.  While a nuisance suit could result in an injunction, thus cutting off the problem, bringing such a suit would be quite expensive and time consuming for the complaining neighbor.  In contrast, pursuing relief through local code enforcement would likely solve the problem more quickly, and would be carried out primarily at the expense of the local government. 

Colorado’s new licensing scheme for medical marijuana businesses under the Code goes into effect on July 1, 2011.  Local jurisdictions throughout Colorado are still in the process of updating their regulations to conform to this dual state/local licensing system.  As they do, it will be interesting to see if other jurisdictions will attempt to regulate odors as Boulder has.