Residents of the northern Douglas County City of Castle Pines North, or Castle Pines as it’s now known, voted on Tuesday to abolish the City’s recently established urban renewal authority.  The yes votes on Question 300 outnumbered the no votes by almost 2 to 1.  In abolishing the City’s urban renewal authority, residents decided not to grant City Council and the urban renewal authority – here one and the same body – the urban renewal powers granted to such authorities by Colorado’s urban renewal laws (31-25-101, C.R.S.), including the ability to capture and direct to the construction of new public improvements incremental tax revenues created by virtue of new or redeveloped portions of the City.  So, why did Castle Pines’ residents reject the authority  I’ve got some ideas, but first a little background on urban renewal. 

Urban renewal laws have been on the books for more many years, and the authorities created under the laws have successfully implemented numerous urban renewal projects across Colorado. The Denver Urban Renewal Authority is just one such example.  Urban renewal laws grant urban renewal authorities the power to issue bonds to pay for qualifying elements of an urban renewal project, which typically consists of public streets, drainage improvements, sewer lines and other public infrastructure, but in any event, improvements that are intended to eliminate blight.  The urban renewal authority captures the incremental property and sales tax generated on redeveloped property (for a maximum period of 20 years), calculated as the difference of such taxes before and after developing the property.

Urban renewal projects are permitted, as an initial matter, only within areas where an urban renewal plan has been adopted by the municipality containing the urban renewal authority.  To establish an urban renewal plan for a particular area, the municipality must first determine that the area is “blighted.”  It is this determination of “blight” where residents often run into issues. 

I believe the residents of Castle Pines didn’t like their community being labeled as blighted, as most people don’t like to have their property labeled as blighted.  Unfortunately, the urban renewal law requires a finding of “blight”, based on a number of indicia as a prerequisite to establishing an urban renewal authority, notwithstanding that many of the indicia don’t fall into the category of conditions most people associate with blight – like faulty lot layout, defective title conditions, unusual topography and inadequate street layout.  

Also, I believe the residents of Castle Pines thought the incremental tax dollars captured by the urban renewal authority amounted to a tax increase.  With or without an urban renewal authority, the incremental taxes generated by development are collected by the government.  But, the rationale behind the urban renewal law is that such increment would not be available if the development did not occur.  In other words, the development enabled by public financing of a portion of the public improvements would not have occurred, and therefore the increment would not be available, but for the urban renewal’s ability to capture the increment.  In sum, the urban renewal authority is not responsible for tax increases, it merely uses the increased taxes collected by virtue of development to encourage development.  

Finally, I believe the residents may have thought “urban renewal” should be relegated exclusively to urban areas.

The real debate here should not be focused on whether a community contains indicia of blight or if the development is located in an urban area, but instead on specifically when and where it is appropriate to use tax increment financing to stimulate development, if at all.  If the debate does not focus on these issues, the public will continue to get lost in the meaningless distinction between the practical and legal interpretations of “blight” and “urban” under the urban renewal law.  Urban renewal laws could be easily reconstituted to address specifically when and where tax increment financing is appropriate, and I think they should be.

 

CREW Denver’s 11th Annual Women of Influence awards luncheon was held yesterday at The Ritz-Carlton.  The theme of this year’s event was “Leading the Renaissance.”  Fawn Germer, Oprah-endorsed, best-selling author of 6 books including Finding the UP in the Downturn, delivered an inspiring keynote address encouraging everyone to turn adversity into opportunity.  All attendees received a signed copy of Fawn’s book.  Otten Johnson was the Keynote Sponsor, and First American Title Insurance Company was the Book Sponsor.  The event was a big success and a complete sell-out. 

 There were 16 nominees for the Women of Influence award, all outstanding, well-qualified women who are “Leading the Renaissance” in their own and different ways.  At the event, the four finalists were announced, all hailing from different sectors of commercial real estate. 

 The four finalists were:

  • Cyd Petre, Senior Vice President, Special Assets Group, Colorado Business Bank — Cyd leads the Special Assets Group at Colorado Business Bank and her group’s charge is to deal with troubled real estate loans.  Using creative and out-of-the box approaches, Cyd and her team have successfully resolved over 50% of the banks troubled loans in 2009 and are well on their way to the same success for 2010.
  • Karen Blumenstein, Project Developer, THF Realty, Inc. — Karen managed to renegotiate a public-private partnership for a retail project that was put in place when the economy was soaring.   Things were not working the way that the players had envisioned and Karen found a way to restructure the deal in order to help save a project.   
  • Tracy Huggins, Executive Director, Denver Urban Renewal Authority — Under Tracy’s leadership, DURA has managed to take the most difficult projects under the most difficult economic circumstances and find a way to make them happen.  These projects have included Dahlia Square and a third school in the Stapleton redevelopment. 
  • Tristin Gleason, Co-Owner, Project One Integrated Services, LLC — Tristin, as the owner of a small business providing construction management/owners representation services, managed to refocus her company on public projects in the education, public safety and utility realms.  As a result, Tristin’s company hired 2 additional people in 2009 and 5 in 2010, a track record unheard of in the construction business during this downturn. 

Tracy Huggins was named the 2010 CREW Denver Woman of Influence.   Otten Johnson congratulates Tracy and all of the other nominees.

Several weeks ago The New York Times ran an article about noise and vibrations caused by wind turbines.  The article noted that excessive noise has led to complaints and even lawsuits from neighboring landowners.  This shows that while new wind turbine designs are quieter and safer than earlier models, operators of wind turbines (as well as those who lease land to them) still need to remain cognizant of possible nuisance claims that can be brought by neighboring landowners.

Wind Turbine small.jpgTo prevail on a nuisance claim, a neighboring landowner needs to show that the wind turbines substantially interfere with the use and enjoyment of his or her property.  This can be a difficult and fact intensive proposition, especially since courts tend to consider the social utility of the complained of use. 

However, the risks are substantial: a prevailing landowner may be entitled to recover money damages for dimunition of property values or even an injunction that restricts the continued operation of the wind turbines.

Developers and landowners might consider the following ways to avoid potential nuisance claims:

  • Carefully compare potential wind farm sites.  Rural and open spaces far away from residential developments are best.
  • Examine the feasibility of negotiating and obtaining advance waivers from adjoining landowners before beginning construction.  Maybe a neighbor would be willing to waive a nuisance claim for something as simple as having a say in the color or placement of the wind turbines.
  • Assess the cost-effectiveness of operating the wind turbines at a slower rate or only during certain hours of the day.
  • Inquire about insurance plans that cover nuisance claims.

Wind energy is important, both for the economy and the environment.  Care needs to be taken to minimize the risk of nuisance claims derailing the industry’s continued growth.

Photo by the russians are here (Flickr)

The Colorado Supreme Court’s October 18, 2010 decision in Bly v. Story clarifies two issues with respect to condemnation proceedings in Colorado.  Bly involved a private party’s condemnation of an easement for a private way of necessity over a neighbor’s driveway.  The court, construing C.R.S. § 38-1-102(1), held that a metes and bounds legal description and specification of the particular purpose of the condemnation is not required in a condemnation petition.  Applied to the facts, the court found that a “general description,” along with a map that made the location of the proposed easement clear, was sufficient.  With respect to the proposed use, the court found that, for a private condemnation, mere recitation of any of the purposes listed in C.R.S. § 38-1-102(3) is sufficient.

Though this suggests that the rules for the sufficiency of driveway.jpgcondemnation petitions are fairly liberal, in Bly, a metes and bounds description, and a more detailed explanation of the nature of the proposed use of the easement were provided during discovery and/or in trial testimony.  Accordingly, while a somewhat vague petition may survive a motion to dismiss, condemnors would probably be well-advised to include more specifics in their petitions, if possible, and such information should definitely be supplied at some point during the course of the proceeding. 

Bly also addressed the admissibility of valuation evidence in a condemnation case.  The owners of the condemned land sought to introduce evidence of the cost of replacement of the driveway at issue, but the trial court refused to admit the evidence.  Even though the relationship between the evidence and the ultimate issue—the value of the easement—was tenuous, the Colorado Supreme Court concluded that the evidence should have been admitted.  However, in the circumstances, the court found that the failure to admit the evidence was harmless error. 

What is potentially important for future cases is the court’s clear statement of very liberal rules of admissibility of various forms of valuation evidence in a condemnation trial.  Depending on the facts of the case, some evidence may be entitled to more weight than others, but:

The evidentiary rules applicable to a trial for an award of just compensation are expansive, and all evidence relevant to the determination of market value of the condemned property is admissible.

Photo by normanack (Flickr)

159659669_1f15d48922_t.jpgAs the presence of carbon dioxide increases in the atmosphere, so does interest in ways to dispose of that carbon dioxide.  One possibility is to store it in underground gaps, voids or pore space.  This process is known as carbon sequestration.

Currently, real property is generally divided into a surface estate and a severable mineral estate.  The mineral estate includes substances in the ground, such as coal, oil, gas and other hard minerals.  It is not entirely clear, however, how existing case law and statutes would address underground pore space. 

The Colorado Department of Natural Resources convened a panel, including Tom Ragonetti from our firm, to discuss legal issues surrounding the ownership of underground pore space and possible legislation.  There are several options, including allocating ownership of the pore space to the surface estate, the mineral estate or the State of Colorado for the public’s benefit.  Any resolution will have advantages and drawbacks.  Here are a few questions to consider:

  • How will pre-existing severances of minerals be treated?  Would the language of the severance make a difference?  For instance, what if the severance or reservation was broad enough to include not just “minerals” but anything of value under the surface? 
  • Would a void caused by the extraction of minerals, such as oil, gas or coal, be treated differently from a naturally occurring void?
  • How will owners deal with voids that cross property lines?  Could an owner be required to accept carbon dioxide in a void he or she owns?

In any case, the ability to control the rights to store carbon dioxide underground could be a new source of value in real property.

Photo by eMaringolo (Flickr)