Last summer, the U.S. Supreme Court set off a storm of protest when it held that cities in search of increased tax revenue may condemn private property so it can be turned over to a developer who would then produce the additional revenue.
Technically, what the court said was that the U.S. Constitution isn’t offended by such land transfers done in the name of economic development.
Well, there is now a case in Colorado that may determine whether the state’s laws and constitution permit cozy legal arrangements designed to raise revenues.
The Mountain States Legal Foundation has filed a lawsuit on behalf of a Sheridan property owner in Arapahoe District Court challenging an urban renewal scheme along South Santa Fe Drive in Sheridan which – on the surface, at least – appears to be tailored to the benefit of a single developer.
The plaintiff in the case is Lochness Properties, Inc., the owner of a brick building within the project’s boundaries. Lochness contends the Sheridan urban renewal project was tailored to benefit the development firm of Miller-Weingarten. This firm, the court complaint says, originally proposed a “revenue-enhancing, retail development” to city officials in October 2002. A couple of months later, negotiations began. A blight survey was done and a moratorium on future development was imposed long enough to allow the creation of an official urban renewal project. The complaint says Sheridan’s actual purpose was “not blight removal” but the advancement of “private interests,” in violation of state law.
It is undisputed that Miller-Weingarten ended up being the only bidder on the project – in part, the complaint says, because the notice period was so brief.
Lochness has, for these and other reasons, asked the court to declare the entire urban renewal project null and void.
The heart of the case is the claim that the city failed to follow the requirements of state law, requirements that are clearly intended to make sure that urban renewal projects aren’t used to benefit a specific private development firm.
For example, state law requires that a city act only upon a “citizen petition” that urges redevelopment. In the Sheridan case, it is argued that Sheridan “engineered” the petition drive and effectively urged itself to act.
In addition, the law requires the finding of actual blight. In Sheridan, it is alleged that 75 percent of the area involved is not blighted.
The law also requires a public hearing on whether a redevelopment authority should be established. The complaint alleges Sheridan skipped this step.
Finally, requests for proposals are to be subject to a competitive bidding process. The complaint alleges that in this case, there was no competition before a contract was awarded.
Lochness charges that the city of Sheridan operated in bad faith throughout the three years it was fashioning an urban renewal project designed to increase local tax revenues. Among the examples of bad faith is the claim that the city mailed out notices of public meetings timed to “arrive the day after said meetings.”
In some earlier cases, the Colorado Supreme Court has held that an urban renewal project isn’t necessarily defeated simply because land is transferred from one set of private owners to another. Such transfers, the court has said, may satisfy the requirement that land is to be condemned only for public use.
What is interesting about this case is that it is mostly based on claims that the required legal procedures for declaring blight and forming a specific urban renewal project weren’t met.
As early as January 2003, Mayor Mary Carter told a public meeting that the city of Sheridan needed additional revenue and that the redevelopment plan would allow the city to get it.
As it turned out, the company that promised to produce the additional revenue in 2002 got the development contract three years later.
The issue for the court is whether the award of that contract under these circumstances is legal under both Colorado law and the condemnation provisions of the state constitution.
Efforts to reach Sheridan’s mayor and the attorney representing the city for comment on the lawsuit were unsuccessful both Tuesday and Wednesday.
At a minimum, the city has, as a result of this lawsuit, some serious explaining to do. You can bet every city in Colorado will be paying close attention.
Al Knight of Fairplay is a former member of The Post’s editorial-page staff.
