June 25, 2019

Colorado Court of Appeals: TABOR Election Illegal Where Landowners Denied Participation in Election

The Colorado Court of Appeals issued its opinion in Landmark Towers Association, Inc. v. UMB Bank, N.A. on Thursday, April 21, 2016.

Real Estate—Special District—Property Taxes—Time Bar—Waiver—Bill of Costs—Prevailing Party—Taxpayer’s Bill of Rights—Notice.

A real estate developer created a special district, the Marin Metropolitan District, as a vehicle for financing the infrastructure of a to-be-developed residential community, the European Village. The District issued bonds to finance the development, which were to be paid for by property taxes imposed on landowners within the District. A group of condominium owners who did not live in European Village learned that their properties had been included in the District under suspicious circumstances. The condominium owners received no benefit from the European Village development, and they had not been notified of and did not vote in the elections to create the District and approve the bonds and taxes. Acting through their homeowners association, plaintiff Landmark Towers Association, Inc., they brought two actions, one to invalidate the creation of the District and the other—this case—to invalidate the approval of the bonds and taxes and to recover taxes they had paid to the District. Following a bench trial, the district court granted Landmark part of the relief it requested, ordering partial refund of taxes paid and enjoining the District from continuing to collect taxes from the Landmark condominium owners.

On appeal, defendants, UMB Bank, Colorado Bondshares, and the District, contended that all of Landmark’s challenges to the validity of the taxes are barred by the 30-day time limit in C.R.S. § 11-57-212. However, defendants waived this issue by not raising it at trial.

Bondshares and UMB contended that the district court erred in denying their bill of costs because they prevailed on Landmark’s fraudulent transfer and unjust enrichment claims against them. While no specific claims were asserted against Bondshares and UMB at trial, they were aligned with the District’s position and had not prevailed in the overall context of the litigation. The district court did not abuse its discretion in denying this claim.

Landmark contended that the district court erred in ruling that the District’s Taxpayer’s Bill of Rights (TABOR) election was valid. The court of appeals determined that the organizers who voted in the election were not eligible electors because the organizers’ contracts for options to purchase parcels were sham agreements. Therefore, the organizers illegally participated in the District’s TABOR election and their votes are void. It follows that the TABOR election was invalid. The court also held that those under contract to purchase units in the Landmark Towers were eligible electors in the TABOR election who did not receive constitutionally required notice. Therefore, the district court erred; the TABOR election itself was illegal and the District’s taxes to pay the bonds were illegally levied. The District must refund all taxes paid illegally with simple interest and the Landmark buyers are entitled to an order enjoining the District from levying any further taxes without proper voter approval.

The judgment was affirmed in part and reversed in part, and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

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