Mountain Law: Summit County faces legal challenge over Brown’s Cabin site
March 10, 2015
Summit County is facing a legal challenge to its transferable development rights (TDR) program. Here's what I've been able to learn about the case so far from court documents.
The dispute pertains to the Brown's Cabin site, which is currently a parking lot along East Keystone Road within easy walking distance to River Run. Like much of Keystone, the Brown's Cabin site was at one time owned by a developer known as Intrawest. In 1995, Intrawest applied for and received approval of the Keystone PUD, which provides the zoning for the Brown's Cabin site. Under the Keystone PUD, the permissible uses of the Brown's Cabin site include up to 100 units of multifamily employee-restricted housing, a child-care center, an information center and a parking lot.
At some point Intrawest sold the Brown's Cabin site to a third party who then lost it to a lender named Vision Bank. Vision Bank has been trying to sell the site for a number of years without success. A developer called Magni Keystone LLC is now under contract to purchase the property from Vision Bank for $1.3 million subject to Magni being able to obtain a favorable rezoning that would allow it to put 56 market-rate units on the site. In turn, that would require Magni to purchase developments rights under the county's TDR program that would cost about $2.3 million. (For more about the TDR program, see my article titled "Restricting land use tricky in Colorado," which appeared in this newspaper on Oct. 21, 2014).
Magni applied for approval of the rezoning and was denied by both the Snake River Planning Commission (SRPC) and the Board of County Commissioners (BOCC). (In the interest of full disclosure, I served on the SRPC for a number of years before this matter was decided.) Magni then filed suit in Summit County District Court seeking to overturn the denials. Magni is backed in the litigation by the Mountain States Legal Foundation, which, according its website, is "a nonprofit, public interest legal foundation dedicated to individual liberty, the right to own and use property, limited and ethical government and free enterprise system."
County denies developer’s claim of making ‘unconstitutional taking’
To fairly describe all of the legal arguments being made in the case would take more space than I have here. Suffice to say that the case presents some interesting procedural and substantive issues of law. Magni's main argument is that the restricted zoning of the site, coupled with the requirement to purchase development rights before it could develop market-rate units, has left Magni with no economically viable use of the site and is, therefore, an unconstitutional taking. The county responds that its denial of Magni's particular application to build 56 market-rate units on the site does not preclude Magni from economically developing the site in a less ambitious manner and is, therefore, not a taking. The county also points to the fact that Intrawest willingly agreed to the zoning restrictions in the context of the overall Keystone development. The county therefore argues that the economic viability of the entire resort, not just the Brown's Cabin site, must be considered for purposes of takings analysis.
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My October article about the TDR program mentioned that the constitutional underpinnings of such programs are not firmly settled. In the cases I am aware of, a property owner known as the "sender" disputes being given transferable development rights in lieu of the ability to develop the sender's property. This case is the reverse in that the legal challenge is brought by the property owner who must purchase development rights in order to develop (i.e., the "receiver"). Given the potential impact that an adverse decision would have on the county's planning goals, it will be interesting to see how court decides the matter.
Noah Klug is owner of The Klug Law Firm LLC. He may be reached at Noah@TheKlugLawFirm.com.
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