Aspen property owners challenge city’s affordable-housing fees

Rick Carroll
Aspen Times

ASPEN — The Colorado Court of Appeals will decide whether a limited liability company can move forward with claims that the city charged an excessive affordable-housing fee to the developer of a luxury home on a lot in the West End neighborhood.

A panel of three judges on the state’s appeals court heard oral arguments in Denver on Nov. 16 concerning the standing of the LLC that has alleged the city overcharged the developer of a luxury single-family home in the West End by billing it an impact fee of $755,278 for affordable-housing mitigation.

One claim in the suit seeks a declaratory judgment that the city miscalculated the fee, that it refund the property owner the difference in the amount that was wrongly imposed, and pay other damages.

The second claim asks that the court find the city “abused its discretion and acted in an arbitrary and capricious manner … by improperly imposing an affordable housing impact fee which was not correctly calculated on Lot 4 of the Ranger Station Subdivision.

The lot owner paid the fees, which the city requires before issuing a building permit, according to the lawsuit.

The merits of the lawsuit aren’t the issue before the Court of Appeals. The three-judge panel instead is tasked with deciding whether the plaintiff is eligible to sue the city.

District Court Judge Denise Lynch did not think so, based on her July 2021 order dismissing the lawsuit. The order agreed with the city’s position, argued through a motion to dismiss the lawsuit, that the plaintiff did not have standing to sue because it is not the actual lot owner who paid the housing fees in question. Lynch cited state statute that “specifically designates land owners and persons who paid impact fees during the development process as parties who can assert challenges” regarding development impact fees imposed by the government.

“It is indisputed that Plaintiff is not the landowner” of the property subjected to the fee, Lynch’s order said.

The plaintiffs also asked for Lynch’s permission to amend the suit to add a challenge to a second housing fee, in the amount of $543,539, that was charged to the developer of another one of the five lots that comprise the Ranger Station Subdivision, named in reference to the the U.S. Forest Service, which owned the undeveloped land from 1940 until 2013, when it auctioned off the lots.

That motion was denied by Lynch also in July 2021. That decision also is being appealed.

The plaintiff goes by DR 24F16, a limited liability company that Aspen law firm Garfield & Hecht formed in Feb. 3, 2021, according to the secretary of state’s corporate registry. DR 24F16 does not own either lot, but is instead the “assignee” of the claims from the properties’ actual owners.

In court filings, Garfield & Hecht lawyers argued that if the Court of Appeals upholds Lynch’s dismissal of the case, the judges can still reverse her dismissal of their motion to amend the complaint and order that the lawsuit identify the property owners as plaintiffs.

In a related matter, the owners of the two properties, at least on paper, sued the city with similar allegations in January. The plaintiffs are identified as Forest Lookout II LLC, the owner of 426 N. Eighth St. that paid $755,278 in affordable-housing mitigation, and Aspen Forest 8th St., the owner of 412 N. 8th St., which paid $543,539.

Public loan documents identify Aspen hotelier Michael Brown as the manager of Forest Lookout II. Aspen Forest 8th St. is based in Las Vegas with property records linking it to former Wynn Resorts Chief Operating Officer Marc Schorr.

“If that case proceeds to a final judgment and the property owners prevail, isn’t this case moot?” asked Judge Lino S. Lipinsky de Orlov of the Court of Appeals at the November hearing.

Boulder lawyer Joshua Marks, arguing for the city at the November hearing, responded that “it should be.”

“It seems like you get only one bite at the apple, yes,” said Boulder lawyer Joshua Marks, arguing for the city. “But technically doesn’t that prove the point the assignee (DR 24F16) shouldn’t be moving forward on this claim (the appeals action). It should be the property owners. … The property will get their day in court to determine if this mitigation was property enacted and property imposed.”

The Court of Appeals is the third venue of the lawsuit, which was originally filed in February 2021 in U.S. District Court of Denver before it was refiled in Pitkin County District Court.

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