Appeals court sides with Aspen property owners, sends case back to judge
The Colorado Court of Appeals ruled Thursday that a limited-liability company has proper standing to sue the city of Aspen over its affordable-housing fees.
The written order concluded that “the LLC stands in the shoes of the property owners” of two individual lots in Aspen’s West End neighborhood. The ruling reversed District Court Judge Denise Lynch’s dismissal of the suit and means the LLC, which is called DR 24f16, can seek a declaratory judgment that the city refund the allegedly miscalculated fees to the property owners. The ruling also remands the case to Lynch for further proceedings.
DR 24f16’s legal gripe with the city goes back to February 2021, when the LLC filed a lawsuit in U.S. District Court of Denver before refiling it the same month in Pitkin County District Court.
The heart of DR 24f16 LLC’s lawsuit arguments, however, have not been addressed ever since Lynch dismissed the suit in July 2021. She agreed with the city’s position that DR 24f16 did not have standing to sue the Aspen government, partly because of state statute that “specifically designates land owners and persons who paid impact fees during the development process as parties who can assert challenges.”
The Court of Appeals disagreed, noting it found no established case law showing that a property owner can mount its legal claims through another party.
DR 24f16’s suit originally challenged the city fees charged to Forest Lookout II LLC, the owner of 426 N. Eighth St. that paid $755,278 for affordable-housing mitigation as a requirement to secure a city building permit to start construction on a luxury single-family home.
The payment was made in the form of a so-called “employee cash-in-lieu mitigation impact fee,” which is one option property owners can use to satisfy the city’s mitigation requirements for new development.
After the suit was filed, another property owner, Aspen Forest 8th St., which is behind 412 N. 8th St., paid $543,539 in housing mitigation to the city in April. That prompted Aspen law firm Garfield & Hecht PC, representing DR 24f16 in the court action, to seek the court’s permission to also challenge the method in which that fee was calculated. As well, Garfield & Hecht motioned the court to add the property owners as plaintiffs.
The day after she threw out the lawsuit, however, Lynch denied Garfield & Hecht’s motion to amend the complaint by adding by property owners as plaintiffs, finding it moot in the aftermath of her dismissal.
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.
The lots are part of the five-parcel Ranger Station Subdivision near the Castle Creek bridge, 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.
The two owners asserting their claims through DR 24f16 — Forest Lookout II LLC and Aspen Forest 8th St. — have an active lawsuit against the city with similar allegations concerning how the city calculated the fees. That suit was filed in January.
Both suits carry out claims under Rule 106 of the Colorado Rules of Civil Procedure, which allows government decisions over land-use issues to be challenged in court.
“Although we disagree with the Court of Appeals determination, we must note that this was a highly-technical legal issue that had not been previously resolved by the courts,” said Boulder lawyer Josh Marks, who represented the city in oral arguments made to the appeals court Nov. 16, in a statement about the ruling.
“The city of Aspen is weighing its options on whether to seek further review before the Colorado Supreme Court. The city feels the re-instatement of this suit now has limited impact on the dispute. In a separate lawsuit, the actual lot owners have challenged the city’s affordable-housing impact-fee formula that was applied to their development proposals. The city will continue to defend the mitigation requirements that were applied to this development and agreed to by the prior owners of the property.”
For more information, read our previous coverage:
Snowmass Tourism announced the appointment of Drew Welsheimer as the organization’s new sales group sales director. His first day was Jan. 26.