Aspen asks judge to reconsider RETT case
Aspen, CO, Colorado
ASPEN – The city of Aspen is asking a judge to reconsider and amend an order that exempted the new owner of the Hotel Jerome from the city Real Estate Transfer Tax (RETT).
Pitkin County District Judge Gail Nichols ruled in June that Jerome Ventures LLC didn’t have to pay the RETT because it acquired the historic hotel through a special warranty deed in lieu of foreclosure from LCP-Elysian. Nichols found that the city’s RETT ordinance exempts transfers of property when that property was security for a debt.
In a brief in support of a motion filed July 11, the city disagreed with the judge’s interpretation of the ordinance language. In addition, the city claimed the broad interpretation made by the court “would grant an exemption to virtually every property, with the potential to completely eviscerate the City’s tax.”
Parties in a real estate transaction could avoid paying the RETT by creating a “fictitious” loan and using the property as security. The party that borrowed the money could surrender the property to the lender to avoid an alleged foreclosure action, thus allowing the parties to trade property without a taxable sale, the city argued.
In earlier motions, Jerome Ventures and its parent company, Jerome Property LLC, contended that the foreclosure “extinguished” any lien for a RETT. The city countered that the Hotel Jerome changed hands through a “fraudulent conveyance” designed to evade the tax bill.
The city has a 1.5 percent RETT. The tax bill would have been at least $405,000 for the Hotel Jerome transaction, by the city’s calculation.
The city is asking the judge to vacate her earlier judgment, enter a judgment in favor of the city, then schedule a trial on issues that would remain outstanding because of the reversal.
The city’s motion noted it was seeking an alternative to a standard appeal of the judge’s earlier decision.
“Errors occur and this is simply a method of correcting them without resorting to an appeal,” the city’s motion said.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.