2017 COA 149
Colo. Ct. App.2017Background
- Woodcrest owned a .65-acre Parcel C situated between Parcels A and B; Developer (Century Communities) bought A and B intending a unified Carousel Farms subdivision.
- Town's annexation/approval agreement required consolidated ownership of A, B, and C before final plat approval; Developer needed Parcel C to obtain Town approvals.
- Developer offered to purchase Parcel C; Woodcrest refused. Developer then formed Carousel Farms Metropolitan District (District) whose board members were Developer principals/employees.
- The District issued a notice of intent, adopted a Resolution of Necessity, filed condemnation proceedings, and obtained immediate possession of Parcel C before any final plat or subdivision approval.
- The District amended the annexation agreement (without signing) so District ownership of Parcel C satisfied the Town’s consolidation requirement; Woodcrest challenged the condemnation as a bad-faith device to benefit the Developer.
- The trial court granted possession to the District; the appellate court reversed, finding the taking lacked a proper public purpose, was unnecessary for a public purpose, and circumvented statutory limits on transfers to private entities.
Issues
| Issue | Woodcrest's Argument | District's Argument | Held |
|---|---|---|---|
| Whether the condemnation was for a public purpose | The taking was primarily to advance Developer's private interest (to satisfy the Agreement), not a public purpose | Parcel C would be used for public improvements (roads, sewers) once subdivision approved, so condemnation served a public purpose | Condemnation was not for a public purpose because the taking itself served Developer's private objective rather than an immediate public necessity |
| Whether acquisition of Parcel C was necessary to achieve the public purpose | The taking was premature and unnecessary because no subdivision or approvals existed without Developer acquiring Parcel C first | Resolution of Necessity and statutory deference to condemnor justify presuming necessity | Not necessary: the taking was a step removed from any realized public use and therefore premature |
| Whether District acted in bad faith / as alter ego of Developer | District acted as Developer's alter ego to circumvent Developer's lack of condemnation power; Directors conflicted | Board’s Resolution and stated public-benefit support legitimacy; deference to condemnor required absent clear bad faith | Court found substantial evidence of bad faith and an alter-ego relationship, warranting heightened scrutiny and rejection of presumption of good faith |
| Whether the taking violated statute forbidding takings for transfer to private entity for economic development | District’s condemnation enabled transfer/dedication in service of Developer’s contractual obligations, effectively accomplishing indirectly what Developer could not do directly | District contends it dedicated Parcel C for public use and did not transfer to private entity | Court held the scheme circumvented the anti-Kelo statute (§ 38-1-101(1)(b)(I)) and therefore was improper |
Key Cases Cited
- Kelo v. City of New London, 545 U.S. 469 (2005) (Supreme Court decision prompting state restrictions on condemnations for private economic development)
- Denver W. Metro. Dist. v. Geudner, 786 P.2d 434 (Colo. App. 1989) (condemnation invalid where essential purpose was to assist private interests; bad-faith scrutiny for district boards dominated by private owners)
- Am. Family Mut. Ins. Co. v. Am. Nat'l Prop. & Cas. Co., 370 P.3d 319 (Colo. App. 2015) (a later unintended or removed taking cannot be justified by an earlier public-purpose act)
- Pub. Serv. Co. of Colo. v. Shaklee, 784 P.2d 314 (Colo. 1989) (likelihood of permit/approval is relevant to public‑use determination)
- Bd. of Cty. Comm'rs v. Kobobel, 176 P.3d 860 (Colo. App. 2007) (public purpose is determined case-by-case; incidental private benefit does not defeat public use if essential purpose is public)
- Town of Parker v. Colo. Div. of Parks & Outdoor Recreation, 860 P.2d 584 (Colo. App. 1993) (condemnation authority must be conferred by statute and is narrowly construed)
- Colo. State Bd. of Land Comm'rs v. Dist. Court, 430 P.2d 617 (Colo. 1967) (deference to condemnor on necessity absent showing of bad faith)