Featured, Peter Blake, Politics, Taxes

Blake: Aurora development still faces court fights, legislative battles

Aurora officials rejoiced loudly last week when Denver District Judge Norman Haglund rejected a lawsuit filed by numerous Denver hotels’ against the city’s proposed Gaylord Hotel and Conference Center.

He claimed the plaintiff hotels lacked standing to sue, and thus didn’t rule on the merits of their case.

But Gaylord still has a long way to go before it can proceed with the $850 million project, at least if it’s counting on the $81.4 million subsidy from the Colorado Economic Development Commission. The money would come from the 2.9 percent sales tax on hotel rooms that would normally be forwarded to the state but is kept by the developer under tax increment financing.

It would be the largest convention facility in the state, with 1,500 rooms and a water park.

The hotels haven’t abandoned their suit and plan to ask either for reconsideration by the district court or a review by the Colorado Court of Appeals.

If it’s the former, Haglund won’t be around to handle the case. He’s turning 72 and, according to the Colorado constitution, must retire at week’s end.

Denver lawyer Karen L. Brody has been appointed to take his place but it isn’t known whether the case will go to her or some other district judge.

Haglund issued a lengthy oral opinion but only a very brief written decision to go with it. The hotels are waiting for a transcript of the former, so they might know better what he meant.

icon_op_edApparently Haglund ruled that the hotels lacked standing because they don’t have a legally protected interest in the project and won’t be directly affected by it. The judge indicated only a losing applicant would have the right to sue.

The hotels, of course, think they have do have an interest and certainly will be affected, since the new project will presumably take away much of their business.

Under normal circumstances, new competition is part of life and if the hotels can’t handle it, too bad for them. But they allege that the subsidy award breaks the law and whoever’s running the project now should submit a new application.

Gaylord Entertainment, which won the development commission’s preliminary subsidy award in May 2012, bailed out of it a few days later and sold its rights to Marriott International. Marriott then hired RIDA Development Co. to build the complex, the plans for which have changed considerably. Final plans, and the third-party report required by law, were never submitted to the development commission, the hotels allege.

The plaintiff hotels might be right, they might be wrong, but nobody has ruled on the validity of the application process and it would seem reasonable that anyone affected by the project would have the legal right to insist that the law be followed.

Aurora’s celebration of Haglund’s ruling should be further muted by the fact that there is a second suit pending that was filed two months ago by a couple of Aurora taxpayers who maintained the contract violated the Taxpayer’s Bill of Rights (TABOR).

Since a constitutional issue is involved, ordinary citizens have less of a burden proving they have standing to sue.

The plaintiffs claim that local subsidies would amount to more than $800 million over 30 years, making it the largest in state history. To get the money Aurora has created an “enhanced taxing area” that encompasses only the planned development. That enables the developer to set higher tax rates, the proceeds from which would be returned to the developer by the city to pay off the loans.

Such a “taxing area’ is not authorized by state law. Nor was it approved by city voters; It was approved by a single voter — a Denver resident, as it happens — appointed by the landowner, the beneficiary of the project.

Isn’t that convenient! The city maintains its status as a home-rule city entitles it to do this, but the plaintiffs say that status doesn’t trump the state constitution.

The development has to be an “urban renewal” project to justify the tax increment financing, but it includes agricultural land that the plaintiffs maintain cannot, under state law, be termed “blighted” for this purpose. For good measure, the agreement says the developer is entitled to recoup the taxes for 30 years, although urban renewal law limits plans to 25 years.

Meanwhile, House Speaker Mark Ferrandino, D-Denver, is trying to tighten up the Regional Tourism Act, which authorizes the subsidies granted by the economic development commission.

The act probably ought to be abolished outright, especially since the state constitution, at least in theory, prohibits subsidies to private interests. But House Bill 1350 simply tweaks the standards. It would require a state agency, not the project applicant, to pay for the third-party analysis. It would also require that most tax revenue generated by the project come mostly from out-of-staters, not from Coloradans living outside the zone.

It’s late in the session and action on the complex bill has hardly begun; thus it may not pass even with the speaker behind it. But at least the legislature is ready to take a look at the regional tourism act, which isn’t now properly reviewed by the legislature, the governor or, apparently, even the courts.

Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for CompleteColorado.com. Contact him at pblake0705@comcast.net You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.CompleteColorado.com

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