Hi. I’m Dave Hersh, a shareholder at Burg Simpson Eldredge Hersh & Jardine. I want to talk to you today about a major victory Burg Simpson won for Colorado taxpayers. This victory has a major impact on taxes imposed on homeowners in Colorado.
On September the 6th of this year, senior District Court Judge Donald Marshall, sitting in Arapahoe County District Court, entered an order in the Landmark Towers Association vs. Marin Metropolitan District case. In this case, Judge Marshall determined that the taxes that were being imposed on the owners of the Landmark Towers were illegal.
This is really the first case of its kind in the state of Colorado. It’s unique because the judge ordered and determined that the taxes the special district was collecting are, in fact, illegal. It’s a case that is going to make a big difference for Colorado homeowners. In this case, Judge Marshall considered a challenge to the taxes under TABOR, the taxpayer Bill of Rights. As you recall, the taxpayer Bill of Rights was passed in 1992 by Colorado voters, and it became a constitutional amendment. In this case, Judge Marshall determined that the metropolitan district had imposed taxes on the residents that were illegal under TABOR.
And the savings are significant. For the homeowners, over one million dollars in past taxes already collected by the Marin Metropolitan District must be refunded to them along with interest. In addition to that, between $17 million and $22 million dollars of future taxes that were going to be collected now have been declared illegal and cannot be collected. In addition to these millions of dollars collected for the homeowners, Burg Simpson was able to recover the costs and attorneys fees of prosecuting this action under TABOR.
It’s common in Colorado land development that a developer will form some sort of special district, or a metropolitan district, to pay for improvements to property. TABOR, our constitutional provision, says that the people who are going to be paying the taxes must be given a fair opportunity to vote on raising their taxes. In this instance, the developer used technicalities—and frankly some sleight of hand—to both create the district improperly and also to impose taxes on residents who had purchased the homes. Over 130 residents who had contracts to purchase homes had taxes imposed on them when they had no opportunity to vote on the creation of the district, the issuing of bonds for the district, or the raising of taxes to pay for those bonds.
In fact, the residents of those properties were taxed to pay for improvements to the next door property.
It was a mechanism by which the developer—and this is a word I’ve actually never seen a judge use in an opinion before—the developer foisted those taxes and the cost of developing that second parcel off on the backs of the residents who had already purchased their property. The result is that this metropolitan district was created without any homeowner votes, $30 million dollars in bonds were issued by the metro district which the homeowners then had to repay, taxes were raised by approximately $3 thousand dollars per unit per year for the average homeowner, and the money that was raised went to the pocket of the developer. In his decision last week, Judge Marshall decided that the Constitution in the state of Colorado trumps special-interest laws, and that it was illegal for taxpayers to be required to pay taxes they did not have the opportunity to vote on.
This decision by Judge Marshall really puts some teeth into TABOR. It’s entirely consistent with TABOR’s language and purpose, but it was hotly contested. This is a case that’s the first of its kind to go to trial, but it gives taxpayers another tool to ensure that they are not only being taxed, but being taxed in ways that are proper and legal.
I’m Dave Hersh, senior shareholder with Burg Simpson Eldredge Hersh & Jardine, and co-chair of the commercial practice group. If you’ve been affected by any of the issues in this video blog, I’d like to hear from you. You can reach me at 303-792-5595, or you can reach us online at burgsimpson.com.