City of Lafayette v. Town of Erie

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
June 14, 2018

2018COA87

No. 17CA0595, City of Lafayette v. Town of Erie — Municipal
Law; Eminent Domain — Public Use or Purpose — Necessity —
Bad Faith

A division of the court of appeals considers whether a

municipality may condemn a parcel of land belonging to a statutory

town for the purpose of creating an open space community buffer.

The division also considers whether the municipality’s finding of

necessity and public purpose can be reviewed based on a showing

of bad faith.

Following the supreme court’s decision in Town of Telluride v.

San Miguel Valley Corp., 185 P.3d 161 (Colo. 2008), the division

concludes that a municipality may condemn a statutory town’s

property because an open space community buffer would be a valid

public purpose.
 However, the division concludes that (1) the district court’s

finding of bad faith behind the municipality’s decision to condemn

the property was correct; and (2) the municipality’s finding of

necessity can be reviewed. The division holds that the

municipality’s ultimate reason for condemning the property — to

prevent a grocery store and its associated tax revenue from

relocating — is not a valid public purpose.

Accordingly, the division affirms the judgment.
COLORADO COURT OF APPEALS 2018COA87

Court of Appeals No. 17CA0595
Boulder County District Court No. 16CV30791
Honorable Norma A. Sierra, Judge

City of Lafayette, a home rule municipality and a Colorado municipal
corporation,

Plaintiff-Appellant,

v.

Town of Erie Urban Renewal Authority; and Town of Erie, Colorado

Defendants-Appellees.

JUDGMENT AFFIRMED

Division VI
Opinion by JUDGE FOX
Ashby, J., concurs
Furman, J., specially concurs

Announced June 14, 2018

Hamre, Rodriguez, Ostrander & Dingess, P.C., Donald M. Ostrander, Richard
F. Rodriguez, Stephanie Ceccato, Denver, Colorado; Williamson and Hayashi,
LLC, David Williamson, Boulder, Colorado, for Plaintiff-Appellant

Waas Campbell Rivera Johnson & Velasquez LLP, Darrell G. Waas, Mikaela V.
Rivera, Denver, Colorado, for Defendants-Appellees
¶1 This dispute stems from the attempt by the City of Lafayette

(Lafayette) to condemn a parcel of land owned by the Town of Erie

(Erie). Lafayette appeals the district court’s order granting Erie’s

motion to dismiss for lack of jurisdiction. Because the record

supports the district court’s finding that Lafayette had an unlawful

motive for the condemnation, we affirm.

I. Background and Procedural History

¶2 Lafayette, a home rule municipality, and Erie, a statutory

town, were signatories to the East Central Inter-Governmental

Agreement (IGA), a comprehensive plan that sought to maintain

some rural development as community buffers. The agreement

lasted from 1994 to 2014. Lafayette and Erie were also signatories

to the Super IGA — a comprehensive development plan for Boulder

County. Erie and Lafayette withdrew from the Super IGA in July

2013.

¶3 After the two IGAs ended and the land along Highway 287 was

no longer designated for rural preservation, commercial

development by Erie and Lafayette ensued along Highway 287. The

map below shows the relevant corridor of Highway 287. The Tebo

property is part of unincorporated Boulder County. Lafayette

1
annexed Weems, a residential community. The Safeway above Nine

Mile Corner — the property at issue — is in Erie. Beacon Hill,

located below Nine Mile Corner, is residential property within

Lafayette.

2
¶4 Erie formed the Town of Erie Urban Renewal Authority

(TOEURA) in 2011. In 2012, TOEURA purchased the Nelson

property and the Kuhl property — together, they form Nine Mile

Corner. Erie annexed Nine Mile Corner from TOEURA in 2015.1

¶5 In 2013, Erie commissioned a geotechnical investigation of the

property which determined that the property was suitable for

development. Two blight studies commissioned by Erie, in 2012

and 2015, found that Nine Mile Corner was a blighted area. Erie

then began to develop an urban renewal plan for the property. Erie,

TOEURA, and the Nine Mile Developer signed a disposition and

development agreement on March 22, 2016.

¶6 Erie hired a consultant to examine the property and identify

potential tenants, including King Soopers. King Soopers had a

location in Lafayette, but it had developed a larger store prototype.

In early 2016, Lafayette became aware that King Soopers might

relocate to open a larger store. In February 2016, Lafayette

1 Lafayette argued in the supplemental briefing requested by this
court that the property still belongs to TOEURA, a statutory body.
However, the record (and the parties’ previous briefing) indicates
that Erie annexed the property as of 2015 so the property is
currently within the boundaries of Erie, a statutory town.

3
 engaged in discussions to keep King Soopers (and its corresponding

tax revenue) in Lafayette. Lafayette offered King Soopers a potential

development site north of the Walmart on the west side of Highway

287.

¶7 In May 2016, Lafayette’s city council passed an ordinance

declaring, “[a]cquisition of [part of Nine Mile Corner] is necessary for

the public purpose of open space and benefits associated with open

space, as well as preservation of Lafayette’s local and unique

character, and buffering of Lafayette from development activities in

neighboring communities.” Lafayette determined it would condemn

twenty-two acres of the southern portion of Nine Mile Corner to

create an open space community buffer and leave the remaining

twenty-three acres of Nine Mile Corner for Erie.

4
 2

¶8 After attempting to purchase the property,3 Lafayette filed its

petition in condemnation and motion for immediate possession in

July 2016. Erie responded by filing a motion to dismiss arguing

that Lafayette’s condemnation lacked a proper public purpose,

thereby depriving the court of jurisdiction. After a two-day

2 The Nine Mile Corner property: the blue/shaded area reflects the
twenty-two acres Lafayette sought to condemn, and the white area
reflects the twenty-three acres left for Erie.
3 The record is sparse regarding Lafayette’s purchase efforts. Erie’s

answer brief asserts that Lafayette never attempted to negotiate the
size of the condemnation parcel, but does not assert that Lafayette
never attempted a purchase. Lafayette contends it tried to
purchase the property before starting condemnation proceedings,
but denies it was obligated to negotiate the size of the
condemnation parcel.

5
 evidentiary hearing, the district court granted Erie’s motion to

dismiss, thus preventing Lafayette from condemning the property.

¶9 Lafayette appeals, arguing that its condemnation had a proper

public purpose and that no bad faith motivated its condemnation

decision. Although we agree that condemnation to create an open

space community buffer could be a proper public purpose, the

record here supports the district court’s findings that Lafayette’s

condemnation decision fails because it was motivated by bad faith.

Thus, we affirm the district court’s judgment.

II. Standard of Review

¶ 10 The parties dispute the applicable standard of review. In

examining the public purpose for a condemnation, we examine

whether the stated public purpose is supported by the record. City

& Cty. of Denver v. Block 173 Assocs., 814 P.2d 824, 828-29 (Colo.

1991). Allegations of bad faith are also reviewed by reference to the

record. Id.; see also Glenelk Ass’n, Inc. v. Lewis, 260 P.3d 1117,

1120 (Colo. 2011) (in a private condemnation action, the district

court’s findings of facts are reviewed under the clearly erroneous

standard); Denver W. Metro. Dist. v. Geudner, 786 P.2d 434, 436

6
 (Colo. App. 1986) (recognizing that even if there is an incidental

public benefit, a court may still find bad faith).4

III. Open Space Buffer as Public Purpose

¶ 11 First, we consider whether a municipality may condemn

property belonging to a statutory town for an open space buffer

under article XX of the Colorado Constitution. As a general matter,

Town of Telluride v. San Miguel Valley Corp., 185 P.3d 161 (Colo.

2008), concluded that open space buffers can serve a valid public

purpose.

A. Condemnation Law

¶ 12 Home rule municipalities may “condemn property for any

lawful, public, local, and municipal purpose.” Id. at 164 (discussing

Colo. Const. art. XX); see also Kelo v. City of New London, 545 U.S.

469, 478 (2005) (recognizing that a governmental entity may not

take property “under the mere pretext of a public purpose”).5 It is

4 The parties agreed in their briefing that there is not a specific
definition of “bad faith” in the case law; rather it is a fact specific
inquiry into whether a condemning entities’ proffered motives for a
condemnation are legitimate.
5 Decisions before and after the 2005 decision in Kelo v. City of New

London, 545 U.S. 469, 478 (2005), have examined the motives of
condemning authorities when considering whether a taking was

7
true “the powers of a home rule or statutory municipality to acquire

by condemnation property outside of its territorial boundaries

[must] be limited to the narrowest extent permitted by article XX of

the state constitution,” § 38-1-101(4)(a)(II), C.R.S. 2017, but our

supreme court has stated more than once that the powers

enumerated in article XX are illustrative not exclusive, see Telluride,

pretextual. See Fideicomiso De La Tierra Del Caño Martin Peña v.
Fortuño, 604 F.3d 7, 23 n.13 (1st Cir. 2010) (noting that the court
was not foreclosing a later as-applied challenge to a condemnation
as a “mere pretext of a public purpose” (quoting Kelo, 545 U.S. at
478)); Franco v. Nat’l Capitol Revitalization Corp., 930 A.2d 160, 171
(D.C. Cir. 2007) (acknowledging the potential for a claim that an
alleged “public purpose is a pretext” to a condemnation (quoting
Kelo, 545 U.S. at 478)); Cty. of Hawaii v. C & J Coupe Family Ltd.
P’ship, 198 P.3d 615, 647-49 (Haw. 2010) (noting that courts must
consider evidence of an illegitimate purpose and determine whether
the rationale was “a mere pretext for its actual purpose to bestow a
private benefit”); Middletown Twp. v. Lands of Josef Seegar Stone,
939 A.2d 331, 337-38 (Pa. 2007) (“In considering whether a primary
public purpose was properly invoked, this [c]ourt has looked for the
‘real or fundamental purpose’ behind a taking[,]” meaning that “the
government is not free to give mere lip service to its authorized
purpose or to act precipitously and offer retroactive justification.”)
(citation omitted); see also Cottonwood Christian Ctr. v. Cypress
Redevelopment Agency, 218 F. Supp. 2d 1203, 1229 (C.D. Cal.
2002) (“Courts must look beyond the government’s purported public
use to determine whether that is the genuine reason or if it is
merely pretext.”); 99 Cents Only Stores v. Lancaster Redevelopment
Agency, 237 F. Supp. 2d 1123, 1129 (C.D. Cal. 2001) (“No judicial
deference is required . . . where the ostensible public use is
demonstrably pretextual.”).

8
 185 P.3d at 166; Town of Glendale v. City & Cty. of Denver, 137

Colo. 188, 194, 322 P.2d 1053, 1056 (1958) (allowing Denver to

condemn property belonging to Glendale for the construction of

sewer lines because “[a]lthough sewers are not expressly mentioned

in the Constitution, the powers enumerated therein are by way of

illustration and not of limitation”).

¶ 13 In a condemnation action, “the burden of proof is on the

condemning entity to demonstrate, by a preponderance of the

evidence, that the taking of private property is for a public use[.]”

§ 38-1-101(2)(b).

¶ 14 In Telluride, our supreme court concluded that “article XX

grants home rule municipalities the power to condemn property,

within or outside of territorial limits, for any lawful, public, local,

and municipal purpose[,]” because “the list of purposes in section 1

[of article XX] is not comprehensive.” 185 P.3d at 166. But,

Telluride did not adopt a uniform rule for what constitutes a lawful

public purpose “because of the difficulty of capturing the

permissible range of local and municipal projects with a static

9
 test.”6 Id. at 167. On the facts before it, the Telluride court

concluded that open space and parks were a valid public purpose

for which a municipality could condemn extraterritorially. Id. at

167-68.

¶ 15 Section 1 of article XX also provides, “[a municipality] shall

have the power, within or without its territorial limits, to . . .

condemn . . . in whole or in part, and everything required therefore,

for the use of said city and county and the inhabitants

thereof[.]” Colo. Const. art. XX, § 1; cf. City of Aurora v. Commerce

Grp. Corp., 694 P.2d 382, 385 (Colo. App. 1984) (“[T]here is a

presumption against implication of authority for eminent domain

not expressly granted[.]”). Thus, a municipality would not

6 In Town of Telluride v. San Miguel Valley Corp., 185 P.3d 161
(Colo. 2008), the court did not analyze the Public Service Co. of
Colorado v. Shaklee, 784 P.2d 314 (Colo. 1989), factors. It is
unclear if the court’s failure to reference Shaklee is meaningful.
But here, the district court referenced and considered the Shaklee
factors: (1) the physical condition of the property; (2) the
community’s needs; (3) the character of the benefit the project
would confer on the community; and (4) the necessity of the
improvement for the development of state resources. Shaklee, 784
P.2d at 318. Because Telluride, 185 P.3d at 164-68, suggests that
extensive discussion of these factors may not be necessary, the
district court’s discussion was sufficient. In any event, we can
affirm the district court on any ground supported by the record.
Taylor v. Taylor, 2016 COA 100, ¶ 31.

10
necessarily be prohibited from exercising its legitimate

condemnation authority to take land owned by a neighboring

statutory town, if a valid public purpose exists.7 See City of

Thornton v. Farmers Reservoir & Irrigation Co., 194 Colo. 526, 537,

575 P.2d 382, 391 (1978) (“[Beth Medrosh Hagodol v. City of Aurora,

126 Colo. 267, 248 P.2d 732 (1952),] recognizes that Colo. Const.

[a]rt. XX grants to home rule municipalities ample power to acquire

by condemnation property already devoted to a public use.”); Town

of Glendale, 137 Colo. at 195, 322 P.2d at 1057. But see Town of

Parker v. Colo. Div. of Parks & Outdoor Recreation, 860 P.2d 584,

586 (Colo. App. 1993) (“The right to take property already dedicated

to a public use for another public use exists in some cases, but

such rights must be by specific grant of authority.”); see also CAW

Equities, L.L.C. v. City of Greenwood Village, 2018 COA 42M, ¶¶ 27-

28.

7After Telluride, a bill to limit the ability of a home rule
municipality to acquire real property outside its territorial
boundaries via condemnation was introduced to the General
Assembly. H.B. 09-1258, 67th Gen. Assemb., 1st Sess. (Feb. 3,
2009). However, the bill did not pass.

11
 B. Bad Faith in the Condemnation Context

¶ 16 Lafayette argues that (1) there was no bad faith or fraud

behind its decision to condemn the property and (2) its finding of

necessity cannot be disturbed. We disagree with both contentions.

¶ 17 Courts may review condemnation actions to determine if “the

essential purpose of the condemnation is to obtain a public benefit.”

Geudner, 786 P.2d at 436. Even if a condemnation decision is

motivated in part by a public benefit, “the existence of an incidental

public benefit does not prevent a court from finding ‘bad faith’ and

invalidating a condemning authority’s determination that a

particular acquisition is necessary.” Id. Bad faith factors into the

lawful public purpose analysis. Without judicial review of

condemnation actions, there would be no end to one entity

subverting another entity’s condemnation action by initiating one of

its own. See Schroeder Invs., L.C. v. Edwards, 301 P.3d 994, 999

(Utah 2013) (“[O]ne of the primary policies underlying the ‘more

necessary public use’ provision is the avoidance of serial takings.”)

(citation omitted); Lake Cty. Parks & Recreation Bd. v. Ind.-Am.

Water Co., 812 N.E.2d 1118, 1123 (Ind. Ct. App. 2004) (“[A]bsent

12
 the prior public use doctrine, property could be condemned back

and forth indefinitely.”).

¶ 18 In Telluride, however, the court noted that the trial court

found that Telluride’s condemnation was not motivated by bad

faith. Town of Telluride, 185 P.3d at 169 n.7. Thus, on review, the

court “accept[ed] as fact that Telluride sought the condemnation

pursuant to [a] constitutionally valid purpose.” Id.

¶ 19 Further, “[t]he issues of necessity and public purpose are

‘closely related and, to some extent, interconnected.’” Geudner, 786

P.2d at 436 (quoting Thornton Dev. Auth. v. Upah, 640 F. Supp.

1071, 1076 (D. Colo. 1986)). “While the existence of a public

purpose is always subject to judicial review, the necessity of an

acquisition of a specific parcel of property may only be reviewed by

a court upon a showing of bad faith.” Id. Thus, if bad faith is at

issue, courts may look behind an entity’s stated condemnation

purpose and finding of necessity.

C. Analysis of the Legality of the Asserted Purpose

¶ 20 Lafayette’s argument hinges on its belief that because the

Lafayette city council determined this condemnation was necessary,

the district court cannot look behind that determination to see if it

13
 was motivated by bad faith. This is incorrect. It is true that “[a]

determination of necessity . . . is not reviewable absent a showing of

bad faith or fraud.” Block 173 Assocs., 814 P.2d at 829. But here,

Erie’s motion to dismiss alleged that Lafayette’s condemnation was

motivated by bad faith and was not for a lawful public purpose.

¶ 21 To rebut Lafayette’s claim that the taking was for a public

purpose, § 38-1-101(2)(b), Erie presented evidence of Lafayette’s

alleged bad faith during the two-day evidentiary hearing. Because

Erie sufficiently showed that Lafayette’s decision could have been

motivated by bad faith, the district court appropriately reviewed

Lafayette’s finding of necessity. See Block 173 Assocs., 814 P.2d at

828-29 (“In examining the stated public purpose for a

condemnation, we look to whether the stated public purpose is

supported by the record.”).

¶ 22 Pheasant Ridge Associates Ltd. Partnership v. Town of

Burlington, 506 N.E.2d 1152, 1154 (Mass. 1987), presented a

similar question on “the lawfulness of the town’s taking in light of

the plaintiffs’ assertion that the taking was made in bad faith[.]”

The court stated that “[b]ad faith in the use of the power of eminent

domain . . . includes the use of the power of eminent domain solely

14
 for a reason that is not proper, although the stated public purpose

or purposes for the taking are plainly valid ones.” Id. at 1156. That

is precisely the situation here. The stated public purpose of an

open space buffer is valid, but blocking Erie’s planned development

— planning that predated Lafayette’s condemnation petition — is

not lawful. See, e.g., R.I. Econ. Dev. Corp. v. Parking Co., L.P., 892

A.2d 87, 104 (R.I. 2006) (concluding that condemnation of a

temporary easement was inappropriate where it was motivated by a

desire for increased revenue and was not undertaken for a

legitimate public purpose). Because the district court’s

determination — that Lafayette’s primary interest in the property

was to interfere with Erie’s proposed commercial development —

enjoys record support, we defer to those factual findings. See

Glenelk Ass’n, 260 P.3d at 1120; Bd. of Cty. Comm’rs v. Kobobel,

176 P.3d 860, 866 (Colo. App. 2007) (finding no valid public

purpose for challenged condemnation of land used as a public road

to a private cemetery).

¶ 23 Although TOEURA submitted its land use application in

October 2016 (after Lafayette passed its condemnation ordinance),

Erie had begun sufficient work to develop the site including hiring a

15
 developer, identifying potential tenants, and signing a development

agreement. As in Pheasant Ridge, Lafayette filed its action to

condemn the property only after Erie’s development plans began to

take shape. See 506 N.E.2d at 1157 (“The matter of taking the

subject site came forward only when the plaintiffs’ proposal became

known.”). “Although not controlling, the absence of any prior town

interest in the site or its neighborhood is instructive on the matter

of good faith.” Id. At the evidentiary hearing, Lafayette’s city

administrator tried to explain that Lafayette’s failure to include the

property on previous open space and trail priority (PROST) lists

from 2008 to 2016 did not reflect a lack of interest in the property.

He suggested that the PROST lists reflected properties Lafayette

believed Boulder County would financially partner with Lafayette to

acquire, but that Lafayette had always been interested in the

subject property. The district court judge heard all arguments and

evidence and reasonably concluded that Erie’s explanation — that

Lafayette had no interest in the property until it learned of Erie’s

proposed development — was more credible.

¶ 24 Erie also presented evidence that without the southern

twenty-two acres, the value of the property was severely diminished

16
and developing the remaining portion could be foreclosed. The

district court was within its discretion to consider the respective

economic impacts on Erie and Lafayette of losing the property and

King Soopers as a tenant, see Kelo, 545 U.S. at 490 (concluding

that a taking in furtherance of an economic development plan

constitutes a public use), and to determine Lafayette invoked its

condemnation power improperly — especially because Lafayette was

unable to explain how it determined that the condemned

twenty-two acres were necessary, see Piedmont Triad Reg’l Water

Auth. v. Sumner Hills Inc., 543 S.E.2d 844, 847 (N.C. 2001) (stating

that the condemning entity must explain what portion of the

condemned property is actually for the asserted public purpose and

what portion of the land is “in excess of the public purpose” to

prevent “the condemner from taking the entire tract of land by

[asserting] that the property is needed for a public

purpose without defining that segment of the land actually

necessary”). Here, Lafayette engaged in extensive commercial

development along Highway 287 but ignored Nine Mile Corner —

until King Soopers threatened relocation. Finally, Lafayette

presented no evidence showing why the setback incorporated in

17
 Erie’s development plans would be insufficient to serve as a

community buffer.

¶ 25 Because Erie, as the property owner, met its burden of

showing bad faith, see Goltra, 66 P.3d at 174, the district court

properly examined Lafayette’s finding of necessity to determine,

with record support, that the taking to establish an open space

community buffer was pretextual and was not a lawful public

purpose. See Glenelk Ass’n, 260 P.3d at 1120. The court also

indicated that Lafayette’s public officials were highly motivated to

keep King Soopers — and the corresponding tax revenue — within

Lafayette. Accordingly, the record amply supports the district

court’s findings. See id.

IV. Attorney Fees and Costs

¶ 26 Because the district court has not issued an order on Erie’s

motion for attorney fees, we do not review the issue. See Weston v.

T & T, LLC, 271 P.3d 552, 561 (Colo. App. 2011) (“The trial court

must make sufficient findings, so that, when they are considered

together with the record, the reviewing court can conduct a

meaningful review.”).

18
 V. Conclusion

¶ 27 Because Erie sufficiently showed that Lafayette’s

condemnation decision was made in bad faith and was thus not for

a lawful public purpose, we affirm the district court’s judgment.

JUDGE ASHBY concurs.

JUDGE FURMAN specially concurs.

19
 JUDGE FURMAN, specially concurring.

¶ 28 I agree with my colleagues that Erie sufficiently showed that

Lafayette’s condemnation decision was made in bad faith and was

thus not for a lawful public purpose. That was the focus of the

litigation in the district court. I write separately to point out what I

consider to be a more important question that we need not answer:

Whether the Colorado Constitution, or some other authority,

authorizes one home rule municipality to exercise its eminent

domain power over public land owned by a statutory town. The

parties in the district court appear to have assumed that such

authority exists; so the focus of the litigation was over whether

Lafayette had a proper public purpose in acquiring the land. My

agreement with the division is on this narrow basis.

20