Steamboat Springs The city of Steamboat Springs has decided to return more than $40,000 in impact fees and forego the risk of a lengthy and expensive legal trial.
The Steamboat Springs City Council said it would return $16,327 in impact fees to Gilstrap Enterprises Inc. and $25,008 to K&K Builders. The city would retain $6,000 from impact fees paid by the two developers.
The agreement avoids a legal battle that could have ended in the Colorado Supreme Court and had the potential to set a precedent for how much control state laws have over home-ruled municipalities.
"This type of case would be really an uphill battle for the city," City Attorney Tony Lettunich said.
The cost of the trial, the state's recent ruling against home-rule municipalities and the Colorado Municipal League's unwillingness to take on the issue as a test case all played into the city's decision to resolve the case instead of going to court.
Under Colorado Senate Bill 15, impact fees cannot be collected from projects that received development approval before an impact fee ordinance went into place. Both Gilstrap Enterprises and K&K Builders had projects approved before the city passed the impact fee ordinance on Nov. 6, 2001.
Lettunich previously said the council's decision had the potential to impact close to $80,000 in impact fees from all projects that had planning approval and were built during the 14 months the impact fees were in place. However, after further research, Lettunich said Gilstrap and K&K Builders were the only ones who would be exempted under Senate Bill 15.
If voters had not decided to replace impact fees with an excise tax in the November 2002 general election, the projects that would have been exempted by the bill would have meant millions of dollars in lost tax revenue.
"At this point, the city does not have a big stake in this issue because of the repeal of the impact fee ordinance and adoption of the excise tax," Lettunich said. "I think, at this point, it is better left to the municipalities that have a larger stake to proceed with this issue."
When attorney Bob Weiss came before the city asking for the refund under Senate Bill 15, the city had argued the state law did not apply to Steamboat Springs because the city operates under a home-rule charter. The city said impact fees were a matter of local concern and therefore not subject to state law.
Weiss said if the impact fee refund would have gone any further, he would have argued the matter was of mixed state and local concern, meaning the city could pass laws on impact fees as long as they did not conflict with state laws.
The conflict between state and local control is a recurring issue, Lettunich said, and one that would most likely end up in the Colorado Supreme Court.
"The Supreme Court is the only court that can make a determination of whether or not a matter is of statewide concern or local concern," he said.
Before the Supreme Court made a decision to hear the case, the case would have had to go to the District Court and then the Court of Appeals.
That process could have cost the city more than $20,000, Lettunich said.
When Senate Bill 15 was first passed, Lettunich said CML had expressed enthusiasm in challenging it. But that enthusiasm has since diminished.
Part of the reason the CML has shied away from the case could be recent state decisions that ruled against local control.
"There is a sense, if you talk to different authorities in municipalities, a general consensus that the home-rule argument is under a certain amount of attack at the General Assembly level and the court pendulum maybe be swinging away from local concern," Lettunich said.
And the concern that the city could lose, which might take away some rights of home-rule municipalities, is one of the reasons the city did not proceed.
Lettunich said other communities have been facing similar problems with impact fees and the case could eventual make its way to the Colorado Supreme Court.
"Down the road, it could still very well go up (to the Supreme Court), but not this community at this time," Lettunich said. "Thank goodness."