Aurora Urban Renewal Authority v. PK Kaiser.
2022 COA 5. No. 20CA1162. Municipal Law—Constitutional Standing—Political Subdivision Standing Doctrine—Prudential Standing—Public Improvements—Urban Renewal Law—Tax Increment Financing—Failure to Exhaust Administrative Remedies.
January 6, 2022
Colorado’s Urban Renewal Law (URL) authorizes the creation of urban renewal authorities to undertake urban renewal projects aimed at redeveloping slum and blighted areas. The URL authorizes the use of tax increment financing (TIF) to fund these projects. TIF uses recently assessed property values in an urban renewal area to establish a base tax value, and as property values increase above the base value, increased tax revenues are allocated to financing the renewal project. Those revenues are applied to the renewal fund and used to pay down the debt against the project. The statute does not specify precisely how county assessors should calculate base and increment values but delegates that authority to the Colorado Property Tax Administrator (Administrator). The Administrator’s manuals are titled the Assessors’ Reference Library (Reference Library).
The Aurora Urban Renewal Authority; Corporex Colorado LLC (Corporex); and Fitzsimons Village Metropolitan District 1, Fitzsimons Village Metropolitan District 2, and Fitzsimons Village Metropolitan District 3 (collectively, Metro Districts), sued the Arapahoe County Assessor (Assessor) and the Administrator, alleging that the Reference Library’s apportionment methodology violates the URL, and sought declaratory and injunctive relief. The district court found that the Metro Districts and Corporex lack constitutional standing and the Aurora Urban Renewal Authority and the Metro Districts lack prudential standing to sue the Administrator. It granted summary judgment in favor of the Assessor on the remaining claims.
On appeal, the Metro Districts and Corporex argued that the district court erred by dismissing them for lack of constitutional standing. To establish standing, plaintiffs must have suffered an injury in fact to a legally protected interest. Here, plaintiffs adequately pleaded that the Reference Library, published by the Administrator and applied by the Assessor, has resulted in minimal revenue to the TIF despite great increases in property values. According to the complaint, a methodology that leads to this result jeopardizes the viability of the Aurora Urban Renewal Authority’s urban renewal projects. Therefore, the Metro Districts and Corporex have alleged facts sufficient to demonstrate an injury in fact in their declaratory judgment claim. Further, the Metro Districts and Corporex are integral participants in the URL, so their alleged injuries were to a legally protected interest. Accordingly, all plaintiffs have constitutional standing.
The Metro Districts and the Aurora Urban Renewal Authority argued that the district court erred when it dismissed all claims asserted by the governmental plaintiffs against the Administrator for lack of prudential standing. The prudential standing limitation precludes standing when (1) the agency seeking judicial review is subordinate to the agency whose decision is sought to be reviewed, and (2) no statutory or constitutional provision confers a right on the subordinate agency to seek judicial review of the superior agency’s decision. The Administrator argued that it is a superior state agency to the Metro Districts and Aurora Urban Renewal Authority. However, the Metro Districts and Aurora Urban Renewal Authority are not agents of the Administrator but are distinct entities with separate powers and responsibilities. Accordingly, they have standing to sue the Administrator under the facts alleged in the complaint.
The Assessor argued that all of plaintiffs’ claims are untimely because they did not seek judicial review of the State Board of Equalization action within 35 days, as required by CRS § 24-4-106(4). However, even if there was a failure to exhaust administrative remedies, it was not fatal to plaintiffs’ claims because (1) it would be unjust to require plaintiffs to litigate this controversy on the basis of a factual record compiled at a hearing conducted years before the damage constituting the alleged statutory violation occurred; and (2) whether the TIF methodology in the Reference Library is consistent with the URL presents a question of statutory interpretation, which does not require agency expertise and is not a matter of agency discretion. Accordingly, the district court correctly declined to dismiss plaintiffs’ claims for failure to exhaust administrative remedies.
On the merits, plaintiffs argued that the Reference Library is inconsistent with the URL because (1) the term “general assessment” in the URL refers only to a change in the statewide general assessment rate of real property, and (2) the Reference Library’s methodology for calculating TIF revenues conflicts with the URL and case law interpreting the URL. The portions of the Reference Library that allow the Assessor to proportionately adjust the base and increment values any time there is a general reassessment, and not only when the statewide reassessment rate changes, are not contrary to law. The Reference Library’s distinction that requires the direct and indirect effects of the creation of an urban renewal plan to be allocated differently does not effectuate the central purpose of the URL, is not supported by the text of the URL, and is contrary to case law interpreting the URL. Accordingly, as written, the current distinction in the Reference Library between direct and indirect benefits is contrary to law. As a result, these Reference Library provisions are void as a matter of law.
The portion of the judgment dismissing the Metro Districts and Corporex for lack of constitutional standing and the ruling that the Metro Districts and the Aurora Urban Renewal Authority lacked prudential standing to sue the Administrator were reversed. The portion of the judgment rejecting dismissal based on a failure to exhaust administrative remedies and the portion of the summary judgment construing “general reassessment” to include the biennial reassessment of real property were affirmed. The summary judgment in favor of the Assessor was reversed, and the case was remanded for entry of an appropriate declaratory judgment in favor of plaintiffs and against both the Administrator and the Assessor, consistent with this opinion.