The Score is Three to One on Tabor Compliance

This is a letter to the Editor that appeared in Monday's Mountain Mail. Council will be discussing this matter on Nov. 29

To the Editor:

I read in the November 17th Mountain Mail that the NRCDC board received an expert legal opinion declaring that no TABOR violation exists on the Vandaveer loan with High Country Bank. Interestingly, that was the same conclusion that the bank's attorney arrived at, as well as an independent attorney hired by concerned citizen Alison Brown. So we have three outside experts who did not find TABOR violations. Only our city attorney, who declared at the outset he was not well versed in TABOR law, thinks we have a problem.

The attorney for the NRCDC refers to case law to support his conclusion. What cases does the city attorney use to support his position? We, the citizens, can't know because the council refuses to make that document public.

A second article in the same paper reported that the city's attorney fees on the TABOR issue were approaching thirty thousand dollars. The NRCDC apparently paid their attorney no more than ten thousand since that was the stated cap. A lot of money spent for little clarity.

TABOR law is complex and when dealing with such complexity legal opinions may vary. However, the weight of expert opinion certainly indicates that the council need not panic and create fire sale conditions that will deny we, the citizens and true owners of this property, the opportunity to reap the best return on our investment.

While I don't believe the city should be in the land speculation or development business, I do believe that the board of the NRCDC is quite correctly attempting an orderly liquidation that has the best chance to fully pay off the bank loan and quite possibly return a profit to the citizens.

It seems that the council has painted itself into a corner by prematurely creating a compliance plan for violations that don't appear to exist. The council has gone so far as to propose an auction,if needed, without a reserve. Under these conditions, it is likely that an out of town speculator will get a bargain and the city will have to contend with lost capital and lost opportunity.

Also lost in this panic is any further discussion of what we, the citizens, would like to see develop on this acreage. There has been past discussion of affordable housing or recreational uses. If this land is handed to a developer without restrictions, only the existing zoning stands between us and a future development that may damage our small town lifestyle. Do you want big box stores, acres of new homes? Or some open space and solid, planned development? Nobody is asking your opinion.

If the NRCDC board is allowed to do their job, perhaps we can pay off our loans, see a profit or hold on to some of the land for community goals. The board should be commended for standing up to the council and attempting to fulfill their fiduciary duty to their true constituents, the citizens. The council should fall in line and support the board. Enough money has been lost to legal fees. Let's get back on track.

Thomas Jacobson

Comments

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  • ...thanks Jake.

  • I agree with Mr. Jacobson.

    I would add a couple of items: 1. This land was bought, as I understand it, to secure the very senior water rights associated with it at a reasonable price. The land itself was not bought with the idea of the city needing the land for any particular purpose other than the water rights. The plans for disposing of the land need to well thought out, maximizing the financial return and/or usefulness of the land to the citizens, rather than dumping the land at a fire sale price due to the self-imposed panic by this city council.
    2. The decision by this city council to hire a local attorney, even if not experienced in municipal law, appears to be costing the taxpayers a lot of money and aggravation in this particular case. And why, as a taxpayer, am I paying for the town attorney's legal opinion, but not allowed to see it? Is the council embarassed by the quality of the legal opinion? I thought some of the members of this council ran on the platform of more transparency than previous councils.

    Lee Dodge

  • Lee, Some clarification on the purchase and payment. Under Colorado Water Law, land and water rights are separate and separable property rights. From negotiations with the previous owner, both had to be acquired at the same time. The land was purchased, financed, and paid for via the General Fund. The financing, with a long term mortgage to the prior owner, was a violation of TABOR. The debt was ultimately paid off using reserve funds in the General Fund. The water rights went into the Water/Sewer Enterprise Fund, and were financed there. That was legal under TABOR. The way the contract for the sale was written, both debts had to paid off at the same time. The reserves from the Water/Sewer fund were used up, creating a need to raise rates to build back the reserves. The City Attorney responsible for creating the TABOR problem was fired. What is the motivation of the majority on the current Council and the current City Attorney? The attorney appears to have a number of personal goals to keep the citizens at bay, and obviously likes to make money given the size of the charges to the City, even with no municipal experience. I think the majority on the current Council have the potential to create a glorious mess for future Councils.

  • edited December 2016

    A few points:

    1) The HPWC, P.C. opinion letter obtained by and written to Alison Brown states in relevant part:

    "In preparing this opinion, we have reviewed certain documents provided by you related to the City, the NRCDC and the Loan. We have not, however, had the opportunity to review all documents that may be pertinent, and have not had the ability interview City or NRCDC officials and staff, or individuals from the Office of the State Auditor (“OSA”). Additional or different information may change our analysis and/or conclusions. Please note that we are not an accounting or auditing firm and are only providing a legal opinion that is based upon our reasonable judgment. We are not offering accounting, audit or tax advice. Finally, this opinion is directed solely to you, Alison Brown, as our client and is not intended to be relied upon by any third party with whom we do not have an express attorney-client relationship."

    Ms. Brown got an attorney to say what she wanted him to say, but he's not going to stand on his opinion to anyone but her. For anybody to offer Ms. Brown's HPWC, P.C opinion letter as something the public should rely upon is disingenuous and directly contrary to the terms of the opinion itself.

    2) No opinion letter offered in contradiction to City Attorney Kahn's opinion has acknowledged the fact that the City gave $millions in real property to the NRCDC while retaining a "reversionary" interest, meaning the land and improvements were to come back to the City after a period of 20 or 30 years.

    However, the Forest Service lease payments made to the NRCDC will not be enough to allow the NRCDC to pay off the present loan from High Country Bank, leaving a balloon payment of $3 million+ due in September 2023. At that time, the NRCDC may or may nor be able to renegotiate this loan. If not, the City is on the hook for it, in order to protect its revisionary interest in the land. So in a nutshell, the City is presently in a position where it HAS TO de facto guaranty the loan entered into by the NRCDC, if the City wants to protect its own investments.

    Salida taxpayers face a very real possibility of being forced to assume and pay-off a long term loan, without ever having the opportunity to vote this imposition upon themselves. That is the crux of a TABOR violation, no matter how many attorneys you pay to say whatever you want them to say.

    3) The Vandaveer property is worth what it is worth, not what people want it to be worth, simply because of what the City or the NRCDC owes. Waiting for a $6 million offer on a property worth $4.5 million is going to be a long wait, with the City burning more money, time and energy as time goes on.

    Has the property yet been listed or marketed? That would be a great first step toward finding market value. Or is the NRCDC instead treading water and twiddling thumbs while it argues pointlessly about TABOR?

    If the NRCDC Board gets the property on the market, seven months or more is time enough to find a willing buyer on the open market. All this "fire sale" nonsense arises from an irrational, non-bona fide offer that Walt Harder and John Diesslin put together in a day or two following a controversial decision by Council a couple months back. Their offer was so nonsensical and hastily assembled that it purported to purchase land that the NRCDC no longer owned.

    4) The present Vandaveer situation is a "glorious mess." Prior councils created it. I think the majority on the current Council works diligently and prudently to resolve this glorious mess created by past councils. Hanlon arranged to have the NRCDC pay $100,000 to Kutak Rock to set up a 63-20 bond issue ($80k utterly wasted) and for closing services ($20k). He more than any other created the mess we have, and he was paid an average of $175,000 per year from 2010 - 2013 (plus whatever the NRCDC paid him while he worked both sides) to so marvelously foul things up.

    City Attorney Kahn is extremely qualified and incredibly intelligent. I had a conversation a few months back with a local retired attorney in which he eviscerated Kahn for his alleged lack of competence. I asked him, "Have you looked at his qualifications? Did you review his resume? Do you know what kind of law he has done (much of which by the way is complex real estate transactions representing private developing entities in front of local governments)? Did you watch the candidate interviews? Are you aware that he clerked for the Colorado appellate courts (a great honor)?"

    The answer? "No, no, no and no." Well do some research before you criticize, and let's keep the attorneys' fees in perspective.

    5) If you think the citizens of Salida really want to support buying Vandaveer Ranch again, file a petition for a ballot initiative. Get moving or it will be moot.

    6) I'd personally like to see the strip of wetlands extending 80 yards or so south of the Little Arkansas put into greenspace and would be willing to aid such an effort, even though it irks me that we would have to buy them again.

    For what it's worth.

  • Jeff' It is interesting how this entire debate/conversation seems to have been created by your profession. The initial error was from the city attorney along about 2004. This lead to the TABOR violation and necessitate debt repay. Then later, Carl Hanlon said the 63-20 could function and the construction and long term debt which was created would not be recourse to the citizens, so obviating TABOR.

    Now we have a new council, with a different agenda, who hired another attorney, with no experience in either municipal or TABOR law, and who has said what the majority of council wants to hear about TABOR violations. Then there are several other attorneys who disagree with the idea of TABOR violations who say so . Your comment, about attorneys saying what clients want to have said is true. After all, you were an at least peripheral member of CAG and supported some of their ideas.

    I do not disagree on your comment about the wetlands.

  • While attending last summer’s public meetings put on by the City of Salida about Vandeveer Ranch and what to do with the property I did not hear any suggestions to have a "Fire Sale". While living and working in Salida one of the biggest issues facing our citizens is housing, or actually affordable housing. It seems a few years ago in early 2000's it might have been different, such as running out of water for the residents, especially with the draught of 2002. As for the concept of the Vandeveer Ranch purchase thankfully there were some insightful people on City Council when it came available. Purchasing it for the senior water rights was important and was the best vision for our town. As for the sequence maybe it could have been done better, or maybe no matter how it could be done there is always someone with a complaint. However, it was done and I thank those people involved for helping to solve one of the most important long term issues for our town. Here we are in 2016 and one of the biggest issues now is housing, it has been brought up at public meetings, it has discussion groups, it is obvious, and it will not go away. Now we have this Vandeveer land issue and a housing shortage. It seems prudent to put the two together and possibly solve today’s very serious problem. Look at Buena Vista, they just did something similar and the community loves them for it. Instead we have three members of City Council, the mayor, and City Attorney wanting to dispose of the land as quickly as possible.

    A very important item happened again at the Nov 29th City Council meeting. The public showed up with suggestions on what to do with the land, there was discussion of solutions, there was emotion, there was a petition with 300 signatures. City Council members Hal Brown, Melodee Hallett, Mike Bowers, and Mayor Jim Livecchi ignored everyone and still voted to dispose of the land. Then they voted on the motion to not make available any client-attorney information even when the client is the City of Salida. There was also a motion of delaying this sale process and having it go to a vote of the people next November, where the citizens would have the option on the ballot to purchase and make decisions about their community, this was again voted down.

    The City Council members of Brown, Hallett, Bowers and Mayor Livecchi have gone too far, again. Even though they have controlled the quorum of City Council votes for quite some time this issue is just too big to let slide, they have gone rogue.

    My questions are why is there even an issue with Tabor violations and the Vandeveer Ranch property? Did City Attorney Ben Kahn dream this up on his own? Or was City Attorney Ben Kahn given direction by City Council and/or the Mayor? I attend and watch a lot of City Council meetings and I do not remember this process being discussed and then all of a sudden it becomes a priority. For the elected officials who ran on the transparency ticket you are doing everything but being transparent.

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