The Crested Butte News Serving the Gunnison Valley since 1999
“We’re happy it’s settled”
By Alissa Johnson
A chapter of litigation related to the operations and financing of parts of the Prospect Homestead subdivision appears to be coming to a long-awaited end. The multitude of lawsuits arose over disagreements about infrastructure debt for parts of the subdivision and how operations would be paid for. All but one have reached settlements, and it appears the final dispute is nearing settlement as well.
There are several players involved in the complex situation, including Reserve Metro Districts 1 and 2 (operations and financing districts, respectively, within Prospect), the town of Mt. Crested Butte, a developer group that includes Crested Butte Mountain Resort (CBMR), and Gunnison County. As of late May, only Reserve Metro District 2 (RMD2) and the county were still working on an agreement.
At the heart of the matter were financial hardships for RMD2. According to Kathy Fogo, town attorney for Mt. Crested Butte, the district found itself unable to pay for its infrastructure debt; the developer excluded some of its developer-owned property from RMD2 and then it was reclassified from residential to agricultural.
That combination, along with a significant decline in property values, resulted in a loss of tax base.
“That made it impossible for the district to make the full debt payments and have money available for operations,” Fogo said.
That kicked off a series of disputes when RMD2 went so far as to sue the developer group and implement mill levies that exceeded the mill levy cap of 50 mills, subject to the state’s Gallagher amendment and outlined in its service plan. At one point the mill levy reached as high as 115 mills. That resulted in a series of additional lawsuits involving Reserve Metro District 1, Mt. Crested Butte and the county over whether exceeding the cap was legal.
Ultimately, the Colorado Court of Appeals ruled in favor of property owners requesting a determination that the mill levy cap was valid and could be enforced. Since then, RMD2 has settled with the developer, amended its service plan with Mt. Crested Butte to allow for the refinancing of its debt, and reached a settlement with RMD1 that will result in the termination of a master intergovernmental agreement.
According to town attorney Fogo, the outcome is significant: RMD1 and RMD2 have untied themselves financially and simplified the relationship between them.
“When these districts were formed there was no development yet so they were formed to fund the development of infrastructure and such. There used to be more that needed to be financed as far as constructing the infrastructure and to maintain things like roads, water and sewer, and fire protection,” Fogo explained
Now, many of those things are covered by outside entities like the Gunnison County Electric Association, the Mt. Crested Butte Water and Sanitation District, and the Crested Butte Fire Protection District. As a result, the parties were able to agree to terminate the IGA and the amended service plan sufficiently outlines each district’s responsibilities. It’s a simpler scenario, where RMD2 is responsible for road maintenance.
The remaining issue lies between the county and RMD2: the payment of tax abatements owed to homeowners who overpaid taxes when the mill levy exceeded its cap. The county wanted assurances that RMD2 would fund abatement for homeowners who had paid property taxes above and beyond the mill levy cap.
As of last week, deputy county attorney Gretchen Stuhr said it looked like an agreement was being reached. “We had a good conversation with RMD2 and it looks like they are planning to go ahead and fund abatement for those who filed petitions and those who can still file for abatement in 2014,” she said.
The actual agreement is still being drafted, so it is not a done deal, but could be the final piece needed to put this chapter to rest. As CBMR president Ethan Mueller said, “We’re happy it’s settled. We’re hoping the districts can move forward positively together and ultimately be a benefit for the overall community and really to the owners within the district.”
