Homeowners sue CB over ADU enforcement

Town and insurance company gear up for court

by Mark Reaman

Two Texas residents who own deed-restricted property in Crested Butte filed a lawsuit this week against the town of Crested Butte, the Town Council and the town manager in Gunnison District Court. The suit is in connection to a dispute over the homeowners’ obligation to rent out the accessory dwelling units (ADUs) located on their properties.

Gunnison attorney Marcus Lock filed the case on behalf of Sopris 715, LLC that is managed by John Kiltz. That property is located at 715 Sopris Avenue. Christopher Mize, who owns property at 225 Butte Avenue, is the other plaintiff in the case.

Dara MacDonald was served twice Tuesday with a complaint, once for herself as town manager and another for the town, while mayor Glenn Michel was served with the complaint for the council as a governing body.

“We are not yet prepared to discuss the merits of the case,” MacDonald said Tuesday. “With vacations and holidays, it will probably be a few weeks before we can get CIRSA [the Colorado Intergovernmental Risk Sharing Agency] and the attorney they appoint to get the case up to speed.”

On Monday night, December 19, after an executive session at the Town Council meeting, the council passed a motion to “direct the Town Attorney and staff to work with CIRSA on representing the Town and to prepare for defense of the litigation filed against the Town and the Town Manager by Marcus Lock on behalf of Sopris 715 LLC and Christopher Mize.”

CIRSA is the town’s insurance agency.

The 17-page complaint filed with the court laid out a half dozen claims about why the property owners are not subject to the current town regulations and why the appeals process was flawed. The ADUs in question were built in the 1990s. The council revised the town code in 2015 to more strictly regulate the ADUs in town. The ADUs in Crested Butte that are deed-restricted with the intent to rent to local workers were given tap fee and density breaks when constructed in exchange for the deed restriction.

Lock argues for the homeowners that the town cannot change the rules governing the ADUs. He says that the original deed restriction on the properties provides that “a long-term rental unit as defined by the Crested Butte Municipal Code will be maintained on the property.” He says both owners are currently maintaining such a unit that is capable of being rented for a period of six months or more as a long-term rental unit. He says they are not bound to the current regulation to actually rent the units.

“The only definition of ‘long term rental’ relevant to the Deed Restrictions was the definition in the Town Code at the time the Deed Restrictions were executed,” the lawsuit complaint states. “Application of the 2015 Ordinance to the Properties is invalid and improper.”

The suit claims “the Properties are not bound by any amendments or modifications to the definitions of ‘long term rental’ in the Town Code or new enforcement schemes, including without limitation the New Definition Provision or the New Enforcement Scheme in the 2015 Ordinance.”

The suit notes that a proposed settlement agreement had been reached between representatives of the property owners and representatives of the town before a scheduled hearing on the matter, but not accepted. The suit states that MacDonald did not accept the proposed settlement agreement but did not explain why. The suit says there were no findings of fact, no conclusions of law, no basis for the affirmation of the respective Notices of Violation, no references or citation to the record in the Notices of Decision.

The suit also basically claims there is a takings or damaging of the property value of Mize and Sopris 715 LLC under the current regulations; “the Notices of Decision constitute arbitrary, irrational and wrongful government action;” a court and not the town manager should have heard any appeal; and that by enforcing the 2015 ordinance it is a violation of the Colorado rent control statute that prohibits municipalities from enacting regulations that “would control rent on either private residential property or a private residential housing unit.”

The suit, which was officially dated December 14, asks the court to award damages, costs and legal fees to Mize and Kiltz from the town.

The town is not expected to have a formal reply to the suit until at least January 2017.

View the 17-page suit: ADU Lawsuit