A ruling last week by the Court of Appeals has frozen dozens of pending bond sales by special metropolitan taxing districts, which are common financing mechanisms for new development, and could affect many more. State lawmakers have been working overtime drafting legislation in hopes of heading off future lawsuits related to the ruling.
The Court of Appeals, ruling in a case titled Landmark Towers Association vs. UMB Bank, upheld the position of a group of Landmark condo owners that successfully invalidated the creation of the Marin Metropolitan District, aimed at financing the public improvements needed for a condo project in the development that was never built. The condo owners didn’t get to vote in the election creating the special district although they would pay taxes into the district.
The problem is that there are a number of districts that have had similar elections and with similar voter qualifications, said one attorney. The ruling could open litigation regarding elections held long ago, affecting outstanding debt obligation.
The ruling likely will be appealed, but that process could take years. In the meantime, the case has wreaked havoc in the finance community.
Financiers say there could be as much as $500 million in new infrastructure on hold in Colorado until there is a legislative fix.