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LLC v. Colorado Economic Development Comm'n

Court of Appeals of Colorado, First Division

September 10, 2015

1405 Hotel, LLC; 550 15th Owner, LLC; Broadmoor Hotel Inc.; Brown Palace Hotel Associates Limited Partnership; Cheyenne Mountain Conference Resort; CHSP Denver LLC; DiamondRock Cherry Creek Tenant LLC; DiamondRock Denver Downtown Tenant LLC; HEP Denver Ltd., d/b/a Magnolia Hotel; Oxford Hotel 2005 Holdings LLC; and Westminster Boulevard Finance, LLC, Plaintiffs-Appellants,
Colorado Economic Development Commission, Division of the Office of Economic Development and International Trade, State of Colorado; and City of Aurora, Colorado, Defendants-Appellees

          City and County of Denver District Court No. 13CV34006. Honorable Karen L. Brody, Judge.

         Lewis Roca Rothgerber LLP, James M. Lyons, Hilary D. Wells, Hermine Kallman, Denver, Colorado, for Plaintiffs-Appellants.

         Cynthia H. Coffman, Attorney General, LeeAnn Morrill, First Assistant Attorney General, Denver, Colorado, for Defendants-Appellees Colorado Economic Development Commission, Division of the Office of Economic Development and International Trade, State of Colorado.

         Kutak Rock LLP, Thomas W. Snyder, Daniel C. Lynch, Michael M. Frandina, Denver, Colorado, for Defendant-Appellee City of Aurora.

         Hawthorne and Berger, JJ., concur.


         TAUBMAN, JUDGE.

          [¶1] Plaintiffs, eleven hotels along Colorado's Front Range,[1] (collectively the Hotels) appeal the trial court's order dismissing their complaint against the Colorado Economic Development Commission (CEDC) and the City of Aurora (Aurora). The Hotels allege that the trial court improperly refused to review the CEDC's decision to award Aurora an $81 million tax subsidy pursuant to its authority under the Colorado Regional Tourism Act (the RTA). Because we agree with the trial court's conclusion that the Hotels lack standing to challenge the CEDC's decision, and because we do not reach their constitutional claim, we affirm.

         I. Background

         A. The Regional Tourism Act

          [¶2] In 2009, the General Assembly enacted the RTA to provide a mechanism through which as many as two local governments per year can obtain sales tax increment financing for the development of large-scale regional tourism projects. § § 24-46-301 to -310, C.R.S. 2014. The law permits successful applicants to establish regional tourism zones or authorities within their borders and allows them to collect a portion of the revenue derived from state sales taxes within those zones. See § 24-46-303, C.R.S. 2014 (defining, among other terms, " regional tourism authority," " regional tourism zone," and " state sales tax increment revenue" ). The revenue is then used to fund the development of a specific large-scale tourism project within the zone. See § 24-46-302(1)(c), C.R.S. 2014 (" Colorado is in competition with other states to attract large-scale regional tourism projects." ); § 24-46-302(1)(d) (" It is in the interest of [Coloradans] to provide a financing mechanism for attracting, constructing, and operating large-scale regional tourism projects that will attract significant investment and revenue from outside the state." ).

          [¶3] The RTA prescribes a detailed application process which requires applicants to submit, among other documents, maps of the proposed project area, § 24-46-304(2)(a), C.R.S. 2014; a narrative description of the project, including cost estimates, id. at (2)(c); an economic analysis detailing the project's impact on the local economy, id. at (2)(d); and information regarding the project's financing, id. at (2)(e) to (h). The RTA also requires applicants to provide an economic study from a third-party analyst selected by the Office of State Planning and Budgeting. Id. at (2)(i). The third party reviews the data provided by the applicants to ensure the application's general accuracy. Id. at (2)(i)(I) to (IV).

          [¶4] Consideration of an RTA application is a two-step process. First, before approving a project, the CEDC must make several findings: (1) the project is extraordinary and unique in nature and reasonably anticipated to contribute significantly to economic development and tourism in the state and region where the project is located; (2) the project is reasonably anticipated to result in a substantial increase in out-of-state tourism; (3) a significant portion of the sales tax revenue generated by the project is reasonably anticipated to be attributable to transactions with nonresidents of the state; [2] and (4) in the absence of the award, the project is unlikely to be developed within the foreseeable future. Id. at (3)(a) to (d).

          [¶5] Second, section 24-46-305(3), C.R.S. 2014, requires the CEDC to adopt a resolution specifying (1) the local government that has been approved to undertake the project; (2) the area of the regional tourism zone; (3) whether the CEDC has authorized the creation of a regional tourism authority; and (4) the percentage of state sales tax increment revenue that will be dedicated to the regional tourism project.

         B. Aurora's RTA Application

          [¶6] For the purposes of this appeal, the parties do not dispute the following facts as set forth in the Hotels' second amended complaint.

          [¶7] During the RTA's inaugural application cycle in 2011, Aurora submitted a proposal requesting a tax increment subsidy to support the building of a $824 million hotel and conference center with 1500 rooms and approximately 350,000 to 400,000 square feet of meeting space to be developed by the Gaylord Entertainment Company (the Gaylord Project). The Gaylord Project's application presented a detailed description and economic analysis, including a third-party analyst's conclusion that the project would likely not be developed but for RTA funding.

          [¶8] In May 2012, the CEDC announced its intention to approve the Gaylord Project's requested $81 million tax increment subsidy, pursuant to the RTA, so long as Aurora satisfied certain conditions within 120 days.[3] However, the CEDC did not adopt a resolution memorializing the award at that time.

          [¶9] Later that same month, Gaylord Entertainment announced its decision to withdraw from the Gaylord Project. The company further announced that it was selling its brand name and management rights to Marriott International. In October 2012, Gaylord Entertainment announced that it had merged with a wholly owned subsidiary called Ryman Hospitalities.

          [¶10] One year later, during the May 2013 CEDC meeting, Aurora announced that RIDA Development Corp. (RIDA) had agreed to develop a similar hotel and conference center, and that Marriott International would operate the project (the RIDA/Marriott Project). However, Aurora did not submit a new RTA application.

          [¶11] In July 2013, the Hotels, joined by additional hotels, the Colorado Hotel and Lodging Association, and the Metro Denver Hotel Association, submitted a petition to the CEDC requesting that it require Aurora to submit a new RTA application for the RIDA/Marriott Project.[4] Specifically, it claimed that material changes to the proposed project, as well as the change in the developer from Gaylord to RIDA, necessitated a new application. The petition also requested that the CEDC hold a public hearing to address these concerns and alleged that the CEDC's May 2012 preliminary approval of the Gaylord Project had expired on its own terms.

          [¶12] At its regularly scheduled July 2013 meeting, the CEDC heard the petitioners' concerns and notified them that it would take the petition under advisement. In August 2013, the Attorney General wrote to petitioners, denying their petition on the ground that it was untimely under section 24-4-106(4), C.R.S. 2014, of the State Administrative Procedure Act (APA), and C.R.C.P. 106(b). The Attorney General asserted that the CEDC's May 2012 preliminary approval of the Gaylord Project constituted final agency action, giving petitioners either thirty-five days from that date to challenge the action pursuant to section 24-4-106(4) or, in the alternative, twenty-eight days to petition for judicial review under C.R.C.P. 106(b). Because the petition was untimely under either deadline, the Attorney General denied it on behalf of the CEDC.

          [¶13] In October 2013, the CEDC adopted a final resolution approving Aurora's RTA application for the RIDA/Marriott Project.

         C. This Action

          [¶14] In September 2013, the Hotels filed this action against the CEDC and Aurora in Denver District Court. A second amended complaint was filed in October 2013. The complaint alleged four claims for relief: (1) a claim in the nature of mandamus brought under C.R.C.P. 106(a)(2) to compel the CEDC to require Aurora to submit a new application for the RIDA/Marriott Project, as required by the RTA; (2) a claim brought pursuant to the APA, section 24-4-106(4), seeking review of the CEDC's final agency action denying their petition for reconsideration and approving the RIDA/Marriott Project; (3) a claim for declaratory relief pursuant to C.R.C.P. 57 and section 13-51-105, C.R.S. 2014, challenging the constitutionality of section 24-46-309, C.R.S. 2014, of the RTA; and (4) a claim seeking a declaration that procedural irregularities in the CEDC's approval of the initial Gaylord Project invalidated that RTA award.

          [¶15] In December 2013, Aurora moved for a C.R.C.P. 12(c) judgment on the pleadings, asserting that the Hotels lacked standing to bring claims one, two, and four. Aurora conceded that the Hotels had standing to bring their third claim, but maintained that this claim should be resolved in its favor on its merits. The court held a hearing in March 2014 and, in April 2014, granted Aurora's C.R.C.P. 12(c) motion in an oral ruling. In July 2014, the trial court entered a written order denying the Hotels' C.R.C.P. 59 motion.

          [¶16] On appeal, the Hotels contend that (1) the trial court erred in ruling that they lacked standing to bring their first, second, and fourth claims for relief; and (2) the court misconstrued their third claim as a facial, rather than an as applied, challenge to the constitutionality of section 24-46-309. Aurora and the CEDC maintain that the trial court correctly resolved these two issues and further assert, as a jurisdictional matter, that the Hotels' complaint was untimely under both section 24-4-106(4) and C.R.C.P. 106(b).

         II. ...

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