Carousel Farms Metropolitan District, a quasi-municipal corporation and political subdivision of the State of Colorado, Petitioner-Appellee,
Woodcrest Homes, Inc., a Colorado corporation, Respondent-Appellant.
County District Court No. 15CV30013 Honorable Richard B.
Alderman Bernstein, LLC, Jody Harper Alderman, Carrie S.
Bernstein, Amy E. Arlander, Denver, Colorado, for
Reagor, PLLC, David D. Schlachter, Portland, Oregon, for
Respondent-Appellant Ann A. Terry, Denver, Colorado, for
Amicus Curiae Special District Association of Colorado
1 Appellant, Woodcrest Homes, Inc., owned a .65-acre parcel
of land (referred to as Parcel C) outside the Town of Parker.
Century Communities, Inc., and its subsidiaries
(collectively, the Developer) acquired the parcels to the
north and south of Parcel C, with a plan to create a
development - Carousel Farms - comprising all three parcels.
Under its agreement with the Town, the Developer could not
move forward with its development plan until it acquired
2 Woodcrest, though, declined to sell Parcel C for the price
offered. So the Developer threatened to condemn the property.
When Woodcrest did not acquiesce, the Developer created the
Carousel Farms Metropolitan District (District), the
appellee, which promptly initiated condemnation proceedings
and took possession of Parcel C.
3 The District defends the condemnation of Woodcrest's
property as a lawful exercise of its power of eminent domain
on the theory that Parcel C will ultimately be used for a
public purpose. In accordance with the Developer's
proposed development plan, the infrastructure for the
Carousel Farms subdivision, including public improvements
such as roads and sewers, will be located on Parcel C.
4 We conclude that the District cannot meet its burden by
showing that, under the Developer's plan, once approved,
the taking will result in the property's eventual use for
public purposes. Rather, the taking itself must be necessary
to serve a public purpose.
5 Here, the taking was carried out by the District, acting as
a sort of alter ego of the Developer, to ensure that the
Developer met its contractual obligations to the Town. True,
once those obligations are satisfied and the development plan
can proceed, the District intends to put the property to a
public use. But this amounts to a classic case of the tail
wagging the dog - the District condemned property to advance
the private development process, the completion of which
would then require the construction of infrastructure, which
qualifies as a public purpose necessitating the condemnation
of Parcel C. We do not agree that this scenario passes
constitutional or statutory muster, and therefore we reverse.
Woodcrest Begins the Development Process and Buys Parcel C
6 Carousel Farms comprises two twenty-acre parcels (Parcel A
and B) and the .65-acre strip of land sandwiched between them
(Parcel C), located in unincorporated Douglas County.
7 Woodcrest initially intended to develop Carousel Farms. As
a prerequisite to development, the three parcels had to be
annexed into the Town, rezoned as planned development, and
approved as a subdivision - an extensive process that
entailed the preparation and approval of a sketch plan, a
preliminary plan, and a final plat. As the Town explains in
its municipal code, "[e]ach step is a distinct process
involving the submittal of an application, an application
fee, required plans and reports, referrals of the proposal to
other agencies and public hearings/meetings." Parker
Mun. Code 13.07.040(a)(2).
8 To meet those obligations, Woodcrest bought Parcel C and
entered into contracts to buy Parcels A and B. It executed an
annexation agreement and successfully progressed through the
sketch plan and preliminary plan phases of the subdivision
process. The final plat prepared by Woodcrest's
engineering firm was never approved, however, because
Woodcrest did not ultimately acquire Parcels A and B. After
six months without further progress, Woodcrest's
development plans were deemed abandoned.
Developer Takes Over Development of Carousel Farms
9 About five years later, in 2012, the Developer stepped in.
At the immediate possession hearing, the Developer testified
that it essentially picked up where Woodcrest had left off:
the engineering firm had retained all the development plans
so the Developer was "able to pick those plans up."
It contracted to buy Parcels A and B and began the
subdivision process, making some adjustments to
Woodcrest's plans along the way.
10 In January 2014, the Town entered into a new annexation
agreement (the Agreement) with the then-current owners of
Parcels A and B. Under the terms of the Agreement, the Town
would not annex Parcels A and B, nor would it approve any
plats for Carousel Farms, unless the Developer owned all
three parcels, including Parcel C. This latter condition was
contained in the following provision:
2. Consolidation of Ownership of the Property and the Strip
Parcel. The Town has no obligation to approve (including the
setting of any public hearings) any plats for the Property
until all of the following conditions are satisfied: a. [The
Developer] or its assign is the owner of the Property
[Parcels A and B] and the real property described in Exhibit
C [Parcel C] . . . (the "Strip Parcel").
b. The Strip Parcel [Parcel C] is zoned PD-Planned
Development . . . .
c. The Strip Parcel [Parcel C] is made subject to this
Agreement by an amendment hereto.
11 In the meantime, the Developer made overtures to Woodcrest
to acquire Parcel C. In January 2013, it offered to buy the
parcel for approximately $45, 000. But Woodcrest declined
that offer, noting that it had essentially subsidized the
Developer's entitlement process because the Developer had
used Woodcrest's development plans and because the owners
of Parcels A and B had retained Woodcrest's earnest
money, presumably reducing the Developer's purchase price
of those parcels. Woodcrest told the Developer that its offer
"must increase substantially."
12 The Developer did not make another offer. Instead, two
weeks later, it sent Woodcrest a notice that it intended
"to move forward with annexation into the Town of
Parker." If Woodcrest did not accept the offer
"expeditiously, " condemnation proceedings would be
initiated "with Town Council's support." The
Developer did not explain the basis for its authority to
condemn Woodcrest's property, and Woodcrest assumed that
it was the Town that might move to condemn Parcel C.
13 In fact, though, the Town never considered condemning
Woodcrest's property. At the possession hearing, the
Town's representative testified that the Town did not
even want to "talk about" the possibility of taking
Parcel C because the Town "d[oesn't] do
condemnation." Rather, as the Town's representative
explained, the Town preferred that "the two property
owners, " meaning the Developer and Woodcrest,
"work it out by themselves."
14 But the Developer made no further attempts to "work
it out" with Woodcrest. Instead, it simply moved forward
with its development plans. It closed on Parcels A and B and,
in the fall of 2014, the former owners assigned their rights
and obligations under the Agreement to the Developer.
15 On September 2, 2014, the Town held a public hearing on
the Carousel Farms sketch and preliminary plan. The
Town's planning department conditioned approval of the
plan on the Developer acquiring and rezoning Parcel C and
including it within the Agreement. According to the planning
department representative, only with the addition of Parcel C
would the Developer's sketch and preliminary plan satisfy
the density requirements under the Parker 2035 Master Plan.
The Town approved the plan on the condition that "[t]he
Woodcrest Parcel shall be acquired, rezoned to Carousel Farms
PD and made a part of the Carousel Farms Annexation
Developer Forms the District and the District Condemns Parcel
16 During the fall of 2014, the Developer also created the
District, a new metropolitan district that would serve
Carousel Farms. According to the District's service plan,
the District's primary purpose was to finance the
construction of public improvements authorized to be