The Right to Blight

April 2004

The past month has witnessed a number of legislative and judicial developments in Colorado regarding condemnations of private property. In March, the Colorado Supreme Court ruled in a closely watched case that the Arvada Urban Renewal Authority could not condemn private property that was not “blighted” for the benefit of another private party. Environmentalists and property owners alike have touted the decision as a victory, which seems to be indicative of a growing judicial trend towards restricting the freedom of municipalities throughout the United States to condemn real property purely for the benefit of private parties.

In the Arvada Urban Renewal Authority case, the Authority initiated a condemnation action to acquire a portion of a lake located on a private commercial office complex to be used as a parking lot for a proposed Wal-Mart Supercenter. Wal-Mart demanded the additional parking space as a condition to its acquiring empty retail space on adjacent property. The Court held that because the lake was not considered a “blighted” area under Colorado law, the Authority did not have the right to condemn the lake.

In order for a municipality to condemn private property, Colorado’s Urban Renewal Law requires that the property be considered “blighted.” Generally this means that the property substantially impairs or arrests the sound growth of the municipality or constitutes an economic or social liability because the property contains a type of defect such as deteriorating structures or unsafe or unsanitary conditions.

Proponents of condemning the lake in Arvada argued that because the property was found to be blighted in 1981, the Authority retained condemnation rights, despite the fact that the property had been subsequently redeveloped and actually was no longer blighted. The Court disagreed, concluding that in order for the Authority to condemn the property, it would have to conduct public hearings and make a renewed finding of blight with respect to the property (which the Authority is not likely to accomplish).

This case is particularly timely given current proposed legislation (HB 1203) in the Colorado State Legislature which would statutorily restrict the ability of municipalities to condemn private property. Many believe that the Arvada Urban Renewal Authority case was the impetus for HB 1203.

In our February newsletter, we described the provisions of HB 1203. As of this date, HB 1203 still is being considered by the Colorado Senate, having been approved by the House on April 5, 2004 by a vote of 40-24.

Since its introduction, HB 1203 has been amended to add a restriction on the right of a municipality to condemn property in another territory for the purpose of maintaining the property as open space. This amendment, commonly referred to as the “Telluride Amendment”, is thought to be an effort to prevent the town of Telluride from condemning 600 acres of vacant private property in San Miguel County that is owned by a developer.

There is no guarantee that the information provided in this Legal Update is current, accurate, complete, or is applicable to your particular circumstances. You should not rely on any information provided in this Legal Update or its applicability to any particular facts or circumstances without first seeking legal or other professional advice. For more information regarding this topic, please contact Jay Kamlet at (303) 825-4200.

Arvada Urban Renewal Authority v. Columbine Professional Plaza Assoc., Inc. 2004 Colo. LEXIS 113 (2004)

See 31-25-103(2), C.R.S.