Boulder County voters last Nov. 5 turned down the county commissioner-supported proposal to form a special taxing district to collect taxes from property owners in subdivisions within unincorporated Boulder County for the repaving of roads leading from their homes to a Boulder County owned and paved road. The commissioners refused to take no for an answer and, just three weeks later, used their power and authority under state law to do so by resolution, creating The Subdivision Paving Local Improvement District (“LID”) assessing taxes for the funds they believe they need and imposing a perpetual lien for the special tax which has now been recorded in the land records.
The LID affects close to 11,000 properties in 118 subdivisions.
The Resolution allocated 20 percent of the expected costs to the county treasury in recognition that people other than those who live in the subdivisions use the subject roads. The remaining 80 percent is assessed against the subdivision properties using a formula calling for 25 percent to be based on the value of the property and 75 percent to be based on the length of the road in the subdivision where the property is located.
This has caught many buyers and sellers of affected properties by surprise who had not anticipated the assessment which averages $5,340 per property, but is payable in installments over 15 years. Provision for the allocation of responsibility for payment of the LID tax should be explicitly addressed in contracts to buy and sell real estate as buyers and sellers are already voicing different views on how that is to be done as they approach closing. The better time to resolve this issue is before the contract is fully executed or by an amendment ahead of the closing date. The standard contract language states that special assessments are to be pro-rated for the year of closing. Without specifically addressing the new LID, the seller may be responsible for a pro-ration of the full assessment and not just the minimum 1/15th portion due that year.
A lawsuit challenging the legality of the LID has been commenced by plaintiffs willing to pay the full amount now as required by state law in order to mount the challenge. The suit is seeking equitable relief in the form of an injunction prohibiting the county from collecting the LID taxes and requiring release of the recorded liens. Arguments in support of the suit include the commissioners exceeded their legal authority, the LID violated the Colorado Taxpayer’s Bill of Rights known as TABOR which is a constitutional limitation on raising taxes, and the affected property owners were denied constitutionally guaranteed due process. Although the subdivisions have contracts with the county for maintenance of the roads in issue, the commissioners’ position is that these agreements did not anticipate or cover the repaving and drainage and shoulder improvements which have become necessary in their opinion.
Matthew S. Finberg is a Boulder attorney.
