AIRORA | As the legal battle over Aurora’s massive Gaylord hotel project trudges through local courts, city officials are hoping a recent legal maneuver will mean the end of a lawsuit filed against the project by two Aurora residents.
At issue is whether funding for the project — including $300 million in tax incentives from the city of Aurora — followed the law. Opponents of the plan say it skirted the state’s Taxpayers Bill of Rights, while supporters say it followed well-established rules for big projects that rely partly on tax incentives.
Two Aurora residents have filed a lawsuit against the city claiming the project violates Colorado’s tax restriction laws.
In response, city officials filed their own claim asking Judge Edward C. Moss for a “validation certificate” saying the funding mechanism has been legit. If Moss sides with the city, city lawyers hope he will then toss the lawsuit, having already found the funding followed the law.
Tom Snyder, one of the lawyers hired by the city, said that while city officials have no doubt that the funding followed the law, they asked the judge for the certificate because a ruling from a court would give investors a bit more confidence in the project and help to sell the bonds needed to fund it.
“We’re very confident that the financing mechanism used in the incentive agreement are all lawful,” he said.
Lawyers for the two residents suing the city — David Bishop and Regina Thomson — oppose the validation certificate.
In their lawsuit, Bishop and Thomson accuse the city of crafting a special taxing district and allowing just one person — a real estate developer from Denver — to vote on a special tax there to benefit Gaylord. In total, the local and state taxes promised to Gaylord could top $800 million over the next 30 years, according to the lawsuit.
Under Colorado’s Taxpayer Bill of Rights laws, lawmakers typically have to get voter approval for any tax hike.
Mark Grueskin, one of the lawyers representing Bishop and Thomson, said in court last week that it was improper for a single voter to make a taxing decision that could affect the whole city.
Supporters of the Gaylord project have long argued that the tax money in question would not exist if not for the project, and said taxes would be paid by hotel visitors, not city residents.
Wendy Mitchell, president of the Aurora Economic Development Council, which arranged the Gaylord deal with the city, said she is confident the city will prevail in court.
“We just have to be patient and work through the process, because all they are going to try to do is delay,” she said. “It was clearly a transparent process, we followed every aspect of the law that we were supposed to.”
Still, even after a day of argument in open court, when the legal wrangling over the project could wrap up is anyone’s guess. The Bishop and Thomson lawsuit is scheduled to go to trial in December, and Snyder said the judge will likely rule on the validation certificate in the coming weeks.
Snyder said the city and backers of the project hope the judge grants the certificate, and having ruled the funding was appropriate, opts to toss the lawsuit sometime this summer.
“We believe the court is going to decide both cases together to a large degree, because the cases do overlap,” he said. This isn’t the first time the Gaylord project has wound up before a judge.
Last year, of a group of hotels, chiefly from Downtown Denver, filed a lawsuit claiming the state should revoke $80 million in state tax rebates for the project because details of the project had changed since the money was pledged. In April, a Denver judge dismissed all of the claims filed by the Front Range hotels against the Gaylord project.
Our friends in Denver receive millions of dollars from regional tax payers every year making Denver into the great city that it is. Denver loves to be friends when Denver is the receiver but Denver forgets about sharing with anyone else. It’s time that our friends in Denver get out of the way of this project and go back to focusing on their own downtown and DIA. Denver, don’t hurt your neighbors!
Interesting info in this article; Tom Snyder, is one of the outside attorneys Aurora has hired for this case, wants to make investers comfortable. Makes one wonder why the city is Paying Charlie Richardson $59/per hr. for his insider info. Do the attorney’s the city hired, upon Charlie’s recommendation, only communicate with the city through Charlie?
As I recall the old City Attorney, Charlie Richardson, also asked for a certification of validation when the AURA granted Gaylord the most generous TIF in the history of Colorado. (100% of all future tax revenue that is not designated by law for 33 years, plus two enhanced taxes. (lodger tax and a special taxing district) That request for validation was denied.
According to some industry experts, including Disney, 33 years exceed the life expectancy of the Western themed Gaylord project; oops it is now a smaller sized hotel/convention center with a water park. Wonder who will be paying for the water for the water park? Do you think another excemtion to the new water fees will be granted by this City Council?
But as the supports say, this “new tax money is only money that Gaylord will generate, it’s not like we are giving Gaylord actually money.” The 50 mil tax levy for the Brighton School District that will be going to Gaylord is not real money because they do not have that money now so they will not be giving up real money either. With this logic argument, isn’t the money raised by sales tax really only money that is generated by businesses and not really the city’s money either?
In the words of some Aurora residents – “Growth Pays for Growth”. It’s my view that using Tax Increment Financing (TIF) is not a great money grab by a developer to increase their profits, but a way to fund the enormous infrastructure investment necessary to bring a project through to fruition. The developer needs to “up front” the cost of streets, curb and gutters, sewers and water. The TIF allows the developer to sell the needed bonds that actually pay for infrastructure at the time of construction. Bonds are nothing more than packaged infrastructure loans for the development. Bond financiers need to see a funding stream that is capable of paying back the bonds. By using the TIF, future users of the project pay back the bonds and when the bonds are paid, the TIF essentially goes away.
The use of a TIF for commercial development is not a lot different from a housing development forming a metro district to install the water and street infrastructure. Future home owners pay a metro district tax that pays off the bonds that builds the common infrastructure. “Growth pays for growth” and the use of the TIF and the metro district insure that the rest of the community is not saddled with the cost of new infrastructure.
I see the TIF as a good way to make future users of this development, or any other commercial development pay for the use of the infrastructure supporting their visit to the property. “We the people” get the benefit of high quality jobs, a high quality destination facility, and a good use of the land in Aurora near the airport. The alternative to this “big” project is more of what is already there, small short stay motels. TIFs for the Gaylord are win-win for all of us!