Developers seek refund from city

Companies say impact fees were collected for approved projects

— Two developers will argue tonight that the $47,000 impact fees they paid to the city of Steamboat Springs were illegal under state law and should be refunded.

K & K Builders Inc. and Gilstrap Enterprises Inc. cite a state law that prohibits municipalities from collecting impact fees for projects that have already received planning approval.

The council approved the New Development Impact Fee on Nov. 6, 2001. The council implemented the fee as a way to force growth to pay for itself. The fee -- which was different for single-family homes, multifamily units and commercial properties -- was paid by the developer when the building permit was issued.

At around the same time the council passed the ordinance, Gov. Bill Owens signed into law a bill prohibiting cities from collecting impact fees for projects already approved, even if building permits had not yet been issued.

But the city believes the law does not apply to Steamboat because Steamboat operates under a home rule charter.

Both developers asked City Manager Paul Hughes to refund the fees, but the city refused. Tonight the developers are coming before the council to appeal that decision.

A memo to the council from City Attorney Tony Lettunich states land use measures are historically of local concern and the Legislature is prevented from regulating them.

"Their position in things like this ... is that cities have the authority to pass laws that conflict with state law," said attorney Bob Weiss, who will represent both K & K Builders and Gilstrap at Tuesday's meeting. "There is some truth to that, but it depends on what it is."

Lettunich informed the council that K & K Builders has indicated it would file a lawsuit if the appeal is denied. He also indicated the Colorado Municipal League has interest in pursing the legal question and might participate in defending the city in litigation.

Weiss, who was one of the loudest objectors to impact fees, said the state bill empowered non-home rule charter cities to institute impact fees, but also placed restrictions on the scope of the collection.

"There is a perception within the development community that they can be unfair," Weiss said.

In June 2002, K & K Builders paid a total of $29,000 in impact fees on a project that received approval in 1997. The company built two multi-family developments of four units each in the Willowbrook subdivision.

In the summer of 2002, Gilstrap paid $18,000 in impact fees for its project in the Curve subdivision.

In August 2001, Gilstrap submitted its application for a fast food restaurant, gas station and convenience store on the west side of town.

If voters had not approved to replace impact fees with an excise tax in November, tonight's decision would have a much greater impact on city funds. Because impact fees were only in place for a year, just a handful of commercial developments that were built received approval prior to the impact fee ordinance.

If the excise tax, which is not restricted, had not been approved, many more potential developments could have been considered for exemption.

"It would have been a much bigger issue because there were a lot of approvals that might have fallen into that position," Weiss said. "It would have been a much bigger issue money wise."

Weiss said the two developers decided to wait until after the November vote before asking for the refund.

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