In a case decided on December 11, 2017 by the Colorado Supreme Court, Kutak Rock attorneys Neil L. Arney, Mia K. Della Cava and Thomas W. Snyder, representing Colorado Bondshares and UMB Bank, secured an important reversal of a Colorado Court of Appeals ruling which sent shock waves through the real estate, financial and legal communities. In UMB Bank, N.A. et al. v. Landmark Towers Association, Inc., the Colorado Supreme Court held that a challenge pursuant to the Tax Payers Bill of Rights (“TABOR”) years after the election took place was time-barred under C.R.S. § 1-11-213(4), which requires an election contest to be filed no later than 10 days after the certification of the results of an election.

In 2007, qualified electors held a TABOR election pursuant to the Colorado Special District Act, C.R.S. § 32-1,101, et seq., to approve the organization of a special tax district, the imposition of taxes and the issuance of bonds to finance a planned commercial and residential development. In June 2011, long after the certification of the results of the 2007 TABOR election, the Landmark Towers Association filed an action on behalf of its members, claiming the TABOR election was invalid because the qualified electors were not properly qualified and that purchase contract holders should have participated in the election. In 2016 the Court of Appeals ruled in favor of Landmark Towers Association, thereby casting doubt on the validity of previous special district elections and chilling the special district bond market in Colorado.

In arguments to the Colorado Supreme Court, counsel for both parties relied on the Colorado Supreme Court’s opinion in Cacioppo v. Eagle County School District Re-50J, 92 P.3d 453 (Colo. 2004), which held that “if the claim alleges that the ballot issue as passed cannot stand under the laws of this state, it is substantive in nature and thus not subject to the time requirements of…section 1-11-213, which governs the time for appeal concerning challenges to election results.”

Specifically, Landmark argued that the statute was equitably tolled on the grounds that the condominium owners allegedly learned about the special district election when they started receiving their property tax bills in 2009. However, the Colorado Supreme Court held that equitable tolling does not apply to C.R.S. § 1-11-213 because C.R.S. § 1-11-213 is a non-claim statute, not a statute of limitations. Non-claim statutes cannot be equitably tolled. Further, Landmark argued that the time bar does not apply because it concerns the substance of the election ballot issues and not the means by which the election results were obtained. Therefore, Landmark contended that the bond and tax election should be invalidated based on allegations that ineligible voters participated in the election and eligible electors did not receive notice of the election. However, the Colorado Supreme Court rejected this argument, holding that Landmark’s lawsuit raised a challenge to the means by which the election results were obtained, not the substance of the ballot issue. As a result, the Colorado Supreme Court held that “this is precisely the type of challenge” prohibited by Cacioppo and was “properly subject to section 1-11-213(4)’s time bar.”

“The opinion of the Colorado Supreme Court brings certainty and finality back to the public finance market,” said attorney Neil L. Arney. “This case, combined with the Cacioppo decision, will protect the Colorado bond market and the special district elections throughout Colorado from the ambiguity of election contests brought after districts were formed, bonds were issued and property taxes were levied.”