Fischer v. City of Colo. Springs

• Decision Date: 16 September 2010
• Docket Number: No. 09CA2058.,09CA2058.
• Citation: 260 P.3d 331
• Parties: Lindsay E. FISCHER, Plaintiff–Appellant,v.CITY OF COLORADO SPRINGS and the City of Colorado Springs Public Facilities Authority, Defendants–Appellees.
• Court: Colorado Court of Appeals

260 P.3d 331

Lindsay E. FISCHER, Plaintiff–Appellant,

v.CITY OF COLORADO SPRINGS and the City of Colorado Springs Public Facilities Authority, Defendants–Appellees.

No. 09CA2058.

Colorado Court of Appeals, Div. II.

Sept. 16, 2010.

Lindsay E. Fischer, P.C., Lindsay E. Fischer, Colorado Springs, Colorado, for Plaintiff–Appellant.Patricia K. Kelly, City Attorney, Shane N. White, Assistant Attorney, Colorado Springs, Colorado, for Defendants–Appellees.Opinion by Chief Judge DAVIDSON.

In this challenge to the constitutional legitimacy of the Economic Development Agreement entered into between defendants, the City of Colorado Springs (City) and the Colorado Springs Public Facilities Authority (PFA), and the United States Olympic Committee (USOC), plaintiff, Lindsay E. Fischer, a resident of the City, appeals from the grant of a motion for judgment on the pleadings and dismissal of the complaint. We affirm in part, reverse in part, and remand.

I. Background

A. The Economic Development Agreement

The Economic Development Agreement (EDA) is not contained in the record on appeal. However, the following is undisputed: the City and the USOC entered into the EDA for the purpose of developing facilities for use by the USOC. To raise funds to acquire and renovate the facilities, the EDA provided for a lease purchase agreement between the City and the PFA—a nonprofit corporation operated by City officials.

Under the lease purchase agreement's terms, the City authorized the PFA to issue certificates of participation, a form of security representing a proportionate undivided interest in an agreement such as, here, a lease. See § 11–51–201(17), C.R.S.2010. With the proceeds, the PFA was to purchase from the City the Police Operations Center and Fire Station No. 8, and then lease them back to the City, assigning its rental income to the investors who had purchased the certificates. The police and fire stations would also serve as collateral for the certificates. The lease between the PFA and the City, however, would be annually renewable, subject to future city councils' decisions to appropriate money to fund it.

Regarding the facility to be developed by the City for the USOC, the EDA provided that the City would use the revenue from its sale of the police and fire stations to acquire and renovate a downtown building. The City would then lease the building to the USOC, either for no charge or for one dollar per year, and convey it to the USOC, for no additional cost, after thirty years.

B. Trial Court Proceedings

Plaintiff challenged the validity of the EDA on three grounds: (1) the certificates amounted, in substance if not in form, to a contract obligating the City to commit future revenues, which is prohibited, unless first authorized by an election, by the Colorado Constitution and the City's home rule charter; (2) because the EDA provided that the City would lease the facility to the USOC, either for no charge or for one dollar per year, and convey it to the USOC after thirty years, the scheme amounted to an unconstitutional donation or grant to a private corporation; and (3) the EDA conflicted with the PFA's articles of incorporation, which require financing arrangements between the City and the PFA to be “consistent with the limitations of the Colorado Constitution and the home rule Charter of the City.”

Because the EDA required the PFA to issue the certificates within forty-five days of its execution, the City requested, and the court granted, an expedited briefing schedule and judgment. After a status conference, the court agreed with the City, over plaintiff's objection, that the issues could be narrowed to whether “the City, without voter approval, [may] enter into an annually renewable lease purchase agreement providing for issuance of certificates of participation.” Determining that the parties agreed as to what the lease purchase agreement provided, but disagreed about its legal effect, the court concluded that this issue was purely one of law, and could be decided on the pleadings.

Ultimately, the trial court determined that the lease purchase agreement “does not constitute a general obligation debt or multiple fiscal year financial obligation.” Granting the City's motion for judgment on the pleadings, the court acknowledged that “[i]t may be unlikely that the City would ever not renew the lease on the [police station] and [the fire station],” yet, it concluded, “as long as that possibility exists and is legally permissible ... future city councils are not required to appropriate funds. An election is not required.”

The court then dismissed the complaint with prejudice, and plaintiff filed this appeal.

II. Standard of Review

Judgment on the pleadings is appropriate when a case's material facts are not in dispute, and “judgment on the merits can be achieved by focusing on the content of the pleadings and any facts of which the court will take judicial notice.” City & County of Denver v. Qwest Corp., 18 P.3d 748, 754 (Colo.2001) (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1367, at 509–10 (1990)). We note that, contrary to plaintiff's contention that the trial court here considered matters outside the pleadings, specifically, that under the EDA, the City is to sell the police and fire stations to the PFA, this same information was set forth at paragraph 26 of plaintiff's amended complaint.

“In considering a motion for judgment on the pleadings, a court must construe the allegations of the pleadings strictly against the movant, and it must consider the allegations of the opposing party's pleadings as true.” Smith v. TCI Commc'ns, Inc., 981 P.2d 690, 695 (Colo.App.1999). Thus, implicit in the trial court's grant of the City's motion here was a determination that the controlling law and undisputed facts permitted resolution of the entire matter without further discovery or introduction of evidence. See Qwest Corp., 18 P.3d at 754. We review this determination, and the court's disposition of the City's motion for judgment on the pleadings, de novo. See Bedard v. Martin, 100 P.3d 584, 588 (Colo.App.2004).

III. Election Not Required

On appeal, plaintiff contends that the trial court erred in granting the City's motion for judgment on the pleadings concerning the first claim stated in his complaint: that the certificates may not be issued unless first authorized by an election.

Plaintiff concedes that “the City's answer d[id] not contest the facts stated in the plaintiff's amended complaint,” yet he argues that, because a trier of fact could draw disparate inferences about the practical effect of the EDA's undisputed provisions, this matter cannot be decided solely on the pleadings. See Koch v. Whitten, 140 Colo. 109, 113, 342 P.2d 1011, 1013 (1959) (“Where material issues of fact are present which can only be determined from [ ] testimony, [a] motion for judgment on the pleadings is improper.”).

Although plaintiff agrees with the City that, by its terms, the lease purchase agreement provided that the City's lease of the police and fire stations was annually renewable and, therefore, future city councils would have discretion not to fund it, he argues that the trial court failed to consider evidence that, because those facilities served vital public safety functions, the public would not tolerate a decision to surrender use and occupancy of them. That the police and fire stations served as collateral on the certificates, he contends, renders such a decision even more impracticable.

Thus, plaintiff reasons, because future city councils effectively would be obligated to appropriate money from the general fund to renew the City's lease of the police and fire stations each year, both Colorado Constitution article XI, section 6, and Colorado Springs City Charter § 7–90, prohibited the issuance of the certificates without an election. We disagree.

A. Legal Framework

Article XI, section 6(1) of the Colorado Constitution prohibits a political subdivision, such as the City, from “contract[ing] any general obligation debt by loan in any form” “unless the question of incurring [it] be submitted to and approved by a majority of the qualified taxpaying electors voting thereon.” Likewise, the City's home rule charter, section 7–90(d) requires voter approval in advance of the creation of any “financial obligation [of the City] ... that extends, or causes a penalty if not extended, past the fiscal year incurred without adequate present cash reserves irrevocably pledged and held for all future payments.” Although plaintiff also premises a claim on section 7–80(a) of the City Charter, concerning debts payable from the proceeds of ad valorem property taxes, that provision does not appear applicable to the EDA.

As plaintiff contends, these provisions proscribe any arrangement in which the City is contractually obligated to incur a debt, the repayment of which will obligate future city councils to commit revenues from the general fund. See, e.g., Deti v. City of Durango, 136 Colo. 272, 274–75, 316 P.2d 579, 580–81 (1957) (where lease purchase agreement provided that city must appropriate money from its general fund each year to fund a thirty-one-year lease, it violated art. XI, § 8 (repealed and reenacted, in pertinent part, as art. XI, § 6, Jan. 1, 1972)). Such an obligation is termed “constitutional debt.” In re Interrogatories by Colorado State Senate (Senate Resolution No. 13) Concerning House Bill No. 1247, 193 Colo. 298, 305, 566 P.2d 350, 355 (1977) ( “To constitute a debt in the constitutional sense, one legislature, in effect, must obligate a future legislature to appropriate funds to discharge the debt created by the first legislature.”).

Constitutional debt is indicated where (1) the obligation pledges future revenue; (2) the obligation requires use of revenue from a tax otherwise available for general purposes; (3) the obligation is a legally enforceable obligation...