Oberndorf v. City and County of Denver
| Decision Date | 19 September 1988 |
| Docket Number | 86-C-1445.,No. 86-C-1075,86-C-1075 |
| Citation | 696 F. Supp. 552 |
| Parties | Donald OBERNDORF, Loe Stern, Harry Paul Wertheimer, Mike Smith, Administrator of the Edith O. Wertheimer Trust, and Dottie Hammel, Plaintiffs, v. The CITY AND COUNTY OF DENVER, The City Council of the City and County of Denver, by its Council Members (not as individuals, but as members of the City Council), T.J. Hackworth, M.L. Sandos, Stephanie A. Foote, Paul L. Swalm, John J. Silchia, Nieves Perez McIntire, Hiawatha Davis, Jr., Salvadore Carpio, Cathy Donohue, William R. Roberts, Robert L. Crider, Cathy Reynolds, William A. Scheitler, The Denver Urban Renewal Authority, Federico Pena, Mayor of the City and County of Denver, and BCE Development Properties, Inc., a Colorado corporation, f/k/a Oxford Properties, Inc., Defendants. BLOCK 173 ASSOCIATES, a Colorado General Partnership, Plaintiff, v. The CITY AND COUNTY OF DENVER, The City Council of the City and County of Denver, by its council members T.J. Hackworth, M.L. Sandos, Stephanie Foote, Paul A. Swalm, John Silchia, Nieves Perez McIntire, Hiawatha Davis, Jr., Salvadore Carpio, Cathy Donohue, William R. Roberts, Robert L. Crider, Cathy Reynolds, William A. Scheitler, The Denver Urban Renewal Authority, Federico Pena, as Mayor of the City and County of Denver, BCE Development Properties, Inc., a Colorado Corporation, f/k/a Oxford Properties, Inc., Defendants. |
| Court | U.S. District Court — District of Colorado |
Harold A. Feder, Feder, Morris, Tamblyn & Goldstein, P.C., Denver, Colo., for Oberndorf plaintiffs.
James A. Clark, Bruce Pringle, Baker & Hostetler, Denver, Colo., for Block 173 Associates.
Stephen H. Kaplan, City Atty., Robert M. Kelly, Karen A. Aviles, Asst. City Attys., Denver, Colo., for Mun. defendants.
Marlin D. Opperman, Opperman & Associates, Denver, Colo., for D.U.R.A.
Dale R. Harris, David R. Hammond, Davis, Graham & Stubbs, Denver, Colo., for BCE Development.
This is an action filed by two groups of plaintiffs who own real property located in downtown Denver, Colorado, to challenge a proposed urban renewal plan. Plaintiffs Block 173 Associates ("the Block 173 plaintiffs"), a Colorado general partnership consisting of descendants of the Cheesman-Evans families, own Block 173 in fee simple. Block 173, bounded by Fifteenth Street, Glenarm Place, the Sixteenth Street Mall, and Welton Street, is now a parking lot.
The second group of plaintiffs, the Oberndorf family ("Oberndorf plaintiffs"), own a fifty percent interest, as tenants in common with BCE Development Properties, Inc., in four lots situated within Block 196, on the corner of Tremont Street and the Sixteenth Street Mall. This property is leased to small retail businesses.
Defendants are: (1) the City and County of Denver, Colorado ("City"), the City Council, and Federico Pena, the Mayor of the City and County of Denver, Colorado (collectively the "Municipal defendants"); (2) the Denver Urban Renewal Authority ("DURA"); and (3) BCE Development Properties, Inc. ("BCED"). Defendant BCED is a Colorado corporation that owns, or controls under long term leases, all of Block 196 except for the lots owned by the Oberndorf plaintiffs.
The issues before me arise out of two consolidated lawsuits filed by the named plaintiffs. A third action, Cook et al. v. The City and County of Denver, Colorado, et al., Civil Action No. 86-C-1278, has been settled and dismissed.
The Oberndorf plaintiffs' complaint seeks damages for alleged antitrust and conspiracy violations based on §§ 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. §§ 1, 2 (First Claim) and alleged civil rights violations under 42 U.S.C. § 1983 (Second Claim). It also prays for injunctive relief (Third Claim).
The Block 173 plaintiffs allege claims for violations of civil rights based on § 1983 (First and Second Claims), conspiracy to violate civil rights (Third Claim), and anti-trust and conspiracy violations under the Sherman Anti-Trust Act (Fourth and Fifth Claims). They seek an injunction, declaratory judgment, and damages.
Defendants have moved for summary judgment as to all claims asserted by the plaintiffs. The issues have been fully briefed, counsel have presented extensive oral argument, and all motions are ripe for decision. Subject matter jurisdiction exists under 28 U.S.C. §§ 1331, 1343, and 15 U.S. C. §§ 1, 26.
Plaintiffs' claims arise from an urban renewal project proposed by the Municipal defendants to be constructed in part on the properties owned by the plaintiffs. Defendant BCED is the proposed developer of the project.
In early 1983, the City and the Denver Partnership, Inc. ("DPI"), a nonprofit civic and downtown business organization, began courting national retail developers and department stores in an effort to enhance and revitalize the downtown Denver area. City officials and DPI soon determined that some sort of public/private partnership, with substantial public financial involvement, would have to be formed in order to develop a multi-block retail project downtown. This conclusion was based on such factors as high land costs, lower return for retail projects than for office towers, and the need to make substantial concessions to anchor department store tenants in order to lure them to Denver.
In the summer of 1983, DPI formed the Sixteenth Street Retail Development Task Force to assist in forming a public/private partnership to construct a multi-block retail project on the Sixteenth Street Mall. Although the City and DPI contacted several potential developers, only the defendant BCED demonstrated sufficient interest and capacity to develop the desired multi-block retail project. BCED proposed a two or three block project on the Mall to be constructed on Block 196, Block 173 and the block on which the May D & F Department Store is now located. In December 1984, the defendants Mayor Pena and BCED held a press conference to announce the plans of BCED and Reliance Development Company, (which then had the development rights to Block 173), to build the "Centerstone Project."
After this announcement, discussions among the City, BCED and others continued, focusing on available forms of public financing. It was determined that the most attractive and promising method was tax increment financing, a form of public funding that allows sale of municipal bonds to raise money for public improvements. It appears undisputed by the parties that urban renewal is the only vehicle available under Colorado law for implementing tax increment financing. See Urban Renewal Auth. v. Byrne, 618 P.2d 1374 (Colo.1980). Colorado's Urban Renewal Law is set forth at Colo.Rev.Stat. §§ 31-25-101 et seq. The City thus began taking the actions necessary to adopt an urban renewal plan.
Section 31-25-107(1) of the Urban Renewal Law provides that no urban renewal project shall be undertaken unless the appropriate authority, here the City Council, determines by resolution that the area is blighted or a slum. On December 4, 1985, the City Council's Budget and Finance Committee recommended that the City Council fund a DURA blight study to analyze a fifteen-block area in downtown Denver that was contemplated to be included in the proposed urban renewal district. On December 16, 1985, City Council Resolution No. 85 was passed at a public meeting. This resolution ordered DURA to begin preparing an urban renewal plan, and to perform a blight study for the fifteen-block area bounded by the Sixteenth Street Mall, Broadway, Cheyenne Place, Colfax and Champa Streets.
DURA solicited proposals from four consulting firms and on February 6, 1986, the DURA Board of Commissioners selected the firm of HOH Associates, Inc. ("HOH") to conduct the blight study.
In March 1986, HOH concluded its study, finding that numerous blight factors existed in the fifteen-block area. However, no blight factors were found to exist in the blocks here at issue now being considered for the Centerstone Project. These blocks, however, are part of the fifteen block area found to be blighted. HOH presented its blight study conclusions to DURA at a public meeting held March 20, 1986.
During this same period, DURA began preparing drafts of the urban renewal plan, with input from the City Council, the Mayor's office, the Denver Planning Office, various City agencies, bond underwriters, BCED and its representatives, area land owners and other interested persons. DURA's proposed urban renewal plan would create an urban renewal district covering the fifteen block area found to be blighted. It authorizes the use of tax increment bonds to finance public improvements, including retail, commercial, and related support facilities, with developers to be selected through a bidding process. Projects would be constructed pursuant to redevelopment agreements between private developers and DURA, as approved by the City Council. The plan initially gave DURA the power to condemn property but, at the insistence of certain property owners, including the plaintiffs, DURA's condemnation power was limited to the Plan's Phase I and, if the land subject to condemnation was larger than 25,000 square feet, DURA was required to obtain prior City Council approval. The initial Phase I development focused on three blocks, including the property owned by the plaintiffs and BCED.
On April 21, 1986, the Downtown Development Committee of the City Council met with the Denver School Board at a public meeting to discuss the urban renewal plan and tax increment financing. The Denver Planning Board met and reviewed the plan on May 7, 1986, voting to recommend the plan's approval to the City Council. DURA also recommended to the City Council that the plan be approved.
On May 27, 1986, after giving public notice, the City Council considered the proposed urban renewal plan at a public meeting. Plaintiffs and their representatives appeared and opposed the plan, disputing the existence of blight in the area. At the...
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