Subdivision Improvement Requirements and Guarantees in Colorado
| Publication year | 1985 |
| Pages | 554 |
1985, April, Pg. 554. Subdivision Improvement Requirements and Guarantees in Colorado
The subdivision of land for residential and commercial purposes has attained a frenzied pace in the western United States as industry and its prospective employees seek the benefits of life in some Sun Belt states. To stave off the potentially harmful consequences of the subdivision process, all of the western states have enacted subdivision control laws. Perhaps the most important feature of these laws is the requirement that the developer complete necessary public improvements as a condition of approval of the subdivision proposal. Approval by the local planning commission or legislative body is necessary before the developer can convey any property within the subdivision.
Recognizing that development would be stifled if developers could not convey subdivision property until all improvements were constructed, local governments permit the developer to guarantee performance in lieu of actual completion. Thus, the developer can achieve an income flow with which to complete improvements. Should the developer default on the promise to complete necessary improvements, the local government can resort to the guarantee as a source of funds which can be used to complete construction.
Colorado law authorizes both city and county governments to impose subdivision improvement requirements on developers and to accept some form of performance guarantee in lieu of completion.(fn1) Local governments can require the developer to construct streets, water distribution systems, sewage collection systems, storm drainage facilities and virtually any other requirement reasonably necessitated by the subdivision.(fn2)
The performance guarantee may take the form of a surety bond, letter of credit, cash or property escrow or any other security acceptable to the local government.(fn3) Case law concerning subdivision improvement requirements and guarantees in Colorado has developed to the point where a review can be valuable to the real estate attorney who drafts them.
Although a Colorado state court has not ruled expressly on the constitutionality of subdivision improvement requirements, the Tenth Circuit Court of Appeals has rejected a claim of an unconstitutional taking in an annexation case. The annexation situation is a close parallel to subdivision improvement requirements because the local government mandates that such improvements be dedicated to the public following completion. Thus, in both cases, otherwise private improvements become public property.(fn4)
In Trentman v. City and County of Denver,(fn5) the plaintiff developer had constructed a central water system as part of a residential subdivision. The developer recouped his costs by charging unit owners a fee to connect with the system. When the city and county of Denver annexed the subdivision, the city took responsibility for the system. The plaintiff argued that...
To continue reading
Request your trial