Chapter 3 - § 3.6 • CHALLENGES TO FUNDING AND FUNDING SOURCES

• Jurisdiction: Colorado

§ 3.6 • CHALLENGES TO FUNDING AND FUNDING SOURCES

On a few occasions, landowners have sought to challenge a condemnation action by raising lack of funding issues. Generally, the owner will argue that either there are insufficient funds to pay the award or that the funds that are available have been obtained in an unlawful manner. In either case, consistent with the majority position on this issue, Colorado courts have uniformly rejected such challenges. In one of the first cases to do so, Public Service Co. v. City of Loveland, the Colorado Supreme Court held that questions concerning whether municipal bonds available to fund the project had been lawfully raised were not to be determined in a proceeding to condemn property.⁵⁶ In referring to these issues as "non-justicable questions in a special statutory condemnation proceeding," the court held:

It is to be observed that the present objections do not and cannot go to the question of the legality of the proceedings under which the municipal bonds or obligations were issued or the right of the city to get money that way. . . . We remark that just how much of the money was raised by bond issues and how much by other municipal obligations, or the manner in which either was obtained or spent, are questions not be asked in an action in eminent domain.⁵⁷

A similar outcome was reached in Rabinoff v. District Court, when the owner challenged the condemnation action based on an assertion that there would be insufficient funds to pay for all of the properties being taken for an urban renewal project.⁵⁸ The court held the issue to be without merit. And in Post Printing & Publishing Co. v. City & County of Denver, a condemnation ordinance stating that if the award exceeded $115,000 the city would dismiss the case was found an insufficient basis on which to declare the condemnation improper.⁵⁹

In Public Service Co. v. Shaklee a landowner argued that the fact that a private entity, who would benefit from the construction of a transmission line, had agreed to pay for most of its construction was evidence that the taking was not for a public use.⁶⁰ In finding this fact "not crucial," the court held that "[e]ven if persons who benefit from the improvement agree to pay for it entirely, the taking of necessary property is valid, as long as the use of the property is a public use."⁶¹

Finally, in Town of Silverthorne v. Lutz,⁶² the appellate court was faced with an issue involving a home rule city's efforts to condemn...