What: Valuation trial for Valley Floor condemnation by Town of Telluride. The town seeks to acquire the 573-acre portion of the Valley Floor south of the Highway 145 Spur (the east-west road that leads into Telluride, "the Spur"). SMVC owns another 121 acres north of the Spur, and 20 acres at Society Turn, at the southwest corner formed by the intersection of Highway 145 and the Spur. These parcels are commonly referred to respectively as "the South Side," "the North Side," and "the Society Turn parcel."
How the SMVC got the land: In 1967 Joe Oberto sold his Valley Floor property to Newmont Mining, owner of Idarado, for $300,000. Sixteen years later, the Cordillera Corporation, the predecessor to the San Miguel Valley Corporation, purchased approximately 860 acres from the Telluride Valley Corporation.
At stake: The 540-acre parcel west of Telluride, east of Society Turn. The Telluride Town Council voted to file legal action condemning the Valley Floor in January 2004, after the town voted in June 2002 to acquire the South Side of the Valley Floor through condemnation. Votes were 609 in favor, 385 opposed.
Condemnation means: Also referred to as the power of eminent domain, it’s a legal process by which a governmental entity may take title to property owned by a private party, provided that just compensation is paid.
Value to be determined by: A panel of six jurors from Delta, all of whom are property owners, will render a verdict with a determination of value on a one-page jury verdict form that will include the legal description of the property.
Value in this case means: The reasonable market value of the Valley Floor under an analysis of what is the most advantageous use or development.
When and where: Delta County Courthouse, started Feb.5, ending within a three-week outside time range.
Why is it in Delta?: The case is being heard in Delta County after the SMVC requested a change of venue of the jury trial to another county in August of 2004, a request the judge approved.
Featured lawyers: The Town of Telluride is represented by Leslie Fields, Esq., and Jack Sperber, Esq., two partners with the Denver law firm of Faegre & Benson; the San Miguel Valley Corporation is represented by Darrell Waas, Esq., Mikaela Rivera, Esq., and Patricia Campbell, Esq., of the Denver law firm of Otten, Johnson, Robinson, Neff and Ragonetti.
Presiding judge: San Miguel County District Court Judge Charles R. Greenacre
Witnesses for the SMVC: Johnnie Stevens, lifelong Telluride resident and frequent player for the SMVC over Valley Floor development issues; Peter Jamar, of Peter Jamar Associates Land Planning; Larry Stark, a land appraiser for National Valuation Consultants, Inc.
Witnesses for the Town of Telluride: Wayne Hunsperger, an expert appraiser who will be offering rebuttal testimony to the testimony of Stark; Mike Rozycki, San Miguel County Planning Director; Kent Sharp, SE Group, expert in ski area planning and expansion; Bill Granger, water law expert; Kevin Patrick, Esq.; Richard Chase, town’s appraiser
SMVC’s estimated value of the Valley Floor: $50 million
Based on what sort of analysis: Stark based his value conclusions for the two possible development options for the Valley Floor as follows: $40,600,000 for Alternative A and $56,750,000 for Alternative B.
Jamar testified to three development alternatives for the South Side: Alternative A, which involves 15 units under a one unit per 35-acre analysis; Alternative B, which involves 77 lots or approximately 1 unit per 7 acres on the south side; and, Alternative C, which involves a plan of up to 1,200 people on the south side of the Valley Floor with up to 800 units of density. To arrive at his $50 million estimate for the south side of the Valley Floor, Stark indicated that the final figure was a “reconciliation” between his two prices.
For Alternative A, Stark reviewed his 10 comparable sales of property from the Telluride area, Jackson, Wyo., Aspen and Steamboat Springs. The range of value for these comparables was approximately $20,000 per acre up to $160,000 per acre.
For Alternative B, Stark reviewed his four comparable sales of property in the Telluride area, Jackson, Wyo., Steamboat Springs and Breckenridge. The range of value for these comparables was approximately $87,000 per acre up to $185,000 per acre.
Town of Telluride’s estimated value of the Valley Floor: $26 million
Based on what appraisal: In Feb. 2001, an appraisal prepared by Chase and Co., for Telluride, valued SMVC’s 714.14 acres at $22.6 million. In 2003, another appraisal by Chase and Co. valued the south portion of the Valley Floor at $19.3 million, and in 2005 at $26 million.
Where the money is coming from: On Nov. 7, 2006, Telluride voted 585-333 to approve an additional $10 million in Open Space bonding capacity, increasing the town’s available funds for the acquisition to approximately $30 million. Additional funds are being sought from private donors and various grassroots fund raising efforts, such as those by the Valley Floor Preservation Partners (www.valleyfloor.org).
Strategy of town’s attorney, Fields, in cross examining the lineup of SMVC testimony: To point out the hypothetical nature of the appraisal and development plans and rule out or diminish the significance of speculative forecasts. For example, the cross examination of Jamar reviewed the assumptions necessary for his development scenarios.
According to Telluride Town Attorney Kevin Geiger: “These development assumptions for Alternative B included receiving approval from San Miguel County for a PUD on the south side, which includes completion of the county’s five step review process for PUD approval. The Forest Service would have to approve a possible gondola from the Valley Floor across the U.S. Forest Service parcel of property known locally as the ‘Wedge’ before cresting out on Coonskin ridge in Mountain Village near the Peaks Hotel and Spa. The State of Colorado Water Court must approve an augmentation plan to permit the creation of certain water features on the Valley Floor including the creation of the approximately 24 acre Blue Lake. The U.S. Army Corps of Engineers would have to approve a new individual Section 404 permit under the Clean Water Act, which would include a new comprehensive delineation of the Valley Floor’s wetlands since the prior delineation expired in 2000. It is also anticipated that the U.S. Army Corps of Engineers would be involved in the Landowners’ proposal to improve the fish habitat of the San Miguel River by extensively rerouting the San Miguel River in an attempt to return the river to a more natural meandering state as opposed to the current channeled alignment. Finally, the Town of Telluride would have to approve access to Colorado Avenue, sewer service and possibly water service.”
On cross examination of Stark for the town, Fields questioned the reconciliation of value at $50 million, which he acknowledged as a subjective number between the two ranges of possible value. She also challenged both standard and extraordinary assumptions of Stark’s appraisal. Fields inquired on a number of specific adjustments made for Stark’s possible development scenarios.
Possible appeals: Either party can make an appeal to the Colorado Court of Appeals.
What this is all leading to: A conservation easement binding the majority of the Valley Floor as undeveloped in perpetuity. On Feb. 5, the town requested letters of interest and statements of qualifications from land trusts and conservation management entities who might be interested in holding and managing the conservation easement. In addition to the initial conservation easement, a management plan is anticipated to be adopted by the town in partnership with local stakeholders.
The town will own the Valley Floor when: Funds for the anticipated jury award will be needed to be paid within 90 days of the court judgment. This is currently projected to be in May. Once the deposit is made, a court “Rule of Order” will convey the Valley Floor to the town. From that time, the town will be in possession of the property, pending an appeal. If an appeal is filed, the SMVC cannot take the jury award. If the jury award is withdrawn from the court registry, then any possible appeals will be dismissed.