New real estate war brewing in Colorado front range

Is Colorado turning into California where residents lament about affordable prices and yet seek to place broad restrictions on growth that would increase supply.  In Jefferson County, the city of Morrison is opening a new war in the “real estate battles”.   How does this impact future development?  Is this a “model” for other communities?

What happened?

The Jefferson County planning commission and the City council of Morrison approved a large development on a parcel that had been zoned for this purpose for many years.  The builders developed a site plan that not only met the site requirements but exceeded them.  All of this was reviewed and approved; the developers were ready to begin site preparations and building infrastructure when their plans were sidelined by a ballot initiative.

The ballot initiative

A citizens group initiated a ballot initiative to allow residents the final say on whether the development proceeds or not.  Essentially the residents will vote on the development project and either approve or disapprove.  This vote will override the prior approval by both the county and the city of Morrison

What is the problem with this approach?

Having individual projects go to a vote is very disruptive to business and long-range development since all the guidelines are basically thrown out the window.  The developer on this project not only followed all the rules that they were given from both the county and city but they also modified their plans to have lower density than what was allowed.  The counsel, of trained land planners/professionals, approved of these plans.  Now the developer must jump through yet another hoop that could derail their project after they have already invested hundreds of thousands into the property.  This uncertainty will stifle growth and lead to lawsuits when approved plans for properties are not followed.

Unlawful taking of property

Lawsuits will no doubt spur from this “random” approach to land planning.  What if you were the owner/developer on this parcel in Morrison that has spent hundreds of thousands of dollars on the site plans that met the county guidelines but now are disapproved by the voters.  Who pays for this loss?  What if now the density changes to one house per 35 acres as opposed to high density?  This parcel will decline in value exponentially.  Who is responsible for the loss in value?  I can guarantee these questions will soon be answered by a court after costly litigation

Other communities likely will follow suit

Unfortunately, Morrison will be a roadmap for other communities.  Many communities are getting fed up with the increased growth and there is a continued movement of “not in my backyard”.  This is not new to Morrison and is popping up throughout the front range and mountain communities that have limited areas to grow.  Morrison is the first I’ve seen that has fought a large-scale development that was already approved via a ballot initiative.  Others will likely follow as they also desire to keep development out of their “backyard”

Decrease in building activity

Communities that go down the path of “dysfunctional” growth with no clear guidelines for approval will stymie any future building activity.  The risk to a developer spending substantial time and money with no guarantee of payback will increase.  Many developers and lenders will not stomach the increased risk that a plan will be approved and then subsequently denied based on popular opinion as opposed to sound land planning.

Dangerous Precedent

Morrison is setting a dangerous precedent having development plans decided by a popular vote.  This will create a dysfunctional plan that will ultimately hurt the city as development is substantially decreased or curtailed altogether as developers are unable to work with the uncertainty of approvals.  This will also lead to countless lawsuits as property owners are deprived of the true value of their property.

Instead of litigation and gauging popular opinion on each development, cities like Morrison would be well served to modify their development plans so that all parties have a clear roadmap going forward.  A cohesive plan without uncertainty for the developer and litigation for the city is a much better path forward for Morrison and other communities throughout the front range.

Resources/Additional Reading

1. https://www.denverpost.com/2018/08/15/morrison-neighbors-fighting-housing-development/
2. http://www.nber.org/papers/w21154

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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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