The Town of Vail’s looming condemnation of a parcel where Vail Resorts wants to build affordable housing sets the stage for a protracted battle.
Eminent domain in Colorado typically involves governments, taxing districts or transportation departments claiming properties for a public good, like a wider road, a new firehouse or even urban renewal, with bigger spaces for more lucrative businesses.
This story first appeared in The Outsider, the premium outdoor newsletter by Jason Blevins.
The Town of Vail’s plan to condemn about 23 acres owned by Vail Resorts is to prevent any development in hopes of protecting a bighorn sheep herd that winters in the aspen groves near Interstate 70. The Vail town council plans to vote on the condemnation Tuesday.
A previous town council approved Vail Resorts’ plan to build a mix of units to house as many as 165 workers on about 5 acres, with the rest set aside as open space.
“What’s interesting about this case is that it involves two really benign purposes: open space for wildlife and housing. I do not think the courts will step into that question. It’s up to the condemning authority to decide,” said Jan Laitos, a University of Denver law professor with an expertise in property rights.
So Laitos does not expect a legal battle to be waged on the town’s ability to deploy eminent domain to protect wildlife. But the next step in the condemnation process, when the Town of Vail and Vail Resorts haggle over the value of the condemned parcel, will be explosive.
Both Laitos and retired University of Colorado law professor Richard Collins point to a previous eminent domain case in a Colorado mountain town for guidance on how the town and ski resort operators may reach agreement on the value of the parcel.
When a deep-pocketed investor proposed luxury homes and a village on Telluride’s pastoral valley floor in the late 1990s, the town moved to block development, citing damage to the region’s rural character. Town voters approved a decision to condemn the 572 acres on the valley floor in 2002. The case eventually landed in the Colorado Supreme Court, which ruled that Telluride had the power to condemn that acreage outside its boundary.
The valuation proved spicy. The town offered the developer $26 million. The developer wanted $51 million. He forced a jury trial to move to nearby Delta County where the jury in 2007 ordered Telluride to pay $50 million, which was twice what the town had set aside to protect the parcel. A massive fundraising effort followed and the valley floor remains a bucolic stretch of open space on the edge of downtown Telluride.
In Telluride, the value boiled down to the developer arguing the “highest and best use” of the 572 acres, where he envisioned multimillion-dollar homes, shops and restaurants. At Vail, that could come down to whether the parcel could ever be used for high-end homes.
“The Vail corporation will argue that the land should be valued for its higher and best use,” said Collins, who penned a legal paper analyzing the Telluride valley floor case. “Assuming the ski corporation wants to fight this, that will absolutely be their argument. Highest and best use. That’s just good lawyering.”
The parcel, which Vail Resorts discovered it owned in 2016 after it had been mistakenly listed as owned by the Colorado Department of Transportation for decades on county property records, was initially zoned for duplexes. The property could have been developed into 10-to-15 duplex lots — each lot a minimum of 15,000 square feet — with as many as 30 homes. Today, nearby half-duplexes are selling for as much as $4 million.
The ski area operator worked with the previous town council to change that zoning to multifamily housing on only one portion of the acreage, with about 17 acres undeveloped. That was part of the deal for the previous council’s 4-to-3 approval of the project.
The Eagle County Assessor valued the rezoned 5.4-acre parcel at $4.4 million in 2021, with an assessed value of $1.3 million. Without the acreage set aside as open space and open for development of condos, it would be valued much higher, especially as home prices skyrocket in the last year.
Laitos has another case that could shine some light on how this parcel could be valued. In the 1990s, as Las Vegas expanded its McCarran Airport, Clark County began passing ordinances that prevented tall buildings near the runways.
The idea was to prevent those skyscraper casinos in flight paths. The owners of parcels near the airport cried foul, saying the new rules limited development and Clark County was condemning their property. For the owners, the highest and best use of their largely undeveloped parcels were tower casinos. For the airport, the fair market value was a much smaller number.
“The Nevada Supreme Court basically awarded these small land owners, one guy had a dog-walking business, tens of millions. They became multimillionaires because the valuation was not the current value but what it could be in the future,” said Laitos, who worked as a consultant for Clark County in the case. “If a Colorado court goes with the highest and best use, the Town of Vail will have to pay big dollars because that land in Vail is so incredibly valuable.”
“If the ski company is able to raise the price high enough they might force the town to back off its condemnation plan,” Collins said. “That would be the company’s legal strategy, is my guess.”
That Las Vegas eminent domain case took six years. The Telluride Valley Floor case took even longer. Vail Resorts is hammering the town council with the argument that its $17 million plan for the parcel in East Vail is “shovel ready” and could be hosting workers by the start of the 2022-23 ski season. A legal battle will certainly last years.
And unlike Telluride and Las Vegas, the two sides of this argument will spend the next several decades working side by side in all kinds of partnerships addressing how to mitigate the impacts of one of the busiest ski areas in the country.
“There is a political side here. These two have an ongoing relationship and they need to get along,” Collins said. “That may somehow enter into this case one way or another.”
Jim Burling, the vice president of legal affairs for the Pacific Legal Foundation, said traditional uses of eminent domain have focused on removing minorities and poor residents from land that could be used for parks, roads and development that will deliver higher tax revenues.
Burling, who has studied eminent domain in the U.S. for decades, sees similarities to the Town of Vail’s condemnation of the East Vail parcel and uses of eminent domain in major cities like New York City and Washington D.C., which displaced thousands of poor residents.
“The town may be dressing this up in a different way with the focus on sheep, but the result is the same: it’s about keeping poor people out of the community,” said Burling, who agrees that the highest and best use valuation of the East Vail land will force the town to pay a high price for the acreage. “This is going to be some of the most expensive sheep habitat in the world.”