Transferring development rights, Summit County style

This article is reproduced from the Summit Daily News, August 26, 2009, by permission of author Noah Klug

A recent court ruling muddies the waters.

The Summit County District Court recently decided the county could not require a landowner to purchase density through the county's transferable development rights (TDR) program in order to develop his four lots. The court's decision is likely to result in changes to the county master plans and regulations.

In the 1960s, the Stoningtons bought four contiguous platted lots in the Silver Shekel subdivision near Breckenridge. In 1978, the Stoningtons successfully petitioned the county to vacate the lot lines between the four lots to create one large lot. The Stoningtons indicated in their petition that they did not plan to develop the property. Since that time, the county has treated the lots as one lot for purposes of property tax and other matters. Doug Polanski purchased the consolidated lots in 2006 and then applied to the county to re-establish the lot lines. The board of county commissioners (BOCC) approved the request subject to certain conditions, including the requirement that Polanski purchase density for the three recreated lots through the county's TDR program. Polanski asked the district court to review the TDR requirement.

The BOCC said it made its decision because (1) the Stoningtons told the county that they would not develop the lots and (2) the county relied on the Stoningtons' representations to its detriment by foregoing “decades of property tax revenues, and assessments for public improvements.” The court rejected the county's reasoning because there was no evidence that Polanski knew about the Stoningtons' representations when he purchased the lots. The court also found that the Stoningtons' representations were not a promise that they (and future owners) would never develop the lots, but only a statement that the Stoningtons personally had no intent to develop the lots at that time. The court noted that the county could have protected its interests in 1978 by replatting the lots into a single lot or recording a covenant restricting the lots' development (neither of which was done).

The court found these reasons sufficient to overrule the BOCC. Nevertheless, it took the unusual step of identifying an additional ground for reversing the BOCC's decision based on the language of the county master plans and regulations (even though that issue had not been raised by Polanski). Courts don't usually consider arguments that are not raised by the parties to a dispute, but they have discretion to do so in exceptional circumstances.

The court interpreted the Countywide Comprehensive Plan, which provides guidance for development of the county overall, two Upper Blue Master Plans, which provide guidance for development specifically in the Upper Blue Basin (which extends from Hoosier Pass to Lake Dillon), and the County Land Use & Development Code. Taken together, the court found the language of these documents to mean that a property's underlying zoning governs its allowed density, not provisions in the master plans that purport to restrict density. Since the lots at issue were zoned to allow two homes per acre, and they were more than two acres in total size, the court said the county could not require Polanski to purchase additional density in order to recreate the four lots.

Summit County disagrees with the court's decision; but, rather than appealing, the county decided it would be more productive to make significant changes to its regulations and master plans to ensure the continuing viability of the TDR program. It will be interesting to watch this process develop. A copy of the Polanski decision is on my firm's website, www.BreckenridgeLawyer.com, for those interested in reading it.

Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at (970) 453-2734 or Noah@BreckenridgeLawyer.com. He is a member of the Snake River Planning Commission, which may be involved in reviewing the TDR program.

Mountain Law: Enforcing community standards, Six things to know

This article is reproduced from the Summit Daily News, July 29, 2009, by permission of author Noak Klug

Condominiums and single-family homes are often subject to protective covenants, as well as rules and regulations adopted by their homeowner associations. Even though the association may be primarily responsible for enforcing these provisions, they can usually be enforced by individual owners. Here are six things to know about enforcing community standards:

1. Options for enforcing community standards.

Community standards are best enforced informally. Where informal efforts fail, associations have the power to impose fines for violations (see #4 below) and to enforce a lien (#5 below). Standards may be enforced through legal action. If the cost to remove the violation is less than $7,500, a covenant can often be enforced quickly and inexpensively in small claims court.

2. One-year limit on enforcing some community standards.

If an owner builds something on his property that violates the covenants, such as building a fence when the community prohibits fences, the association and neighbors have only one year to file a lawsuit. A prudent association will confront the situation soon after discovering the violation so that meaningful discussions can take place with the owner long before the expiration of this short statute of limitations. There is no statute of limitations for building or zoning violations; if a covenant violation is also a building or zoning violation (such as building a home that is too tall), the association may have a remedy through government authorities.

3. Attorney fees. In most disputes between an association and a homeowner, the court has the power to award reasonable attorney fees and costs to the prevailing party. If an association sues an owner for a perceived violation and the owner prevails, the association cannot assess the owner for any portion of the association's litigation expenses.

4. Enforcement by imposition of fines. Associations may enforce standards by imposing fines; however, fines are not valid unless the association has a written policy providing the fine schedule. The policy must include a fair and impartial fact-finding process to determine whether an owner should be held responsible. The process must, at a minimum, provide the owner with notice of an alleged violation and the opportunity for a hearing before impartial decision makers who do not have a financial interest in the outcome or personal interests in the outcome greater than general membership of the association.

5. Enforcement by association lien. Homeowner associations may enforce a lien under Colorado law against the property of an owner who does not pay required fines or assessments. The lien exists by operation of the statute and need not be recorded in the public records to be valid (although many associations record a notice of lien anyway). The amount of the lien includes fees, charges, attorney fees, fines, accelerated payments, and interest. Associations may enforce their liens by foreclosing on the property with a sheriff's sale. A portion of the lien has special priority under Colorado law, which makes it a powerful collection tool. (For a general discussion of lien priority, see my April 29, 2009, article titled “Lien Priority Fundamentals”).

6. Dispute resolution policy. Colorado law requires that homeowner association boards adopt written policies concerning how disputes will be handled between the association and owners. These policies often require that disputes be submitted to mediation with a neutral third party before either side can file a lawsuit.

Owners and associations should consider carefully the options available, the risks, and the correct procedures for enforcing community standards. This is one topic I will address at a free class I am teaching on homeowner association law Thursday (July 30). For more information, contact Brooke Roberts, Land Title Guarantee Company, (970) 453-2255.

Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for advice on your particular situation.

5 things to keep in mind on property co-ownership

This article is reproduced from the Summit Daily News, July 8, 2009, by permission of author Noah Klug

When unrelated individuals share the ownership of a home or condo, it's wise for them to take the time at the outset to prepare a co-ownership agreement. The two most common forms for holding title to co-owned property are (a) holding title to the property in the owners' individual names and (b) forming an entity to hold title, with the entity owned by the individuals. The form used depends on many factors, and affects many issues, including how the property can be financed (if at all), the owners' respective tax benefits and burdens from owning the property, the owners' potential liability to third parties injured at the property, the potential for protection from the owners' creditors, and how the property will pass upon the death of any owner. The choice should be made only with professional advice. Regardless of how title is held to the property, here are five topics that should be addressed in any co-ownership agreement:

1. Usage Rights. The co-ownership agreement should provide firm and fair guidelines for when the property may be used by each owner. Many co-owners create a rotating schedule so that key periods (such as Christmas and other holidays) are allocated equally. A fixed schedule, however, doesn't prevent the owners from informally re-arranging their occupancy periods.

2. House Rules. The co-owners should have a clear understanding of the dos and don'ts of usage. For example, will pets or smoking be allowed? May an owner allow friends and relatives to use the property? May any owner put the property into a rental management program for their use period? Are the owners required to have the property professionally cleaned after each use?

3. Management and Financial Issues. Unless the co-owners hire a professional property manager, the co-ownership agreement should designate the owner (perhaps on a rotating basis) who will handle the bills and other paperwork for the property. The agreement should include a list of these duties, and provision should be made for when the designated manager cannot or does not perform the required tasks.

The likelihood of disputes over money will be reduced if the owners agree to an annual budget in advance, including the anticipated expenses and income (if any), coupled with a schedule of regular contributions from each owner. The budget should include building a cash reserve so funds are readily available to pay for needed repairs and replacement.
4. Making Decisions and Resolving Disputes. It is not uncommon for co-owners to have a difference of opinion on crucial issues, and a well-drafted co-ownership agreement will contain a dispute resolution process. If, for example, a home were co-owned by two couples and one couple wanted to remodel but the other couple didn't, the result could be a stalemate. Many co-ownership agreements include a requirement that disputes be mediated by a third party.



5. Exit Strategy. When co-owners buy a property together, they usually have similar goals. But, sooner or later, their interests may diverge because of changes in their individual financial situations, relocation, divorce, death and other events. The co-ownership agreement should address whether one owner can sell or give his interest to an outside party and whether any owner can force a sale of the entire property or another owners' interest. Co-owners often retain a preemptive “right of first refusal,” with special rules for disposition to a relative.

When co-owners address important issues at the outset, it is more likely that they will have a smooth relationship. For a longer list of issues that should be addressed in any co-ownership agreement, check our firm's website at www.BreckenridgeLawyer.com and click on “Co-Ownership Questionnaire.”

Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult a professional for advice on your particular situation.

When local government says ‘time out!'

This article is reproduced from the Summit Daily News, June 9, 2009, by permission of author Noah Klug.

I read with interest a recent article in the Summit Daily News titled “Condo-Hotel Approval Triggers A Look At Zoning,” which discussed Summit County's approval of a new development on Tiger Road. We don't have a pony in the race about the development, but it struck me that the project was apparently approved because it complied with zoning adopted in 1969 despite concerns about how well that zoning meshes with today's community vision. Summit County's hands were likely not tied in the matter. When faced with potentially inadequate regulations, Summit County, like all local governments, has tools at its disposal to halt or slow growth until it adopts new growth-management programs, comprehensive plans, or zoning ordinances. One frequently used approach is imposition of a moratorium.

The leading Colorado case involved a businessman who purchased a shuttered historic theater in Central City prior to the 1991 constitutional amendment allowing limited-stakes gambling in that city. After the amendment was adopted, the landowner entered into a contract to sell the theater contingent upon the city's approval of a gambling permit, and he applied for the permit. The city then placed a moratorium on new development in the gaming district until studies were completed concerning the city's capacity to absorb growth spawned by gambling. As a direct result of the moratorium, the landowner's permit application was suspended and his pending sale fell through. Ten months later, the growth studies were completed and the city repealed the moratorium. The landowner then sued the city alleging that the moratorium constituted a taking of his property because it left him with no reasonable use of the theater during the 10-month period. The court held that it was permissible for a municipality to impose a moratorium if it was based on a good faith and reasonable effort to permit more effective governmental decision making. The court also held that there had been no “taking” of private property, and the owner was not entitled to any compensation.

The Central City case showed the power of local governments to impose moratoria under their police powers. In another case involving controversial proposed development of a large ranch between Aspen and Snowmass, the court held that Pitkin County had authority under a statute known as the Local Government Land Use Control Enabling Act to impose a temporary moratorium on land use application reviews while the county made changes to its master plan. Similar provisions likely could have been invoked concerning the development on Tiger Road.

Local governments do not have unlimited powers to impose moratoria. In a case from Colorado Springs, the city council, by resolution, approved a moratorium on adult bookstores pending further studies of the issue, and a bookstore operator sued. The court held that because ordinances are adopted by legislative process, they can only be changed by new ordinances adopted through legislative process. Thus, the city's moratorium by resolution was ineffective.

A case from Boulder went all the way to the United States Supreme Court, which held that it was a violation of federal antitrust law to adopt a moratorium on the expansion of cable television businesses in the city while the council drafted a new ordinance to regulate these businesses and invite new operators into the market.

So, when local governments are faced with regulations that are potentially inconsistent with community goals, they have the ability to call “time out” for a reasonable period of time to study and address the issues provided that they follow the correct procedures. That option was likely available in the Tiger Run case (as well as other options that the county may be pursuing).

Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com.

Making land available for public recreation? Protection exists

This article is reproduced from the Summit Daily News, May 26, 2009, by permission of  author, Noah Klug

Every so often I run across a landowner who tells me that he would like to make his land available to the general public for skiing, hiking, or some other recreational use, but he is afraid of the liability that might result if a person were injured on the land. Fortunately, there is a state law known as the Colorado Recreational Use Statute (CRUS) that is designed to promote public use of private lands for recreation by shielding landowners from most liability. Here is a brief discussion of the law.

Generally speaking, Colorado law divides users of land into three categories: trespassers, licensees, and invitees. The potential liability of the owner depends on the status of the user and increases with each category.

• Trespassers: A trespasser is a person who enters onto land without the landowner’s consent. A landowner is liable to trespassers only if the owner causes intentional harm. For example, if a landowner erects a cable across his private road to restrict access and a trespassing mountain biker is injured when he runs into the unexpected cable, the landowner would only be liable if the cyclist could show that the landowner erected the cable with the intent of causing harm rather than simply as a roadblock.

• Licensees: A licensee is a person who enters onto land for his own purposes, but with the landowner’s consent. This category includes the landowner’s social guests. A landowner is liable to licensees for failure to take reasonable precautions or give reasonable warnings about known dangers on his property. For example, if a homeowner knows that a glass door in his home is difficult to see, but doesn’t tell his guests about it or mark it conspicuously, he could be liable if one of his guests walks into the door and breaks his nose.

• Invitees: An invitee is either a person who transacts business on the property with the owner or a member of the public who is expressly or impliedly invited onto the property. A businessman at a meeting is generally an invitee of the host company, and a shopper is an invitee of the supermarket. A landowner is liable to invitees if he fails to take reasonable action to protect against dangers — not just those of which he had actual knowledge, but also those of which he should have been aware.

In the absence of CRUS, a landowner might be justifiably reluctant to make his land available to the public for fear that the users would be categorized as licensees or invitees, and that the landowner could be liable not just for his intentional acts, but also for his failure to protect or warn about known risks or risks of which a judge or jury determine he should have known.

So what does CRUS do? CRUS provides that a landowner who either directly or indirectly invites or permits, without charge, any person to use his property for recreational purposes (a) does not thereby extend any assurance that the property is safe for any purpose; (b) does not confer upon such person the legal status of an invitee or licensee to whom special duties are owed; and (c) does not assume responsibility in any way for such person’s acts or omissions. The term “recreational purposes” is given a broad definition that includes most pursuits. In the event that a recreational user of land sues the landowner, the prevailing party in the action is entitled to his attorney fees and costs of litigation. CRUS’s protections extend to the landowner’s tenants and other occupants.

A landowner can still be liable under CRUS if:

• He intentionally harms someone;
• He charges for the use of his land;
• He permits use of the land as part of his business; or
• He maintains an “attractive nuisance” on the land, which is a dangerous condition that is extraordinarily attractive to children (such as unattended machinery). Abandoned mining operations and areas of natural or manmade water storage or diversion (i.e. ponds, ditches and streams) are not considered attractive nuisances under CRUS.

So, a landowner who is hesitating to make his land available to the public should consider whether CRUS’s protections justify a change in position.

Noah Klug is an attorney with Bauer & Burns, P.C. in Breckenridge. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for a review of your particular situation.

Protection for contractors as construction season begins

This article is reproduced from the Summit Daily News, May 13, 2009, by  permission of the author Noah Klug.

Top 10 things to know about mechanic’s liens

As the construction season begins in the mountains, here are 10 things to know about mechanic’s liens:

1. What is a mechanic’s lien?

State law gives a lien to most workers on real property and suppliers of materials incorporated into real property to help protect against nonpayment. The law calls these people “mechanics.” A mechanic’s lien makes it more likely the “little guy” will get paid.

2. Who can claim a mechanic’s lien?

Almost any person who performs work or supplies materials to improve another person’s property can claim a lien, including contractors, subcontractors, decorators, tree services, architects, surveyors, and engineers (but not lawyers or real estate brokers).

3. What is the process for claiming a mechanic’s lien?

A person entitled to a mechanic’s lien who has not been paid must first give 10 days’ notice to the property owner and general contractor of his intent to record the lien. The notice must include certain information and must be delivered in person or by regular or certified mail. If the worker is not paid during the 10-day period, he can record the lien statement in the office of the Clerk and Recorder.

4. Are there any deadlines for recording a mechanic’s lien?

Yes. A lien statement must generally be recorded no more than four months after the worker did his last substantial work at the property (so the worker must allow 10 extra days before the recording deadline to deliver the notice of intent to file the lien). The four-month deadline can be extended if the worker records, within the four-month period, a proper notice to extend the time.

5. What happens if the worker doesn’t follow the statutory procedure for filing a mechanic’s lien?

Courts typically enforce the mechanic’s lien statute strictly, which means that failure to give proper notice or to meet deadlines may result in a lien being invalidated.

6. What are the options once a lien has been recorded?

The lien claimant can (a) file a lawsuit in district court to have the sheriff sell the property to satisfy the liens; (b) let a another lienholder file the lawsuit and jump into the lawsuit; or (c) take no action and pray that he gets paid before the lien expires. With a few exceptions, the lien will expire if a lien foreclosure lawsuit is not filed within six months after the whole project is completed or 12 months after the lien is recorded (whichever is sooner).

7. What is the priority of a mechanic’s lien?

A mechanic’s lien is given special priority by statute; its date of priority is the date that the first work was done on the project by any worker. This is often the date that the architect drew plans or that the property was surveyed, and it often predates a construction loan. (For a discussion of lien priority, see my April 29 column on Lien Priority Fundamentals).

8. What are the alternatives to filing a mechanic’s lien?

Mechanic’s lien litigation is complex and expensive, with little hope of recovering attorney fees. Some mechanics with modest claims (or invalid liens) choose to skip lien litigation and simply file a lawsuit for breach of contract against the person who should have paid. If the claim is less than $7,500, it can usually be filed in small claims court, where things happen quickly, inexpensively, and (usually) without lawyers. County court is almost as quick and simple and has jurisdiction over claims up to $15,000.

9. What happens if the worker files a lien for more than he is owed?

If a worker knowingly files a lien for more than he could reasonably recover in court, the whole lien could be invalidated and the owner could be awarded his attorney fees.

10. What if the owner pays the general contractor but the general doesn’t pay a subcontractor?
The subcontractor is still entitled to a lien on the property.

Noah Klug is an attorney with Bauer & Burns P.C. He may be reached at (970) 453-2734 or
Noah@BreckenridgeLawyer.com.

Mountain Law: Lien priority fundamentals

Reproduced from the Summit Daily News, April 28, 2008, by permission of the author, Noah Klug.

Any person interested in foreclosures should understand lien priority fundamentals. Here’s an introduction.

A “lien” is a legally protected interest that a creditor has in a debtor’s property. One common type of lien is a deed of trust (or mortgage) recorded to secure repayment of a loan. There are many other types of liens.

All liens against a property can be ranked in order of priority. Generally, lien priority is determined by the order in which the liens were recorded in the office of the clerk and recorder. Some liens, such as tax liens, homeowner association assessment liens and mechanics’ liens, are given special priority by statute, meaning that they can sometimes “jump ahead” in priority over liens that were recorded earlier.

Any creditor who holds a lien, regardless of the lien’s priority, can potentially force sale of the encumbered property through foreclosure proceedings to satisfy the debt. The rights of competing lienholders in the foreclosure depend on whether their liens are senior or junior to the lien being foreclosed.

A lien senior in priority to a lien being foreclosed continues to encumber the property after the foreclosure. For example, if a property has two liens encumbering it and the second lien forecloses, the first lien remains in place after the foreclosure. This is a trap for the unwary buyer, who might purchase a property at a foreclosure sale not realizing that his title will be subject to one or more liens. The buyer is then forced to make arrangements to pay the liens or those liens could be foreclosed.

In contrast to the holder of a senior lien, whose interest is not threatened by foreclosure of a junior lien, the holder of a lien junior in priority to a lien being foreclosed must either “redeem” the property within a specified time after the sale or his lien will terminate. For example, if there are two liens against a property and the first lien forecloses, the holder of the second lien can redeem by paying the amount of the high bid at the foreclosure sale (plus interest). The second lienholder would then receive deed to the property free and clear of the first lien. If the junior lienholder in this example does not redeem, his lien will no longer encumber the property after the foreclosure. This doesn’t mean that the debtor no longer owes him money; it means that the property is no longer collateral for the debt and he must enforce the debt using remedies other than foreclosure (such as suing for breach of contract).

Matters get more complicated if there are multiple liens junior to the lien being foreclosed, but the principles are the same: Junior lienholders, starting with the most senior, must, in turn, pay the amount of the high bid at the sale plus all senior liens that redeemed ahead of them or their liens will be terminated. For example, if there are three liens encumbering a property and the first lien forecloses, the holder of the second lien can redeem by paying the amount of the high bid at the sale. The holder of the third lien can then redeem by paying the amount of the high bid at the sale plus the amount of the second lien (if the second lien redeemed). The high bidder or last to redeem gets deed to the property.

When faced with foreclosure of a senior lien, a junior lienholder should determine how much equity is in the property, which is the difference between the property’s fair market value and the amount necessary to redeem. If there is little or no equity, redemption is usually inadvisable because it would cost more than could realistically be recovered by later sale of the property (taking into account sales commissions and holding costs). If there is sufficient equity in the property, it might be worth redeeming to save a junior lien because the cost to redeem could potentially be recovered by later sale.

Lien priority affects many aspects of the complex foreclosure process. This article is intended as a general overview; consult a real estate attorney for advice on your particular situation.

Noah Klug is an attorney with Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. For a general overview of the residential foreclosure process in Colorado, go to www.BreckenridgeLawyer.com and click on “A Summary of the Foreclosure Process”.

Mountain Law: Landmark law brings changes for landlords and tenants

Reproduced from the Summit Daily News, March 18, 2009 by permission of the author, Noah Klug.
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The Colorado Legislature passed a new law in 2008 codifying certain obligations of residential landlords and tenants. The statute applies to tenancies that began on or after September 1, 2008, and applies to all sorts of properties, including apartments, rooming houses, rental condos, single-family homes, and trailers (if the landlord owns the trailer). It applies to verbal leases as well as written leases, but does not apply to rentals for less than 30 days.

Landlord Obligations

The new law requires landlords to maintain leased premises in a condition “fit for human habitation,” and includes a long list of specific landlord obligations, such as:

• Maintaining “weather protection” of the roof and exterior walls;
• Maintaining the plumbing, heating, electrical and sewer systems in good order and in compliance with the building code that was in effect when they were installed;
• Providing reasonable hot water;
• Maintaining floors, stairways and railings in good repair;
• Providing locks or security devices for all exterior doors and operable windows; and
• Complying with applicable building, housing, and health codes.

It’s not uncommon for written leases to contain a provision whereby the tenant waives claims for dangerous or defective conditions. Except in a few limited situations, the new law makes unenforceable any provision in a lease that attempts to waive the landlord’s obligations for habitability.

If a tenant gives the landlord written notice of an uninhabitable condition (if the tenant is not the cause of the problem), and the landlord fails to fix the problem within five business days after receipt of the notice, the tenant may vacate the premises and terminate the lease. If the tenant prefers to stay in the premises, he can ask a court to order the landlord to fix the problem (but the tenant must report the unsatisfactory condition to local government before filing suit).

In the past, tenants would often defend their failure to pay rent on the basis that there was something wrong with the premises. Under the new law, if a landlord files a lawsuit to evict a tenant for nonpayment of rent, the tenant will be obligated to give some or all of the delinquent rent to the court as a prerequisite to contesting the condition of the property.

The new law does not change a landlord’s right and obligation to follow the statutory eviction process to remove a tenant who doesn’t pay rent or violates other terms of the lease. The new law prohibits certain forms of landlord self-help such as turning off utilities and changing the locks on the doors unless the property has been abandoned by the tenant.

Tenant obligations

The new statute also imposes duties on tenants (including occupants who haven’t signed a written lease), such as:

• Keeping the premises reasonably clean, safe, and sanitary;
• Complying with building and health codes;
• Using utilities and appliances in a reasonable manner;
• Not disturbing the peace of neighbors;
• Informing the landlord if the premises are actually or potentially uninhabitable; and
• Not damaging, defacing, or removing any part of the premises.

Here are some additional details of the law:

• In response to a tenant’s notice that a property is uninhabitable, a landlord is permitted to move the tenant to a comparable property at the landlord’s expense;

• If certain requirements are met, landlords and tenants can agree that the tenant will perform work to remedy conditions making the property uninhabitable; and

• Landlords are not permitted to retaliate against tenants who claim that a property is uninhabitable by arbitrarily increasing rent or decreasing services, or by pursuing or threatening to pursue eviction of the tenant.

The last major revision to landlord tenant law in Colorado was in 1971, when the Legislature imposed treble damages on residential landlords who fail to timely refund or account for security deposits after termination of the lease. The 2008 law promises to bring a new wave of accountability for landlords and tenants.

The new statute contains details and exceptions that are not mentioned in this article. A complete copy of the new statute can be found at www.BreckenridgeLawyer.com. You should consult a real estate attorney for a review of your own situation.

Noah Klug is an attorney with Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com.

Vail Resorts reports strong Spring

This article was pubished in the Summit Daily News, June 9, 2010, by Julie Sutor.

SUMMIT COUNTY — Vail Resorts finished the 2009-2010 ski season in stronger shape than in the previous year, with increased activity among destination visitors and improved guest spending, according to an earnings report the company released Wednesday.

Skier visits during the company's third quarter (February through April) improved by 4.6 percent over the same period in 2009. Its third-quarter bottom line in the mountain segment improved by 9.6 percent.

Vail Resorts CEO Rob Katz said he was “very pleased” with the company's performance in its mountain segment, which includes lift tickets, restaurants and ski school.

“In fact, during the spring break and Easter periods in 2010, we saw levels of skier visitation, total lift revenue, ski school revenue, dining revenue and retail/rental revenue that were comparable to the results we saw during the same periods in 2008 and 2007, giving us confidence in improving customer trends as we start planning for the 2010-2011 season,” Katz said.

Destination visitation during the third quarter increased by an estimated 7.9 percent over the same quarter last year.
Skier visits on the rise

Heavenly posted the strongest improvement in skier visits, with a 9.6 percent increase in visitation in the third quarter of fiscal year 2010, compared to the same period in 2009. Overall visitation for the quarter at the company's Colorado resorts — Breckenridge, Keystone, Beaver Creek and Vail — increased by 3.7 percent. Total skier visitation for all five of the company's resorts during the 2009-2010 season increased 2.5 percent over 2008-2009, despite record-low snowfall at the Colorado resorts during the early part of the 2009-2010 season.

Of the four Colorado resorts, Breckenridge fared best in terms of skier numbers, with an increase of 5.6 percent for the season. Neither Vail nor Beaver Creek were able to surpass the previous season's skier numbers, owing to the scant early-season snowfall. Vail did not open its back bowls until after Christmas. Skier visits at Vail declined by 1.4 percent for the season, even though third-quarter skier visits were stronger than in the previous year. Beaver Creek's skier numbers were down by 0.4 percent for the season.

Season passholders skied approximately 10 days on average during the 2009-2010 ski season, down by half a day compared to last season.

Within the mountain segment, ski school and retail/rental revenues were particularly improved. Revenue from ski school increased $4.3 million, or 11.7 percent, for the quarter, and retail/rental revenue increased $6.9 million, or 14.3 percent, primarily due to higher retail sales and rental volumes across the majority of locations.

Lodging still sluggish

The company's bottom line in the lodging segment during the third quarter was down 5.5 percent from the same period last year. The decrease was due almost entirely to declines at Keystone lodging properties and increased expenses in marketing and employee medical costs. Keystone experienced a significant drop in business from large groups, with a 24.6 percent decline in group room nights during the three-month period.

Excluding Keystone properties, total room revenues would have increased by $0.5 million, and transient room nights would have increased by 7.9 percent.

Looking forward

Vail Resorts recently completed its One Ski Hill Place project in Breckenridge. To date, the company has closed on 23 of its 88 luxury condominiums and anticipates additional closings over the next several weeks.

“We have full confidence in the ultimate success of this project and will be patient in our approach to ensure we maximize our proceeds from future sales,” Katz said.

Spring season pass sales for next season are down by about 14 percent compared to last spring. But Katz said last spring's strong season pass sales were due to a “mad dash” by consumers to purchase the Epic Pass, uncertain over whether the company would continue to offer the product. This year, the company assured consumers of the ongoing availability of the Epic Pass, thereby eliminating their urgency to purchase it.

The company has allocated $75-85 million in capital projects and maintenance, most of which will be spent this summer. The projects include a new high-speed chairlift at Vail, an alpine coaster at Breckenridge and renovations to lodging rooms at Keystone.

Keystone, county strike deal with Denver Water to safeguard resort snowmaking

This is an article from the Summit Daily News, July 28, 2010, reported  by Julie Sutor.

Denver Water will delay repairs to Roberts Tunnel, allowing Keystone to blow snow in early season.

SUMMIT COUNTY — Snow will blow as scheduled this season at Keystone Resort, thanks to a deal among the ski area, Summit County government and Denver Water.

The resort relies on water from the Roberts Tunnel, owned by Denver Water, to blanket its slopes in white every year through early-season snowmaking. Keystone is allowed to pump as much as 1,500 acre feet from the tunnel between Sept. 1 and March 31 each winter.

Denver Water needs to make repairs on the Roberts Tunnel, which draws about 54,000 acre feet per year from Dillon Reservoir to supply municipal water to the Denver Metro Area. The tunnel is 50 years old and requires valve replacements at its east end — a project that must be performed while the tunnel is drained, thus rendering water unavailable for Keystone during construction. The repairs were originally scheduled to begin on Nov. 1 and last throughout the winter until April 4, 2011.

“That would impact an entire season of Keystone's snowmaking, which is essential to guarantee good snow by the holidays,” Summit County manager Gary Martinez said.

That scenario would be worrisome to Summit County government, which receives sales tax revenues from Keystone and the many businesses in and around its base areas.

So Keystone and Summit County have negotiated a deal through which the resort will pay Denver Water $120,000 to postpone work on the Roberts Tunnel until Dec. 16. The delay will allow Keystone to draw water through Dec. 15.

Denver Water is still planning to finish construction by April 4, 2011, in time to capture spring runoff and fill reservoirs with water for summer use. The Keystone funds will cover the added costs of completing the project on a tighter timeline.

In the event that construction isn't done by the April deadline, and Denver Water loses the opportunity to store spring runoff, both Summit County and Keystone will make up for the deficits with water from Clinton Reservoir and Dillon Reservoir for up to three years.

“This is an example of the county putting our water portfolio to good use. It would be really tough for our revenue budget to have Keystone fall flat because of an inability to make snow,” Martinez said.

In a separate agreement, Breckenridge Ski Resort will lease water from Summit County for snowmaking for three years. Summit County will use funds from the lease agreement to purchase water rights in Wolford Mountain Reservoir, just north of Kremmling.

Summit County Energy Loans on Hold

This article was reported in the Summit Daily News, July 28, 2010, by Julie Sutor.

SUMMIT COUNTY — Ten local households are hoping to receive low-interest loans this summer to pay for energy-saving upgrades like new insulation, crack-sealing and efficient boilers. But loan giants Fannie Mae and Freddie Mac are standing in the way.

The 10 households are prospective participants in Summit County government's Home Energy Loan Program (HELP), launched this year as a small-scale pilot project. Each home underwent an energy audit that identified the most cost-effective and energy-saving improvements. Under HELP, households are eligible to receive loans of up to $17,000 for energy improvements. The loans would be repaid at 4 percent interest over a period of 10 years through the owners' property tax bills. Of the 10 households that have applied so far, the average loan amount would be $12,000.

“They're all good, they're all cost effective, and they're all going to create good energy savings,” said Lynne Westerfield, of High Country Conservation Center.

However, Fannie Mae and Freddie Mac won't touch mortgages on homes in which people have participated in energy loan programs like HELP. The two corporations do not provide home loans directly; rather, they buy mortgages from lenders after borrowers complete the closing process, thereby allowing lenders to complete more loans.

The problem stems from the fact that HELP loans, and others like them, are repaid through property tax bills. That's convenient for the homeowner and relatively simple for the county. And it helps the county meet its goal of reducing energy consumption in the residential community. But in the event of a foreclosure, back property taxes (including the balance of the HELP loan, in such cases) are repaid first, before the mortgage. In essence, such mortgages are riskier investments for Fannie Mae and Freddie Mac, which together guarantee more than half of the home mortgages in the country.

Other communities that offer similar programs, including the Town of Breckenridge, the City of Boulder, Pitkin County and Gunnison County, are likewise impacted. In all, 22 states have authorized the loans, often referred to as Property Assessed Clean Energy, or PACE programs. A new batch of PACE pilot projects was set to launch this summer, with the help of $150 million in Recovery Act and Department of Energy funding.

Some mortgage lenders have proposed increasing the loan amount on all mortgages in communities that offer PACE programs, regardless of whether a given borrower plans to partake.

“We had something elegantly simple turn into something unbelievably complex,” assistant county manager Thad Noll said.

A national problem

At a meeting of the Summit Board of County Commissioners Tuesday, county officials agreed to put the program on hold, pending a solution at the local, state or federal level. The county commissioners were firm on the point that they could not offer a program that would effectively raise the purchase price of homes throughout the county.

“This is not a Summit County problem: This is a national problem,” Commissioner Thomas Davidson said. “They have to figure this out. It's too important to too many people.”

The Colorado Congressional Delegation and other lawmakers are applying pressure at the federal level to salvage the PACE programs. The State of California, where PACE was first conceived, has gone so far as to sue Freddie Mac, Fannie Mae and the Federal Housing Finance Agency (FHFA).

Rep. Jared Polis, who represents Summit County, signed on to a letter earlier this month urging FHFA Director Edward DeMarco to resolve the deadlock.

“PACE programs have been expanding rapidly across Colorado because they create jobs, cut pollution and allow homeowners the chance to save money on their utility bills,” Polis said. “Resistance to these groundbreaking programs has gone on for far too long, and our communities are suffering.”

Polis said DeMarco should step down from his post if he won't cooperate on the issue.

In the mean time, Summit County's 10 households, and others like them across the country, will have to wait.

“We're going to tell these people and their contractors that we're still trying. But we're on hold for right now,” Noll said.

The Summit County loans were tentatively scheduled to go out in mid-August. Delays have the potential to increase the cost or complexity of the proposed home-improvement projects, since many such upgrades are easier to perform before cold weather hits.

This article by Erica Christoffer  and Robert Freedman, is reproduced in total from Realtor Magazine, August, 2010

Housing Myths Busted!
Two e-mail chains are spreading misinformation about pending legislation, NAR says. One claims that the energy bill that’s working its way through Congress would require home sellers to obtain an energy audit or make energy retrofits before they can sell their home. In reality, the bill includes a provision that requires new construction to be energy-labeled but prohibits states from requiring new ratings when the house is resold.

The second e-mail states that the health care bill contains a 4 percent transfer tax on home sales. The truth is that the bill imposes a 3.8 percent Medicare tax for some high-income households that have "net investment income."

The tax, which goes into effect in 2013, applies only to households with adjusted gross income of more than $250,000 ($200,000 for individuals). Also, since the capital gains exclusion rule is still in effect, the tax would be charged only on home-sale proceeds that exceed the exclusion amount of $500,000 ($250,000 for individuals). That’s an amount that touches few households.

Global Issues Affect U. S. Mortgages

This article byh Lawrence Yun, chief economist of the National Association of  Realtors, is reproduced in full  from his article in Realtor magazine.

Economy: Global Issues Affect U.S. Mortgages

The Gulf Coast oil disaster and European economic issues will likely affect the U.S. mortgage market.

By Lawrence Yun
August 2010

With the home buyer tax credit ended and the housing market now largely on its own, how can we expect the real estate market to perform? In the near term, we’ll probably see home sales slide measurably lower. By the third quarter, it will be up to job creation and consumer confidence to bring in buyers.

One factor that should help the market is the improving availability of financing for second homes and high-priced properties that require a jumbo loan.

These segments of the housing market were essentially shut down last year as banks scrambled to boost their capital to well beyond government “stress test” levels. Even the most creditworthy buyers found it difficult to get financing.

Today, banks are steadily moving toward more normal lending activity, even in sectors that don’t have government backing—not surprising given the huge profits and improved capital situation in the banking sector. Commercial financing could improve, too.

But as the housing market shows signs of stronger health, bigger economic issues are now on the horizon, putting important variables outside of the control of our market.

The meltdown in Greece could impact the capital position of U.S. banks if that country defaults on its obligations and Germany and other big economies of Europe say no to providing additional bailout funds to Greece and other at-risk countries like Spain and Portugal. With global capital at risk, money in the United States for any mortgages other than those with government backing could once again disappear.

The devastating oil spill in the Gulf of Mexico is another big unknown. The full impact won’t be understood for years, but we can expect domestic oil prices to rise measurably or the United States to import more oil. In either case our economic growth will be impeded.

Breckenridge Market Share increased 3 percent last winter

In an article posted by Robert Allen in the Summit Daily News, July 22, 2010, it was  reported that the Town of Breckenridge's marketing stimulus makes an apparent difference.

Breckenridge's market share among ski towns increased 3 percent last winter as the ski resort regained its title of the most visited in the United States.  After gloomy projections in October that winter lodging occupancy could fall as much as 20 percent, Breckenridge Resort Chamber president, John McMahaon said that the  $250,000 the town council provided as a marketing stimulus nearly filled the gap.  He said that recent branding efforts are having an impact.

Both McMahon and Breckenridge mayor John Warner spoke of the need for a sustainable marketing revenue stream.  The $250,000 was pulled from the town's excise fund to make the town competitive with other ski communities.  Warner and other town council memebers are pushing for a 1 percent lodging tax increase to help sustain marketing funding.

After two years of declines, 2010 year-to-date numbers are starting to climb.

With real estate values in a ski resort tied to area popularity and ski travelers booking lodging, this news bodes well for the Breckenridge real estate market.

For more information, go to http://www.breck4sale.com/, or email Susan Gunnin at gunnin@colorado.net.  

Low mortgage rates, tax credits lift home sales in April

(This is an article from The Denver Post, May 25, 2010, reported by Alan Zibel and Martin Crutsinger)

WASHINGTON — Homebuyers rushed to take advantage of government incentives and low mortgage rates in April, giving the housing market its biggest boost in five months.

But now that a homebuyer tax credit has expired, growth in the second half of the year will depend on the lure of historically low mortgage rates and the strength of the economic recovery.

Some economists say mortgage rates alone won't be enough to propel the market.

"Although mortgage rates have fallen sharply, the combination of high unemployment, heavy indebtedness and tight credit suggest to us that demand will stumble," said Paul Dales, an economist at Capital Economics.

Sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said Monday. The increase in sales sparked a rise in home prices. The median price for a new home rose to $173,100, up 4 percent from a year ago.

The national numbers are similar to earlier reports on metro area home sales. A record number of homes in the Denver area went under contract in April, according to data released earlier this month.

There were 6,616 homes placed under contract in the metro area last month, a 27.6 percent increase over April 2009, according to data released this month. There were 4,188 residential sales closed last month, up 16.3 percent from 3,602 closings in March and 23.5 percent from 3,390 in April 2009.

Nationally, mortgage rates fell last week to the lowest level for the year and close to 50-year lows as worries over the European debt crisis sent investors rushing into the safety of U.S. credit markets.

But Patrick Newport, an economist at IHS Global Insight, said the key to growth in the housing market won't be low mortgage rates.

"What really will drive sales forward and I mean after July, will be the job market," Newport said. "Having a good mortgage rate helps affordability, but we've had low mortgage rates for a long time now and sales have stayed below 5 million, except when the tax credit was involved."

Denver Post staff writer Margaret Jackson contributed to this report.

Big chill on mountain resort areas' home sales beginning to thaw

(This is an article that appeared in The Denver Post on May 23, 2010 and reported by Margaret Jackson)

The mountain real estate market plunged so far last year that it seemed there was practically no place for it to go but up this year.

Turns out, that perception is proving to be true.

During the first quarter, many resort areas have seen the number of homes sold rise substantially compared with the same period a year ago. While it's a step in the right direction, the market is still not as good as in 2007 or 2008.

"2009 was so rank and so off, it was just scary," said John Helmering, a broker in the Vail Valley. "Realtors in the Vail Valley have been through the worst time period ever in the history of Vail real estate. This is an improvement, but not from 2008."

Still, it's too soon to call the first-quarter rebound a recovery, said Byron Koste, executive director emeritus of the University of Colorado Real Estate Center.

"It's going to slowly recover as people get confident that the wealth erosion that occurred in '08 and early '09 is really behind them, and they're back to making more money," Koste said. "If there is a rebound to that erosion, it may be short-lived. It's not clear to me that we have any reason to be rebounding, other than we all want to rebound."

Still, the improving first-quarter sales have given many mountain real estate professionals a reason to be optimistic.

In Eagle County, which includes Vail and Avon, the number of transactions for the first three months of 2010 rose a whopping 190 percent, to 276, compared with 145 during the same period a year ago. But that's still 27 percent lower than in 2008 and 58 percent lower than in 2007.

Activity should improve with the completion of Solaris, the Four Seasons Residence Club and the Ritz-Carlton Residences this summer, Helmering said.

"Our village and Lionshead are going to be put back together, and I really think that's going to have an impact on people's impression of Vail," he said. "It's been seven or eight years under construction. You couldn't walk down the street without walking around a huge hole in the ground."

Routt County statistics reveal a similar trend, with the number of transactions during the first quarter rising almost 113 percent, to 312, compared with 277 a year ago. Dollar volume in the county, which includes the resort community of Steamboat Springs, was up more than 225 percent to $125.7 million in the first three months, compared with $55.7 million a year ago.

Lending remains tight.

The numbers are approaching the level they achieved during the first quarter of 2008, but are nowhere close to their peak of 2007, when 573 homes sold for a total of $317 million during the first three months of that year.

The challenge, according to broker Mitch Clementson of Steamboat Springs Real Estate, is in getting financing to buy a house.

"In the old days, if they could see the fog when you breathed on a mirror, they'd give you a loan," he said. "But now, especially with the condo projects, they've gotten very strict. You have to have sterling credit, a lot of income and a lot of money to put down."

In San Miguel County, home to Telluride, just 80 homes sold for a total of $89 million during the first quarter, well off the peak years of 2005 and 2006. In 2005, 227 homes sold for $166.1 million during the first quarter. The following year, 183 homes sold for $196.2 million during the same period.

"In my 26 years of being a high-end luxury resort broker in Colorado, we've never seen an adjustment in our market like we have the last two years," said George Harvey, broker/owner of The Harvey Team in Telluride.

The market is likely to improve over the next few years because developers can't get financing to build new projects, Harvey said. But before pricing improves, San Miguel County has an inventory of 795 houses to burn through.

"It's going to be two or three years before a quality developer can get money," Harvey said. "After we go through this inventory, I think there's a chance it could get moderately good again in a couple of years because there won't be any new product."

While first-quarter sales in all of Pitkin County were down compared with a year ago, they increased in the Upper Roaring Fork Valley communities of Aspen, Snowmass Village, Woody Creek and Old Snowmass. So far this year, 79 residential properties have closed, a 49 percent increase over the same period a year ago, said Aspen broker Tim Estin.

"There are some significant bargains here based on trends and prices," Estin said. "I would definitely say the smart money is recognizing that and there are transactions occurring."

Prices haven't rallied.

In Summit County, there were 160 homes sold during the first quarter, a 29 percent increase over the 124 transactions during the same time a year ago. However, the number is still 44 percent less than the 286 deals closed in the first quarter of 2008 and 55 percent off the 360 sales in 2007.

And while sales look like they're on the upswing, pricing is still off compared with a year ago, said Joanne Hanson, a broker with Coldwell Banker Colorado Rockies Real Estate.

"Generally, I tell sellers if you want prime pricing, then wait," Hanson said. "But it could be three or four years."

Margaret Jackson: 303-954-1473 or mjackson@denverpost.com

Change in residential transactions from first quarter of 2009 to first quarter of 2010.
 EAGLE COUNTY +190%
ROUTT COUNTY  +113%

SAN MIGUEL COUNTY  +53.8%

SUMMIT COUNTY  +29%

PITKIN COUNTY -7.3%

Unemployed? Don't lose hope

The following is an article which appeared in the Summit Daily News, May 18, 2010, by Julie Sutor.

To brighten employment prospects in a tough economy, update your skills and seek help on the job search.

SUMMIT COUNTY — As the resort-driven local job market goes through its annual spring lull, employment prospects for job-seekers may seem especially dismal right now. But for the unemployed, there are a few reasons for optimism, and there are resources available to make the experience less painful.

Summit County's labor force usually shrinks by about 4,000 to 5,000 jobs between March and May each year, according to data from the Colorado Department of Labor and Employment (CDLE). In the last three years, May has been the month with the smallest labor force of the year, with even fewer jobs than in October, when the job force takes its autumn dip. But in June, the number of local jobs begins to grow again.

The most recent data suggests the contraction Summit County's workforce could be slowing. In March of this year, 17,660 workers had jobs in Summit County, just barely behind March 2009, when 17,730 people were in the local workforce.

“While results for March are mixed, the Colorado job market continues to stabilize,” said Donald Mares, CDLE executive director.

Nationally, nonfarm payroll employment in April rose by 290,000, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply, according to the U.S. Bureau of Labor Statistics. Job gains occurred in manufacturing, professional and business services, health care, and leisure and hospitality. Federal government employment also rose, reflecting continued hiring of temporary workers for Census 2010.

That could be good news for Summit County.

“Going into the summer season, our visitor numbers are really going to depend on whether we see a rebound in the national economy,” said Kent Abernethy, labor specialist at the Colorado Workforce Center in Frisco. “But even if the national economy isn't strong, people will take shorter trips, and that tends to mitigate some of the effects for us. People from the Front Range may decide to come up here for special events and other things rather than taking a longer trip.”

Take advantage of the resources

For the unemployed, Abernethy advised looking for work in sectors where job growth is likely, especially when workers can adapt their existing skills to a new setting or complement their skills through a little training. The Workforce Center offers workshops to help job seekers change careers and identify the skills they'll need to do it.

Abernethy suggests, “learning the shades of green available in an existing career. Electricians can learn to put in a solar photovoltaic system. Civil engineers can learn to set up a smart-grid system.”

The Workforce Center also offers skills assessments, which can help a worker identify which skills will transfer from a weak job sector to a strong one.

“You can see how your skills transfer, where the gaps are and what training you need to make the leap,” Abernethy said.

Some workers who have been laid off may even qualify for financial help with job-training or tuition.

Job seekers can also use the Workforce Center during a job search.

“If you've been in the workforce for 15 years, things have really changed dramatically since the last time you looked for a job. It's much more Internet-based, so you want to access good websites and get registered as a job seeker,” Abernethy said.

Workforce Center staff can also receive help with writing a resume and honing interview skills.

Wyoming Nervous about Colorado River Demand

The following is a reprint of an article that appeared in the Summit Daily News, May 18, 2010, by Ben Neary, Associated Press Writer.

GREEN RIVER, Wyo. — Wyoming has an unusual problem among the states in the Colorado River system: lots of water and, other than supporting some fine trout fishing, no way to put a significant amount of it to use.

Yet increasing demand for water in the upper Colorado River basin, combined with new government predictions that climate change could reduce future water supplies, are ratcheting up concerns in Wyoming about how to preserve the state's share for the day when it's needed.

People in southwestern Wyoming are particularly concerned about two proposals to tap the Green River, and the Flaming Gorge Reservoir it feeds, to help supply Colorado's populous Front Range.

The Green River, a major tributary to the Colorado River, flows from the craggy heights of Wyoming's Wind River Range into Flaming Gorge Reservoir and on into Utah before it takes a brief turn into western Colorado.

Les Tanner makes his living on the recreation and tourism at Flaming Gorge Reservoir, where he has owned the Buckboard Marina since 1969.

“It's a good fishery; boating is good. It's just an all-around good recreational lake,” Tanner said while working on his dock on a recent spring day. “If they stop the flow of good water coming into this lake, all we're going to have is a stagnant pond.”

Wyoming has been using about 525,000 acre feet from the Green each year — about 73 percent of what has been the state's typical annual Colorado River Compact allocation of 833,000 acre feet. An acre foot is the amount of water that covers an acre to a depth of 1 foot.

The Colorado River Compact of 1922 essentially divides the basin's water, giving 7.5 million acre feet annually to the upper basin states of Colorado, New Mexico, Utah and Wyoming, and an equal amount to the lower basin states of Arizona, Nevada and California.

The upper basin states apportion their share among themselves. Colorado gets nearly 52 percent, New Mexico just over 11 percent, Utah 23 percent and Wyoming 14 percent.

If there's not enough water in the system for both the upper and lower basins to get their full 7.5-million acre foot share, the upper basin states still must deliver the full amount on average to the lower basin. The upper states then divide what's left according to their percentage formula.

Wyoming, a state of roughly 540,000 people, doesn't expect to use its full share of Colorado River water over the next 30 years even under the most ambitious growth scenarios. However, Phil Ogle of the Wyoming Water Development Office said his office is working on a new study of whether drier conditions could reduce the water supply in the Green River Basin.

Harry LaBonde, deputy Wyoming state engineer, said Wyoming's surplus draws attention from parched states downstream.

“There's no doubt that if you are using the water, you're more secure,” LaBonde said. “But the whole reason that Wyoming has entered into the Colorado River Compact and the Upper Colorado River Compact is to preserve its ability to use a certain allocation of water.”

Aaron Million, a Fort Collins, Colo., businessman, has applied for permits to build a private, multibillion-dollar pipeline from the Green River in Wyoming to Colorado. He has identified several Colorado agricultural interests that say they want more water and says the pipeline would also serve some customers in eastern Wyoming along the way.

Million's application spurred a coalition of Colorado municipalities to propose a 500-mile pipeline project of its own. The coalition is years behind Million's project in seeking federal and state approval.

Local governments in southwestern Wyoming have mobilized to fight both pipeline projects. The cities of Green River and Rock Springs and the counties of Sweetwater, Uinta, Sublette and Carbon oppose any draw from the Green, said Green River Mayor Hank Castillon.

Castillon's city recently invested millions in a kayaking course and walkways along the river that courses through town. Castillon fears that taking water from the river or the lake would hurt tourism, recreation and limit the town's future economic development.

The main question, Castillon said, is whether the State of Colorado has the right to draw any more water out of the Colorado River system.

Colorado's official answer to whether it has the right to more water seems to be “maybe.”

Ray Alvarado, spokesman for the Colorado Water Conservation Board in Denver, said his state is currently using between 2.3 million to 2.6 million acre feet of water under its share of the Colorado River.

How much more Colorado is entitled to isn't known, Alvarado said. But he said it's possible the answer could be none.

A new draft study by the Colorado Water Conservation Board concludes Colorado can draw between zero and 1 million acre feet more per year over the next 30 to 60 years, depending on climate change and other states' consumption, Alvarado said.

Colorado, meanwhile, estimates its population will rise from 5 million to 7.1 million people by 2030.

Both Million and the municipalities say Colorado's unused share of Colorado River water is adequate to meet the demands of their pipeline proposals, which would count against Colorado's share.

Million has applications pending with the Wyoming State Engineer's Office to divert some 250,000 acre feet of water a year from locations near the town of Green River and from Flaming Gorge Reservoir. He said he plans to modify his application to take all the water below the town to minimize environmental effects.

The U.S. Bureau of Reclamation, which operates Flaming Gorge Reservoir, estimated a few years ago that the reservoir could supply a pipeline drawing 165,000 acre feet a year over 40 years combined with other projected water uses. After 2050, as development in Wyoming increases, the bureau study projected the reservoir could sustain an annual diversion rate of 120,000 acre feet.

Bureau officials say they're revising their report and say it may well conclude even less water is available for any pipeline project.

Yet Million said he remains optimistic.

“We fully anticipate the surpluses in the system will be there that will allow the project to move forward with full protection of Flaming Gorge and the river below,” Million said. “And if they're not, the project shouldn't and will not go forward.”

The states of Wyoming and Colorado will participate in a U.S. Army Corps of Engineers environmental review of Million's project. The agency says it plans to have a final report on the project by 2014.

Wyoming's surplus water situation has worried state lawmakers for years.

“At some point are they simply going to say, 'You didn't use it, and when you didn't use it, you lost it,”' said Republican Rep. Kermit Brown of Laramie.

Yet Alexandra Davis, assistant director for water at the Colorado Department of Natural Resources said she doesn't believe development in Colorado places Wyoming's water is at risk because allocations are based on percentages of available water.

“Colorado doesn't get to say, 'Well we developed ours, therefore, Wyoming, you don't get yours,”' Davis said.

Economist: Expect home-price weakness to persist

The following is an article written by Matt Carter for Inman News

Home sales expected to bounce back to normal by 2012
By Matt Carter, Friday, May 14, 2010.

WASHINGTON -- With the economy on the mend, home sales could bounce back to their historical levels by 2012, although the bulging foreclosure pipeline is likely to keep prices in check, economist Mark Zandi of Moody's Analytics told Realtors holding their annual midyear meeting in the nation's capital.

Zandi said he expects sales of new and existing homes to grow from between 5.5 million and 6 million this year to between 6 million and 6.5 million next year, and hit about 7 million in 2012.  That would put home sales back on their historic trend line. But Zandi said that when it comes to home prices, "the coast is not quite clear."

With the foreclosure pipeline full -- Moody's estimates that 4.3 million out of approximately 50 million first mortgages are in foreclosure or overdue by 90 days or more -- Zandi expects further price weakness for the next six to 12 months and no real price growth through 2012.

Although loan modifications could help about half of homeowners facing foreclosure avoid losing their homes, another 9 million homeowners are underwater by more than 20 percent, he said, making them more likely to consider a "strategic default."  Strategic defaults, or defaults by homeowners who are able to make their mortgage payments but choose not, will constitute a fourth wave of foreclosures, Zandi said.

The first wave of foreclosures, in 2006, often involved house flippers who got into trouble when prices stopped rising. Subprime borrowers facing interest-rate resets dominated the second wave in 2007, which was followed in 2008 by foreclosures among the unemployed and borrowers with negative equity.

There are already about 9.5 million vacant homes -- about 1.5 million more than would be expected by historical trends -- and it could take two years to work off that inventory, Zandi estimated.  That assumes that builders keep putting up homes at a slower-than-usual pace of 600,000 homes a year, while new household formation produces demand for 1.35 million homes a year, a difference of 750,000.

While builders could very well pick up the pace of construction, Zandi expects demand will rise even faster -- a view echoed by National Association of Realtors Chief Economist Lawrence Yun.  Yun said that with housing starts so far below historical norms, there's a chance that there will be housing shortages. Home prices could rise 2 to 3 percent this year and even more steeply after that because of the constraints on supply, he said.

While that might seem like a nice problem to have, Yun said abrupt price appreciation would not be good for businesses because some buyers will be priced out of the market.  Sales of distressed homes are expected to account for between 30 and 40 percent of transactions for the rest of the year, Yun said. But the European debt crisis could lead to additional stress tests for U.S. banks, which would hurt jumbo and second-home lending, he said.

Zandi said the structured finance market, which channeled money into home lending before the financial crisis, remains "completely dormant." Fannie Mae, Freddie Mac and the Federal Housing Administration are standing behind 95 percent of loans, he noted.

"It's not healthy for our economy to be reliant on the government for mortgage credit," Zandi said. Nor is the rising ratio of federal debt to gross domestic product, which could eventually drive up interest rates and derail his optimistic economic projections, he said.

Zandi expects GDP, which fell 2.5 percent last year -- the worst showing since 1933 -- should grow by 3 percent this year, 4 percent in 2011, and 5 percent in 2012.  But it may be 2014 before enough jobs are created to make up for the 9 million lost during the financial crisis, he said.

Businesses must create 125,000 a month just to keep up with the growing size of the nation's work force, he said -- a "break-even" pace he expects can be sustained this year. Next year, Zandi expects about 250,000 jobs will be created each month, a figure he said should grow to 300,000 in 2012.

Tessa in Silverthorne

This blog posting has absolutely nothing to do with Breckenridge Real Estate. Rather, it is a video of my daughter, Tessa, during one of her gymnastics competitions last June. She was 12 years old at the time. I'm just a little proud of her!!!