Opinion ID: 2631724
Heading Depth: 4
Heading Rank: 3

Heading: Compliance with Amendment 1's Restriction on Multi-year Financial Obligations

Text: The parties disagree as to whether the contractual limitations the Petitioners adopted to comply with Amendment 1 precluded the establishment of any vested contractual rights over the life of the Agreements. Parker's argument is essentially that either the terms of the Agreements prevented the creation of vested contractual rights that could be disturbed by the Charter Amendment or that such rights, if they existed, would unconstitutionally violate Amendment 1. The Petitioners claim that Dougherty and Interrogatories on HB 99-1325, both of which examined Amendment 1's prohibition on multiple year financial obligations, permit formation of multiple year nonfinancial obligations, as provided in the Agreements here. In Dougherty, the court of appeals examined whether a lease-purchase agreement for a road grader between the county of Boulder and an investment banking firm constituted a multiple-fiscal year direct or indirect district debt or other financial obligation under Amendment 1. 890 P.2d at 201. The lease-purchase agreement provided for an initial eight month term with four additional one-year renewal terms. The court of appeals found that the agreement did not create a multiple fiscal year financial obligation because it did not require that funds be appropriated in any single year. Id. at 207. The investment banking firm in Dougherty argued that the lack of a future financial obligation in the lease-purchase agreement was a matter of form rather than substance because the county had the intent to make payments every year until the conclusion of the agreement. Id. The court of appeals held that even were such intent present, the fact that nonpayment was a distinct possibility under the agreement distinguished it from a multiple year financial obligation. [4] Id. We examined the court of appeals' analysis in Dougherty in Interrogatories on HB 99-1325. See 979 P.2d at 556-57. We found that the lease-purchase agreement was not a financial obligation requiring voter approval because it did not entail the borrowing of funds or pledge the credit of the State. Id. at 557. We distinguished that contract from the revenue anticipation notes (RANs) that were the subject of the interrogatories because in the RANs it [was] evident that the State [was] receiving money in the form of a loan that came within the scope of other financial obligation whatsoever in Amendment 1. Id. at 557-58. Further, we held that merely because a payment obligation is discretionary beyond its first year does not dictate that it is outside the scope of Amendment 1. Id. at 558. To determine whether a multiple-year fiscal obligation is implicated, the entire obligation must be looked at as a whole. Id. The payment obligations of the proposed RANs were likely to extend into multiple years and therefore the RANs were within Amendment 1 because the State had to pledge its credit for the notes to be marketable. Id. In order to sell the notes, the State had to create a security interest that would likely extend beyond one year. Id. We noted that when Amendment 1 was presented to the voters they were told that it would require voter approval for the creation of most financial obligations that extend beyond the current fiscal year unless government sets aside enough money to fund the obligation in all years that payments are due. Id. (citation omitted). Consequently, when the entire transportation budget for the year was approximately $585 million, the voters could reasonably expect to have the issuance of $1.0 billion in transportation RANs submitted to them. Id. at 558-59. By contrast, looking at all of the economic realities and circumstances created by the Agreements here, there is no obligation that Golden make payments to the Developers in any single year. Much like the positions of the parties in Dougherty, Golden may well have contracted with the intent to make appropriations under the Agreements every year and the Developers may well expect to receive reimbursement payments every year, but ultimately the language of the Agreements leaves the matter to the discretion of the City Council. Nothing in the Agreements prevents the City Council from exercising its discretion to decline to appropriate funds. Moreover, the Agreements contemplate reimbursement only for an incremental portion of the tax revenues generated from the developed property. Due to this provision, the Agreements are not contingent on the borrowing of funds, the extension of Golden's credit, or any payments for which funds are unavailable. Consistent with our holding in Interrogatories on HB 99-1325 and the court of appeals' holding in Dougherty, we find that the Agreements do not create a multiple-fiscal year direct or indirect district debt or other financial obligation as defined by Amendment 1. For reasons stated elsewhere in this opinion, we reject Parker's argument that the terms of the Agreements which allowed them to comply with Amendment 1 prevented the vesting of nonfinancial contractual rights.