Interchange landowners upset with assessment plan

WINDSOR – Owners of land surrounding a new interchange now under construction at I-25 and Colorado Highway 392 are upset with a plan to have them pay for about $5 million in unmet costs for the project.

The $27 million rebuild of the interchange was mostly funded with federal and state grants, but a shortfall of about $5 million is being paid by the cities of Fort Collins and Windsor, who cooperated to get the interchange replaced.

About two dozen landowners and ownership groups, with more than 40 parcels surrounding the interchange, are being asked to pay assessments on their properties at the time of development to repay the cities.

Several of the property owners say they are prepared to go to court to get the fees reduced.

“They’re asking a small group of landowners to pay 100 percent of the shortfall for a project that benefits a large region,´ said Curt Burgener, owner of Burgener Trucking on the interchange’s northwest side. Burgener owns about 28 acres next to the interchange.

“The adjacent landowners are not the ones who caused the interchange to fail,” he said. “It failed because of growth between Fort Collins and Windsor.”

Development barrier The interchange has been considered undersized by the Colorado Department of Transportation, and that’s prohibited any large development project in the near vicinity.

Landowners weren’t able to move forward with potential development proposals because of the CDOT restriction. When money for the project was awarded in 2010, the cities – and landowners – rejoiced that a longtime barrier to development around the interchange would soon be removed.

But that sentiment has changed since then on the part of some area landowners. “I think their process and the way they’re doing it is wrong,´ said David Muth, whose family owns property near the interchange. “Obviously, the areas surrounding the interchange – and the whole communities of Fort Collins and Windsor – are going to benefit as well.

“Although the landowners are going to benefit, everyone benefits and should pay for it.”

The cities commissioned a study by Foster Valuation Co. in Greeley to look at other interchanges in the Denver area along I-25 and E-470 to guide the creation of assessments for the Windsor interchange.

That $8,250 study – split by the two cities – resulted in differing assessments for four “zones” radiating outward from the interchange for varying distances, with zones closest to the interchange projected to gain the most in development value.

In his report to the cities, consultant West Foster noted that – because the Windsor interchange was a rebuild and not a brand-new interchange – the per-square-foot values assessed were rated at 25 to 50 percent of the values of the new interchanges studied in Denver.

Foster’s report concluded that the Windsor interchange properties would increase in value far more than the $5 million being assessed.

“It is clear from the data gathered at the four interchanges studied that the improvements proposed at the Interstate 25 and Colorado Highway 392 interchange will enhance property values within (the study area) at a minimum of $19.1 million, which is greater than the $5 million being assessed.”

Study area too limited Robert Hau, a broker for Sperry Van Ness and a representative of Burgener, said the Foster study area was too limited.

“In the end, it wasn’t a large enough area included in the taxation district,” he said. “It came down to the landowners paying the entire ($5 million) amount and the cities paying nothing, and that’s what’s not acceptable.”

Foster noted in his report that the study was limited to properties in both cities’ growth management areas in the vicinity of the interchange.

In some cases, landowners are being asked to pay hundreds of thousands in assessments, although the money won’t be required until a development deal is approved.

John Frey, Windsor attorney, said the landowners have known all along that they would be asked to repay the $5 million difference.

“The original IGA (intergovernmental agreement) said we’d upfront that money,” he said. “We’re going to recover that amount from the specially-benefitted properties around the interchange.”

Frey said the assessment fees have not yet been formally adopted by the two cities, something he doesn’t expect until after the first of the new year.

Rick Richter, capital projects manager for the city of Fort Collins, said he’s aware of the concerns being voiced by some of the interchange area landowners.

“There’s a lot of concern about it from the property owners,” he said. “But there’s no sense of urgency on our part. None of these fees would apply until the property is developed.”

But landowners are also concerned about having a large assessment fee hanging over their properties and how that might affect a potential development deal. They also are upset by having to pay interest on the fees starting next year when the interchange project is finished.

Hau said some landowners are “prepared to go to the mat” to resist the repayment plan.

“The cities don’t seem to be listening to the landowners, and (the plan) doesn’t comply with any state statutes,” he said.

“The landowners really want to get a settlement here. They do want to contribute something, but based on fairness and legality.”