By Vince Phillips
As the City of Salida moves forward with development at South Ark on the very same former Vandaveer Ranch property the City purchased in 2004, it is worth revisiting a detailed internal analysis prepared by then-City Attorney Ben Kahn in late 2016. That 61-page memorandum, titled “City of Salida – SNRCDC TABOR SOF & Relevant Considerations,” lays out the complete factual and legal history of the Salida Natural Resource Center Development Corporation (SNRCDC). Virtually no one outside a small circle of insiders has ever seen it. It is the definitive contemporaneous record of what actually happened.
The story begins in 2004. The City purchased the Vandaveer Ranch, approximately 190 acres and 300 acre-feet of senior water rights, for a total cost of $3,250,010. The City paid $450,000 down and financed the balance with a 20-year owner-carry promissory note of roughly $2.75 million. The goal was straightforward: convert the agricultural water rights to municipal use, then sell portions of the land for higher-density residential and commercial development to serve as a gateway to the City.
By early 2009, under Mayor Chuck Rose, a planned master-developer deal for the entire property collapsed amid the national credit crunch. At that point, City officials determined that the original owner-carry note violated TABOR. The City responded by paying off the note early, using $760,000 from the water reserve fund and $1,671,999 from the general reserve fund — all of these corrective actions took place under Mayor Rose, well before Jim LiVecchi’s term as mayor
Colorado’s constitutional prohibition on multi-year debt without voter approval or fully funded reserves. To avoid further compliance problems, the City paid off the note early. It used $760,000 from the water reserve fund and $1,671,999 from the general reserve fund, drastically reducing both reserve accounts. The total cost of the transaction, including principal and interest, reached approximately $3,651,358 by the 2009 payoff. In response to this experience, the City created the SNRCDC in late 2009 as a Colorado nonprofit corporation under IRS Revenue Ruling 63-20. The stated purpose was to act exclusively on behalf of and for the benefit of the City of Salida and its inhabitants, focusing on the acquisition, construction, operation, and maintenance of public improvements located in or substantially connected to Salida.
The Articles of Incorporation and Bylaws contained important disclaimers: the corporation was not to be considered an agent of the City, and any bonds or obligations it issued would not constitute a debt of the City.However, the entity’s actual governance structure told a different story. City Council appointed and could remove all directors, with or without cause. The City Administrator served as an ex-officio, non-voting board member. The initial officers and directors were sitting City officials: City Administrator Jack Lewis as President, Finance Director Jan Schmidt as Treasurer, and Community Development Director Dara MacDonald as Secretary. The corporation’s principal and registered offices were at City Hall.
All assets were ultimately to revert to the City upon dissolution. Later bylaws amendments strengthened City oversight and applied open-meetings laws to board proceedings.The 2016 memorandum carefully examines whether this structure succeeded in creating a truly independent private nonprofit. Drawing on Colorado Supreme Court precedent, most notably Colorado Association of Public Employees v. Board of Regents of the University of Colorado (804 P.2d 138, 1990), the memo analyzes the key factors courts use to distinguish public instrumentalities from genuinely private entities: who founded it, who controls the board and operations, and whether the government retains a reversionary interest in the assets.
The memo concludes that the extensive City control built into the SNRCDC’s formation and governance created a serious risk that its long-term secured financing, such as the traditional lender loans used for the Natural Resource Center project, could be treated as an indirect debt or financial obligation of the City under TABOR.
In other words, despite the nonprofit form and independence language on paper, the substance of the arrangement likely made the SNRCDC’s debts subject to TABOR’s voter-approval or full-reserve requirements
To address this risk, the City Council in 2016 adopted Resolutions 2016-81, 2016-88, and 2016-97. These resolutions directed a comprehensive review and a plan to bring the City into full TABOR compliance with respect to the SNRCDC.
This internal memorandum is not a political document. It is a careful, citation-heavy legal and factual analysis prepared by the City’s own attorney to protect the City and its taxpayers. Many residents formed strong opinions about the SNRCDC saga based on public meetings, media coverage, and the simplified narratives that circulated at the time. The 2016 memo provides the complete record that was never made public.
As Salida embarks on new development initiatives at South Ark, current Council members and staff, most of whom were not involved in the 2009-2016 period, now have the opportunity to review this history. Understanding what the City’s own attorney documented in 2016 may help avoid repeating the same structural and compliance challenges.
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