By Vince Phillips
NRCDC Part 1 summarized the core facts from then-City Attorney Ben Kahn’s 61-page internal memorandum of December 31, 2016. That document, never released to the public at the time but temporarily posted online, provides the definitive contemporaneous record of the Salida Natural Resource Center Development Corporation (SNRCDC).
Here are additional key details from the same memo that shed light on how the City actually operated the entity:
Heavy City control from day one
The SNRCDC was incorporated in late 2009. Its Articles of Incorporation and Bylaws contained language stating the corporation was not an agent of the city and that its obligations would not constitute City debt. Yet the governance structure built into those same documents gave the City effective day-to-day control. City Council appointed and could remove every director, with or without cause.
The City Administrator served as an ex-officio, non-voting member of the board. The initial officers were all sitting City officials: City Administrator Jack Lewis as President, Finance Director Jan Schmidt as Treasurer, and Community Development Director (later City Administrator) Dara MacDonald as Secretary.
Later bylaws changes in 2013 further strengthened City oversight. Those amendments were signed by Dara MacDonald, Councilmember Tom Yerkey, Councilmember Keith Baker, and Tim Glenn, all in their capacities as SNRCDC board members. Glenn was a former Chaffee County Commissioner and, at the time, also a board member of the SNRCDC’s current lender. The corporation’s principal and registered offices were listed as City Hall at 124 E. Street, Salida. All assets were ultimately to revert to the City upon dissolution. The City retained prior consent rights over any changes to the Articles or Bylaws.
The water fund drawdown
When the original 2004 owner-carry note was paid off in 2009 to cure the TABOR violation, the City used $760,000 from the water reserve fund and $1,671,999 from the general reserve fund. The memo records that this action reduced the water fund reserve account to approximately $200,000 and the general fund reserve to about $300,000.
The total cost of the Vandaveer Ranch transaction, principal plus interest, reached roughly $3,651,358.The memo presents these reserve transfers as the City’s chosen method of fixing the earlier TABOR problem. It does not analyze whether drawing down enterprise-fund reserves in this manner raised separate legal or accounting issues.
One-way flow of resources and decision-making
Throughout the memo, Kahn documents how City staff, offices, elected officials, and financial resources were used to advance SNRCDC activities while the entity was presented to the public as an independent nonprofit. City officials wore dual hats. City Council exercised direct appointment and removal power over the board. Public improvements financed by the SNRCDC were required to be located in or substantially connected to Salida and operated for the benefit of the City.
This is the heart of the legal analysis in the memo.
Kahn carefully applies Colorado Supreme Court precedent, Colorado Association of Public Employees v. Board of Regents (804 P.2d 138, 1990), to show that when a government entity founds and maintains effective control over an ostensibly private corporation, including board selection, operational control, and a reversionary interest in assets, courts treat the corporation as a public instrumentality rather than a truly independent entity.
In plain terms, the memo shows the City was operating the SNRCDC in substance, even while the legal paperwork emphasized independence.
The 2016 turning point
By late 2016, new City leadership had reviewed the structure. Kahn’s memorandum provided the factual and legal foundation for Resolutions 2016-81, 2016-88, and especially 2016-97, the divestiture resolution. Those resolutions directed a comprehensive compliance plan and ultimately severed the City’s direct control over the SNRCDC.
The memo is not a political attack. It is the City’s own attorney documenting serious TABOR risks created by the very structure the City had designed years earlier. It is a clear-eyed risk-management document meant to protect taxpayers.
Many Salida residents formed strong opinions about the NRCDC saga based on hysteria during public meetings and media coverage from 2009-2016. The internal record Kahn prepared in 2016 tells a more complete and technically precise story than the simplified narratives that circulated at the time, and remains in the public consciousness.
As the City now pursues development at South Ark on the same former Vandaveer Ranch land, these documented governance and compliance lessons from 2009-2016 deserve careful review by current Council members and staff who were not involved in that earlier chapter.
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