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Judge's ruling adds wrinkle to RedPeak case

Highlights:

  • Judge rules on zoning issue for so-called RedPeak parcels.
  • If neighbors win, zoning reverts to R-4.
  • Win or lose, plaintiffs likely will appeal

If a court finds that the current zoning is invalid on the so-called RedPeak parcels in the heart of West Highland, the zoning reverts to the previous designation, which allows even taller buildings than the current zoning, a judge has ruled.

A rendering of RedPeak's plan for an apartment where a portion of the church has been razed.

A rendering of RedPeak’s plan for an apartment where a portion of the church has been razed.

The decision by Denver District Court Judge Robert Lewis McGahey Jr. would require the zoning to revert R-4 if he finds in favor of 10 neighbors who belong to a grassroots group called No High Rises in Highlands, and are suing the city and the owner of the three parcels on Lowell Boulevard, West Moncrieff Place and Meade Street, just north of West 32nd Ave.

McGahey is scheduled to preside over a three-day bench trial on the matter starting on Aug. 21.

The R-4 zoning, which had been in place for about 50 years, allows 75-foot buildings, or about six-story buildings, on the parcels, according to the city.

Checkmate?

“It seems like a checkmate move,” said Daniel Markofsky, a real estate attorney, who is not involved in the dispute, but who has been following it closely.

“The neighbors were seeking to stop development and didn’t seem to grasp that the zoning that existed before potentially would allow higher and more intense uses than the new designation,” said Markofsky, an attorney with Feldmann Nagel LLC.

However, Laura Goode, the founder of the No High Rise group, said that while R-4 allows a building up to six stories on Lowell, she said an expert witness they hired will testify at the trial that R-4 allows smaller buildings on the other two parcels, because those two lots are tiny.

She wasn’t sure of the maximum height allowed under R-4 on Meade and Moncrieff, but she said she knows it is less than six stories.

Goode said she expected the judge’s decision.

Goode: R-4 better than U-MS-5

While R-4 zoning is “not ideal,” it is better than the current zoning of U-MS-5, zoning Goode said.

With requirements known as setbacks and step-backs from the street and curbs, and more parking, R-4 would allow less density and fewer units than under U-MS-5, she said.

Kerry Buckey, an assistant City Attorney, in a court document filed in May, said that if the city loses the lawsuit and the land reverts to R-4, it will “encourage a potential settlement of this matter, or in the alternative, allow the parties to prepare for trial with greater clarity as to potential outcomes of this litigation and save time and expense at trial.”

He also provided legal reasons for the return to R-4, in the event the city loses.

McGahey, in an order filed late Tuesday afternoon, said he found the city’s arguments “persuasive.”

Not so with the plaintiff’s position that the land needed to be rezoned under the current code.

The plaintiffs have not asked for a specific zoning, but are seeking to have the matter remanded to City Council to be rezoned under the new code.

“I find the Plaintiff’s argument would put me in the position of ordering the City Council to adopt specific legislation and thus would infringe upon established principles of separation of powers,” McGahey wrote.

“I do not have the authority to order the City Council to re-zone the Parcels under the New Code,” the judge continued.

“Thus, if after a trial on the merits here, the new U-MS-5 zoning designations are found to be invalid, they will be disregarded and the prior valid zoning designation of R-4 will be in effect.”

Shepherd expected ruling

City Councilwoman Susan Shepherd, whose district includes the parcels and is embroiled in the lawsuit, said she is not surprised by the decision, which she learned from InsideRealEstateNews.com.

“If the plaintiffs win, then the zoning would revert to R-4 is what Community Planning and Development and the City Attorney’s office have been telling me all along,” Shepherd said.

However, she said U-MS-5 is far superior to R-4.

“If that happens and noting further could be done, we have the potential something that would be terrible for the neighborhood could be built on those sites,” said Shepherd, who is on the witness list to be called by the plaintiffs at the trial.

Shepherd noted that the 13-story building at Julian Street and West 32nd, less than two blocks from the parcels in dispute, was built under the R-4 zoning. That building, formerly called Eden Manor,  recently sold to a private developer and was renamed as Julian32 at Highland Square.

R-4 zoning also would allow fewer retail options than under U-MS-5.

RedPeak had proposed including one or more restaurants and retail on Lowell and Meade, but not on Moncrieff.

R-4 would allow a bank, hotel motel and a bed and breakfast, but not restaurants.

“Because R-4 does not allow commercial, it was unequivocally a win for the neighborhood,” Goode said, as it will mean less congestion and traffic on nearby streets.

However, Goode, in a rare concurrence with Shepherd, said that she would rather have the parcels rezoned under the current code.

She said she thought rezoning all three lots to allow a maximum  of four stories, would be a “fair offer,” that would seriously be considered by the plaintiffs. (Editor’s note: There is no U-MS-4 that would a maximum height of four stories in the new zoning code.)

Appeal likely

No matter how the judge rules, she said the plaintiffs will likely appeal, she said.

“It is very likely, win or lose, we will appeal,” Goode said.

If they win, they likely will appeal to have the R-4 portion of the ruling overturned, she said.

However, she said the rumor on the street that the plaintiffs are simply trying to delay the construction as long a possible is not only inaccurate, but offensive.

The trial was initially scheduled for May, but was delayed at the 11th hour when the mother of Laurie J. Rust, the plaintiff’s pro bono attorney, died of breast cancer, Goode said. Rust is an attorney with Gordon & Rees LLP.

“In fact, not only is it disingenuous for anybody to say that, but may I say, mean-spirited? When Laurie was supposed to be at the trial, she was on with her mother on her death-bed.”

When they were rescheduling the trial, Goode said the docket was filling up quickly. Other than the Aug. 21 date, the next available times were in November or January.

“Laurie bent over backwards to get Aug. 21, because she felt bad the trial was delayed because of her,” Goode said.

Rust, who lives in the neighborhood, is putting in many long hours, all of them for free.

“Laurie Rust is truly the angel, truly the savior, of West Highland,” Goode said.

Also, Goode said she sees no signs that the market for luxury apartments in the neighborhood is “shifting backwards. It is getting stronger.”

However, the cost of labor and materials have skyrocketed since RedPeak first proposed constructing the community in 2011. Interest rates also have jumped since May.

Because RedPeak Properties does not own the land yet, it was dropped from the lawsuit. The buildings on Lowell and Meade would have five stories, while the one on Moncrieff would have four stories, under a proposal by RedPeak prior to the lawsuit.

The land was rezoned to U-MS-5 in June 2010, during the biggest rezoning of Denver’s zoning code in more than half of a century.

Spot zoning alleged

The neighbors, in the lawsuit, contend the U-MS-5 classification is illegal spot zoning. They argue the zoning is incompatible with the surrounding neighborhood of mostly single-family homes and point out the parcels in question have been designated as “areas of stability,” and not “areas of change,” under the city’s Blueprint Denver planning and transporation guide.

On the other hand, a portion of a former church building, that would be incorporated into one the new buildings on Lowell, is about 70-feet tall. And there is a tall four-story building just north of the church on Lowell and a 13-story building about a block away.

Buckey also had argued that the judicial branch does not have the authority to become involved in the rezoning issue, as that is a legislative, not a judicial, function.

“Municipal zoning is a legislative, not judicial, matter; however, zoning is subject to judicial review as to its validity,” McGahey wrote.

“Thus, the court my find a zoning designation invalid is discretion is clearly abused. The question of the validity of zoning under the New Code is a matter of fact to be determined at trial.”

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Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.