Fischer files response in USOC case; judge may rule tomorrow

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Attorney Lindsay Fischer filed a 25 page response yesterday in his lawsuit against the City of Colorado Springs, which alleges that the city’s plan to mortgage the Police Operations Center and Fire Station 8 and use the proceeds to pay for the proposed retention package for the U.S. Olympic Committee is illegal.

Fischer filed the lawsuit last month and District Judge Scott Sells issued a “minute order” on Sept. 10 in which he gave the city until Sept. 15 to file a motion for judgment. The order also gave Fischer until Sept. 22 to respond to the city’s motion.

The judge wrote in the order that, “Over objection of Plaintiff, the Court adopts (city attorney White’s) written description of primary legal issue before the court. ‘May the city without voter approval enter into an annually renewable lease purchase agreement providing for the issuance of certificates of participation?’”

Sells also wrote that he will attempt to rule before Sept. 24, one day before the deadline for the city to either issue certificates of participation to finance the USOC deal or renegotiate the time frame.

Fischer contends in his original filing that the plan, which calls for the city, acting through its Public Facilities Authority, to issue debt in the form of certificates of participation secured by the two buildings, will create a de facto long-term debt, and therefore requires voter approval.

In its response, the city argued that the issuance of the COPs complies with applicable law in all respects and that the debt incurred is annually renewable by City Council. Therefore it does not constitute a long-term obligation of the city and does not require voter approval.

In his response, Fischer makes several arguments and cites multiple precedents that purport to show that these COPs are COPs in name only. Fischer also formally objects to the court’s definition of the central issue, calling it “simplistic,” and to the apparent deference shown by the court to the city’s deadlines, since “(such deadlines) are by private contract and subject to modification.”

Fischer’s principal contentions are:

  • Case law indicates that, in a COPs issuance, the intermediary (the PFA) must be independent. 
  • The articles of incorporation of the PFA do not permit it to issue COPs for purposes that are unrelated to the provision of government services or performance of government functions.
  • The Colorado Constitution explicit forbids gifts to any private corporation.  The USOC is a private, nonprofit corporation. “Whether a gift is involved,” Fischer wrote, “is a question of fact and the law can only be applied after the facts have been elucidated by discovery.”
  • Fire Station 8 and the POC were built and/or improved with money from a “special fund,” Fischer wrote, referring to the voter-approved public safety sales tax. Does this “result in any restrictions or limitations on the improvements so financed.” Again, discovery is required.
  • Previous COPs that have been unsuccessfully challenged in court have been authorized “only in connection with improvements for core governmental use.”
  • The issues in the case are multiple, many require discovery and no “dispositive” order can be entered.
  • The court’s decision in the 1981 case that first established the legality of Colorado COPs financings, Gude v. Lakewood, states that “(if) the proposed financing plan will in fact create a general obligation debt of the city … then voter approval is required.”  The Gude decision also took into account the fact that the city would eventually get back the building that the COPs proceeds were used to construct.
  • The city’s decision to mortgage the POC and Fire Station 8 is a “game changer,” making the proposed COPs de facto bonds, since no circumstances can be imagined in which a subsequent council would decline to renew the “annual” agreement.

In his response, Fischer frequently attacks the city’s assertions and claims.

Referring to the city’s apparently interchangeable use of the terms “annually renewable lease-purchase agreement” and “annually renewable rent,” Fischer says that “… the denial of realities in the defendant’s documents raise a question as to whether the defendant’s counsel have much familiarity with the documents, this particular deal and the area of secured financing in general.”

Later, noting “omissions” in the facts as presented to the court by the city, Fischer complains about “the skinniness and misdirection in the defendants’ facts.”

Fischer said he hasn’t decided whether to appeal an adverse ruling.

“If I did so, I’d appeal directly to the (state) Supreme Court under Rule 21 (which permits direct appeals in certain cases),” he said. “But whether I appeal may depend upon the content of the judge’s ruling.  Appeals are very expensive – and (while I’ve been working on this matter) I haven’t been covering my overhead. It’ll cost $225 just to file the appeal.”

4 Responses to Fischer files response in USOC case; judge may rule tomorrow

  1. As much as I like having the USOC headquarters here in the Springs, I am not sure I want to mortgage city assets for future generations to be burdened with over the period of time the USOC might decided to call Colorado Springs home.

    Thanks to Mr. Fischer for being an advocate for Springs residents. I think all of us have had it with closed door, rubber stamped deals that have put this city in financial trouble.

    mike finkbiner
    September 23, 2009 at 2:10 pm

  2. Don’t you worry, Lindsay, we’ll get that $225 covered for ya if need be. You go boy!!

    owleye
    September 23, 2009 at 2:41 pm

  3. At a time when the City Council is trying to convince the taxpayers that there is a need for increasing taxes (real estate mill levy), it seems irrational that the city council would place us more deeply in debt with this massive (certificate of participation) bond issue. If the city council really thought this was a wonderful idea, which would please the Colorado Springs citizens, they would have put this bond issue on the November ballot. Instead, they called the debt a certificate of participation. Ultimately, this is a public debt owed by the taxpayers.
    I am amazed that there is not a louder outcry from the public. We all should be grateful for Mr. Fischer’s
    legal efforts.

    Douglas Raskin, MD, DMD
    September 23, 2009 at 3:08 pm

  4. Free rent on 90,000 sq ft of downtown office space looks a lot like a gift. In fact, if a private landlord offered such free space, there would probably be some significant tax advantage involved, since the market value of such a lease could be construed as a donation.

    It is ironic that the city is offering up collateral, in the form of Police and Fire Department properties, while at the same time threatening the taxpayers (aka voters) with police and fire department layoffs because of budget shortfalls.

    Maybe the city should issue the COPS to keep the police and fire departments adequately staffed. Does the USOC employ more folks than will be laid off in the police and fire departments.?….I’ll bet they don’t…….

    Unfortunately, in the end, it’s a lot sexier to have the Olympic Rings on the city council’s business cards, rather than a police or fire department symbol……pretty sad, really……..

    And did anybody catch the Chambers ‘neutral’ position on the mill levy increase? Maybe they’ll explain it to those of us who are ‘ignorant and uninformed’……..

    John Whitten
    September 23, 2009 at 3:28 pm