Colorado has some of the strictest rules against governments taking private property through eminent domain, and that could make it harder for the Denver Broncos to cross the goal line when it comes to building a new stadium in the Lincoln Park neighborhood.
The Colorado Constitution guarantees just compensation for any real estate acquired for a public use and allows owners to challenge whether a use is truly public. Statutes were tightened even more in 2006, with limits barring the use of eminent domain to claim property for economic development purposes or to boost tax revenues.
In short, when land is taken, it must be for genuine public uses, not as a workaround to benefit a private entity.
That matters because Denver Water has sent out “notices of intent” for nearly two dozen properties near its 36-acre campus, which is adjacent to Burnham Yard, a 58-acre site owned by the Colorado Department of Transportation. That former railroad yard, being prepared for sale, is considered a leading candidate for a new football stadium that the Denver Broncos are considering.
But land is also needed for surrounding developments like bars, restaurants, hotels and housing. Sports teams increasingly want to control those assets and profit from them, which requires a much larger footprint in the past.
“Different property owners are responding differently. We figured there was no reason not to go ahead and get an appraisal,” said Adam Foster, an attorney representing the owners of 1245 N. Umatilla St., which was among the properties between 12th and 14th avenues and between I-25 and Shoshone Street that received notices.
Denver Water has been fairly vague in explaining why it needs the land and what it intends to do with it, Foster said, adding that “At this time, we are taking them at their word that it is for a public process.”
The Broncos said the team has studied locating a new stadium in Denver, Aurora and Lone Tree. But since August, proxy companies tied to the team have purchased at least 13 parcels near Burnham Yard and made sellers sign nondisclosure agreements. That suggests the location south of the current stadium and on a light rail line is the leading candidate.
Even with those purchases, the Broncos still need some land from Denver Water’s campus next door to Burnham Yard, and the two sides have been discussing the matter for more than a year via frequent meetings.
“At this time, Denver Water is just exploring some voluntary acquisitions of properties near our Operations Complex to meet future operational needs. There are no set plans, as we are only evaluating potential options for the future,” said Travis Thompson, a communications manager with Denver Water.
Denver Water hasn’t acknowledged that it will need the parcels, which cover approximately 18 acres, to replace land it may sell to the Denver Broncos. And it has repeatedly emphasized the “voluntary” aspect of its purchase requests, which in the case of the Latino Cultural Arts Center’s Las Bodegas campus at 1935 W. 12th Ave. resulted in a rescinded offer to purchase its parcel.
Attorneys contacted said they expect the “notice of intent to acquire” letters that went out in April and May could eventually lead to a “petition for immediate possession” for owners who refuse the initial offer, which would start the formal eminent domain process.
“You have to send somebody that notice. It gives the landowner the chance to plan,” said Don Ostrander, an attorney with Hamre, Rodriguez, Ostrander & Prescott in Englewood who has worked on some of the state’s highest profile condemnation cases, including the assembly of land for Coors Field, RTD’s FasTracks project and E-470.
Appraisals are the next step. Denver Water has determined what it considers a fair value, and property owners are entitled to obtain an appraisal at the utility’s expense, essentially a second opinion.
“Most of the properties will be acquired through negotiation, but not all of them,” Ostrander said.
Owners near retirement, or who face costly repairs or clean-up to sell, or who aren’t up for a legal battle, may take an offer they find agreeable enough and call it a day. Others may push for a higher price or not want to sell.
Denver Water, despite the claim of everything being voluntary, has the ability to force a sale on those who refuse to reach terms, real estate attorneys said. Whether the utility has solid legal standing to do so is another matter.
“You can’t condemn property for an entity that doesn’t have the power to condemn,” Ostrander said. “They have to be careful about using it or they will put themselves at risk that someone says there isn’t a public purpose.”
A key question the courts may be asked to decide is if Denver Water would be acquiring the land in question absent a sale of land it currently owns to facilitate the development of a new stadium.
“The key issue comes down to whether this is for public infrastructure or deemed to benefit a private party. Colorado state law is pretty clear on that,” said Peter Towsky, a partner at Robinson & Henry in Highlands Ranch. “There is a potential trial awaiting each of these eminent domain takings.”
If Denver Water acquires land to replace land that will be sold to the Denver Broncos, a private party, it is violating Colorado’s rules on eminent domain actions, Towsky said.
“There are some seemingly legitimate questions that could be raised in a challenge over this,” he said. “The leverage lies with the property owners. If they challenge any of this in court, the public use aspect, that will delay things significantly.”
Richard B. Collins, an emeritus professor at the University of Colorado Law School and expert on eminent domain, however, said a judge could decline to link the two actions. Denver Water is within its rights to sell land it owns, and it can use eminent domain to acquire land that it needs.
“The courts could reject the claim by deeming the two parts of the plan as separate, so that Denver Water’s condemnations stand alone and are valid. The 2006 statute could be avoided by finding that the proposed scheme is not urban renewal,” he said.
Courts have been generous in defining what is of public purpose, and could declare that retaining the Broncos in Denver serves a public purpose, he said. And it will be hard to argue that Denver Water isn’t using the land it acquires for its campus, a public use.
“For these reasons, I think it likely that the courts would not invalidate the scheme. But I could be wrong,” he said.
Colorado tough on takings
Colorado tightened its standards on eminent domain after the Arvada Urban Renewal Authority used a blighted designation to claim a privately-owned and spring-fed lake that was popular with locals. The plan was to fill the lake in and use it as a truck turnaround for a new Walmart.
The Colorado Supreme Court ruled in 2004 that economic dissatisfaction didn’t justify taking private property and that the condemnation was not permissible under urban renewal laws. Private property advocates in the state sought stronger safeguards in 2005, when the U.S. Supreme Court ruled in Kelo vs. City of New London that eminent domain could be used for economic development purposes.
The Colorado legislature in 2006 responded by passing a bill that prohibited takings solely for economic development purposes and required clear and convincing evidence of blight before private property can be condemned for redevelopment.
Retired Grand County Republican State Rep. Al White, a sponsor of that bill, said that Denver Water may be crossing a line if it resorts to eminent domain in a way that benefits the Broncos, who don’t have that power. Its approach is subtle, not flagrant, but in his view violates the protective intent of the legislation passed nearly two decades ago.
“If they go the eminent domain route to acquire property after selling to a private for-profit entity, that would seem to tip-toe across the line of what my bill was designed to do, i.e. prevent public takings for the benefit of private profit,” White said.
Aside from the public use argument, property owners could also challenge whether the price they are being offered is fair, the most common point of contention in eminent domain disputes.
BusinessDen in June reported that LLCs affiliated with the Denver Broncos assembled more than a dozen parcels near Burnham Yard. Some of the purchases carried premiums at two to three times the going rate of prior sales, which will make it harder for Denver Water to replace whatever land it gives up.
For example, Golden developer Jeff Shanahan paid $5.75 million for a building on 1.4 acres at 1530 W. 13th Ave. in March 2023. Backed by a loan from Denver, he planned to build affordable housing. But in January, an LLC affiliated with the Denver Broncos offered him more than double what he had paid — $12.5 million.
Owners want the “Broncos” price, not the “market” price that Denver Water calculated, and many are expected to hire appraisers to determine a value that reflects those purchases, sources familiar with the matter said.
Complicated land transactions involving multiple parcels typically have some holdouts, Ostrander said. That was the case with Coors Field, when Mary Siiro and the Cowperthwaite family fought hard to retain their parcels for as long as they could. The legislature restored eminent domain powers to sports districts, including the Denver Metropolitan Major League Baseball Stadium District, allowing the project to move forward.
The Broncos, however, are expected to independently fund any new project rather than using a stadium district. That puts them in a better position to control the surrounding development and avoid the complications of partnering with taxpayers. But it leaves them without a powerful tool to acquire land.
Denver Water could proceed on its current course and make any purchases without using its power of eminent domain, an approach White favors and one that would avoid a fight over public use. But it may have to pay more, which could trigger complaints that it is harming customers to benefit a sports franchise. Or the Denver Broncos, with their deeper pockets, could also step in, buy up the land, and arrange a swap.
Landowners who can find a way to hold out could realize substantially higher values in five to 10 years as the area redevelops, Towsky said. But if the Broncos find it too difficult to assemble the land needed, they may pursue other options, including staying at Empower Field’s current location.
Breaking up a campus
Burnham Yard is a brownfield site, and the contamination from decades spent as a railroad repair yard will need to be cleaned up. But the surrounding parcels, including the ones that Denver Water wants, aren’t officially blighted. They may not all look pretty, but aside from a few vacant lots and empty buildings slated to become apartments, most remain productively employed.
Tenants include HVAC and roofing contractors, a treatment center, a janitorial firm, a lighting supplier, an oil and gas company, and a distributor of trampolines. Most of the buildings were built in the 1950s, 60s and 70s, and a couple in the 1980s. The oldest, 1340 Umatilla St., dates to 1910.
“I suspect they will be successfully able to argue the case and purchase,” said Vivek Sah, director of the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver’s Daniels College of Business, said of Denver Water’s efforts.
It is one thing if a public entity tried to condemn land in a productive area like Cherry Creek, and another in a tired industrial zone that could use a new lease on life. Too many interests are aligning in support of a new stadium at that location, Sah said.
Tenants typically receive assistance with moving expenses and owners, if they build a strong case on valuation, can likely achieve a price that works for them. Foster said the area, with or without a stadium, is changing rapidly and is ripe for redevelopment.
But owners and tenants alike will likely struggle to replace what they are giving up in terms of highway access, central location and lower cost. Many could find themselves pushed outside Denver city limits.
Denver Water also faces significant trade-offs if it splits up its contiguous campus and moves some of its operations into the surrounding neighborhood, where cross streets and traffic will reduce the privacy and undisturbed access it now enjoys.
“It would be difficult. It’s probably not ideal. But nothing is as ideal as where they are now,” said Jim Lochhead, former CEO of Denver Water from 2010 to 2023.
Building a unified campus cost more than $200 million and years of planning to pull off. The main headquarters was completed in December 2019, right ahead of the pandemic.
Letting it go will not be easy, but Lochhead also acknowledged that the stadium and the redevelopment of the surrounding area presents an important economic driver for Denver. A new stadium has become a top priority for Mayor Mike Johnston, and Gov. Jared Polis is involved in the talks to sell Burnham Yard.
“It would be too bad for Denver Water to give up that campus or a portion of that campus, but it’s something that I think is for the good of the community, as long as Denver Water is kept whole and its customers are kept whole,” he said.
Denver Post reporter Elliott Wenzler contributed to this report.
