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A group of property owners, collectively referred to as Aranci, argued the Lower South Platte Water Conservancy District violated the Colorado Taxpayer’s Bill of Rights when the district increased its mill levy from 0.5 mill to one mill for 2020 to 2022. The Colorado Court of Appeals agreed with Aranci and reversed the district court’s judgment.
In 1996, the district fixed the rate of levy at 0.5 mill, and voters covered by the district approved Referred Measure 4D, which, among other things, set the mill levy and stated “no local tax rate or property mill levy shall be increased at any time without the prior approval of the voters of the Lower South Platte Water Conservancy District.”
The district continued to levy taxes based on that rate through 2018, but increased the rate of levy to one mill in 2019, and continued to tax at the one mill rate in 2020, 2021 and 2022.
Aranci filed a complaint in district court, including a class certification request. The complaint alleged the district’s increase in its rate of levy without voter approval was unconstitutional. Aranci sought an injunction against the district, a refund to class members and attorney fees and costs.
The district asserted a counterclaim for declaratory judgment the rate of levy of one mill levied in 2019 through 2022 and any tax years after was constitutional under TABOR.
The parties then filed cross-motions for a determination of a question of law under Colorado Rule of Civil Procedure 56(h), asking the district court to determine whether the rate of levy increase in 2019 and subsequent years was constitutional under TABOR.
The district court determined the increase was constitutional under TABOR, because the statute that controls how water conservancy districts fix their rates of levy “pre-dates TABOR” and requires the district to fix the rate of levy based on a “mandatory,” “non-discretionary formula.”
The district court also denied Aranci’s request for class certification under Rule 23(a) and entered final judgment in the district’s favor.
Aranci appealed. They argued the district court erred when it determined the increase was constitutional under Rule 65(h). Specifically, Aranci argued TABOR required voter approval before the district could fix a rate of levy above the prior years’ 0.5 mill rate of levy and the district didn’t obtain such approval.
The appeals court agreed with Aranci.
The appeals court reversed the judgment, including the denial of class certification under Rule 23, and remanded to the district court for further proceedings. The appeals court also included an instruction to the district court to determine whether the case shall be certified as a class action and whether the property owners may recover their reasonable attorney fees and costs on appeal.