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Lawsuit Seeks to Allow Taxpayers Right to Vote on Stormwater Fee
DENVER (August 29, 2013) Stop Stormwater Utility Association (SSUA) and individual taxpayers represented by the national law firm Polsinelli PC today filed a lawsuit in Adams County District Court against Adams County and its Board of County Commissioners seeking to hold the County’s stormwater fees unconstitutional. Plaintiffs (SSUA and the taxpayers) seek enforcement of the Taxpayer’s Bill of Rights of the Colorado Constitution (the “TABOR Amendment”) and allege the County’s imposition of a stormwater “fee” is a veiled attempt to avoid the required public vote for new taxes under TABOR. The citizens of Adams County have joined together in an effort to eliminate this illegal “Rain Tax” and are asking the County Commissioners to provide the taxpayers their constitutional right to vote on any new taxes imposed. A copy of the Complaint can be found on SSUA’s website at www.StopRainTax.com. Background Info: Plaintiffs understand storm drainage infrastructure needs maintenance, rehabilitation and eventually replacement. What is at issue in this case is whether Adams County (Defendants) can violate constitutional requirements to accomplish these tasks. TABOR requires a vote of the people before the State or any local government may create new debt, levy new taxes, increase tax rates, or institute tax policy changes directly causing a net tax revenue gain. Without a vote of the people, Defendants have levied a tax on the residents of unincorporated Adams County in relation to an unnecessary stormwater utility “fee.” The Association’s lead counsel, Sean R. Gallagher, said: “The issue in this case is whether the Adams County Commissioners should be allowed to circumvent the requirement that all new taxes be approved by the people by simply characterizing these new charges as fees.”The newly imposed stormwater utility was adopted by the County Commissioners in September 2012, for implementation in January 2013. The stormwater fee was placed on property owner’s 2012 “property tax statements.” In meeting minutes uncovered from a 2010 meeting between Adams County and AMEC (the environmental consulting company the county hired on a “sole source” bid for $650,000), the document states “the stormwater fees if added to the property tax statements may not produce high customer service complaints and associated costs because it won’t be ‘highly noticeable’ since property taxes are likely to decrease and the total due on the statement may not increase. This is the way it was done in Arapahoe County and a relatively small percentage of people ‘noticed’ it and ‘complained’ about it.” Plaintiffs believe this was a calculated attempt to keep these illegal fees hidden from the general public so the County would not encounter citizen pushback. Plaintiffs believe 40-50% of the property owners within the “service fee area” still remain unaware these new taxes are being imposed on them.

As a result of this unnecessary utility, Adams County planned to extract an additional $5.1 million from the taxpayers within the unincorporated area costing some businesses over $20,000 in new taxes. This new tax also affects nonprofits, schools, and churches. Adams County already has one of the highest unemployment rates in the State of Colorado. With the economy struggling to recover, implementation of this new tax will only discourage businesses from job creation. Due to overwhelming citizen pushback, the Commissioners placed a temporary cap on the stormwater taxes for the 2013 tax year. Plaintiffs believe this was only an attempt to appease the citizens and silence their opposition. Adams County represented to the public that a “stormwater utility fee” was necessary in order to generate revenues for their efforts to comply with federal mandates from the U.S. EPA and the federal Clean Water Act, and further represented “non-compliance” with the EPA Clean Water Act regulations would result in fines ranging from $10,000 to $25,000 per day. In a nearly identical case, on August 1, 2013, the Michigan Court of Appeals ruled in favor of similar plaintiffs, calling “stormwater utility fees” an illegal tax the citizens did not get to vote on. The State of Michigan has very similar laws as Colorado’s TABOR amendment in protecting citizen’s constitutional right to vote. For more information: Plaintiffs created a website called www.StopRainTax.com to provide education and organize. SSUA has over 1,000 members and counting and nearing 100,000 hits to its website. Immediate questions can be directed to: Stan Martin - (SSUA President) info@stopraintax.com (303) 875-1022 Legal Counsel for the Association: Sean R. Gallagher, Polsinelli PC, sgallagher@polsinelli.com, (720) 931-1163 Richard M. Murray, Polsinelli PC, rmurray@polsinelli.com, (303) 583-8242
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Gary Mikes (SSUA Treasurer) gary@garymikes.com (303) 475-0413

DISTRICT COURT, ADAMS COUNTY, STATE OF COLORADO Court Address: 1100 Judicial Center Drive Brighton, CO 80601 Plaintiffs: STOP STORMWATER UTILITY ASSOCIATION, a Colorado unincorporated association; STAN MARTIN, GARY MIKES; GERALD SCHROEDER; and THEODORE STALLONE. v. Defendants: ADAMS COUNTY; BOARD OF COUNTY COMMISSIONERS OF ADAMS COUNTY; EVA J. HENRY, in her official capacity; CHARLES TEDESCO, in his official capacity; and ERIK HANSEN, in his official capacity. Attorneys for Plaintiff Sean R. Gallagher (#16863) Richard M. Murray (#38940) POLSINELLI PC 1515 Wynkoop St., Suite 600 Denver, CO 80202 Phone Number: (303) 572-9300 sgallagher@polsinelli.com rmurray@polsinelli.com COMPLAINT

▲ COURT USE ONLY ▲ Case No.

Division

Plaintiffs STOP STORMWATER UTILITY ASSOCIATION, a Colorado unincorporated association, STAN MARTIN, GARY MIKES, GERALD SCHROEDER, and THEODORE STALLONE (collectively, “Plaintiffs”), by and through counsel, POLSINELLI PC, for their Complaint against the Defendants, state and allege as follows: INTRODUCTION 1. This is a cautionary tale about a local government exceeding its power to tax its residents by disguising the tax as a service fee. The Board of County Commissioners for Adams County formulated a revenue generating measure to tax stormwater. In a talking points paper, the Board was advised that the measure presented them with the following “cons:” first, it could affect the electability of the Commissioners; and second, the public would likely vote against the tax. Therefore, Adams County, through its County Commissioners, decided to impose the tax

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without a public vote by labeling it as a “fee.” Defendants’ unconstitutional taxation should not stand. This new tax is not based on any rational, fair, or proportionate means, calculations, or services in return to the taxpayers. The tax is nothing more than a veiled attempt to shift around general fund money and tax the property owners of unincorporated Adams County for the water that falls from the sky, regardless of the actual amount of runoff from those properties. 2. Plaintiff seeks enforcement of the Taxpayer’s Bill of Rights of the Colorado Constitution (“TABOR”). Colo. Const. art. X, § 20. TABOR requires a vote of the people before the State or any local government may: create new debt, levy new taxes, increase tax rates, or institute tax policy changes directly causing a net tax revenue gain. Without a vote of the people, Defendants have levied a tax on the residents of unincorporated Adams County in relation to an unnecessary stormwater utility “fee.” By levying a tax without a vote of the people, Defendants violated the rights of Plaintiffs and the registered voters of Adams County to vote on the imposition of new taxes, as guaranteed by TABOR. Plaintiffs therefore seek declaratory and injunctive relief to abate and correct Defendants’ unconstitutional actions. JURISDICTION AND VENUE 3. This Court has jurisdiction over Plaintiffs’ claims for relief pursuant to the Colorado Constitution, article VI, section 9, and article X, section 20. 4. Venue is proper under Colorado Rule of Civil Procedure 98(b)(2) in any jurisdiction where Defendants or their agents engage in unconstitutional taxation or debt creation. PARTIES 5. Plaintiff Stop Stormwater Utility Association (“SSUA”) is a nonprofit, publicinterest, unincorporated membership association located in Adams County, Colorado. SSUA was formed to educate the public as to the improper levying of the stormwater utility tax in Adams County without a vote of the residents of the county. SSUA has members who are registered to vote in Adams County, own real property in Adams County, and who are subject to the imposition of the stormwater utility tax. 6. Plaintiff Stan Martin is a third generation resident of Adams County, a registered voter, and property owner in unincorporated Adams County, residing at 10700 East 157th Court, Brighton, Colorado 80602. 7. Mr. Martin received an initial stormwater tax bill of $702.98 included with his 2012 property tax statement. Mr. Martin involuntarily paid this amount from his escrow account automatically through his mortgage lender. Mr. Martin appealed the tax assessment. Mr. Martin later received a letter from the Neighborhood Services Department, Stormwater Management Division advising that his stormwater tax would be $83.00 for 2013.

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8. Mr. Martin’s mortgage company has increased his monthly payments due to the original $702.98 tax amount having been assessed. Because Mr. Martin’s escrow account did not have sufficient funds for the improper stormwater tax, with an excessive amount to boot, his mortgage company increased his monthly payments from $1,562.42 to $1,712.57, resulting in a financial hardship on him and his family. 9. Mr. Martin’s property is approximately 2.5 acres with a 3% to 4% grade sloping directly into a 1.5 to 2 acre size retention pond. Rainfall, stormwater, and snow melt runs off the property into the retention pond, thereby eliminating or drastically reducing the amount of water that leaves his property. The retention pond was specifically built for the purpose of collecting neighborhood stormwater runoff. Stormwater from approximately twenty houses in the neighborhood drain into the retention pond through a series of open ditches and culverts. 10. Plaintiff Gary Mikes is a resident, registered voter, and property owner in unincorporated Adams County, residing at 8181 East 123rd Avenue, Brighton, Colorado 80602. 11. Mr. Mikes owns three properties in unincorporated Adams County, one of which is an industrial property with a stormwater tax of $107.00. This industrial property is situated below the Commerce City street level that has no curbs or gutters. The stormwater runoff from Commerce City flows onto Mr. Mikes’s property and he manages and stores it. The stormwater flowing onto Mr. Mikes’s property does not leave his property and does not contribute to stormwater in the Adams County stormwater system. 12. Mr. Mikes’s residential property was assessed with a stormwater tax of $158.06. The property is a rural horse property of 2.5 acres that is mostly grass and dirt. 13. Plaintiff Gerald Schroeder is a resident, registered voter, and property owner in unincorporated Adams County, residing at 3851 Imboden Road, Watkins, Colorado 80137. 14. Mr. Schroeder is a retired farmer. He received three different stormwater tax statements, each with a different tax amount. Mr. Schroeder has paid the balance on the latest tax statement. Mr. Schroeder’s property has a network of water tanks for stormwater, thereby eliminating or drastically reducing the amount of stormwater that leaves his property. 15. Plaintiff Theodore Stallone is a resident, registered voter, and property owner in unincorporated Adams County, residing at 15675 Elk Circle, Brighton, Colorado 80603. 16. Mr. Stallone received a property tax statement that included a stormwater tax invoice requiring payment. After Mr. Stallone contested the stormwater tax, the County reduced the tax statement amount. Mr. Stallone has not paid the tax and has received a notice for the tax amount plus interest.

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17. Defendant Adams County is a governmental body organized to provide local governance for the County of Adams, Colorado. It is a local government as defined by Colo. Const. art. X, § 20(2)(b). 18. Defendant Board of County Commissioners of Adams County is the constitutional governing board of officers for Adams County, Colorado. 19. Defendant Eva J. Henry is a member and chairperson of the Board of County Commissioners of Adams County and is responsible with the other County Commissioners for governing Adams County. In that capacity, she is currently enforcing the policies and tax complained of in this action and is sued in her official capacity. 20. Defendant Charles “Chaz” Tedesco is a member of the Board of County Commissioners of Adams County and is responsible with the other County Commissioners for governing Adams County. In that capacity, he is currently enforcing the policies and tax complained of in this action and is sued in his official capacity. 21. Defendant Erik Hansen is a member of the Board of County Commissioners of Adams County and is responsible with the other County Commissioners for governing Adams County. In that capacity, he is currently enforcing the policies and tax complained of in this action and is sued in his official capacity. STATEMENT OF FACTS 22. On November 3, 1992, Colorado voters approved TABOR, an amendment to the Colorado Constitution that circumscribes the revenue, spending, and debt powers of state and local governments. 23. TABOR requires a vote of the people before a local government may levy any new taxes, increase tax rates, or institute tax policy changes directly causing a net tax revenue gain. Colo. Const. art. X, § 20(4)(a). 24. Defendant Adams County is subject to TABOR’s voting requirements.

25. Defendants have levied a stormwater utility fee (“stormwater tax”) imposed on and required to be paid by property owners in unincorporated Adams County based upon the amount of square feet of impervious surface. 26. on zoning. The stormwater tax has temporarily been set at a disproportionate flat rate based

27. Adams County already had an existing stormwater management program before the imposition of the new stormwater utility tax at issue in this action. Upon information and belief, this prior program was financed with general fund monies. Adams County represents on

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its website: “Adams County does have an existing stormwater management program. However, a recent study identified a number of stormwater management measures that Adams County must implement to comply with EPA regulations. This includes increased maintenance of the stormwater system, the construction of significant new stormwater infrastructure, the repair of existing systems, and additional activities required by the EPA.” 28. The Environmental Protection Agency (“EPA”) has not imposed or required “additional activities” as represented by Defendants. 29. Before imposing the stormwater tax, the Adams County Board of County Commissioners hired AMEC Earth & Environmental (“AMEC”) to assist with its efforts in forming a stormwater utility and to consult on the implementation of the tax. 30. Adams County has continued its relationship with AMEC and is still paying AMEC for its services. To date, approximately $650,000 has been paid by Adams County to AMEC. 31. Upon information and belief, Defendants decided to attempt to recover monies allegedly to be expended on stormwater remediation by imposition of a “fee” rather than a “tax” because they knew that, under TABOR, imposition of a tax would require a vote of the people of Adams County. AMEC assisted in that effort. 32. In a December 2011 talking points memorandum for a meeting with Jim Robinson, the County Administrator of Adams County, the pros and cons of the timing for the stormwater tax being included on the January 2013 versus January 2014 tax statements were described under the scenarios of “assume no public vote” and “assume a public vote.” The first “con” under the “assume a public vote” and the bill starting in January 2014 is stated as: “The stormwater utility will most likely fail to pass a public vote.” Therefore, the first and foremost reason against holding a public vote on the stormwater tax was that Defendants knew that it would “most likely fail.” 33. In the December 2011 talking points memorandum, one of the “pros” identified by AMEC is that: “Vote will provide definitive direction for implementing or not implementing a stormwater utility.” However, Defendants ignored this positive aspect of holding a public vote and proceeded with the imposition of an unlawful tax because they knew that the measure would not survive a public vote. 34. In the December 2011 talking points memorandum, the first “con” under the “assume no public vote” for bills starting in January 2013 is: “May impact re-election of Commissioners.” The first “pro” under “assume no public vote” for bills starting in January 2014 is: “Will not impact re-election of Commissioners as much.” Therefore, the main concern about implementing the tax without a public vote was the electability of the County Commissioners.

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35. The stormwater tax is assessed on each property owner based on an estimate of the hard surface/impervious surface area of the property multiplied by the tax amount ($0.00167 per square foot of impervious surface). It is arbitrarily assessed on all property owners in unincorporated portions of Adams County, west of Shumaker Road, without regard to drainage or topography. 36. Adams County represented to taxpayers in its “pre-notification of fees” the following: “The annual Stormwater Utility fee is based on a charge of $0.00167 per square foot of impervious developed land on property owned in unincorporated Adams County that produces water runoff from rain or snow melt. Examples of impervious property include paved surfaces such as driveways and roof tops. All property owners will receive a bill for their Stormwater Utility fee as a line-item assessment on their annual property tax statement, beginning in January 2013.” 37. Defendants represents to the public that a stormwater utility fee was necessary in order to generate revenues for their efforts to comply with federal mandates from the U.S. Environmental Protection Agency and the federal Clean Water Act. Defendants included these representations in publications advocating for the necessity of a new stormwater utility fee. 38. Adams County represents to the public: “The EPA’s Clean Water Act regulations require Adams County to implement a stormwater quality management program. The program includes storm sewer systems for capturing and treating stormwater before it damages rivers, lakes and streams. The EPA regulations also mandate measures to decrease water pollution through increased maintenance of stormwater drainage systems, detecting and eliminating illicit discharges, controlling construction site runoff and implementing best management practices.” 39. Adams County further represents to the public: “Non-compliance with EPA Clean Water Act regulations can result in large fines for Adams County and, in certain instances, individual property owners.” 40. Adams County further represents to the public: “A recent study identified a number of stormwater management measures that Adams County must implement to comply with EPA regulations. This includes the construction of major storm sewers and channels, water quality ponds and associated infrastructure. Maintenance of existing infrastructure and new capital investments are also critical for compliance with the stormwater management plan.” 41. Defendants created the “Adams County Stormwater Utility” in order “to plan, fund, construct, acquire, operate, and maintain drainage and flood control facilities as well as to manage stormwater quality and comply with the unfunded mandates and regulatory requirements of the National Pollutant Discharge Elimination System (‘NPDES MS4 Stormwater’) within its service area (hereinafter the ‘Purposes’) . . . .”

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42. “Adams County, in an adopted resolution by the Board of County Commissioners, established the Adams County Water Activity Enterprise within its service area of the County to carry out those Purposes . . . .” 43. Upon information and belief, the federal government, including the EPA, never demanded, threatened, required, mandated or otherwise regulated Adams County for the purpose of stormwater management as was represented by Defendants. 44. The EPA does not have regulatory authority over stormwater runoff as a pollutant in Adams County. 45. Defendants represented to the public that a “bare minimum” of $5.1 million was needed for the Adams County stormwater program to operate. Defendants represented that the “general fund is insufficient to cover stormwater program costs” and that due to revenue streams having dropped, a new “fee” was necessary to implement the “stormwater utility.” The stormwater tax was expected to raise approximately $5 to $6 million per year. These are some of the arguments made by Defendants in support of imposing the stormwater tax on unincorporated Adams County property owners. 46. The “Mission Statement” for the “utility” is represented on the Adams County website as follows: The mission of the Adams County Stormwater Utility is to improve water quality and flood protection by increasing public awareness of stormwater issues and implementing stormwater drainage system maintenance and improvements, with benefits for public health, private property, the natural environment, and economic development. Adams County recently adopted a Stormwater Utility to address water quality regulations, capital improvement drainage projects and flooding to the maximum extent practicable. Often drainage problems are not easily attributed to a single source, and are usually the result of a combination of things that increase the amount of impervious surfaces (roads, driveways, and development) and affect water quality (erosion, fertilizers, and petroleum products). 47. The Adams County website represents: “The monthly stormwater utility fee will be based on the amount of impervious developed area on your property that creates runoff into the stormwater drainage system.” And, the “Adams County Stormwater Utility Fee will . . . Treat all properties equally.” Currently, the stormwater tax has temporarily been set at a disproportionate flat rate based on zoning. 48. The Adams County website further states: “Governments can use tax revenue for any government activities if there is no direct correlation between the tax rate and taxpayer’s impact or use of government services. On the other hand, governments charge user fees to

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defray the cost of a particular government service, such as stormwater drainage. The fee is based on the impact of that individual property. In this case, the increased runoff from developed property.” However, the stormwater tax is not based on the impact of individual properties or the runoff from individual developed properties. 49. Adams County represents that the stormwater tax is actually “calculated based on a customer’s impact to the stormwater system” and that it is a “user-fee or fee-for-service.” Again, the stormwater tax is not based on customer impact and is currently assessed disproportionately on zoning classifications. 50. To the contrary, the stormwater tax does not correlate to a property owner’s impact on the stormwater system and the characterization of the tax as a “user-fee or fee-forservice” is improper. There is no “user” aspect present. There is no requested “service.” The “fee” is a tax to offset general fund monies. 51. The manner, method, and property owners that the stormwater tax has been levied against are not reasonably related to the purported purpose of the stormwater tax. The stormwater tax is not rationally related to the level, if any, of service provided to the taxpayers. 52. The stormwater tax is being levied and imposed on property owners that have spent significant funds, time, and effort to install and maintain private stormwater remediation. Taxpayers who own real property with impervious surfaces are being required to pay a tax for stormwater that is not producing water runoff into the county stormwater system. 53. Upon information and belief, the stormwater tax revenues are also being used by Adams County for general fund purposes separate and distinct from “stormwater” purposes, including but not limited to general public works tasks such as street sweeping. 54. Upon information and belief, planned capital projects and projects underway are funded with the stormwater tax revenue; including the Clay Street Outfall project which is related to, concerns, and should be under the scope of RTD FasTracks. 55. Like a property tax, the County Treasurer must collect the stormwater tax from property owners. 56. The stormwater tax proceeds fund a stormwater utility in Adams County that was previously funded with only general fund monies. The stormwater tax is being levied to offset the amount of general fund monies paid for stormwater projects in Adams County. Adams County represents on its website: “A stormwater utility will provide the financial resources to cover these costs, protecting general fund dollars that fund other important Adams County services, such as parks, human services programs and transportation programs.” 57. Under section 37-45.1-103, C.R.S., any water activity enterprise established or maintained pursuant to that article is excluded from the provisions of TABOR.

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58. A “water activity enterprise” is defined by section 37-45.1-102, C.R.S., as any government water activity business owned by a district, which enterprise receives under 10% of its annual revenues in grants from all Colorado state and local governments combined. However, under section 37-45.1-103, no enterprise may levy a tax that is subject to section 20(4) of article X. 59. TABOR defines an “enterprise” as “a government-owned business authorized to issue its own revenue bonds and receiving under 10% of annual revenue in grants from all Colorado state and local governments combined.” Colo. Const. art. X, § 20(2)(d). 60. Upon information and belief, the Adams County Stormwater Utility is receiving or will receive more than 10% of its revenues from government sources. Therefore, the utility is not a “water activity enterprise” covered by the TABOR exemption. 61. Upon information and belief, the Adams County Stormwater Utility has or is planned to receive additional monies from the Urban Drainage and Flood Control District (“UDFCD”) to contribute towards stormwater infrastructure projects in Adams County, thereby exceeding the 10% limit on annual government revenues. 62. Upon information and belief, the Adams County Stormwater Utility has or is planned to receive additional monies from the county general fund to contribute towards stormwater infrastructure projects in Adams County, thereby exceeding the 10% limit on annual government revenues. 63. In an October 6, 2008 Adams County Stormwater Funding Study Phase 1 report, under the “Rate and Revenue Estimates” section, it provides: “There are several options for the sources of the projected needs. In addition to a stormwater enterprise, other funds may be used to reach the $10.9M budget. Options include the General Fund, Road & Bridge Funds, and the UDFCD.” 64. The October 6, 2008 report describes different options for funding. Under one option where the stormwater tax generates $6.95 million, it “will decrease the general fund contribution from $4.3M to $2.15M. This option frees up $2.15M (half of the general fund contribution) for other uses the County deems appropriate, including other departments such as fire, police, or libraries.” Under a scenario where the tax generates $9.1 million, the general fund contribution is eliminated, thereby freeing up $4.3 million “for other uses and departments the County deems appropriate.” Neither of these revenue generating options has occurred. Nevertheless, even under the first option, more than 10% of funding for the stormwater utility would have to come from government sources. 65. Adams County has represented that a $10.9 million annual budget is required for stormwater projects. Adams County has represented that the bare minimum annual budget needed is $5.1 million. The initial $5 to $6 million projected annual revenues from the stormwater tax have been lowered due to a cap on fees instituted by Adams County. According

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to the Adams County website, with fee caps in place, Adams County expects to collect just over $2.2 million in annual revenue to offset a portion of the $376 million in identified in stormwater infrastructure projects. 66. Therefore, $2.2 million will be generated in annual revenues but there will be a budget shortfall of at least $2.9 million to $8.7 million depending on whether a $5.1 million or $10.9 million annual budget for stormwater projects is used. Either way, more than 10% of the revenue required for the utility will have to come from non-stormwater tax sources. Upon information and belief, these additional revenues will be from other government monies in violation of the 10% TABOR requirement. 67. Thus, the amount of the tax is not reasonably related to the cost of the services being provided, nor is the tax assessed to finance a particular service by those who are required to pay the tax. 68. Further, the stormwater program is being managed by the Adams County Public Works Department and/or the Neighborhood Services Department; not a standalone utility enterprise. 69. Thus, the Adams County Stormwater Utility created by Defendants for the purpose of the stormwater tax does not create an exemption to TABOR’s voter approval requirement as alleged throughout this Complaint. 70. The stormwater tax levied by Defendants is a tax subject to TABOR’s requirement that a public vote be taken before it is levied or increased. Colo. Const. art. X, § 20(4)(a). 71. The stormwater tax levied by Defendants is also subject to TABOR’s requirement that a public vote be taken before it is enacted because it is a tax policy change resulting in a net revenue gain to Adams County. Colo. Const. art. X, § 20(4)(a). 72. No public vote seeking approval of the stormwater tax was held before Defendants levied the tax. 73. Upon information and belief, Defendant imposed the stormwater tax as a “fee” because they knew that a ballot measure for the stormwater tax would fail and not be approved by the voters. 74. The stormwater tax was imposed by Defendants for the principal purpose to raise revenues for general county fund purposes, rather than to defray the expenses associated with stormwater. 75. SSUA members registered to vote and who own real property in Adams County, including the individual Plaintiffs, have been forced to pay the stormwater tax.

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76. SSUA members and the individual Plaintiffs have derived no direct benefits from the stormwater taxes that they have paid. 77. TABOR guarantees these members’ and Plaintiffs’ right to vote before Defendants may levy new taxes, increase tax rates, or institute tax policy changes directly causing a net tax revenue gain. Colo. Const. art. X, § 20(4)(a). 78. All real property owners in unincorporated Adams County who own property with any impervious surface have been assessed and pay the stormwater tax regardless of whether any stormwater runs off of their property, whether they have private stormwater mitigation systems in place, or whether any stormwater projects or services will benefit their property. CLAIM FOR RELIEF (Unconstitutional Taxation) 79. Plaintiffs hereby incorporate all of the allegations in the preceding paragraphs as if fully stated and alleged herein. 80. TABOR requires a vote of the people before a local government may levy new taxes; increase tax rates; or institute tax policy changes directly causing a net tax revenue gain to any district. Colo. Const. art. X, § 20(4)(a). 81. Defendant Adams County is subject to TABOR because it is a local government that is authorized to levy taxes and that has levied a tax on stormwater. 82. The Adams County Stormwater Utility created by Defendants for the purpose of the stormwater tax fall within the “water activity enterprise” exemption in TABOR. 83. The stormwater tax levied by Defendants is subject to TABOR’s requirement that a public vote be taken before it is levied or increased. Colo. Const. art. X, § 20(4)(a). 84. tax. 85. The stormwater tax levied by Defendants without a vote of the people violates TABOR and is, therefore, unconstitutional. 86. Plaintiff SSUA and its members, and the individual Plaintiffs, have been forced to pay the unconstitutional stormwater tax levied by Defendants without the opportunity to vote. 87. Plaintiffs are therefore entitled to declaratory and permanent injunctive relief against continued enforcement and maintenance of the stormwater tax, until such time as Defendants receive voter approval for the stormwater tax, as required by TABOR. No public vote has been held that authorized Defendants to levy the stormwater

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88. Plaintiffs are further entitled to an order refunding to all taxpayers, including Plaintiff SSUA’s members, all revenue collected, kept, or spent unconstitutionally since the implementation of the stormwater tax, with ten percent annual simple interest calculated from the date of the initial unconstitutional conduct. Colo. Const. art. X, § 20(1). PRAYER FOR RELIEF WHEREFORE, Plaintiffs respectfully request that this Court: 1. Issue a preliminary and permanent injunction declaring that the stormwater tax levied by Defendants without voter approval violates Colo. Const. art. X, § 20 and is therefore unconstitutional, and enjoining collection of said taxes; 2. Issue a final judgment declaring that the stormwater tax levied by Defendants without voter approval violates Colo. Const. art. X, § 20 and is therefore unconstitutional; 3. Issue an order holding unconstitutional and setting aside the stormwater tax;

4. Issue an order directing Defendants to refund all revenue collected, kept, or spent unconstitutionally since the implementation of the stormwater tax, with ten percent annual simple interest calculated from the date of the initial unconstitutional conduct, as required by Colo. Const. art. X, § 20(1); 5. Award Plaintiffs their costs and attorneys’ fees in accordance with law, including Colo. Const. art. X, § 20(1); and 6. Award any other further relief this Court deems just and appropriate.

DATED this 29th day of August, 2013. Respectfully submitted, POLSINELLI PC

s/ Sean R. Gallagher Sean R. Gallagher (#16863) Richard M. Murray (#38940) Attorneys for Plaintiffs

Plaintiffs’ Addresses: SSUA, 8181 East 123rd Ave., Brighton, CO 80602 Stan Martin, 10700 East 157th Ct., Brighton, CO 80602

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Gary Mikes, 8181 East 123rd Ave., Brighton, CO 80602 Gerald Schroeder, 3851 Imboden Rd., Watkins, CO 80137 Theodore Stallone 15675 Elk Cir., Brighton, CO 80603

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        Stop  Stormwater  Utility  Assoc.  (SSUA)   Is  a  non-­‐partisan  grassroots  organization,  comprised  of  and  supported  by  Adams  County  residents,  property  owners,  community   members  and  businesses.     Our  Mission:   Support,  represent  and  advocate  on  behalf  of  those  individuals  whose  voting  rights  have  been  ignored  and  whose  lives  have  been   impacted  by  the  newly  implemented  storm  water  utility  ‘fee’.    We  will  accomplish  this  by  providing  a  clear  and  united  voice  to  the   taxpayers  of  Adams  County  as  well  as  our  county  officials.     Our  Goal:   Repeal  the  newly  implemented  storm  water  utility  fee,  through  all  means  necessary,  including  but  not  limited  to  education,  public   pressure,  legislative  action  and  legal  efforts.    SSUA  will  not  allow  our  local  government  to  operate  a  ‘fee  based  program’  where  the   taxpayers  have  no  choice,  no  say,  no  control  and  NO  VOTE.     ___________________________________________________________________________       Important  Info:   If  you  live  or  own  a  business  in  ‘Unincorporated  Adams  County’  west  of  Shumaker  Rd,  you  are  paying  a  ‘rain  tax’  you  did  not  vote  on.     Our  local  government  is  taking  our  money  without  our  permission  and  it  is  time  to  say  STOP!     PLEASE  log  onto  our  website  at  www.StopRainTax.com  and  enter  your  email  address  under  our  newsletter  section.    This  is  the  only   way  we  can  remain  in  contact  with  you.     In  1992,  the  citizens  of  Colorado  voted  to  approve  the  TABOR  amendment,  the  Taxpayer  Bill  of  Rights.    Colorado  Constitution  article   X,  section  20.    This  law  ensures  the  people  of  Colorado  a  vote  before  the  State  or  any  local  government  may:  create  new  debt,  levy   new  taxes,  increase  tax  rates,  or  institute  tax  policy  changes  directly  causing  a  net  tax  revenue  gain.     Yet  Adams  County  has  bypassed  the  voters,  saying  we  don’t  need  your  vote,  we  will  take  your  money  anyway!     THIS  IS  WRONG  and  must  be  stopped.    Our  organization,  on  behalf  of  all  citizens  in  Adams  County,  is  in  the  process  of  seeking  legal   action.    We  need  your  support.    Please  become  a  member  via  our  website  and  join  the  1000’s  of  citizens  deeply  concerned  over  this   issue.     Legal  action  is  our  last  resort.    It  is  truly  unfortunate  citizens  would  have  to  file  suit  against  their  own  government.    You  would  always   hope  your  elected  officials  would  listen  and  represent  the  people.    However,  despite  the  public  outcry  over  this  new  tax,  two  of  our   recently  elected  commissioners  have  ignored  the  citizens.    Instead  they  have  “hand  selected’  a  20  person  panel  to  make  decisions   for  me  and  you.    How  is  it  the  commissioners  think  20  individuals  can  adequately  represent  27,500  property  owners  living  in  the   unincorporated  area?    If  a  government  is  going  to  take  your  money,  shouldn’t  you  at  least  have  the  opportunity  to  vote  on  it?            

  Know  the  facts  /  history:   In  2007,  Adams  County  Public  Works  Director,  Lee  Essay,  hired  an  environmental  consulting  company  by  the  name  of  AMEC,  via  a   sole  source  bid,  for  nearly  ¾  million  dollars  to  the  taxpayers  to  help  implement  a  new  storm  water  utility.    Lee  Essay  is  now  in  prison   for  county  related  corruption  violations.     AMEC  recommended  placing  the  fee/tax  on  our  property  tax  statements  so  it  wouldn’t  be  “HIGHLY  NOTICEABLE”.    We  believe  a   majority  of  citizens  and  business  owners  still  do  not  know  this  additional  tax  is  being  placed  on  them.     Fees  have  certain  common  traits  that  distinguish  them  from  taxes.    They  are  ‘voluntary  or  paid  by  choice’,  in  that  the  party  paying   the  fee  has  the  option  of  not  utilizing  the  government  service  and  thereby  avoiding  the  charge.     The  new  storm  water  utility  tax  is  designed  to  extract  an  additional  $5.1  million  annually  from  the  taxpayers.           Does  the  county  really  need  more  of  our  money?  Or  is  it  just  GREED?   • Fact  1:    According  to  the  2012  Comprehensive  Annual  Financial  Report  (CAFR)  released  weeks  ago,  the  county’s   ‘unrestricted  fund  balance’  remained  at  over  $150  million.   • Fact  2:    The  county’s  net  position  increased  $9.3  million  from  the  previous  year.    This  typically  serves  as  a  useful  indicator   whether  the  financial  position  of  the  county  is  improving  or  deteriorating.     • Fact  3:    The  county’s  governmental  funds  recorded  an  increase  in  fund  balance  of  $7.7  million  from  2011.   • Fact  4:    Property  tax  revenues  are  estimated  to  increase  in  2013  by  2.1%  bringing  in  millions  more.   • Fact  5:    Sales  tax  revenue  is  projected  to  increase  approx.  10%  over  last  year  bringing  in  approx.  $3.5  million.   • Fact  6:    Adams  County  has  the  second  highest  mill  levy  property  tax  rate  in  the  state  of  Colorado.   • Fact  7:    According  to  the  2012  CAFR,  “the  financial  health  of  the  county  is  good”.   • Fact  8:    Compared  to  similar  county’s  along  the  front  range  (Pueblo,  El  Paso,  Weld,  Arapahoe,  Boulder,  Jefferson),  Adams   County  has  an  average  of  $90  million  more  in  ‘unrestricted  funds’.       Why  isn’t  the  county  being  honest  with  its  own  citizens?   • The  county’s  #1  major  selling  point  for  this  entire  stormwater  utility  has  been  this.       • “The  EPA’s  Clean  Water  Act  regulations  require  Adams  County  to  implement  a  stormwater  quality  management  program   and  non-­‐compliance  with  the  EPA  can  result  in  large  fines  from  $10,000  -­‐  $25,000  per  day”.   • HUGE  difference  between  a  ‘stormwater  management  program’  and  a  ‘stormwater  utility’.    The  county  wants  us  to  think   they  are  one  in  the  same.    WRONG!   • Fact  1:    The  county  already  has  a  ‘quality  stormwater  management  program’  since  2003  and  has  been  in  full  compliance   with  the  EPA  Clean  Water  Act  since  that  time.    Remember,  BIG  difference  between  a  ‘stormwater  utility’  and  a  ‘stormwater   management  program’.    Read  carefully!    The  county  makes  it  sound  and  wants  us  to  believe  this  new  ‘stormwater  utility’  is   required  by  the  EPA.    This  could  not  be  further  from  the  truth.    This  is  extremely  misleading  information.   • Fact  2:    The  county  has  never  been  fined  or  reprimanded  from  the  State  or  EPA,  nor  has  there  ever  been  any  threat  of  fines.     This  is  a  ‘scare-­‐tactic’  to  get  us  to  believe  the  county  will  soon  be  getting  fined  if  we  all  don’t  go  along  with  this  utility.     Again,  very  misleading  information.   • Fact  3:    The  EPA’s  Clean  Water  Act  only  regulates  areas  of  1000  people  per  square  mile  or  more.    Nearly  2/3  of  the   unincorporated  area  within  the  ‘fee  area’  DOES  NOT  fall  under  the  EPA  Clean  Water  Act.    Nathan  Moore  from  the  Colorado   Dept  of  Public  Health  and  Environment  who  spoke  at  one  of  the  meetings  stated  “this  is  an  urban  policy  and  has  little  to  no   affect  on  rural  areas”.   • Fact  4:    The  EPA’s  Clean  Water  Act  only  regulates  the  quality  of  water,  not  ‘quantity’.    This  is  important  to  note,  because  a   tremendous  amount  of  our  money  the  county  is  spending  on  storm  drainage  related  projects  has  nothing  to  do  with  the   quality  of  water,  only  quantity.    Yet  the  county  wants  us  to  believe  this  program  must  exist  because  of  the  mandated  EPA   Clean  Water  Act.    Once  again,  WRONG!      

We  need  your  help,  please  donate:       Checks  to  SSUA,  PO  Box  713,  Brighton,  CO  80601  or  via  our  website  

www.StopRainTax.com  
 

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