November 29, 2017 News » Cover Story

Strawberry Fields' appraiser faces penalties for his work on the city's land exchange 

Value judgment

On May 9, 2016, City Council had lots of questions about the appraisal of the open space known as Strawberry Fields, the centerpiece of Mayor John Suthers' controversial land exchange with The Broadmoor hotel.

The city parks department's appraisal of the property, officially called Strawberry Hill and located along the southern end of North Cheyenne Cañon, was conducted by Kyle Wigington, who valued the 186-acre tract at $1,581,000, or 33 percent less than the $2.4 million market value assigned to the property by the El Paso County Assessor's Office.

Several councilors wanted to know why Richard Muegge, an appraiser hired by the city to review the appraisals of all nine of the land swap parcels to find if they were "appropriate and credible," called the Strawberry Fields report "inadequate."

"The language in here makes me feel really uneasy and nervous," Councilor Tom Strand said of Muegge's report.

After Council sought access to Wigington's work file and were denied by city staff — mayoral Chief of Staff Jeff Greene noted that such data "has never [been] supplied [to city officials] in the history of the city" — Councilor Don Knight was frustrated. "This is about establishing trust with the public," Knight said. "There are people here who are very energetic in their opposition to this [land exchange]. When we have this unanswered question in there, I think we're due the answer."

Muegge later talked with Wigington and obtained more information, and eventually ruled the value "appropriate and reasonable."

But questions have dogged the appraisal ever since, and on Nov. 2, the Colorado Board of Real Estate Appraisers imposed penalties against Wigington noting his Strawberry Fields work file "did not contain documentation in support of the judgments made."

Knight now says that action, while it might call into question the open space's true value, isn't enough to scotch the deal. "Council does not have the right to go back in and reopen this," he says.

In fact, it appears the only way the land swap could be derailed is through court action, and a lawsuit challenging the deal is headed for oral arguments on Jan. 9 before the Colorado Court of Appeals.

Which might explain why The Broadmoor's attorneys wrote amicus (friend of the court) briefs — legal documents filed in court cases by non-litigants with a strong interest in the matter at hand that advise the court of relevant information or arguments — on behalf of two local outdoor advocacy groups last summer and asked they be filed. Both agencies refused. An ethics expert says ghost-written briefs are frowned upon.

click to enlarge Kent Obee is a founder of nonprofit group Save Cheyenne, which has challenged the land swap in a legal action. - CASEY BRADLEY GENT
  • Casey Bradley Gent
  • Kent Obee is a founder of nonprofit group Save Cheyenne, which has challenged the land swap in a legal action.

None of this surprises long-time parks and open space advocate Kent Obee, a founding member of Save Cheyenne, the grassroots group that formed in opposition to the swap and later filed the lawsuit. "It should be made public how corrupt this was," he says of the deal. "It was corrupt on several levels."

Meantime, The Broadmoor is proceeding with a master plan for Strawberry Fields, 8.5 acres of which will be developed for a horse stable and picnic pavilion for its guests. The remainder will be open for public access under a conservation easement that calls for extensive investment by The Broadmoor.

The city introduced the land swap in a Jan. 14, 2016, news release. The proposal immediately drew opposition, and hundreds of citizens packed meetings in the ensuing months. Under the deal, The Broadmoor got Strawberry Fields and a half-acre parking lot at the base of the Cog Railway in Manitou Springs. Wigington gave the two properties a combined value of $2,257,000.

The Broadmoor's appraiser, Thomas Colon, valued the resort's seven parcels, offered in exchange, at $3.6 million. Totaling 486 acres, they include 208 acres of rugged terrain around Mount Muscoco west of Strawberry Fields, portions of the Manitou Incline and Barr Trail, easements for the Chamberlain Trail and nine acres of residential-zoned property southeast of Bear Creek Regional Park, which alone was deemed to be worth $1.4 million.

Questions arose almost immediately about the Strawberry Fields appraisal after it was released to the public in April 2016. Ordered seven months before that by the parks department, the $7,500 appraisal was labeled "restricted," a term used to describe a report that is "not appropriate for most appraisal situations due to the fact that it contains minimal details and content," according to Colorado Appraisal Consultants of Denver. "Further," the firm notes, "this report type may not be understood without additional information contained in the work file that is not transmitted in the report."

click to enlarge City Council voted 6-3 to approve the swap. Members and their votes were, back row from left, Larry Bagley (yes), Tom Strand (yes), Jill Gaebler (no), Keith King (yes), Don Knight (yes); front row, Bill Murray (no), Helen Collins (no), Andy Pico and Merv Bennett (both yes). Neither Bagley nor King sought re-election in April 2017. - FILE PHOTO
  • File photo
  • City Council voted 6-3 to approve the swap. Members and their votes were, back row from left, Larry Bagley (yes), Tom Strand (yes), Jill Gaebler (no), Keith King (yes), Don Knight (yes); front row, Bill Murray (no), Helen Collins (no), Andy Pico and Merv Bennett (both yes). Neither Bagley nor King sought re-election in April 2017.

Councilor Bill Murray took issue with that during the May 9 meeting and asked for the work file to gain a better understanding of Wigington's conclusions. But the file was withheld by the city, because the city itself wasn't given the file, which Chief of Staff Greene said during the meeting is normal procedure. He added that work files can only be released under subpoena.

Murray summed up: "We have a noncredible appraisal where we can't have access to the work papers. You are denying me the right to see the working papers that determine the credibility of the Strawberry Hill appraisal."

Unbeknownst to most at the time, a licensed appraiser in Colorado Springs filed a complaint against Wigington with the state board.

The complaint is confidential, says Colorado Division of Real Estate Executive Director Eric Turner. "We're restricted from even confirming or denying the existence of any complaint," he says.

Turner says complaints are investigated by state board staff who interview the complainant, the appraiser (known as the respondent) and others, and review documentation. The staff then recommends action to the board if any licensing laws were violated. The board makes a decision but doesn't have to notify the respondent of the meeting date on which that decision is made, Turner says.

The appraiser can either agree with the finding and sign an agreement, called a stipulation, or they can appeal the matter to an administrative law judge. Diversion, an action that allows some type of rehabilitation or education for a person who then is allowed to avoid having an offense appear on their record, isn't considered formal discipline, Turner says, so those cases aren't reported as a licensing issue on the agency's website under Wigington's name.

Board actions against appraisers are fairly rare. In 2016, 33 actions were taken, which represents about 1.2 percent of the state's roughly 2,700 licensed appraisers. Through October this year, another 33 appraisers were disciplined. The Wigington case was heard on Nov. 2, so his case isn't included in those numbers, but the board did take action.

click to enlarge City Council members raised lots of questions about Strawberry Fields' appraisal at a May 9, 2016, meeting. - PAM ZUBECK
  • Pam Zubeck
  • City Council members raised lots of questions about Strawberry Fields' appraisal at a May 9, 2016, meeting.

Wigington is highly qualified. Besides being a licensed attorney, he's done appraisal work in 12 states, served as an expert witness in real estate matters, and worked for a long list of governments. He worked on Colorado Springs Utilities' Southern Delivery System pipeline project and the city's Woodmen Road and Academy Boulevard interchange, for example.

After the Independent contacted Wigington on Nov. 15, at which time he said he was unaware of the Nov. 2 meeting of the Division of Real Estate, he called state officials to ask about the investigation. On Nov. 17, he told the Indy the state promised to send him some information. Wigington didn't discuss the particulars of his appraisal with the Indy, however.

His case was investigated by Harold Ovsiowitz and Armon Goldanloo, according the state board's agenda. No records of the investigation itself are available to the public, but during a seven-minute segment of the board's Nov. 2 meeting, a staff investigator reported that Wigington's work file lacked documentation to support his judgments when he made a comparison to other sales. Moreover, the distance between Strawberry Fields and the properties he used to compare it to weren't disclosed, and Wigington didn't provide an explanation for why. In addition, Wigington didn't provide documented support for his decision to view the property's highest and best use as park land.

Highest and best use is defined in the appraisal industry as usage of a property that is physically possible, appropriately supported, financially feasible and that results in the highest monetary value. Some observers contend that up to 30 acres of Strawberry Fields could have served as high-end homesites, consistent with some neighboring land. But Wigington notes in the appraisal, "It appears that an argument can be made the property is more valuable as a park than as a rural residential home site."

He then uses tracts located miles from Strawberry Fields, in rural areas (like Turkey Creek to the city's south) rather than urban ones to establish comparative values. Most comparison tracts used are smaller than Strawberry Fields, ranging from 18 to 94 acres, and three of the seven comparison tracts' sales dated to 2010 or earlier. Wigington made no value adjustment based on location, parcel size, topography or zoning.

The one large parcel used as a comparison was Section 16 near Manitou Springs, 640 acres purchased by the city in 2010 from the Colorado State Land Board for $3.8 million. But Section 16 is very steep, making the possibility of building on it unlikely if not impossible. By comparison, parts of Strawberry Fields contain gentle slopes that might serve as homesites.

As for highest and best use, before the land swap was finalized, real estate broker/Realtor Mike Dorsey called the Strawberry Fields appraisal "complete nonsense," and said if viewed for its development potential, the property might command as much as $50 million.

(Colon, by the way, appraised six of seven of the Broadmoor's land parcels with the highest and best use listed as park land, recreation and/or open space. The Bear Creek parcel, zoned for single family homes, was appraised as residential lots. The city, however, has no plans to build on the land and will maintain it as a park.)

In Wigington's case, the state board voted unanimously to accept the staff recommendation to impose a fine up to $500 and order Wigington to take 41 hours of education in various facets of appraisal work, such as "general appraiser, market analysis and highest and best use, documentation and recording keeping, and comparative analysis," a staff member said during the Nov. 2 meeting.

But the board also gave Wigington diversion, meaning the infraction won't be reported on the state's website under enforcement actions against licensees.

click to enlarge Strawberry Fields remains a contentious issue long after the city transferred ownership to The Broadmoor. - CASEY BRADLEY GENT
  • Casey Bradley Gent
  • Strawberry Fields remains a contentious issue long after the city transferred ownership to The Broadmoor.

Councilor Knight isn't buying the idea that Wigington's value estimate for Strawberry Fields was way off. "If we were going to sell it, whether we sold it to The Broadmoor or Don and Andy's Hot Dog Stand, regardless who we sold it to, the city would always require that it remain open area," he says in a recent interview. "There was never any development potential there. Yeah, if you would have put condos in there, the land would have been worth a lot more. But that's assuming the city agreed to sell the land and zone it something other than park land. Condos are not permissible under park land zoning. The reason I supported the land swap was that land was staying park land. That's why I didn't object that the values weren't 10 times more."

Councilor Jill Gaebler, who voted with Murray and then-Councilor Helen Collins against the land swap, says the state board's action confirms Council was on the right track to question the appraisal. "It's just more information that tells me we should not have traded that land," she says.

Citing pending litigation, the city declined to comment about the state board action against Wigington.

Questions surrounding the appraisal, while interesting, will have no impact on the deal itself. Only a court ruling has that kind of juice, it appears.

Save Cheyenne sued the city on Aug. 2, 2016, claiming that because the open space was purchased by the city in 1885 after a vote of the people, it can't be disposed of without voters' permission. The suit also argued that because Strawberry Fields has a greater value than land traded to the city, the swap violates the state Constitution, which bars government gifts to corporations.

After District Judge Michael McHenry ruled in the city's favor on Dec. 1, 2016, by dismissing the case, Save Cheyenne appealed to the Colorado Court of Appeals. Since then, three entities have intervened — meaning they've joined the lawsuit — the Manitou and Pikes Peak Railway Co., COG Land & Development Co. and The Broadmoor. All are controlled by The Broadmoor's billionaire owner Philip Anschutz.

The city and the resort assert the city's home-rule authority allows the city to dispose of the property via a trade, and that the city got property from the resort valued at $3.6 million, versus Strawberry Fields' $1.6 million appraised value, negating the constitutional argument.

"The only thing that matters is whether the Broadmoor will provide consideration [value or payment]. It will," The Broadmoor argued in court papers. It also noted the Colorado Supreme Court has previously ruled the ban on gifts doesn't apply if the gift "furthers a valid public purpose," which the land swap does by enabling the city to expand its parks and trail system.

Save Cheyenne backers hope questions about the Strawberry Fields appraisal persuade the Court of Appeals to accept the constitutional argument, and at the least refer the case back to either the District Court or even City Council for additional discussion of the open space's true value.

Save Cheyenne couldn't argue that point in a brief, because the briefing window closed before the complaint against Wigington was publicly known.

During that briefing window, however, The Broadmoor, which is represented in the lawsuit by the Colorado Springs office of Hogan Lovells law firm, made a play for support in the form of the aforementioned amicus brief, which was sent to the Trails and Open Space Coalition and the Palmer Land Trust. It's not uncommon for lawyers representing a party in a case on appeal to ask certain entities to file an amicus brief. But it is uncommon for lawyers representing a party in a case to prepare such briefs on behalf of an entity and then ask that entity to file them. The boards of both groups refused to file the Broadmoor's ghost-written briefs, though the TOSC vote was a split decision.

TOSC is a local outdoor advocacy organization that came out in support of the swap. (Indy publisher Carrie Simison, who was not consulted for this story, serves on TOSC's board.) Palmer Land Trust holds a conservation easement on Strawberry Fields.

The Indy obtained copies of the brief, which is titled as being from the outdoor agencies, and is written as though in their voice. Arguing the land swap is good for the city, the brief recounts the swap's provisions and notes Save Cheyenne "tries to create the impression that because Strawberry Fields is no longer under public ownership it is no longer freely accessible to the public."

"The Coalition and the Land Trust submit the attached amicus brief to combat these false notions," says the motion to file a brief by the Trails and Open Space Coalition and the Palmer Land Trust as amici curiae in support of the defendants-appellees. "As the brief explains in great detail, the Land Trust's conservation easement over Strawberry Fields will preserve and improve its scenic beauty and recreational value as parkland, and it will ensure that these resources remain freely available to the community in perpetuity."

The 17-page brief also states, "The Coalition and the Land Trust have joined together in this brief to urge this Court to uphold the land exchange." It closes by saying the exchange is a "boon" to the city's parks and trails systems. "That is why both the Coalition and the Land Trust support it. And that is why this Court should uphold it."

The area reserved for the attorney's name in the amici curiae is not filled out, but the address is that of the Colorado Springs City Attorney's Office.

Citing the pending litigation, the city declined to comment on the amicus brief issue. Palmer Land Trust executive director Rebecca Jewett declined to provide details of The Broadmoor's request, saying via email, "The Palmer Land Trust maintains a strictly neutral position on the land exchange between the City of Colorado Springs and The Broadmoor. Our focus is on the conservation of the land. To that end, we elected not to submit an amicus brief for either party involved in the lawsuit." She later clarified that Save Cheyenne has never requested one.

Susan Davies, executive director of TOSC, gave this account via email: "So the Broadmoor asked us to consider. I said I would take it to the Board. Their lawyers sent the brief. I took it the Board and they said they could not approve it as written. I took that information back to the [Broadmoor] and Lawyers who altered it as requested and asked that I try again. Because of their tight deadline, I had to send the revised brief to my Board and asked them to get a decision back to me in less than 3 days. A great deal of email was exchanged over the weekend on both sides of the issue. All voted and the majority voted not to submit the brief. Again, our position had not changed. We still supported the exchange with conditions (which were met.) But as the brief pitted us against 'Save Cheyenne Canon' and we never considered ourselves adversaries, the majority of Board members felt it was not a position TOSC needed to take."

Ghost-writing amicus briefs by attorneys representing parties to the case on behalf of non-parties runs contrary to the spirit of the Colorado Rules of Professional Conduct, says Denver University Sturm School of Law professor Eli Wald.

"For a lawyer for one of the parties to draft an amicus brief and try to have someone else file it in the case may violate court rules and is inconsistent with the intention of the Rules of Professional Conduct," says Wald, DU's Charles W. Delaney Jr. Professor of Law who's a legal ethics and legal profession scholar.

Wald cited three rules that guide lawyers' practice of ghost-writing amicus briefs. The first is a prohibition on engaging in conduct involving dishonesty (here, not disclosing that the brief was drafted by a lawyer representing a party in the case). The second prohibits lawyers from engaging in conduct that's prejudicial to the administration of justice (presenting the brief as being drafted by a "friend of the court" rather than a party before the court). Under yet another rule, Wald says, "Litigators have to act in a manner that is fair to their opposing party and opposing counsel. If you make an argument, the opposing counsel and party would have an opportunity to address it. If you ghost-write something and you fail to disclose it, you pulled the rug from under your opposing counsel's ability to respond."

"The purpose of an amicus brief is to provide a perspective by someone who is not a party to the case," Wald adds.

Neither The Broadmoor nor its attorneys at Hogan Lovells responded to multiple emails and phone calls seeking comment. Save Cheyenne's attorney Charles Norton of Denver declined to comment on the amicus brief situation or the penalties levied against Strawberry Fields' appraiser.

click to enlarge Legal scholar Eli Wald weighs in. - COURTESY DENVER UNIVERSITY
  • Courtesy Denver University
  • Legal scholar Eli Wald weighs in.

Regardless of how the appellate court rules, the case is apt to be appealed to the state Supreme Court. Save Cheyenne has already said it will appeal an unfriendly Court of Appeals ruling, and it's hard to imagine the city and The Broadmoor would fold if they lose the appellate case. So the court case could drag on for months, even years.

Meantime, The Broadmoor is moving ahead with master planning the property, and the brouhaha over the appraisal has led Knight to propose the city amend its real estate manual to require the city obtain its own appraisals and not rely on a party to the transaction to secure appraisals. It's an irony, since it was the appraisal ordered by the parks department that's in dispute for the Strawberry Fields swap; the appraisals ordered by The Broadmoor and completed by Colon have not been challenged by Council.

A less measurable outcome of the appraisal controversy is how the public will view the state board's action against Wigington in the context of the contentious debate surrounding the city's decision to trade away Strawberry Fields.

"I think some of the public probably will lose some trust in us," Knight says, "and they have the right to lose some trust in us. I hope they realize we as Council were putting our trust in other people, ourselves assuming all the data we were looking at was accurate data."

Gaebler, who opposed the swap, agrees. "I think it does erode trust and that's not good for the city," she says. "I struggle with Strawberry Fields, partly because I don't think the public opinion played any part in that decision."

Richard Skorman, the current president of City Council, who wasn't on the board during the swap, was a founder and leader of Save Cheyenne until he stepped down after being elected to Council last April. Though he has refrained from commenting on the deal as a councilor, it's not hard to guess what his thoughts might be.

Obee, who served 11 years on the city's Parks Advisory Board and its Trails, Open Space and Parks Working Committee, has also harbored suspicions about the deal from the outset. In an affidavit filed as part of Save Cheyenne's case in appellate court, he lists his concerns, among them that the Mount Muscoco land, which represents three-fifths of the acres offered by The Broadmoor, has never appeared on any city list for possible city acquisition. It's remote and rugged, and yet was appraised at $634,000, two-thirds of the $1 million The Broadmoor originally paid for that land and 974 additional acres in the Seven Falls purchase in 2014, Obee notes. Seven Falls, of course, is a popular and presumably lucrative tourist site on the southwest side of Colorado Springs.

The Strawberry Fields appraisal is equally dubious, he says, noting that the El Paso County Assessor's Office valued those 186 acres at $2.34 million before the exchange. The assessor has since upped the value to $2.65 million based on the latest reappraisal of property countywide earlier this year.

"It's unquestionable we got more acres than they got, but in every other sense we gave up something of much, much more value than we got," Obee says. "The reason for that is Strawberry was incredibly low-balled."

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