Lawsuits Fighting Local Land Use Decisions in Colorado are Now More Risky

It is quite common in Colorado for major (or even minor) housing developments to face intense opposition from existing residents. For example, check out the “Sanctuary on the Green” project that would bring much-needed housing to Fort Collins, CO. The project has been mired in controversy since first proposed in 2018. In 2022, neighbors sued and a judge overturned the City’s approval of the “Sanctuary on the Green.”

Indeed, going to court is perhaps the last resort of neighbors opposed to a development project, and it happens a lot. Such lawsuits are known as a “judicial review.” For the plaintiffs (some would say “NIMBYs”), such a lawsuit is almost guaranteed to at least delay the project, and the most the plaintiffs have to lose is some attorney’s fees. Judicial review initiated by opponents of new housing developments probably does reduce the supply of new housing, driving up housing costs. The Colorado legislature thought so, and in 2024 enacted House Bill 24-1107.

HB 24-1107 does not stop opponents from seeking judicial review of a project they don’t like, but it does make that more risky. For judicial review challenging residential developments in which the density is five units per acre or more, the plaintiffs (i.e., the “NIMBYs”), will have to pay the local government’s attorney’s fees if they lose the case. The new statute changes the status quo. Normally, both sides would pay their own fees regardless of who prevails, but now we have a one-sided fee shifting dynamic. It is “one sided” because if the plaintiff’s win, they don’t get their own attorney’s fees.

Will this have a chilling effect on NIMBY-initiated litigation? I think so. The plaintiffs will pay their own attorney’s fees, and risk paying the local government’s attorney’s fees as well. That is a big risk. Overturning a project approval via judicial review is already difficult. Most cases fail. The cases are not procedurally complicated, but the attorney’s fees can still be substantial. That’s because major municipalities often hire some of the most expensive law firms in the state to defend a judicial review case, and so run up attorney’s fees in the tens of thousands of dollars. I could see a municipality hiring a high-dollar firm rather than use its own in-house lawyers as a strategy to make the NIMBYs give up. That bothers me a bit, and I am not alone. In July 2024, opponents of Sanctuary on the Green and others filed a federal lawsuit seeking to invalidate HB 24-1107 as unconstitutional. You can read about it here. I think that lawsuit is a longshot, but if the plaintiffs prevail they will likely recover their attorney’s fees. We’ll see…