The Court of Appeals last week struck down a 34-year-old Vail town ordinance placing restrictions on condominium usage, concluding that it amounted to illegal discrimination against condo owners.

A three-judge panel based its decision on a 1992 state law – the Colorado Common Interest Ownership Act – which prohibits requirements on condo communities that are not also applied to developments that may have the same physical structure, but a different form of ownership such as a rental property or a hotel. Given that Vail placed occupancy conditions on units that “would be condominiumized,” and did not extend those conditions to other similar properties with different ownership, it amounted to a violation.

The Community Associations Institute, an international organization for condominium and homeowner associations, urged the appellate court to side against Vail, arguing in a legal brief that the town was undermining the General Assembly’s efforts to set policy for how condos would be treated statewide.

“A published decision in favor of the Town of Vail would impair protected property rights, condone discrimination against the condominium form of ownership, and harm condominium owners and community associations throughout Colorado,” CAI wrote.

The case stemmed from the town’s establishment in 1976 of the Village Inn Plaza development. Vail enacted an ordinance in 1987 allowing for Phase V of the development, but included a condition for developers that spawned the lawsuit. The condition required condominium units to stay in the short-term rental market as temporary accommodations, limited an owner’s use of their unit during the winter “high season” and authorized fines for violations.

Although the condo association adopted the restrictions in 1988, it decided in 2013 it would no longer enforce them. The following year, a commercial owner within the Village sued the association, alleging its rule change violated the 1987 ordinance. The town of Vail also joined the legal action.

The association countered that the town ordinance violated the CCIOA’s anti-discrimination provision.

In June 2018, then-Eagle County District Court Judge Frederick W. Gannett agreed the ordinance with its restrictions on owner occupancy was discriminatory toward condominiums. The town subsequently turned to the Court of Appeals.

Kendra L. Carberry, representing the town of Vail, told the judges at oral arguments that the point of the condo ordinance was to encourage transient occupancy in the commercial core by preventing full-time occupancy.

“In this case, there could not have been discrimination against these condominiums because they already existed prior to CCIOA,” she said.

“So in other words, you discriminated then so you can continue to discriminate now?” retorted Judge Janice B. Davidson.

The appellate panel determined that even though CCIOA was not enacted until five years after the Vail ordinance in question, the law created an enforcement mechanism for “events and circumstances” occurring later than 1992. The parties and judges observed that this language was broad.

But to the panel, an event or circumstances “unambiguously includes the Town’s current actions in seeking to enforce the 1987 ordinance,” Davidson, a retired judge who sat on the panel at the chief justice’s assignment, wrote in the court’s August 12 opinion.

She added that the state and the town both had an interest in the regulation of condo communities, but state law took precedence. Carberry warned that the district court’s original order was unclear about whether the entire 1987 ordinance was invalid, or just the section pertaining to condominium restrictions.

A spokesperson said the Vail council was scheduled to talk about the court decision with the town’s attorney on Tuesday, but the discussion ended up being postponed.

The case is Vail v. Village Inn Plaza – Phase V Condominium Association.