Developer sues Lakewood over rule change it fears could sink apartment project near Belmar Park

A developer hoping to build a controversial five-story, 411-unit apartment complex on the east edge of Lakewood’s Belmar Park has sued the city, claiming local leaders’ recent adoption of a citizen-inspired land use ordinance risks tanking the project.

Kairoi Properties LLC accuses Lakewood of a bait and switch in its Dec. 20 lawsuit. It alleges that the city changed its rules for residential projects by eliminating the ability of developers to pay a fee in place of setting aside parkland for public use, while at the same time boosting — by nearly a factor of two — the required amount of green space that must be dedicated.

Kairoi is asking Jefferson County District Court to nullify the city’s new residential development rules.

The Texas-based company claims in its suit that it had been working with Lakewood city staff for several years while planning the project. Kairoi says it received assurances that it would be able to pay a fee allowing it to avoid setting aside land for public use on its cramped 5.25-acre parcel at 777 S. Yarrow St.

“Kairoi … relied on the City’s express written commitments (and their continual reaffirmation of those commitments), and invested millions of dollars on the design, planning, development, and permitting associated with developing the properties,” the complaint reads.

But Cathy Kentner, a former mayoral candidate in Lakewood who was behind Lakewood’s 2019 slow-growth ballot measure, said the city had ultimate home-rule authority over its local land use regulations.

“I would say Kairoi is very early in the development process. They know the chances they are taking when they develop,” Kentner told The Denver Post. “They know that nothing is done until it is done.”

Kairoi’s proposed project raised alarm among some residents of Lakewood in 2023. They felt the building’s size and proximity to 132-acre Belmar Park in the middle of the city threatened its status as a sanctuary for hundreds of birds — many of them migratory — including the Northern shoveler, the cedar waxwing and the dark-eyed junco.

Earlier this year, a group dubbed Save Open Space Lakewood collected a sufficient number of petition signatures to get a measure on the ballot changing Lakewood’s residential development standards. In November, the City Council decided to pass the measure into law without it going to a vote of the people.

“The public values parks and open space much more highly than making additional luxury market-priced rental housing available,” said Steve Farthing, a Lakewood resident opposed to the project.

Farthing said residents visit Belmar Park not just to see wildlife and natural beauty, but also because it “supports mental and physical health” in a region that has only gotten busier and more crowded in recent decades.

But Kairoi claims Lakewood faces an additional problem with its new measure: By eliminating the fee-in-lieu provision, the city is violating a state law passed this year that’s designed to address Colorado’s severe housing shortage. Passed as House Bill 1313, the law doesn’t allow cities to prohibit the exercise of the fee-in-lieu option when it comes to proposed projects in “transit-oriented communities” — part of a multiyear effort by state lawmakers to incentivize the construction of more housing in Colorado.

The company claims Lakewood’s new rules amount to an unconstitutional “taking” of property by the government.

“The new law proposed by a small number of activists is nonsensical, makes much needed housing development nearly impossible and violates both the U.S. Constitution and state law,” the company wrote in a statement its law firm sent to The Post this week. “We look forward to untangling the unlawful and ill-advised law in court.”

Colorado Municipal League Executive Director Kevin Bommer said Kairoi’s legal case against Lakewood was “standing on wobbly legs.”

“The local land-use and zoning authority of a community is a matter of local concern — and not state concern — until the Colorado Supreme Court says otherwise,” Bommer said. “Local control is local control, whether it comes from the governing body or whether it comes from the residents through the initiative process.”