The group that recently filed a lawsuit against Telluride Mountain Village Homeowners Association (TMVOA), Telluride Ski and Golf and three individuals representing Telski on the TMVOA board, gained an ally in Mountain Village Town Council following a brief discussion and vote at a special meeting Tuesday.
The approved motion authorizes Mountain Village Town Attorney, David McConaughy, to “intervene in the Friends of TMVOA lawsuit against TMVOA to protect the Town’s interests.” Mayor Laila Benitez and council member Patrick Berry recused themselves from the vote and discussion.
The lawsuit alleges TMVOA isn’t in compliance with the Colorado Common Interest Ownership Act (CCIOA), calling out how voting rights are allocated and how it defines “member,” “unit” and “site.” It also notes that Telski essentially controls the six-person board with its three members as a result of the non-compliance.
“Additionally, TSG is granted additional votes for a density bank which is a concept that is not recognized in CCIOA. The allocation of votes under the current methodology, gives TSG effective control of the Association and threatens the Association’s 501c4 tax exemption which could trigger millions in tax liabilities,” according to the lawsuit.
“The Town of Mountain Village owns property within the Town and pays dues to TMVOA like any other property owner, however the Town has never been permitted to participate in TMVOA elections as other property owners do,” Town Manager Paul Wisor said Thursday. “The Town Council elected to join the Friends of TMVOA lawsuit, in part, to address this ongoing taxation without representation.”
Wisor, and town council, are of a mind with allegations in the lawsuit that TMVOA is out of compliance with CCIOA, the Colorado Non-Profit Act and federal tax law. Friends of TMVOA filed its lawsuit June 21, which, in addition to Telski and TMVOA, names Telski’s representatives on the TMVOA board — Telski co-owner Chad Horning, special projects director Jeff Proteau and Tom Richards who serves as Telski’s chief financial officer.
“In addition, with approximately $47.5 million in its bank account, the Town of Mountain Village Owners Association plays an important role in the Mountain Village community,” Wisor said. “As articulated in the Friends of TMVOA complaint, it is clear the TMVOA governing documents do not conform with the Colorado Common Interest Ownership Act and the Colorado Non-Profit Act. It also appears the current structure of the TMVOA board does not meet the requirements of an IRS determination letter previously issued to TMVOA. The Town joined in the lawsuit to assure TMVOA complies with state and federal law so neither the non-profit status nor the $50 million of the community’s money are put in jeopardy.”
Council member Peter Duprey is also a member of Friends of TMVOA. He backs council’s unanimous vote to join the lawsuit.
“I believe Mountain Village Town Council’s unanimous vote to join the Friends of TMVOA’s lawsuit against TMVOA shows how serious these issues are that were enumerated in the complaint, that was filed on June 21, 2022,” Duprey said. “Not complying with Colorado and federal law is serious and needs to be fixed.”
In a previous Daily Planet story, Duprey explained TMVOA has approximately $47.5 million in cash and marketable investments, and residential homeowners contributed nearly 90 percent of that through assessments and real estate transfer fees. He added the lawsuit is “basically to keep the tax-exempt status as a non-taxable entity.”
“The IRS could come in and say you are no longer a tax-exempt entity. Or they could say, we’ll allow you to continue as a tax-exempt entity, but we’re going to fine you 10 percent or 25 percent excise tax on your excess profits over the last seven years. So that would be in the millions of dollars. And none of the residents here want that. We’d rather have that go into Mountain Village than go to the IRS,” Duprey said in an earlier interview with the Planet. “ … We have a gondola that is going to need funding, and we have a bunch of projects in our 30-year Comprehensive Plan where monies are earmarked. And, you know, we think some of that money should go to some of those projects to make Mountain Village a more livable and beautiful place to live.”
Duprey has also said that the prospect of settling out of court would be a satisfactory outcome.
“I think it’s always advantageous to settle. Because if it goes go to the court, everybody’s going to be spending a lot of money and the only ones who win are the lawyers,” he said.
The full lawsuit, as well as a petition seeking to change TMVOA’s governance structure, can be viewed on the Friends of TMVOA website at friendsoftmvoa.org.