Bill Barrett Corp. v. Lembke

2018 COA 134

• Court: Colorado Court of Appeals
• Decided: September 6, 2018
• Docket: 17CA1616
• Status: Published

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY September 6, 2018

2018COA134

No. 17CA1616 Barrett Corp. v. Lembke — Government — Special Districts — Inclusion of Territory — Material Modification of Service Plan; Civil Procedure — Injunctions — Preliminary Injunctions

This case addresses denial of a preliminary injunction, for

failure to show a reasonable probability of success on the merits, to

prevent a special district from taxing minerals held by owners of a

severed mineral estate and extracted by their surface lessees. The

division agrees with the trial court that section 32-1-401(1)(a),

C.R.S. 2017, of the Special District Act does not require consent of

mineral estate owners and their lessees to expand the boundaries of

a special district. The division also agrees that the special district’s

power to tax was not limited by an overlap in services with another

district. However, the division concludes that a reasonable probability

of success was shown as to the special district’s failure to obtain

the board of county commissioners’ approval of a material change

in its service plan as required by section 32-1-207(2)(a), C.R.S.

2017, of the Special District Act. The case is remanded for the trial

court to make further findings under the other Rathke factors and

to reconsider whether a preliminary injunction should be entered. COLORADO COURT OF APPEALS 2018COA134

Court of Appeals No. 17CA1616 Adams County District Court No. 17CV68 Honorable Jaclyn C. Brown, Judge

Bill Barrett Corporation and Bonanza Creek Energy, Inc.,

Plaintiffs-Appellants,

and

Noble Energy, Inc.,

Intervenor-Appellant,

v.

Robert Lembke; 70 Ranch L.L.C.; South Beebe Draw Metropolitan District, f/k/a Bromley Park Metropolitan District No. 1; and United Water and Sanitation District,

Defendants-Appellees.

JUDGMENT AFFIRMED, ORDER VACATED, AND CASE REMANDED WITH DIRECTIONS

Division A Opinion by JUDGE WEBB Berger and Nieto*, JJ., concur

Announced September 6, 2018

Davis Graham & Stubbs, LLP, R. Kirk Mueller, Paul D. Swanson, Denver, Colorado, for Plaintiffs-Appellants

Hogan Lovells US, LLP, Elizabeth H. Titus, Lacy G. Brown, Denver, Colorado, for Intervenor-Appellant

Shook, Hardy & Bacon, LLP, S. Kirk Ingebretsen, Denver, Colorado, for Defendants-Appellees Robert Lembke and 70 Ranch L.L.C. Brown Dunning Walker PC, Douglas W. Brown, David C. Walker, Drew P. Fein, Denver, Colorado; Wass Campbell Rivera Johnson Velasquez LLP, Darrell G. Waas, Mikaela V. Rivera, Denver, Colorado, for Defendant-Appellee South Beebe Draw Metropolitan District

Hamre Rodriguez Ostrander Dingess PC, Donald M. Ostrander, Richard F. Rodriguez, Joel M. Spector, Denver, Colorado; Wass Campbell Rivera Johnson Velasquez LLP, Darrell G. Waas, Mikaela V. Rivera, Denver, Colorado, for Defendant-Appellee United Water and Sanitation District

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2017. ¶1 Plaintiffs Bill Barrett Corporation and Bonanza Creek Energy,

Inc., and intervenor Noble Energy, Inc., (collectively, lessees) appeal

the trial court’s order denying their motion for a preliminary

injunction to prevent defendant South Beebe Draw Metropolitan

District (South Beebe) from taxing oil and gas that lessees produce

from the mineral estate underlying an approximately 13,000-acre

tract (the 70 Ranch) located in unincorporated Weld County.

Defendants Robert Lembke and 70 Ranch L.L.C. (the L.L.C.) own

the surface estate, where all of lessees’ well heads are located.1

Lessees also appeal the court’s entry of summary judgment on one

of their claims.

¶2 We affirm the entry of summary judgment, vacate the denial of

the motion for preliminary injunction, and remand for further

findings consistent with this opinion.

I. Nature and Course of Proceedings

¶3 On appeal, lessees raise three challenges to South Beebe’s

taxing authority. The trial court entered summary judgment on the

1The exact role of defendant United Water and Sanitation District was not developed at the hearing, but according to the amended complaint, “tax revenue collected from [lessees] by [South Beebe] have [sic] been spent and/or channeled to Defendant United Water.”

1 first of these issues.

 Under section 32-1-401, C.R.S. 2017, the severed mineral

estate2 underlying the 70 Ranch could not be included within

South Beebe because all the owners and lessees of that estate

did not petition for and consent to inclusion.

 By including the 70 Ranch within its boundaries to further its

regional operations in several counties, South Beebe modified

its service plan, but did not obtain statutorily required

approval from the board of county commissioners (BOCC) in

each of the affected counties.

 By including the 70 Ranch within its boundaries, South Beebe

violated section 32-1-107(2), C.R.S. 2017, because its services

overlapped with those of Sand Hills Metropolitan District

(Sand Hills).

¶4 Preservation of these contentions is undisputed.

¶5 Lessees obtained a temporary restraining order in the Weld

County District Court that prohibited the Weld County Treasurer,

who had collected the disputed taxes, from disbursing the monies

2 “[A] conveyance which severs a mineral interest from the surface estate creates a separate and distinct estate.” Notch Mountain Corp. v. Elliott, 898 P.2d 550, 556 (Colo. 1995).

2 to South Beebe. Venue was transferred to the Adams County

District Court. That court held an evidentiary hearing on lessees’

motion for a preliminary injunction. Finding that lessees had not

shown a reasonable probability of success on the merits, the court

denied the motion for a preliminary injunction and dissolved the

temporary restraining order. Later, the court entered a final

judgment under C.R.C.P. 54(b) and 56(h) against lessees on their

section 32-1-401 claim.

¶6 Lessees appealed. They requested that this court preserve the

status quo by enjoining the treasurer from disbursing taxes

collected to South Beebe. A motions division of this court granted

the requested relief, expedited briefing, and ruled that the appeal

would be decided without oral argument.

II. Background

¶7 In 2009, Sand Hills included the 70 Ranch within its

boundaries and began assessing ad valorem taxes on the oil and

gas extracted from the mineral estate. Much as lessees have done

in this case, they challenged the taxes levied by Sand Hills and

obtained summary judgment in Weld County District Court. Both

sides appealed.

3 ¶8 In Bill Barrett Corp. v. Sand Hills Metropolitan District, 2016

COA 144, the division agreed with the district court that when Sand

Hills included the 70 Ranch, the combination of its change in

purpose and its complete shift in geography constituted a material

departure from its 2004 service plan under section 32-1-207(2)(a),

C.R.S. 2017. Id. at ¶¶ 21, 23, 30. The division also agreed that this

material modification of the existing service plan required — but

Sand Hills had not obtained — approval from the Weld County

BOCC. Id. at ¶ 32. For these reasons, the division held that Sand

Hills lacked taxing authority after 2009. Id. at ¶ 37.

¶9 Following the entry of summary judgment and before the Sand

Hills appeal was filed, Lembke and the L.L.C. petitioned South

Beebe to include the 70 Ranch. Lessees were not notified of this

action. South Beebe resolved to include the 70 Ranch, agreed to

assume development and construction of the regional water

infrastructure commenced by Sand Hills, and committed to provide

services to the 70 Ranch. The Adams County District Court

approved inclusion of the 70 Ranch into South Beebe, as required

by section 32-1-401(1)(c)(I), which states that “[i]f a petition [for

inclusion] is granted [by the district’s board] . . . , the board shall

4 . . . file [an order] with the clerk of the court, and the court shall

thereupon order the property to be included in the special district.”

(Emphasis added.)3

III. Law

A. Preliminary Injunction Standard

¶ 10 “Preliminary injunctive relief is an extraordinary remedy

designed to protect a [party] from sustaining irreparable injury and

to preserve the power of the district court to render a meaningful

decision following a trial on the merits.” Rathke v. MacFarlane, 648

P.2d 648, 651 (Colo. 1982).

¶ 11 Preliminary “injunctive relief should not be indiscriminately

granted”; rather, it should be granted sparingly, cautiously, and

with the trial court’s full conviction of the urgent necessity for the

relief. Id. at 653. Before granting relief, the trial court must find

that the moving party has shown:

(1) a reasonable probability of success on the merits;

(2) a danger of real, immediate, and irreparable injury which may be prevented by injunctive relief;

3 The order is not at issue in this appeal.

5 (3) that there is no plain, speedy, and adequate remedy at law;

(4) that the granting of a preliminary injunction will not disserve the public interest;

(5) that the balance of equities favors the injunction; and

(6) that the injunction will preserve the status quo pending a trial on the merits.

Id. at 653-54 (citations omitted). If the moving party fails to

establish any criterion, injunctive relief is not available. Id. at 654.

B. Special District Act

¶ 12 The General Assembly enacted the Special District Act (the

Act) with the intent that special districts “promote the health,

safety, prosperity, security, and general welfare” of their inhabitants

and of the State of Colorado. § 32-1-102(1), C.R.S. 2017; see also

Sand Hills, ¶ 15; Todd Creek Vill. Metro. Dist. v. Valley Bank & Tr.

Co., 2013 COA 154, ¶ 37. Special districts are political

subdivisions of the state that possess proprietary powers. Todd

Creek, ¶ 38. But they possess only those powers expressly

conferred on them. Sand Hills, ¶ 15.

¶ 13 Once established, a special district must conform to its service

plan “so far as practicable.” § 32-1-207(1). Any material

6 modifications to the service plan must be approved by the

appropriate governing authority. § 32-1-207(2)(a).

IV. Standard of Review

¶ 14 Statutory interpretation is a question of law subject to de novo

review. See, e.g., Jefferson Cty. Bd. of Equalization v. Gerganoff,

241 P.3d 932, 935 (Colo. 2010). Likewise, appellate courts review

de novo the application of law to undisputed facts. See Camp Bird

Colo., Inc. v. Bd. of Cty. Comm’rs, 215 P.3d 1277, 1281 (Colo. App.

2009). And the de novo standard applies to review of summary

judgments. Rocky Mountain Expl., Inc. v. Davis Graham & Stubbs

LLP, 2018 CO 54, ¶ 27.

¶ 15 “The grant or denial of a preliminary injunction lies within the

sound discretion of the trial court.” MDC Holdings, Inc. v. Town of

Parker, 223 P.3d 710, 716 (Colo. 2010). Generally, the conclusion

reached by the trial court will be not overturned unless it is

manifestly unreasonable, arbitrary, or unfair. Evans v. Romer, 854

P.2d 1270, 1274 (Colo. 1993). “If, however, the issue being

reviewed concerns only legal, rather than factual questions, a trial

court’s preliminary injunction ruling is subject to de novo appellate

review.” State ex rel. Salazar v. Cash Now Store, Inc., 31 P.3d 161,

7 164 (Colo. 2001). The same is true when the ruling rested only on

stipulated facts or documentary evidence. MDC Holdings, 223 P.3d

at 716.

¶ 16 On review of a preliminary injunction, the trial court’s factual

findings will be upheld unless they are so clearly erroneous as to

find no support in the record. Phoenix Capital, Inc. v. Dowell, 176

P.3d 835, 846 (Colo. App. 2007).

¶ 17 Whether a special district’s action constitutes a “material

modification” of the service plan presents a question of law. Indian

Mountain Corp. v. Indian Mountain Metro. Dist., 2016 COA 118M,

¶¶ 59, 61-62. A court looks to the language of the service plan and

gives effect to its plain and ordinary meaning. See Todd Creek,

¶¶ 10-11.

¶ 18 The standard of review as to whether material modifications

were approved by the appropriate BOCC is unresolved. But in

Friends of the Black Forest Regional Park, Inc. v. Board of County

Commissioners, the division noted, “[t]he application of particular

facts to a statute involves a mixed question of fact and law.” 80

P.3d 871, 882 (Colo. App. 2003). Because whether the requisite

approval was obtained will turn on particular facts, the mixed

8 question standard of review applies. See also Hawes v. Colo. Div. of

Ins., 65 P.3d 1008, 1017 (Colo. 2003) (case-by-case issue is mixed

question). In mixed-question cases, an appellate court reviews the

district court’s factual findings for clear error and its legal

conclusions as to those facts de novo. Sheridan Redevelopment

Agency v. Knightsbridge Land Co., 166 P.3d 259, 262 (Colo. App.

2007).

¶ 19 According to South Beebe, because the trial court’s denial of a

preliminary injunction is not a final judgment on the merits, review

of the second and third issues can be only for an abuse of

discretion. To the extent that some of the court’s conclusions

rested on documentary evidence or undisputed facts, however, we

review de novo. And in any event, “[a] trial court abuses its

discretion when it . . . misapplies the law.” Clubhouse at Fairway

Pines, L.L.C. v. Fairway Pines Estates Owners Ass’n, 214 P.3d 451,

456 (Colo. App. 2008).

V. Discussion

A. Application of Section 32-1-401(1)(a) to Owners and Lessees of Severed Mineral Estates ¶ 20 According to lessees, without their consent — as “fee owners”

9 — and that of the other mineral estate owners, the 70 Ranch — or

at least the underlying mineral estate — could not have been

included within South Beebe. South Beebe responds that because

the mineral and surface estates are severed, only the surface

owners needed to petition for and consent to inclusion, and all of

them did.4 Alternatively, South Beebe asserts that because lessees’

well heads are located on the 70 Ranch, it could tax lessees’ oil and

gas production for that reason alone.

¶ 21 The following facts are undisputed. The mineral estate

underlying the 70 Ranch has been severed from the surface estate.

Lembke and the L.L.C. owned some but not all of the mineral

estate. No other mineral estate owner petitioned for or consented to

including this property within South Beebe. Nor did lessees.

¶ 22 In resolving this issue against lessees, the trial court found

that the services provided by South Beebe did not benefit the

subsurface mineral estate. Lessees do not challenge this finding.

¶ 23 First, we address whether mineral estate owners and lessees

4Lembke and the L.L.C., South Beebe, and United Water and Sanitation District filed separate but similar answer briefs. To the extent that their arguments differ, breaking arguments out by party would be purposeless.

10 are “fee owners.” We answer affirmatively only as to mineral estate

owners. Because the parties agree — and the record supports —

that not all of the mineral estate owners consented to the 70

Ranch’s inclusion, we next consider whether South Beebe’s services

can benefit the mineral estate. But since lessees do not argue that

the mineral estate can benefit, we further conclude that lack of

consent by all mineral estate owners does not preclude South Beebe

from taxing lessees.

1. Law

¶ 24 Section 32-l-401(1)(a) provides:

The boundaries of a special district may be altered by the inclusion of additional real property by the fee owner or owners of one hundred percent of any real property capable of being served with facilities of the special district filing with the board a petition in writing requesting that such property be included in the special district. The petition shall set forth a legal description of the property, shall state that assent to the inclusion of such property in the special district is given by the fee owner or owners thereof, and shall be acknowledged by the fee owner or owners in the same manner as required for conveyance of land.

11 The parties have not cited Colorado authority, nor have we found

any, applying this section in the context of severed mineral estate

owners or the interests of mineral lessees.

2. Application

a. Is an Owner or a Lessee of a Severed Mineral Estate a “Fee Owner” Under the Statute? ¶ 25 Answering this question — which the trial court decided

against lessees — involves statutory interpretation and application

of law to undisputed facts, both subjects of de novo review. We first

conclude that an owner of a severed mineral estate is a “fee owner.”

¶ 26 “[W]hile in place, minerals are real property.” Smith v. El Paso

Gold Mines, Inc., 720 P.2d 608, 609 (Colo. App. 1985).

Unsurprisingly, then, our supreme court has concluded that “[a]n

estate in oil and gas may be severed from the remainder of the

realty, and as severed owned in fee simple.” Corlett v. Cox, 138

Colo. 325, 333, 333 P.2d 619, 623 (1958); accord Clevenger v. Cont’l

Oil Co., 149 Colo. 417, 420, 369 P.2d 550, 551 (1962) (“Oil, gas and

other mineral rights in lands may be severed and held by other

than the owner of the surface, and a fee simple title thereto may

vest in the person to whom said rights are granted.”).

12 ¶ 27 South Beebe’s attempt to distinguish Corlett, on which

Clevenger relied, as limited to interpreting the phrase “reserves 1/2

of the usual 1/8 royalty” in a deed, falls short. After all, the

supreme court framed the issue as follows:

Does the Holcomb-Hamilton deed reserve an estate in fee simple to 1/16% of the oil and gas under the land in question, as found by the trial court, or do these words merely reserve the right to share in such oil and gas after it has been severed from the land and reduced to possession?

Corlett, 138 Colo. at 329, 333 P.2d at 621 (emphasis added). Then

it rejected a request to overrule Simson v. Langholf, 133 Colo. 208,

217, 293 P.2d 302, 307 (1956), which noted, “an estate in fee

simple is thus created.”

¶ 28 Of course, we are bound by our supreme court’s case law.

Bernal v. Lumbermens Mut. Cas. Co., 97 P.3d 197, 203 (Colo. App.

2003). And in any event, South Beebe cites no contrary Colorado

authority.

¶ 29 South Beebe’s reliance on statutes other than the Act, where

the legislature supposedly “distinguishes between fee owners and

mineral interest owners,” is misplaced. “[D]efinitions of somewhat

similar terms in other, generally unrelated statutes . . . do not

13 assist in deciding what the Legislature meant in this specific

context.” Coal. of Concerned Cmtys., Inc. v. City of Los Angeles, 101

P.3d 563, 566 (Cal. 2004); see also Bertrand v. Bd. of Cty. Comm’rs,

872 P.2d 223, 228 (Colo. 1994) (“[T]he interpretation of one statute

by reference to an unrelated statute is an unreliable means of

ascertaining legislative intent.”).

¶ 30 For example, South Beebe cites section 24-65.5-101, C.R.S.

2017. But that section is limited to “surface development.” And in

any event, section 24-65.5-102(4), C.R.S. 2017, describes a

“mineral estate” as an “interest in real property.”

¶ 31 True, for purposes of municipal annexations, section

31-12-103(6), C.R.S. 2017, also cited by South Beebe, limits

“landowner” to “the owner in fee of an undivided interest in the

surface estate.” But this subsection also recognizes an “undivided

interest in the mineral estate” as being owned “in fee.” Id.

¶ 32 Nor does South Beebe’s parade of horribles that would

supposedly flow from treating a severed mineral interest as fee

ownership under section 32-1-401(1)(a) persuade us to read Corlett

and Clevenger narrowly. Owners of the severed mineral estate

underlying property to be included in a special district can be

14 identified through title examination and given notice. If the

positions of surface and subsurface owners on inclusion diverge,

the Act provides a remedy. See, e.g., § 32-1-401(2)(a) (notice to all

affected property owners, public hearings, and petitions to be

excluded); § 32-1-401(3) (board of county commissioners decides

petitions for exclusion based on the best interests of the district).5

¶ 33 In contrast, our supreme court has not addressed whether a

severed mineral estate lessee also holds a fee simple interest. We

conclude that such a lessee does not.

¶ 34 Lessees rely on Maralex Resources, Inc. v. Chamberlain, 2014

COA 5, ¶ 14, where the division acknowledged that “interests in oil

and gas leases [are] characterized as interests in real property.”

However, the division did not reach the fee simple question, instead

merely declining “to consider an oil and gas lessee’s interest under

common law landlord-tenant principles.” Id. at ¶ 16. And in any

event, the division held only that the lessee had standing to seek a

prescriptive easement.

¶ 35 Still, lessees assert that a majority of states — or at least those

5Of course, marching this parade before the General Assembly could produce a legislative solution.

15 in the West — hold mineral interest leaseholds to be fee interests of

the mineral estate. Yet, they cite cases from only three states. See

Somont Oil Co. v. A & G Drilling, Inc., 49 P.3d 598, 604 (Mont. 2002)

(“[O]il and gas leases transfer to the lessee a fee simple

determinable estate with the lessor retaining a possibility of

reverter.”), overruled on other grounds by Johnson v. Costco

Wholesale, 152 P.3d 727 (Mont. 2007); Maralex Res., Inc. v.

Gilbreath, 76 P.3d 626, 630 (N.M. 2003) (“The typical oil and gas

lease grants the lessee a fee simple determinable interest in the

subsurface minerals . . . .”); Anadarko Petroleum Corp. v. Thompson,

94 S.W.3d 550, 554 (Tex. 2002) (“A Texas mineral lease grants a fee

simple determinable to the lessee.”).

¶ 36 South Beebe responds that a broad reading of Maralex is

foreclosed by Coquina Oil Corp. v. Harry Kourlis Ranch, 643 P.2d

519, 522 (Colo. 1982) (holding that a federal oil and gas lessee

cannot assert the power of condemnation under Colorado

Constitution article II, section 14 and section 38-1-102(3), C.R.S.

2017). Distinguishing lessees from owners, the supreme court

explained that giving lessees condemnation powers “creates the

possibility that the [property owners] will be subjected repeatedly to

16 the disruptive effect and expense of litigation as successive lessees

attempt to secure a temporary right-of-way.” Id. By contrast,

“condemnation of a right-of-way by the fee owner of the landlocked

estate does not create the same potential for a multiplicity of

lawsuits. If the fee owner condemns the right-of-way, the taking is

permanent and the appropriate compensation for the interests

condemned is established in one proceeding.” Id. The court added,

“[w]hile the lessee’s concern for both the leased property and the

surrounding lands is limited in both subject matter and duration,

the fee owner of the property will consider the broader implications

of his actions over a more extensive period.” Id. at 523; cf. Precious

Offerings Mineral Exch., Inc. v. McLain, 194 P.3d 455, 455 (Colo.

App. 2008) (rejecting easement claims by owner of unpatented

mining claims).

¶ 37 The Coquina rationale is persuasive here. Because a mineral

estate lessee’s interest is temporary, its perspective on being

included in a special district would be short term and potentially

myopic. As well, a special district would possibly have to secure

consent from each successive lessee. Thus, we agree that Maralex

cannot be read as broadly as lessees assert.

17 ¶ 38 Given all this, we decline to treat mineral lessees as fee owners

for purposes of the statute.6 Still, our conclusion that each owner

of the severed mineral estate beneath the 70 Ranch is a “fee owner”

under the statute does not end the inquiry.

b. Does a Severed Mineral Estate Constitute “Real Property Capable of Being Served With Facilities of the Special District” Under the Statute? ¶ 39 Answering this question — which the trial court decided

against lessees — also involves application of law to undisputed

facts. Specifically, on appeal lessees do not dispute the trial court’s

finding that

[m]ineral estates, located far beneath the surface, are not real property capable of being served with the facilities of the special district. Practically, the district cannot provide water and sanitary sewer[,] . . . park and recreation services[,] or any other services authorized by C.R.S. § 32-1-103(10) to the subsurface estate. The surface estate is the only real property in need of and capable of being provided the district’s services.7

6 Having decided this question against lessees, we need not address the numerous administrative and other practical problems that would allegedly ensue if mineral lessees are fee owners, which in any event are implied from the policy concerns in Coquina. 7 Because lessees do not dispute this finding, we express no opinion

on whether a district’s services could actually benefit subsurface mineral estates.

18 ¶ 40 Instead, they argue, first, that by statute only property capable

of being benefitted by the special district may be taxed; and,

second, that taxing property that cannot benefit from tax-funded

services violates due process, citing Landmark Towers Ass’n v. UMB

Bank, N.A. for support. 2018 COA 100, ¶ 29 (“Colorado law makes

clear that imposing a special assessment on property that doesn’t

specially benefit from the funded improvements violates those

property owners’ rights to due process.”). We address, and reject,

each argument in turn.

¶ 41 Lessees’ first argument focuses on the phrase, “real property

capable of being served with facilities of the special district.”

§ 32-1-401(1)(a). But this argument ignores that “capable of being

served” modifies “fee . . . owners of . . . any real property.” Id.

Thus, the phrase tells special districts which owners must petition

for inclusion. It does not limit what property may be included.

¶ 42 Lessees essentially ask us to read the statute as: “The

boundaries of a special district may be altered by the inclusion of

additional real property capable of being served with the facilities of

the special district.” Yet, “[a]bsent constitutional infringement, it is

not our province to rewrite the statutes.” Dove Valley Bus. Park

19 Assocs., Ltd. v. Bd. of Cty. Comm’rs, 945 P.2d 395, 403 (Colo. 1997).

¶ 43 Turning to lessees’ due process argument, they do not provide

a record reference to where they raised this issue in the trial court.

And in any event, they did not mention it in their written closing

argument, nor did the trial court rule on it.8 See McGihon v. Cave,

2016 COA 78, ¶ 16 (“[I]n civil cases . . . ‘[w]e do not consider

constitutional issues raised for the first time on appeal.’” (quoting

City & Cty. of Broomfield v. Farmers Reservoir & Irrigation Co., 239

P.3d 1270, 1276 (Colo. 2010))). And even if an appellate court may

choose to take up such an unpreserved issue as a matter of

discretion, we need not do so here. See Tyra Summit Condos. II

Ass’n v. Clancy, 2017 COA 73, ¶ 8 (“Whether we address

unpreserved constitutional challenges is always a matter of

discretion.”). However, the following observations may be relevant

to the merits of the trial.

¶ 44 First, even were we to take up this unpreserved argument,

under the injury-in-fact test, whether lessees would have standing

8 Although Landmark was decided after the hearing, and after lessees had filed their opening brief, the decision lists several cases holding that property owners’ due process rights are violated when their property does not benefit from special assessments. Landmark Towers Ass’n v. UMB Bank, N.A., 2018 COA 100, ¶ 29.

20 to raise this issue on behalf of owners of the severed mineral estate

is at best doubtful. This is not a case implicating unconstitutional

spending, which can contribute to injury-in-fact. Conrad v. City &

Cty. of Denver, 656 P.2d 662, 668 (Colo. 1982).

¶ 45 Second, assuming lessees have standing, this due process

argument does not limit true ad valorem taxes. See Landmark, ¶ 31

(distinguishing such taxes from special assessments, which “fund

local improvements that benefit particular property”).

¶ 46 Third, Landmark involved a special assessment on one small

area to benefit another small area. In contrast, South Beebe’s

service area encompasses thousands of acres and its water projects

will benefit many inhabitants. See Millis v. Bd. of Cty. Comm’rs, 626

P.2d 652, 659 (Colo. 1981) (“A water district is organized not for the

improvement of land or to benefit only landowners.”); see also

Friends of Chamber Music v. City & Cty. of Denver, 696 P.2d 309,

321 (Colo. 1985) (“As long as the proceeds are devoted to public and

governmental purposes, otherwise valid taxes may be imposed upon

a group of people who will not necessarily benefit from the funds

collected.”).

¶ 47 So, while ownership of a mineral estate is a fee simple interest,

21 we further conclude that it is not “real property capable of being

served with facilities of the special district” under the statute.

Therefore, the owners of the severed mineral estate underlying the

70 Ranch did not have to petition for or consent to the inclusion.

c. Do Other Statutes Provide a Separate Basis for Ad Valorem Taxation? ¶ 48 Having rejected lessees’ challenge to the 70 Ranch’s inclusion

based on the lack of all mineral estate owners’ consent, we need not

address other statutes that South Beebe advances as alternative

bases for taxing lessees. See § 32-1-1101(1)(a), C.R.S. 2017;

§ 39-7-101(1), C.R.S. 2017.

3. Conclusion

¶ 49 The petition’s failure to show consent of all severed mineral

estate owners did not preclude including the 70 Ranch within the

boundaries of South Beebe and did not invalidate South Beebe’s

taxing authority. Thus, we affirm the trial court’s entry of summary

judgment as to lessee’s section 32-1-401(1)(a) claim.

B. Application of Section 32-1-207(2)(a) to a Change in South Beebe’s Original Service Plan ¶ 50 The trial court held that lessees had not shown a reasonable

probability of successfully establishing that South Beebe had

22 violated section 32-1-207(2)(a) by failing to obtain BOCC approval

for a material change in its original service plan. The court found

that although South Beebe had continued to provide the same

services, it had materially modified its service plan in 2013 by

describing a regional role in its revised service plan. Even so, the

court concluded that South Beebe had secured the requisite

approval from the Adams County Planning & Development

Department (planning commission). As for including the 70 Ranch

in 2015, the court found that a material change had not occurred.

¶ 51 Lessees challenge both rulings. We conclude that South

Beebe did not comply with section 32-1-207(2)(a). However, we

agree with the trial court that including the 70 Ranch did not

constitute a material modification.

1. Additional Background

a. Expansion of Services in 2013

¶ 52 The trial court first found that South Beebe had not made any

“addition to the types of services provided by the special district,”

an event that categorically qualifies as a material modification

under section 32-1-207(2)(a). It made the following subsidiary

findings, with record support.

23 ¶ 53 South Beebe was organized, along with other districts, in 1985

under a “Consolidated Service Plan” (original service plan). The

original service plan outlined the proposed service area as “the

proposed development known as ‘Bromley Park’ . . . located in

northern Adams County, Colorado, generally between the City of

Brighton and Interstate 76.” The original service plan contemplated

that the districts would enter into intergovernmental agreements to

“effectively and efficiently provide the services and/or facilities

outlined” in the original service plan.

¶ 54 Bromley Park Metropolitan District #1, South Beebe’s former

name, proposed to provide “[t]he sanitary sewer, storm drainage

and surface and flood control, street, water and park and recreation

plans for the District.”

¶ 55 Since its formation, South Beebe has expanded its geographic

scope and purpose. In 2003, the district changed its name to South

Beebe to better describe the regional nature of the services and

facilities the district provided. In 2013, South Beebe prepared an

“Updated and Revised Service Plan” (revised service plan) that

reflected many of these changes.

¶ 56 At that time, the property located within the boundaries of

24 South Beebe was much smaller — less than one acre in Adams

County. But the revised service plan contemplated adding other

property so that, as development progressed, South Beebe could

provide regional service to those developments and for operation

and maintenance of South Beebe’s overall storm drainage system.

¶ 57 Then the court turned to whether South Beebe’s providing

services beyond the geographic boundaries of Bromley Park to the

larger South Beebe Draw area constituted a change of a basic or

essential nature. The court found, again with record support, that

the revised service plan anticipated including property in both

Adams and Weld Counties. Although the services that South Beebe

contemplated providing were of a type for which the district had

been originally formed, the benefitted residents of Adams and Weld

Counties far exceeded those within the district’s original

geographical boundaries.

¶ 58 The court concluded:

South Beebe’s shift in purpose, from providing facilities and services for the proposed Bromley Park residential and commercial development located near Brighton, Colorado to a regional district reaching beyond Brighton and providing benefits to Adams County (and contemplating providing services to Weld

25 County) constituted a change to the basic and essential nature of the 1985 Original Service Plan.

South Beebe does not challenge this conclusion.

¶ 59 Next, the court concluded that the revised service plan

constituted a material modification requiring approval by the

Adams County BOCC. The court relied on Sand Hills, which stated

that “the district’s shift in purpose, reflected in the 2013 plan, from

a localized district providing for residential and commercial

development in Lochbuie to a regional district reaching beyond

Lochbuie and providing regional benefits to the county constituted

a change to the basic and essential nature of the 2004 plan.” ¶ 23.

South Beebe does not challenge this conclusion either.

¶ 60 Then the court turned to whether South Beebe had obtained

the requisite approval. It found that in response to South Beebe’s

submitting the revised service plan to the planning commission for

approval, South Beebe had received a letter from the planning

commission.9 According to this letter, Adams County had

9South Beebe points us to two other sources of approval from Adams County — statements from the Adams County Attorney and a separate letter from the Adams County Community and Economic

26 determined that South Beebe was not seeking a material

modification. But the letter continued:

[South Beebe] has expressly stated that it does not wish to do any of those things that would constitute a material modification under State Statute. Rather, the district simply would like to replace its current Service Plan in its entirety, to describe their ongoing and future services to users of the District’s infrastructure. So long as the replacement Service Plan does not contemplate anything constituting a material modification, then the County is without the authority to approve it.

¶ 61 The court noted that under section 32-1-202(1)(a), C.R.S.

2017, a service plan must be “referred to the planning commission,”

if required by the policy of the county. However, because at the

preliminary injunction hearing no party had called a witness from

the planning commission or the Adams County BOCC, the court

recognized that it did not know whether Adams County has such a

policy, whether the planning commission had actually reviewed the

revised service plan, or whether (as might be inferred from the

letter) it had relied only on the representation by South Beebe that

the district was not doing “any of those things that would constitute

Development Director. The trial court made no findings as to either source.

27 a material modification under State Statute.”

¶ 62 Despite these reservations, the court further concluded, “it

appears that South Beebe sought approval from the appropriate

governing authority10 for the 2013 Revised Service Plan.” The court

explained that in this way, this case was distinguishable from Sand

Hills. So, it ruled that lessees had failed to show a reasonable

probability of success on the merits.

b. Including the 70 Ranch

¶ 63 The court also considered whether including the 70 Ranch in

2015, if effective, was a material modification of the revised service

plan requiring approval from both the Adams and Weld County

BOCCs. It found that no such modification had occurred. The

court made the following findings, again with record support.

¶ 64 In 2013, South Beebe and Weld County entered into an

“Intergovernmental Agreement Concerning Inclusion of Property”

(IGA), which recognized the expanded regional scope of the district’s

facilities and services. As acknowledged by the IGA, and not

disputed at the hearing, South Beebe received petitions to include

10Because South Beebe had not yet expanded into Weld County, only Adams County BOCC approval was required for the 2013 revised service plan.

28 certain property located in unincorporated Weld County to be used

for storm drainage ponds and facilities to serve anticipated

development in the area.

¶ 65 The IGA recitals provide:

D. South Beebe has no other property within its boundaries that lies in unincorporated Weld County, therefore, pursuant to statute, South Beebe advised the County of the petitions and requested that the County find that the inclusions do not constitute material modifications of the South Beebe service plan. E. The County is willing to consent to the inclusion of property into South Beebe within Weld County pursuant to this IGA. ¶ 66 In paragraph 2 of the IGA, Weld County conditioned its

consent to including land in the county on the following:

a. South Beebe receives a petition from a landowner for such inclusion; b. South Beebe acts in accordance with the provisions of § 32-1-207, [C.R.S.], with regard to overlapping special districts; c. South Beebe acts in conformance with the provisions of § 32-1-207(2)(b)-(d), [C.R.S.], with regard to the provision of service in unincorporated Weld County and, in particular, South Beebe shall not impose extraterritorial fees on any landowner in unincorporated Weld County without the written consent of such landowner; and

29 d. South Beebe does not attempt to include property without the consent of the landowner utilizing the provisions of § 32-1-401(2), [C.R.S.]. ¶ 67 With respect to material modification, paragraph 3 provides:

South Beebe Draw agrees that if the inclusion of property into its boundaries that lies within unincorporated Weld County occurs in contravention of any of the provisions of paragraph 2 above, such action shall constitute a material modification of its service plan and South Beebe shall be subject to a service plan amendment process with the County and the inclusion of property which triggers such service plan amendment shall be ineffective until such time as the [BOCC] of Weld County approve such service plan amendment. ¶ 68 But South Beebe did not petition to include any Weld County

property in 2013 or 2014, after the IGA was executed. Then on

April 1, 2015, South Beebe told the Weld County BOCC that it had

received a petition for inclusion of Weld County property from

Highland Equities, L.L.C. Weld County responded by noting that no

further action was required in light of the IGA. On that basis,

South Beebe motioned the Weld County District Court and received

an order for inclusion of the Highland Equities property on April 17,

2015. No party at the preliminary injunction hearing argued that

the Highland Equities property was not properly included in South

30 Beebe.

¶ 69 On April 5, 2015, in response to the trial court’s summary

judgment against Sand Hills, Lembke and the L.L.C. petitioned to

include the 70 Ranch in South Beebe. South Beebe did not give

Weld County notice of the petition. On April 28 and 29, 2015,

South Beebe motioned the court to add more Weld County property

to the district — including the 70 Ranch. The court granted the

motions on April 29, 2015.

¶ 70 The trial court recognized that while section 32-1-207(1)

requires the “facilities, services, and financial arrangements” of the

special district to conform to the approved service plan, that section

does not mention the “geographic boundaries” of a special district.

The court also noted that section 32-1-207(2)(a) indicates approval

for modification “shall not be required . . . for changes in the

boundary of the special district.” Still, “inclusion of property that is

located in a county . . . with no other territory within the special

district may constitute a material modification of the service plan.”

§ 32-l-207(2)(a).

¶ 71 The statute also prescribes the procedure to include property

located in a county having no other property within the special

31 district. If a special district changes its boundaries

to include territory located in a county . . . with no other territory within the special district, the special district shall notify the [BOCC] of such county . . . of such inclusion. The [BOCC] . . . may review such inclusion and, if it determines that the inclusion constitutes a material modification, may require the governing body of such special district to file a modification of its service plan in accordance with the provisions of this subsection (2).

§ 32-1-207(2)(a) (emphasis added).

¶ 72 Based on these statutes and the IGA, the court further found

that South Beebe had notified Weld County of its original intent to

include Weld County property within its boundaries in 2013 and

Weld County had the opportunity to determine whether that

inclusion constituted a material modification. As reflected in the

IGA, Weld County determined that the proposed inclusion was not a

material modification, so South Beebe could include the property

without formal service plan modification approval, subject to the

conditions identified in the IGA.

¶ 73 When South Beebe first included Weld County property in

2015, Weld County did not require formal approval at that time,

referencing the IGA. And once South Beebe had Weld County

32 property within its boundaries, including more Weld County

property, specifically the 70 Ranch, presumptively was not a

material modification under section 32-1-207(2)(a). On this basis,

the court concluded that the case was distinguishable from Sand

Hills.

¶ 74 For these reasons, the court ruled that lessees did not have a

reasonable probability of success on the merits as to their claim

that South Beebe’s including the 70 Ranch was an unapproved

material modification of the service plan.

2. Law

¶ 75 As set forth above, the Act determines most questions

involving material modifications to service plans and the requisite

approvals. The Act defines “material modifications” as

changes of a basic or essential nature, including but not limited to the following: Any addition to the types of services provided by the special district; a decrease in the level of services; a decrease in the financial ability of the district to discharge the existing or proposed indebtedness; or a decrease in the existing or projected need for organized service in the area.

Indian Mountain, ¶ 61 (quoting § 32-1-207(2)(a)). And if South

Beebe made such a modification without obtaining the requisite

33 approval, then it “did not have taxing authority.” Sand Hills, ¶ 37.

And a court may enjoin action constituting a material modification.

§ 32-1-207(3)(a).

3. Application

¶ 76 South Beebe does not challenge the trial court’s finding,

discussed in Part V.B.1.a, supra, that “the district’s provision of

services beyond the geographic boundaries of Bromley Park to the

larger South Beebe Draw area constituted a change of a basic or

essential nature,” and thus materially modified its service plan.

This finding means that South Beebe had to obtain BOCC approval.

§ 32-1-207(2)(a). The only question, then, is whether — as the

court concluded — actions by the planning commission, the Adams

County Attorney, and the Community and Economic Development

Director satisfied this requirement. We conclude that they did not.

¶ 77 The facts as found by the trial court are undisputed. South

Beebe submitted the revised service plan only to the planning

commission. The planning commission responded that the district

“is not seeking a material modification.” But the BOCC did not take

34 any action.11

¶ 78 In support of its argument that the planning commission’s

letter was sufficient approval, South Beebe relies on section

32-1-202(1)(a) — “the service plan shall be referred to the planning

commission.” But this statute affords South Beebe no shelter for at

least three reasons.

¶ 79 First, because the parties did not offer any evidence that

Adams County had a policy of referring service plans to the

planning commission, the trial court found its existence

indeterminable for the purposes of the preliminary injunction.

Second, section 32-1-202(1)(a) requires the planning commission to

make a recommendation to the BOCC, which did not happen. And

third, the BOCC never set, much less held, a public hearing — the

final requirement in section 32-1-202(1)(a).

¶ 80 Given these procedural defects, South Beebe seeks to rely on

the Adams County Attorney’s purported determination that the

revised service plan was not a material modification. But the

11Contrast this total lack of Adams County BOCC action with the IGA the Weld County BOCC entered into with South Beebe, in which Weld County acknowledged South Beebe’s proposed inclusions and determined they were not material modifications.

35 county attorney did not testify, and the trial court made no such

finding. As well, the testimony cited by South Beebe concerning

purported action by the Adams County Attorney is double hearsay

and conflates such action with the letter discussed in the following

paragraph.

¶ 81 South Beebe also refers to a letter from the Community and

Economic Development Director saying that, as to the revised

service plan, “we do not find the need to process these changes

through any formal Adams County review process.” But the statute

does not allow the director to act for the BOCC. § 32-1-207(2)(a)

(“[M]aterial modifications . . . may be made . . . only by petition to

and approval by the board of county commissioners . . . . ”)

(emphasis added); UMB Bank, N.A. v. Landmark Towers Ass’n, 2017

CO 107, ¶ 22 (courts do not add to or subtract words from a

statute).

¶ 82 Based on supposed action by the Adams County Attorney and

the letter from the director, South Beebe asserts that, “[i]n essence,

the Adams County [BOCC] exercised its discretion . . . consistent

with the permissive language of C.R.S. § 32-1-207(2)(a).” This

assertion misses the mark, both factually and legally.

36 ¶ 83 First, whatever South Beebe means by “in essence” is unclear.

The statute requires ultimate, not delegated, action by the BOCC.

§ 32-1-207(2)(a) (“[M]aterial modifications . . . may be made . . . only

by petition to and approval by the [BOCC] . . . .”) (emphasis added);

see also Weitz Co. v. Mid-Century Ins. Co., 181 P.3d 309, 313 (Colo.

App. 2007) (“‘[O]nly’ is a term of limitation.”). And that did not

occur.

¶ 84 Second, South Beebe conflates two separate provisions of this

section. A special district may make a material modification “only

by petition to and approval by the [BOCC].” § 32-1-207(2)(a). Still,

approval is not required “for changes in the boundary of the special

district,” although “[t]he [BOCC] . . . may review such inclusion.”

Id. (emphasis added). The latter discretionary language applies only

to boundary changes; it does not change the approval mandated for

other changes. And the boundary change question is addressed

separately below.

¶ 85 But even accepting all of South Beebe’s arguments, the trial

court still found, albeit only for purposes of the preliminary

injunction, that the revised service plan was a material

modification. True, “findings made by a trial court after a

37 preliminary injunction hearing are not determinative of the ultimate

merits of the case.” Phoenix Capital, 176 P.3d at 839. But we do

not understand, nor does South Beebe explain, why a similar

finding after a trial on the merits would not trump contrary

determinations by the county attorney, if any, and the director.

¶ 86 The trial court also noted that under the revised service plan,

South Beebe would submit any potential material modification to

“the County Planning and Development staff for determination of

whether the modification is material.” But section 32-1-207(2)(a)

does not refer to action by a county planning commission. It

mandates “approval by the [BOCC].” South Beebe cites no

authority, nor are we aware of any in Colorado, holding that a party

subject to a statutory requirement can somehow unilaterally dilute

that requirement.

¶ 87 Finally, South Beebe’s assertion that “because the Trial Court

found that the District properly sought approval from the Adams

County [BOCC], the Trial Court did not abuse its discretion” misses

the mark in two ways.

¶ 88 First, the court referred to “the appropriate governing

authority,” not to “the Adams County BOCC.” If the court

38 considered the planning commission to be “the appropriate

governing authority,” it made an error of law.

¶ 89 Second, and more importantly, to the extent that the court

focused on South Beebe’s having “sought approval,” the statutory

requirement of BOCC approval is not measured by a special

district’s efforts to obtain that approval. § 32-1-207(2)(a) (“by

petition to and approval by the [BOCC]”) (emphasis added); UMB

Bank, ¶ 22. In other words, even if in good faith South Beebe had

perceived the planning commission as a stand in for the BOCC,

South Beebe made a legal error. And the trial court’s analysis

overlooked it.

¶ 90 For all of these reasons, we conclude that lessees have a

reasonable probability of success in establishing that South Beebe

did not obtain the requisite Adams County BOCC approval.12

Because the trial court dissolved the temporary restraining order

and denied a preliminary injunction on this ground alone, without

reaching the other Rathke factors, we remand the case to the court

12 Our holding is limited to the particular facts presented. We express no opinion on the outcome under other scenarios, such as if the planning commission had gone to the BOCC and been told there was no material modification or if a BOCC refuses to take further action on a proper application by a special district.

39 to consider the other Rathke factors, make findings as to those

factors, and reconsider whether a preliminary injunction should be

entered. See Anderson v. Applewood Water Ass’n, 2016 COA 162,

¶ 1.

b. Inclusion of the 70 Ranch

¶ 91 Lessees also assert that the trial court erred in concluding that

South Beebe’s including the 70 Ranch was not a material

modification. We reject this assertion.

¶ 92 Because section 32-1-207(2)(a) exempts “changes in the

boundary of the special district” from the BOCC approval

requirement for material modifications, boundary changes alone are

presumptively not material modifications. See Beeghly v. Mack, 20

P.3d 610, 613 (Colo. 2001) (“[T]he inclusion of certain items implies

the exclusion of others.”).

¶ 93 In contrast, a change that involves “inclusion of property that

is located in a county . . . with no other territory within the special

district may constitute a material modification.” § 32-1-207(2)(a)

(emphasis added). In this latter situation, the district must give the

county notice; but the county need not approve the inclusion. Id.

(“The [BOCC] . . . may review such inclusion . . . .”) (emphasis

40 added). And “‘may’ denotes a grant of discretion.” Gerganoff, 241

P.3d at 937. And as for including additional property in a county

that the special district already occupies, the statute does not even

require that the district give notice.

¶ 94 Lessees push back on the presumption that boundary changes

are not material modifications. As they see it, Sand Hills held that

an inclusion of “substantial acreage” — such as the 70 Ranch’s

13,000 acres — is in and of itself a material modification. But Sand

Hills does not bear the weight lessees place on it.

¶ 95 Granted, the division did say that the “geographic shift in

2009 to include the 70 Ranch property . . . was . . . a material

modification,” and that “inclusion of the 70 Ranch property . . .

changed [Sand Hills’] basic or essential nature, because new,

substantial acreage (13,000 acres)” was added. Sand Hills,

¶¶ 32-33. But the division did not rest its conclusion solely on the

fact or size of the inclusion. Rather, it focused on three aspects of

the district’s conduct: “the 2009 addition of the 70 Ranch property,”

“the 2011 complete geographic shift to the 70 Ranch property

(removing all Lochbuie property),” and “the district’s shift from a

local focus with the purpose of providing local necessities for the

41 construction of the Altamira Development to a regional focus

providing services beyond Lochbuie’s boundaries.” Id. at ¶ 20.

¶ 96 The 70 Ranch property was the same when South Beebe later

included it. But unlike Sand Hills, South Beebe did not have only a

“local focus,” limited to servicing the needs of a particular

development, before it included the 70 Ranch. Rather, as the trial

court found,

[o]ver the many years since its formation, South Beebe entered into a number of intergovernmental agreements and expanded its geographic scope and purpose. In 2003, the district changed its name to South Beebe to better describe the regional nature of the services and facilities being provided.

¶ 97 As well, the trial court concluded that South Beebe’s 2013

revised service plan described “a shift in purpose” from a local to a

regional service provider. On this basis, Sand Hills is

distinguishable. Unlike in Sand Hills, South Beebe’s shift from a

local to a regional service provider was incremental, beginning in

2003 — long before the 70 Ranch was included. But Sand Hills

remained a local provider until it included the 70 Ranch. Thus, the

mere size of the 70 Ranch did not make its inclusion a material

modification; rather, the inclusion changed the “basic or essential

42 nature” of Sand Hills. In contrast, because South Beebe had

already taken on a regional role, the inclusion simply expanded the

region South Beebe served.

¶ 98 Still persisting, lessees argue that the exemption from BOCC

approval should be limited by the word “only.” See § 32-1-207(2)(a)

(“Approval for modification shall not be required for changes

necessary only for the execution of the original service plan or for

changes in the boundary of the special district . . . .”) (emphasis

added). In other words, according to lessees, boundary changes

could be material modifications requiring BOCC approval if those

changes necessarily encompass other changes, particularly “[a]ny

addition to the types of services provided.” Id.

¶ 99 To bolster this interpretation, lessees explain that along with

including the 70 Ranch, South Beebe undertook other projects

begun by Sand Hills that found no mention in South Beebe’s

original service plan, such as “construction of a 6,000 acre foot

reservoir” located on the 70 Ranch. And lessees assert that this

undertaking added to the types of services South Beebe provided, a

modification the statute explicitly labels as material. See § 32-1-

207(2)(a).

43 ¶ 100 To begin, the word “only” in section 32-1-207(2)(a) modifies the

phrase “for the execution of the original service plan,” not “for

changes in the boundary of the special district.” See Holliday v.

Bestop, Inc., 23 P.3d 700, 705 (Colo. 2001) (“Words and phrases [in

our statutes] shall be . . . construed according to the rules of

grammar and common usage.” (quoting § 2-4-101, C.R.S. 2017))

(alteration in original).13

¶ 101 Even so, we perceive no basis on which to interpret the

exemption clause — “[a]pproval for modification shall not be

required . . . ” — as precluding application of the prior sentence

requiring approval for certain identified material modifications —

“approval of modifications shall be required [as to] . . . changes of a

basic or essential nature, including but not limited to the following:

. . . .” § 32-1-207(2)(a); see also City of Aurora ex rel. Util. Enter. v.

Colo. State Eng’r, 105 P.3d 595, 608 (Colo. 2005) (“Exceptions to the

general laws should be narrowly construed. The legislature, not the

court, should expand these exceptions if desirable.”) (citation

13 Although we have not found a Colorado case dealing with a similar grammatical structure, in comparing the two phrases, each describes a separate category of change; and “only” appears in the first category, but not the second.

44 omitted). In other words, we agree with lessees to the extent that if

a boundary change also resulted in other changes of “a basic or

essential nature,” BOCC approval would be required.

¶ 102 Still, this interpretation leads to the question whether South

Beebe added to its types of services when it took over projects

previously proposed by Sand Hills for the 70 Ranch. The trial court

expressly found that South Beebe had not added to the types of

services provided. The record supports this conclusion.

¶ 103 Sand Hills’ 2013 revised service plan — which lessees argue

was applicable to the 70 Ranch — proposed to provide

“construction, acquisition and installation of local and regional

public improvements, including street and traffic signals, and

water, sewer, storm drainage and park and recreation facilities.”

Likewise, South Beebe’s 2013 revised service plan proposed

“construction, acquisition, installation and maintenance of streets

and safety control, street lighting, landscaping, storm drainage,

television relay, water, sanitary sewer, transportation, mosquito

control, and park and recreation improvements and facilities.”

¶ 104 Every type of service Sand Hills had proposed was also

proposed by South Beebe. By including the 70 Ranch, South Beebe

45 did not propose any services beyond what Sand Hills had proposed.

And to the extent minor variations in the proposed services

language exist, the court’s conclusion is still consistent with the

definition of “type.” See State v. Kalman, 887 A.2d 950, 955 (Conn.

App. Ct. 2006) (“According to the American Heritage Dictionary of

the English Language (New College Ed. 1981), the word ‘type’ is

defined as: ‘1. A group of persons or things sharing common traits

or characteristics that distinguish them as an identifiable group or

class; a kind; category.’”).

¶ 105 Lessees attempt to shift the focus away from types of services

to specific projects Sand Hills planned on completing. This

argument falls short. The statute does not address — and the trial

court properly did not consider — the addition of specific projects.

¶ 106 Given all this, we agree with the trial court that because South

Beebe’s including the 70 Ranch was not a material modification, no

BOCC approval was required. And unlike in Sand Hills, because

South Beebe had previously included other property in Weld

County, it did not even have to provide notice to Weld County before

including the 70 Ranch.

¶ 107 Lessees assert that in the IGA, Weld County had improperly

46 given advance consent to a material modification — which ripened

when South Beebe included the 70 Ranch. But the trial court

found that in the IGA, South Beebe had given Weld County notice of

its intent to include property located in that county. As well, South

Beebe gave specific notice of its intent to include the Highland

Equities property. The county responded that no further action

would be necessary. These findings are undisputed. Nor have

lessees raised any procedural defects in the Highland Equities

property inclusion.

¶ 108 For these reasons, this assertion need not be resolved. And

because the IGA is not in play, we also need not decide whether

South Beebe failed to comply with the IGA by acting on a petition

that did not include all owners of the mineral estate underlying the

70 Ranch.

¶ 109 In the end, we conclude that because including the 70 Ranch

was not a material modification, the trial court acted within its

discretion in ruling that lessees had not shown a reasonable

probability of success in challenging inclusion of the 70 Ranch as

an unapproved material modification.

47 C. Application of Section 32-1-107(2) to Possible Overlap of South Beebe’s and Sand Hills’ Services Within the 70 Ranch ¶ 110 Lastly, lessees contend that under section 32-1-107(2), South

Beebe cannot levy and collect taxes to support services if those

services are already being provided by another special district.

Specifically, they continue, because the 70 Ranch property remains

within Sand Hills, South Beebe is unlawfully taxing them to provide

some of the same services that Sand Hills provides.

¶ 111 The trial court concluded that lessees had not shown a

reasonable probability of success on the merits of this claim for two

reasons.

¶ 112 First, the trial court considered the Sand Hills division’s

conclusion that because the 2009 geographic shift from a local to a

regional service provider was a material modification, the attempted

inclusion of 70 Ranch into Sand Hills without the approval of the

Weld County BOCC violated the Act. The court explained that “[a]

natural reading of the Court of Appeals’ decision is that inclusion of

70 Ranch was ineffective absent appropriate approval. Thus, it is

unclear to the Court whether the 70 Ranch property is within or

48 without the geographic boundaries of Sand Hills.”

¶ 113 Second, the court read section 32-1-107(2) as “not necessarily

preclud[ing] one district from including property within the

boundaries of another district; rather the statute prohibits one

district from providing the same service as another district.” Then

the court observed “it was not controverted at the preliminary

injunction hearing that Sand Hills currently is not developing or

constructing the regional water infrastructure or providing the

regional water services South Beebe intends to provide.”

¶ 114 Lessees assert that the 70 Ranch remained in Sand Hills and

that they raised with the trial court whether South Beebe provided

services overlapping those of Sand Hills.

¶ 115 Under section 32-1-107(2), subject to an exception not

relevant to this case, “no special district may be organized wholly or

partly within an existing special district providing the same service.”

(Emphasis added.) This section “prohibits the creation of a new

district within an overlapping geographical area being served by an

existing district rendering similar services.” Jefferson Ctr. Metro.

Dist. No. 1 v. N. Jeffco Metro. Recreation & Park Dist., 844 P.2d

49 1321, 1325 (Colo. App. 1992) (emphasis added); see also Plains

Metro. Dist. v. Ken-Caryl Ranch Metro. Dist., 250 P.3d 697, 702

(Colo. App. 2010) (“That Act prevents a district from organizing

within the boundaries of ‘an existing special district providing the

same service,’ unless various approvals are received.”) (emphasis

added) (citation omitted). The parties have not cited, nor have we

found, any other authority interpreting this statute.

¶ 116 As to the trial court’s first reason, the Sand Hills division did

not say whether Sand Hills’ violation of section 32-1-207(2)(a) — by

adding the 70 Ranch property without notice to or approval by Weld

County — voided the inclusion of that property. The division’s

silence on this point is consistent with the parties’ claims, which

dealt only with the district’s legal authority to collect taxes and a

possible refund.

¶ 117 Recall, under section 32-1-207(3)(a), a court may enjoin action

constituting a material modification. But the Act neither empowers

a court to void a material modification for lack of approval nor

provides that such a modification made without the required BOCC

approval is void. The parties do not cite, nor have we found,

50 Colorado authority answering this question.

¶ 118 In Upper Bear Creek Sanitation District v. Board of County

Commissioners, 715 P.2d 799, 802 (Colo. 1986), the court said “[a]s

a special district organized pursuant to the 1965 Act, the District’s

modified service plan required approval of the Board before the

changes contemplated therein could be implemented.” Like the Act,

the supreme court could have said that the modified service plan

was void for lack of approval, but it did not do so.

¶ 119 For these reasons, we decline the invitation to decide whether

the Sand Hills decision voided the 70 Ranch’s inclusion into Sand

Hills. Thus, because, at the time of the preliminary injunction

hearing, the 70 Ranch could have remained in Sand Hills, we turn

to the trial court’s second reason.

¶ 120 Beginning where the trial court did, we also read section

32-1-107(2) as prohibiting overlapping services, not merely

overlapping territory. As to the court’s finding that overlapping

services was not raised at the preliminary injunction, an appellate

court “is obligated to search the record for evidence to support the

findings of fact.” Bockstiegel v. Bd. of Cty. Comm’rs, 97 P.3d 324,

328 (Colo. App. 2004). And we will decline to consider an issue

51 raised for the first time on appeal. See, e.g., State of Colo. Dep’t of

Health Care Policy & Fin. v. S.P., 2015 COA 81, ¶ 29.

¶ 121 The question of overlapping services was raised before the

hearing. Intervenor Noble Energy’s reply in support of the motion

for a preliminary injunction noted, “South Beebe attempts to argue

that it is not providing overlapping services in violation of C.R.S.

§ 32-1-107(2).” However, the thrust of this argument was whether

the 70 Ranch remained in Sand Hills: “the Weld County District

Court’s orders make clear that South Beebe may not include and

provide services for [the] 70 Ranch while it is still within Sand Hills,

which is organized to provide the same services.” Noble Energy’s

reply brief did not discuss any evidence of overlapping services.

And as noted above, lessees’ written closing argument did not

mention overlapping services.

¶ 122 True, after the hearing, lessees filed a notice of supplemental

authority “relevant to Plaintiffs’ argument that the same property

cannot be included within two districts providing the same

services.” Defendants objected to the supplemental authority,

arguing in part:

52 Given that Sand Hills [lost] its taxing authority and ability to receive revenue, it is indisputable that Sand Hills can no longer provide services. Thus, there can be no overlapping services with South Beebe and exclusion of [the] 70 Ranch from Sand Hills is immaterial to whether the inclusion of [the] 70 Ranch into South Beebe is proper.

¶ 123 But none of these filings called the trial court’s attention to

services that were — or were not — overlapping. Instead, the

parties alerted the trial court to the legal question of whether the 70

Ranch remained in Sand Hills. And no party asked the court to

resolve the factual question of overlapping services.

¶ 124 Therefore, we conclude that the question of whether services

overlapped is not properly before us. See Qwest Servs. Corp. v.

Blood, 252 P.3d 1071, 1087 (Colo. 2011) (To preserve an issue for

appeal, the attorney must present arguments that “alert[] the trial

judge to the impending error.” (quoting Am. Family Mut. Ins. Co. v.

DeWitt, 218 P.3d 318, 325 (Colo. 2009))).

VI. Conclusion

¶ 125 The trial court’s entry of summary judgment on the lessees’

claim under section 32-1-401(1)(a) is affirmed. The court’s order

denying lessees’ motion for a preliminary injunction is vacated

53 based on our holding that the lessees established a reasonable

likelihood of success on the merits as to whether South Beebe

violated section 32-1-207(2)(a) by failing to obtain Adams County

BOCC approval.

¶ 126 On remand, the trial court must consider the remaining

Rathke factors, make findings of fact on each of those factors, and

reconsider whether to enter a preliminary injunction. The

temporary injunction previously entered by this court, subject to

compliance with any bonding orders entered by the trial court, will

remain in effect until the trial court enters its renewed ruling on the

motion for preliminary injunction. The temporary injunction

entered by this court will automatically dissolve upon the entry of

the trial court’s order on remand granting or denying the motion for

preliminary injunction.

JUDGE BERGER and JUDGE NIETO concur.