What started as a disagreement between two governing bodies in the town of Manitou Springs and grew to encompass a dispute over the maintenance of public restrooms, has escalated into an unusual situation involving a legal dispute and a rift between two brothers, each with a prominent role in the groups at loggerheads.

“I don’t think this marriage can be saved,” said Mayor John Graham, referring to the now tenuous relationship between City Council and the Manitou Springs Metropolitan District.

Members of the district, a quasi-municipal corporation and political subdivision of the state, anticipate a drawn-out court process, said the mayor’s brother, Mike Graham, a director on the metropolitan district board.

At issue: which entity should own and oversee the two downtown public parking lots — Wichita and Smischny. Both were bought and redeveloped by the district using taxes raised among business owners and residents within the district.

The metropolitan district was formed in 1989 by the city’s downtown merchants to provide parking facilities “to promote easy and affordable means for people to visit downtown Manitou Springs businesses and spend time and money downtown,” according to a petition filed in El Paso County District Court. It also was charged with creating a pedestrian walkway and expanding parking opportunities, which the district says it has done.

“The district has efficiently and effectively provided parking services and facilities for the mutual benefit of the public and downtown Manitou Springs businesses,” board Chairman Shemi Shlomo said in a statement to The Gazette.

“The district is able to provide these services at little cost to its taxpayers, as the revenue from the district’s parking facilities are invested into improving the existing parking lots and expanding parking facilities in downtown Manitou Springs,” he said.

The skirmish began last year, when a long-standing intergovernmental agreement for facilities’ maintenance by the city fell apart, a contract the mayor said had been fraught with disagreements. He said the city was providing maintenance services like shoveling snow, cleaning bathrooms and repainting stripes for the parking lots “basically at cost.”

After the deal ended, the metropolitan district locked the public restrooms at one of the parking lots it owns. Amid a “devolving” relationship, John Graham said the closure prompted the city to start the process of dissolving the district.

“We got kind of upset with them,” he said.

City Council voted in favor of the dissolution in February. Since a court order formed the metropolitan district, its dissolution would need to be adjudicated in court, too. The district filed its response petition in April, saying it was still implementing its service plan and should be allowed to continue existing.

Metropolitan districts typically are formed to finance public infrastructure projects, are separate from city or county governments, and operate under their own elected boards and taxing authority.

The district in Manitou and the opposition to potential closure is unusual in that its work is contained within the city, according to some in the industry.

The district is not required to give its consent to dissolve under the law, however, the court document states that dissolving the district “would not reduce administrative costs or enhance governmental efficiency.”

This year, the city has been increasing its parking portfolio, with the newly constructed Dillon lot expected to open this month.

At a meeting in February, Manitou Springs Mayor Pro Tem Natalie Johnson said that dissolving the metropolitan district would allow the city to “unify its parking infrastructure.”

Money from parking fees could benefit the city’s Business Improvement District or be under the charge of a new board that would handle the funding, she suggested.

“We believe it is time to manage these assets in a more coordinated fashion,” she said. “While we do not enjoy using a resolution in our authority as a city this way, every change results in new opportunities.”

Now, the issue has become what may be a unique case in Colorado law — a municipality attempting to force the elimination of a metro district that wants to remain in place.

To consider dissolution, the metropolitan district contends that the city should offer a plan to transfer services and pay fair market value for the district’s assets.

City Councilwoman Julie Wolfe said in February that the assets of the metropolitan district could pass to the city without reimbursement.

“We’re not spending any city money to do this,” she said.

The metropolitan district sees the city’s actions as “a power grab aimed at diverting money away from downtown businesses,” and an “expensive and misguided effort to commandeer the district’s assets and resources for itself,” Shlomo said.

Shlomo believes the city’s “unilateral attempt to eliminate the district” is not in the best interest of the constituents, that is, the city’s downtown businesses.

“The district has no confidence that the city will provide comparable support to downtown Manitou Springs businesses,” Shlomo said.

Furthermore, he said, taxpayers of the city and the district are footing the bill for the litigation.

The schism comes at a time when parking revenue from the two lots that have been under the purview of the metropolitan district is growing.

At the district’s June 11 meeting, a financial report showed total revenue increased substantially for the month of May over last year, from nearly $40,000 in May 2024 to nearly $52,000 last month.

The district also bought the site of the Ute Pass Motel downtown last year to redevelop as a third parking lot. According to the court petition the district filed, $500,000 of the $850,000 purchase is a loan that will be financed over the next 10 years.

Tax revenue for the district has declined over the years as the initial mill levy decreased and has been replaced by revenue from the parking lots.

The district earned more than $394,000 from the lots in 2023, according to the petition, which is more than the district has ever collectively raised in tax revenue since its inception.

The court could dismiss the dissolution plans or order each party to present competing plans at a hearing, the petition states.

Since the city and the district have not been able to agree on how to transfer the services, assets and debts, the issue could be put to the 168 eligible voters of the district. A special election could include voters weighing in on one of two competing plans or a dissolution plan created by the court, according to the reasoning of the district’s petition.

What will happen is not easy to say, since this exact situation might be new to Colorado case law, according to officials. Mayor Graham said that the city was in the process of discussing the implications of state statute.

“We’re working through that, and the metro district is supposed to be working through that, too,” he said.

The Graham brothers are no longer speaking because of the situation, John Graham said.

“It’s just contentious,” he said.

The next scheduled court date is a review hearing on June 18, according to judicial documents.