Marsha Looper of Colorado Citizens for Property Rights said that the proposal's supporters were 38,000 signatures short of winning a spot on the ballot.
The group had wanted to amend the state constitution to bar government from using the power of eminent domain to take homes, farms and businesses and convert them into shopping centers to boost sales tax revenues.
Governor Owens recently signed a similar ban on eminent domain powers.
But Looper worried that home-rule cities could argue the law doesn't apply to them.
She said the group may try to get the issue on the ballot in 2008.