BY FREDA MIKLIN – GOVERNMENTAL REPORTER
The CityB of Greenwood Village gave its permission for the Marin Metropolitan District (the District) to be formed in 2007, including approving it to sell quasi-governmental tax-free bonds totaling $31,485,000 to finance the construction of infrastructure for the European Village, a residential development that was supposed to be built at 5555 Greenwood Plaza Boulevard in Greenwood Village. The bonds were issued and purchased by Colorado Bondshares, a tax-exempt fund.
Facts later revealed that the city was given fraudulent representations regarding the inclusion of residents of the Landmark Towers in the District. The European Village was never built because the principal of the developer, Zach Davidson, converted somewhere between $7 million and $8 million of the bond proceeds to his personal use and when he was indicted for the crime in 2013, he committed suicide. After countless lawsuits, in September 2020, a final order and judgment was entered confirming that Landmark Towers’ residents had no liability for any taxes levied by or any debts incurred by the District.
On June 7, Paul Oberman and Richard Nathan, Landmark residents representing its HOA, asked the GV city council to initiate the legal process provided under state law to have the Landmark Towers removed from the Marin Metropolitan District entirely.
Nathan told the council, “The reason we’ve petitioned you here to exclude us (The Landmark) from the District…is that it started here in 2007, and the Court of Appeals… in May of 2018…(said) that there was a fraud on Greenwood Village…in what was done here in 2007…As a result, the tax obligations of the people in The Landmark were permanently enjoined…We have no business being in the district, and we are asking you to let us out.”
Attorneys Kim Seter and John Walsh appeared at the city council meeting remotely on behalf of Century at Landmark, LLC which owns the 11.4-acre property at 5555 Greenwood Plaza Boulevard, just south of the Landmark Towers. Century bought that land on March 16, 2016 for $11 million, hoping to build luxury townhomes on it. In 2018, when the property was still bare and no development had been approved, the Greenwood Village City Council changed the city’s comprehensive plan to say that residential development in that location “will be discouraged” if it “exceeds on average four dwelling units per acre.”
In the fall of 2019, plans were announced to build a high-end assisted and independent living facility for senior citizens at the location, which GV believed fit the goals of its comprehensive plan. That project got as far as a community meeting on November 19, 2019 before the developer decided not to go forward with the project. No plans have been announced since then for the property.
Seter argued against excluding the Landmark Towers from the district because it would leave the Century property as the only taxpayer available to pay the District’s liabilities. In his opinion, it would be better for everyone if the city and Landmark worked with Century to get the District’s debt to Colorado Bondshares resolved. A certified shareholders report filed by Colorado Bondshares with the U.S. Securities and Exchange Commission for the year ended September 30, 2020 says that the outstanding principal due from the District is $17,485,000, but the actual value of the debt is $1,573,650 and no interest is being accrued on it
Seter’s argument fell on deaf ears and the city council voted unanimously to approve Landmark’s request when GV City Attorney Tonya Haas-Davidson told the council that there was no legal reason for Landmark to remain in the district because “they can’t be taxed, there are no services being provided (by the District), they should be excluded,” and it was proper for the city to petition the court on Landmark’s behalf.
One of the unusual traits of a metropolitan district in Colorado is that it must be approved by the elected officials where it’s located, usually a city council, even though the city bears no responsibility for the debts of the district or any of its actions.
Metropolitan districts are commonly used to allow a developer to borrow money by selling tax-free quasi-governmental bonds to finance the construction of the infrastructure (streets, water, sewer, utilities, etc.) in a new development. The debt is repaid over time by the residents of the metro district through property tax levies. While some would argue that the cost of infrastructure should be borne by the developer, not the people who buy homes in the development, this arrangement has become common in Colorado and gone virtually unnoticed, or at least not understood, for many years. A series of articles in the Denver Post starting in 2019 about metro districts provided disturbing examples of how residents, who are usually unaware when they buy homes in a new development that has a metro district, can get stuck financially if the district, which is usually controlled by the developer, is unable to meet its financial obligations on its bonds. The series of articles drew attention to the long history of poor disclosure and the lack of accountability for metro districts when things go wrong.