Attorney General to Appoint an Special Prosecutor to deal with the Abuses in MD

I am surprised and disappointed with the lack of comments for the committee to review. This goes to show how deep the Metropolitan District problems are hidden in multiple bond refinancing and the issuance of interest rate swaps and collateral requirements for older bond offerings, with proceeds of new bond offerings.

I refer the committee to Julia A. Beckett’s 1995 Dissertation on Bankruptcy of Developer District Governments in Colorado. There is no need to investigate further than Ms. Beckett’s Dissertation and come up with consumer, and homeowner protections against this once “Cottage Industry”, where to lawyers are the play writers in this type of Metropolitan District Tragedy!

“ Local governments are expected to be fiscally sound and onemunicipal bankruptcy is uncommon. There were fifteen developer district bankruptcies in the State of Colorado from 1987 to 1992. These developer districts were formed to aid real estate development and growth. This cluster of municipal bankruptcies raises issues of whether the economy of the 1980s or the state government structure were the causes.

Theory posits that developer districts governments are formed in response to citizen demands for services and that the state that authorizes local governments will exert controls to ensure responsible governance. Bankruptcy theory expects states to take actions to alleviate municipal fiscal emergencies.

Analysis of developer district bankruptcies included systemic consideration of the districts' formation, operations and fiscal crises. Qualitative methods used were: documentary analysis, statutory review and individual interviews. Documentary analysis compared a national sample of states' developer district statutes to Colorado's statutes.

This research found inherent structural flaws in the formation process that permitted developer districts to be formed without proof of need and without representation by the public they were expected to serve.

This research demonstrated that bankruptcies were managerial decisions to remedy a preexisting crisis. However, the system flaws that allowed these developer districts to overextend debt continues.

This study demonstrates the need for a formation process that considers the public to be served by these districts.

***** Finally, there remains the need for centralized state review and appropriate controls over these start-up governments.*****

These developer district bankruptcies made compelling news stories by pitting property owners against bondholders, while naming the developers as "the bad guys." The scandal had all the features of a morality play: threats of homeowners being taxed out of their homes; bondholders losing their life savings through what used to be a safe investment--municipal bonds; developers getting rich and slipping away without responsibility; and state government was not fixing the mess.”

The Colorado Attorney General needs to appoint a Special Prosecutor (Like Mr Henderson’s law firm) with R.I.C.O. Powers to claw back unjust enrichment proceeds which are protected by normal statute of limitations.