We were the Poster Child for Metro District Dissolution
The information presented below was extracted from Colorado’s Department of Local Affairs (DOLA) website (Financial Statements and End of Year independent Audits, Annual Reports with Budgets, Intergovernmental Agreements [IGA]) and the City and County website and is believed to be accurate. The following Annual audits were not available on DOLA, 2011, 2019, 2020, 2021, and 2022. After 2019, Annual Financial Statements Audits were relocated to another state website.
Please list this posting under disappointment with Metropolitan District Operation and Board Oversight.
I live in a Metropolitan District of 2,650+ homeowners and ten or more commercial property owners. Within seven years of the beginning of property accumulation, the Metropolitan District #1 was extinguished and the 30 year, straight line amortization had begun with an average interest rate of 5.138% and outstanding bond balance of $15,070,000. The community was NOT cash strapped, in 2004, there were approximately 2,550 completed homes with another 100 to come on line by 2014. The annual principal and interest payment approximated $980,000 or 14.7 Mill Levy in 2025. Our community was the Poster Child for Metro District Termination Study, well positioned to provide PERMANENT TAX RELIEF to our homeowners, with Federally Related Mortgages to repay.
But wait, the Developer controlled Board and -or Bond Providers were NOT ready to release this Cash Cow MD#2. In 2012, GASB, issued statement #61 and the MD#2 was encouraged to adopt this new accounting mythology, permitting the Refunding of current 2004 Bonds and adding $2,000,000 (approximately) to the Metro Districts’ total outstanding obligation, (the entire amount of the new $2,000,000 funding was used for bond issuance expenses, no cash out to the Metro District), and changing the straight line bond amortization re-payment to an Interest amortization based on a reduced bond repayment schedule the first ten years of the new bond issuance. Issuing new Refunding Bonds does not necessarily equate to paying off the initially issued bonds. Colorado case law supports the theory that all MD#2 are obligated to repay ALL bonds issued by the MD#2. In 2013, our MD#2 had issued at least $27,000,000 in Bond Obligations, but only trace the last bonds issued.
A long story short, instead of only owing $5,500,000 bond principal after 20 years, (2024) our Metro District#2’s outstanding bond balance is almost $11,000,000. Now our homeowners are being asked to repay approximately 66% of the total Refunding Bond obligations in the next ten years, in my opinion, adversely impacting the homeowners’s ability to repay their Federally Related Mortgage Transactions. It appears the early reduction of bond principal payment is designed to set up the MD#2 to seek another refinancing and push the termination deadline into 2054! Colorado Revised Statutes 32-1-xxx, requires Metropolitan Districts to Dissolve as soon as possible, in order to free up resources for other public service needs or General Obligation payments. The spirit of 32-1-xxx is to prevent unnecessary proliferation and fragmentation of local governments and to avoid excessive diffusion of local tax sources!
Colorado legislators have a history of eliminating provisions in transactions, not in the public interest of its citizens ( remember the Rule of 78 and Default Judgment Clauses in consumer contracts?). It would be wise for the legislators to prohibit GASG Statement 61, and require all MD#2 to adopt Straight Line accounting methodology.
If this transaction is a pattern or practice imposed on MD#2s, then a lot of money is being drained from MAIN STREET and given 17th STREET!
The community was told the refinancing was necessary to take advantage of lower interest rates and the outside Auditor proclaims how much less the MD#2 is paying in Bond Principal and interest in the new Refunding bond issue compared to the original bond issue. Simply NOT true, are comparing Apples to Oranges because over $1,000,000 was expenses in administration cost and not classified as interest expense. Of course, if the bonds are again Refunded, none of their misstatement about rate reduction will never come true.
Thank you for visiting the community engagement tool for the Metropolitan District Homeowners’ Rights Task Force.
Pursuant to HB23-1105, this project has now concluded. On behalf of the Department of Regulatory Agencies and the Division of Real Estate, we want to thank you for your interest and participation.