Metropolitan District Homeowners’ Rights Task Force

Comments/Considerations On The Task Force's Interim Report

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  Real Estate Agent Metro District Experience

  by ErichM, over 2 years ago

  I've been a real estate agent in Northern Colorado as Metro districts have proliferated around me. The story that agents were always told was that the purchase price of homes in districts were cheaper because the cost of the infrastructure was included in the mill levy and not in the price of the home. This line of thinking seems to be going away now, as whenever a developer brings a MD proposal to the city of Loveland, they are asked point blank if the homes are being sold at a reduced price due to the MD and the answers I've... Continue reading

  I've been a real estate agent in Northern Colorado as Metro districts have proliferated around me. The story that agents were always told was that the purchase price of homes in districts were cheaper because the cost of the infrastructure was included in the mill levy and not in the price of the home. This line of thinking seems to be going away now, as whenever a developer brings a MD proposal to the city of Loveland, they are asked point blank if the homes are being sold at a reduced price due to the MD and the answers I've seen are; no, they are being sold at market value. Even if homes were being sold at a reduced price, the extra taxes when added to the mortgage make the monthly payment the same or more so in terms of affordability MD's do nothing for consumers.

  Back to my story, after looking for a home for a couple of years in a hot market my wife and I found a home we thought would work for us that was being built in a MD. I knew it would be more expensive, but I tried to ask what I thought were the right questions and did my research on this district to try to make an informed decision. We closed on our home on July 1, 2022, in December of that year we received a letter from the management company letting us know that we (and all our neighbors) would be charged a $700/year fee starting in January of 2023. Needless to say no one was happy about that, the management company did a very poor job of informing the community about what the fee was for and the rumors started to fly. Not expecting this fee, I wrote to the city council to inform them of this and not many on council (who approve all metro districts) realized this could happen but finally the city attorney confirmed that the service plan did allow for the fee. We eventually figured out that this fee was to keep a balanced budget as there wasn't enough money in the bank to keep the neighborhood running, the developer (backed by the one and only Bill Gates, yes, that Bill Gates) was starting to decrease their contribution.

  I decided to fill a vacancy on the board shortly after all of this happened. It been very eye opening to me in the 9 months I been on the board as to how these things operate, and how much money and all the expenses the homeowners are on the hook for when it really gets broken down beyond telling a consumer your mill levy is "X" and your taxes will be about "Y".

  Let's talk about the money, and I am going to use actual numbers from my district but in studying more MD's as they come up at city council, I am starting to believe that my district is in a better position than many others. (Many of you will recognize Thompson River Ranch and Parkside as two districts in Loveland that were either abusive to their homeowners to the point where people were losing their homes or one that just crashed and burned shortly after take-off when the developer pulled out).

  Our district, as of the end of this year, had roughly just under $24 million in total expenditures to date (with most infrastructure construction completed), our bond was issued for $14 million in December of last year after about 80% of the homes in the neighborhood were completed. The timing of these bonds (issued after most homes are built) begs the question do developers need MD's or are they just trying to recoup expenses? I would argue the latter, if they needed the money upfront, I would think that's when the bonds would be issued. By the time our bond was issued our developer had already made $25,661,250 back from the sale of lots to builders. If they sell the remaining lots at current prices the total they will make is $31,350,000 or roughly 30% profit. If we add in the $14 mil from the bond that brings the number up to $45,350,000 or 90% profit. As a real estate agent, I fully realize that we need developers and developers need to make a profit on the work that they do. When we are talking about increasing profits by more than 50% that homeowners are paying to investors like Bill Gates at a time when homes in Colorado are getting less and less attainable I don't agree with that.

  It sounds like the MD structure allows developers to decrease costs while they are developing in the short term, but the costs really seem to add up once the district is up and running and the homeowners are footing the bill. Here are some real expenses that our district is paying for right now:

  Legal: $60k this might be high this year, but I don't see it dipping below $30k in years to come, this compares to most HOA budgets I see at about $5k/year.

  Audits: $12k/year I don't see these in yearly HOA budgets, but they probably have reserve studies done every 5 years or so.

  Elections: I'm told by our lawyer that these could run us anywhere from $12-30K and these are held every 2 years!

  Bond management fees: $8k year, for some reason the district (homeowners) is paying to manage our bond while other people make money off it.

  Bond interest: For our $14 mil bond we are paying $700k in interest every year! Obviously, interest is paid on the purchase of a home using a loan, but this is double dipping on the interest and forcing owners who pay cash for their homes to pay interest, not fair.

  Consolidation costs: We are fortunate enough to be moving towards consolidation and homeowner control sooner rather than later, but our lawyer tells me that this is going to be in the neighborhood of $25k to do with the Tabor Election and legal work that needs to be done.

  Additional O&M fees: Ours is $700/year and I see many other districts have these fees. Some, I'm sure, are to keep up amenities and to keep those amenities private (there is something else about MD's that makes no sense) but we have no amenities just a budget that has inflated greatly since the developer’s team decided years ago how much it would cost and carved it into stone though the mill levy. This was nothing that was disclosed to people when they bought their homes as it didn't exist before December of last year. For people on fixed incomes, it makes a difference.

  Officer payroll: Our directors should get paid for the time they spend in meetings, but we decided to get rid of that. The decision was made that we can't, in good conscience, get paid while everyone in the neighborhood is paying extra to live here.

  Provider costs for each district: We have 3 districts and it costs us money in triplicate when filings or accounting needs to be done, instead of have just one budget or set of costs like in an HOA.

  Changes in Tax Laws: Another surprise in early 2023 was when I went to the assessor’s website and saw that my mill levy for the district had gone from 65 to 66.95 mills. This was done without notice to residents and was a result of a change in Colorado tax that reduced everyone's taxes but actually raised ours to remain revenue neutral. Now we are going to have to deal with less money in our annual budget due to recent tax changes by the state. I haven't seen the actual numbers yet but am told that they will be similar to Prop HH which would have reduced our profit by about $25k/year.

  I am told that our developer advances (that the district has needed to function for the first few years) function essentially like a silent second. If we are good and keep paying our debt as planned for 30 years, the developer advances will drop off after that time. I was told by our accountant, should the homeowners decide to try to get ahead of the game and pay the debt off early, then the developer can then recoup those costs from us. Essentially, making it a prepayment penalty, I can't say this for sure, but I am guessing that is to make as much money as possible for those who have invested in our bond debt.

  Speaking of people making money off our bond debt, I was told that investors in that bond should be public record. However, when I spoke to our bond advisor, he told me that it's a depository bond (DTC) and the investors in that bond come from many places and he doesn't know who they are. One might think that sounds like a loophole, that could enable developers to buy back the bond to keep making even more money.

  TABOR is something else that concerns me greatly with regards to MD's, someone once told me that we can't build new subdivisions because of TABOR. It took me a while to figure out what that meant. I suppose that one could argue that cities can't issue more debt to put in infrastructure because voters wouldn't approve it. Seems like MD's are structured to get around TABOR rights as the district residents would never vote to take on debt or agree to the IGA's that are involved. Everything is voted on before anyone has purchased a home, by board members who will likely never live in the district and, again, these rules and debt are set in stone by the service plan. Even now as a board member, I cannot vote on anything of significance as I am not part of the controlling district.

  Other concerns about MD's:

  Disclosure: Service plans and other documents, supporters of MD's say that all the information is out there and that it's on the buyers to educate themselves before buying. Service plans tend to be very long (ours is 162 pages) and are written in legalese that is hard for the average person to understand. All the information is available but not always easy to find. It takes looking at various websites and talking to many people to put everything together including but not limited to MD websites, DOLA, bond offerings (ours is 270 pages long), etc. this is more than the average consumer is going to do along with everything else that is involved in purchasing a home.

  Equity: I was told by the president of our board that the only allowable costs that MD's can recover through the bond are common expenses, meaning infrastructure that isn't under residential lots. However, taxes are paid based on the value of someone's home. So, we are all paying for the same common expenses but people with bigger homes or homes that were purchased at a more expensive time in the market are paying more. Sure, some of that is evened out when the county does their assessments but homes that cost more are always going to pay more.

  Paying through mill levies: Our $700 fee was instituted because our taxes hadn't been fully assessed. I really don't understand why a developer would want to pay to keep a neighborhood afloat for the time period before the neighborhood is built out and the additional time it takes for taxes to be fully assessed. It seems like this system is bound to have financial problems in the early going.

  Communication: This has been another big issue for our district, and it comes in many forms. Being required to use the local paper to announce meetings just seems like a waste of time. Meeting times in the middle of the day, when it’s most convenient for management and developer teams, doesn’t work well for residents and they feel purposely excluded. As a board member, I can only have a conversation with one other board member at a time. I realize this is a rule for local governments, but it really makes it hard to get anything done.

  Thank you for your time and consideration, I would love to be able to talk to the task force if that’s a possibility in the future. I’ve really been trying to educate myself and the positions I am taking here I would love to discuss with others. I don’t claim that I am right about everything, but I have yet to have someone give me good evidence that I am wrong. I am always happy to have those conversations. As a Realtor, I feel it's my duty to advocate for my clients and consumers in general and I hope this task force will take my experience to heart and use it for positive change. Lastly, I will say that these experiences and positions are my own, I don’t speak officially for anyone else in my office, association or for any of the committees on which I serve. I do, however, find it interesting that when I am looking at listings on the MLS, I often find the verbiage “No Metro District” featured prominently when a home is outside of a MD.
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  CMDR Response to Second Meeting

  by Metro District Resident , over 2 years ago

  Coloradans for Metro District Reform (CMDR) has issued a response to the second meeting of the Metro District Task Force. The link is below.
  
  CMDR Response to 12/18/23 Meeting
  

  
  

  
  

  Coloradans for Metro District Reform (CMDR) has issued a response to the second meeting of the Metro District Task Force. The link is below.
  
  CMDR Response to 12/18/23 Meeting
  

  
  

  
  
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  Hunter's Overlook in Severance needs reform.

  by Bob Lahblah, over 2 years ago

  I hope to bring to your attention some concerns within the Hunter's Overlook and Severance Shores communities in Severance that homeowners like myself have been grappling with. Here's a breakdown of the key issues:

  1. Communication Challenges:

     • Public meetings often catch us off guard with little to no advance notice.
       • For example, during the latest October meeting, notice was only provided because a resident from another district posted about it on their social media approximately four days prior without any notice or acknowledgement from official sources. This incident underscores concerns that the management of the district may intentionally delay notices, hindering... Continue reading

  I hope to bring to your attention some concerns within the Hunter's Overlook and Severance Shores communities in Severance that homeowners like myself have been grappling with. Here's a breakdown of the key issues:

  1. Communication Challenges:

     • Public meetings often catch us off guard with little to no advance notice.
       • For example, during the latest October meeting, notice was only provided because a resident from another district posted about it on their social media approximately four days prior without any notice or acknowledgement from official sources. This incident underscores concerns that the management of the district may intentionally delay notices, hindering community engagement.
     • Important information is primarily shared through opt-in newsletters, leaving some residents feeling out of the loop.
  2. Excessive Water Rates:
     • The water rates in Severance Shores and Hunter's Overlook are disproportionately high, by mroe than double the costs of other HOAs or Metro Districts in our city and neighboring towns.
     • There is a perceived lack of transparency in the cost breakdown, and residents are concerned about the source of the water being linked to the president's private fishing lake.
  3. Authoritarian Decision-Making:
     • Homeowners expressing a desire to participate in governing their houses have faced dismissive attitudes from the board, creating an atmosphere of exclusion.

  4. Unfair Appointment Practices:

     • A nonresident member was appointed to a district with veto authority over others, while a homeowner's desire to participate was denied, raising concerns about fairness and equal representation.

  5. Billing and Online System Issues:

     • Residents have experienced surprise fees on bills, and the online billing system lacks transparency, making it difficult for homeowners to navigate.

  I hope the Task Force can take a closer look at these matters to ensure a fair and inclusive community governance. Your engagement with residents will provide valuable insights for a comprehensive understanding of the challenges faced in our community.

  Thank you for your attention to these concerns, and we look forward to the positive changes that can come from your efforts.
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  Reunion Metro District increases mills to cover lower assessed values

  by FedupwithReunionMetroDistrict, over 2 years ago
  Just wanted to tell this task force that the Reunion Metro District completely circumvented the spirit of the SB23B-01 property tax relief by increasing our mills by an additional 8(after seeing the new CAV) to protect their revenues, meaning none of us get the tax relief we sorely need.

  Just wanted to tell this task force that the Reunion Metro District completely circumvented the spirit of the SB23B-01 property tax relief by increasing our mills by an additional 8(after seeing the new CAV) to protect their revenues, meaning none of us get the tax relief we sorely need.
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  Coloradans for Metro District Reform

  by Metro District Resident , over 2 years ago

  Coloradans for Metro District Reform (CMDR) has issued a response to the first meeting of the Metro District Task Force. The link is below.
  
  CMDR Response to 12/5/23 Meeting
  

  
  

  Coloradans for Metro District Reform (CMDR) has issued a response to the first meeting of the Metro District Task Force. The link is below.
  
  CMDR Response to 12/5/23 Meeting
  

  
  
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  Among other things, please create clean, simple, truthful MD Home Sale Disclosures for Buyers

  by MD and HOA Homeowner, over 2 years ago

  I have been an HOA Homeowner for 31 years in 5 different associations, a past HOA Board Member, a current HOA Delegate, and am a member of a number of HOA organizations.

  Two years ago, I sold my dream home in the Denver Metro because of a rogue HOA Board that upended my life, costing me $68,000 in expenses and adding $50,000 of new mortgage obligation. If I could have found a home not in an HOA that would work for me, I would have purchased it.

  The new home I settled for has 2 HOAs, one now with multiple... Continue reading

  I have been an HOA Homeowner for 31 years in 5 different associations, a past HOA Board Member, a current HOA Delegate, and am a member of a number of HOA organizations.

  Two years ago, I sold my dream home in the Denver Metro because of a rogue HOA Board that upended my life, costing me $68,000 in expenses and adding $50,000 of new mortgage obligation. If I could have found a home not in an HOA that would work for me, I would have purchased it.

  The new home I settled for has 2 HOAs, one now with multiple construction defect lawsuits and the other just coming out of a pricey lawsuit, homeowners vs. the HOA. Yes, before closing I read 738 pages of incomplete and out of date HOA documents. (The seller paid well over $1,000 for those documents that were wrong and upon which I based my purchase decision.) There were no Metro District disclosure documents.

  I knew my property taxes here were going to be 60% higher and I recall vaguely thinking the related Metro District infrastructure debt must be close to being paid since the planned community is largely built out. Then I learned that my Metro District was in the headlines for bond debt financing issues.

  Eventually I found a website about my Metro District. My neighbor and I began writing and calling them. Here’s all we really wanted to know as new homeowners.

  • how much debt was left,
  • what exactly the money was spent on
  • and when, and after 37 years of bond debt would the tax payer obligation be met

  Our calls and email messages went unanswered.

  It turns out that all 5 of the Board members also work for the same development company, coincidentally the same developers that created my HOAs. None of them are homeowners in my District.

  I learned that there was an election coming up for the MD Board. I wrote asking for a self-nomination form. They dragged their feet indicating that I had to show them first why I was qualified and then they’d put the form in the USPS mail. I called them on it and they begrudgingly sent me the form.

  I was elected by acclamation much to their dismay, and was sworn in May 2, displacing a Denver Development company Director and. I wrote to them with questions. They declined to answer. I wrote them again, this time copying the press. They responded with “oops” rhetoric and sent me one document. I persevered.

  For 37 years the Metro District meetings were held in Denver, 24 miles from most of our residents. Colorado Statutes require the meetings to be held in the District, or not more than 20 miles from the District. I asked that the meetings be held in our District.

  I also asked that instead of combining our District meeting with 5 other Metro District meetings that they be separated. They grumbled, but, eventually accommodated separate meetings for 2 of the six Metro District budget meetings because there were homeowners on the Boards for the first time. All six meetings were held in the District for the first time.

  I put the following items on my District’s Board meeting agenda:

  • HB23-1105 MD Task Force notifications - They put a note on the website and called it “close enough.” I asked that the notification be sent by mail. They eyerolled "no." And, no, they don't collect email addresses. I asked that, too.
  • Home purchase disclosures – I didn’t get one. They said that was “unfortunate,” but, they were only required to give notifications to the first buyers of a home.
  • Resident inquiry practice – (I attended my county’s tax townhall meeting on my own and later found out one of the lawyers for my Metro District were there, but declined to identify themselves as representing my District.) The lawyers made the decision to go, stay on the QT, but, didn’t even notify me as a Board member of the opportunity.
  • District invitation decisions – They agreed next time our District gets an invitation to attend an event that they invitation would go to one Board member (but, not to all, not to me).

  I noticed that in the MD meeting held right before mine that the new homeowner Board member was squeezed in at the end of the table, not audience facing like the other Board members. This is subtle, but, powerful messaging. “You’re not a real Board member. You’re an outsider.” If it was Thanksgiving, that new Homeowner Board member would have been seated at the children’s table.

  So look at this objectively. If nothing’s wrong here, what’s up with all the smoke and mirrors (and at the very least unprofessional) behavior?

  Oh, the answer to my original question? The interest on the debt will stop accruing beginning in 2029 because the debt is supposed to be fully paid in 2028, 43 years later. And guess what? Because of how the financing has been done the debt will not be paid off for GENERATIONS.

  THE INFORMATION IN THE PREVIOUS PARAGRAPH SHOULD BE INCLUDED IN THE REAL ESTATE LISTING OF EVERY HOME SALE IN MY (and every Coloradan’s) METRO DISTRICT.

  MD Task Force: Please take the information in the paragraph as an action item.

  Post Script: When I made a comment to one of my fellow Board Directors (a Developer) I told him I would rather have had that infrastructure added to the price of my house as opposed to paying for it for generations. His reply? “What do you care? You’re not going to live in your home that many more years anyway.” (Yes, I'm old.)

  Bottom line: Colorado has a housing crisis. We need Developers to help address the issue and solve the problems. We do not need Developers exploiting taxpayers for Developer exorbitant personal profit.

  Task Force members: Please don’t let homeowner concerns here end up in a dusty report that no legislator is ever going to even bother to read. If you work together, you can create solutions and recommend them to the General Assembly.

  And hey, Chairperson Waters has a top shelf real estate forms committee. Bring them in to your discussion and they can write the disclosure homeowners need and you all can take the credit for initiating it.
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  MD Task Force Meeting Dates

  by MD and HOA Homeowner, over 2 years ago

  In the first MD Task Force meeting, comments were made several times by the facilitator about flexibility in various contexts relative to the task force's evolution. Good level setting.

  Here's a practical application. Please key in on Rep Parenti's comments about changing the task force meeting dates from Tuesdays to either Mondays or Fridays.

  The Colorado General Assembly is scheduled to convene on January 10, 2024. I believe Rep Parenti may have mentioned that Tuesdays are the worst possible days for the legislators on the task force to be able to attend task force meetings because they will be in... Continue reading

  In the first MD Task Force meeting, comments were made several times by the facilitator about flexibility in various contexts relative to the task force's evolution. Good level setting.

  Here's a practical application. Please key in on Rep Parenti's comments about changing the task force meeting dates from Tuesdays to either Mondays or Fridays.

  The Colorado General Assembly is scheduled to convene on January 10, 2024. I believe Rep Parenti may have mentioned that Tuesdays are the worst possible days for the legislators on the task force to be able to attend task force meetings because they will be in legislative committee hearings, etc.

  I understand that as a practical matter task force meeting dates aren't going to be scheduled around one person. Because this is a STATE legislated task force, considering state legislative matters to address issues related to the state's housing crisis, if we want Rep Parenti and Senator Gonzales to be best equipped to do their jobs as legislators AND task force members, please don't delay in getting the task force schedules revised now.

  (Same goes for the HOA Task Force and recognizing the criticality of Rep Ricks and Senator Fields roles. Please change both TF schedules beginning in January to either Mondays or Fridays . . . or even weekend days.)
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  Master slave metro districts (aka Reunion metro district)

  by Mwd11, over 2 years ago

  The sad tail of reunion neighborhood. So much what is wrong with the system is found here. First of most residents in the reunion area are part of two districts. The master RMD(reunion metro district) which tech no one lives in boundary wise and then their own slave district(north range metro districts).

  
  Before the developers get voted out of the slave districts they put in rules that basically say the slave districts have to give up funds to the master and the master dictates taxes. . This master district is developer controlled and has been rigged to where they won’t... Continue reading

  The sad tail of reunion neighborhood. So much what is wrong with the system is found here. First of most residents in the reunion area are part of two districts. The master RMD(reunion metro district) which tech no one lives in boundary wise and then their own slave district(north range metro districts).

  
  Before the developers get voted out of the slave districts they put in rules that basically say the slave districts have to give up funds to the master and the master dictates taxes. . This master district is developer controlled and has been rigged to where they won’t give up control for a very very long time. (Probably beyond most people’s life times)
  
  Due to this policy RMD also dictates the tax rate which is one of the highest in Colorado. On top of this they can take more debt at will that home owners have to pay. Once again home owners cannot vote them out and is 100% developer controlled.
  
  RMD recently sued 3 of the slave districts using home owner money because these districts tried to fix the wrong of the system. Due to this they raised taxes on home owners even after getting a 30% increase due to home values increasing. Once again home owners can do nothing. Oakwood is literally using residents as their personal piggy bank and many are on the verge of loosing their homes. This really just a Breif overview of what is wrong. Good place for information is here :https://www.northrangemetro1.org/pageview.aspx?p=litigation-update.aspx?fbclid=IwAR0R6nNCRErLhW_xu3D8gi_MvmohPCzTMuh83VueSm-csjV8zoHOyBdQVks_aem_AWzevEaOTzC6thURP0_SZRnQ-c-vR09s6qM_g4qUcIpM40Gw1gQWbSBSMBUUTVWO3xc

  
  This is a literal dictatorship and a taxation without representation.

  
  

  
  
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  Metro Districts = More Developer Profit

  by Metro District Resident , over 2 years ago

  I moved into a metro district a year and a half ago and shook things up when I, along with 2 neighbors submitted self nomination forms for the election, when 3 of the 5 board seats were up for election. Shortly after, the attorney for the metro district called me and asked if one of the residents was willing to withdraw their nomination to avoid an election. He confirmed that this was to allow the developer to retain majority on the board. When we refused, the developer electors (who only qualified because 2 of the 3 own 1% interest in... Continue reading

  I moved into a metro district a year and a half ago and shook things up when I, along with 2 neighbors submitted self nomination forms for the election, when 3 of the 5 board seats were up for election. Shortly after, the attorney for the metro district called me and asked if one of the residents was willing to withdraw their nomination to avoid an election. He confirmed that this was to allow the developer to retain majority on the board. When we refused, the developer electors (who only qualified because 2 of the 3 own 1% interest in a rental house in the district, clearly for eligibility purposes) did not withdraw. The district paid thousands for an election that we thankfully, won, that could have been avoided. A nearby commercial district, operated by the developers, has funded the operating expenses of the very new residential district until our property taxes catch up and we’re self sufficient with tax revenue. This is something they knew they would be funding when they planned the district. After hiring a management company, known to only represent homeowner controlled boards, things because contentious. This management company has been involved in lawsuits related to developer abuses in other districts, and the developers in my community have decided they don’t want that legal risk, so they’ve cut off funding our operating expenses and demanded that we terminate the management company. We’re $50k short this year, can’t pay our bills, and are facing having to impose self assessments on many new first time home buyers. Ultimately, we will have to concede to their demands to fund our operating expenses, but it raises the question on why they’re willing to ruin their reputation? It’s because they’re scared of a lawsuit. Perhaps it could be that their profit has OUTRAGEOUSLY exceeded industry standards and that a metro district and bond debt wasn’t needed at all? I urge this task force to stop the abuse! Realize that the “experts” on the task force with misleading names like “education coalition”, are in the pocket of the developers and have zero concern for homeowners. Listen to the residents.
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  Attorney General to Appoint an Special Prosecutor to deal with the Abuses in MD

  by Liam in Broomfield, over 2 years ago

  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... Continue reading

  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.