Metro District Discussion

City Council is considering new regulations for Metro Districts in City of Lakewood.

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Metropolitan Districts Background Memorandum June 11 ( 0.5 MB )

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As a very experienced metro district expert I would encourage further education to ensure understanding of metro districts in financing and operating communities. Your minutes from the last meeting indicate some significant misunderstanding of how districts operate.

In the existing environment districts are an essential element in financing new communities. Partly because of substantially increased requirements by the City and partly because of the difficulty of other financing mechanisms.

Certainly disclosure is essential and most developers and builders fully embrace full disclosure to ensure full understanding by purchasers in these communities.

I have much more to say yet I understand the 7:45 pm cutoff on these comments.

09/17/2020 7:46 pm
Joe Knopinski
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Thank you for your reponses on Solterra resident recourse. As you know, we are struggling over here, and I appreciate your attention to help.

09/17/2020 7:42 pm
JD Lobue
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Thank you for the response, Mr. Bieda, and Mr. Skilling. As you know, we are struggling over here. Thank you again.

09/17/2020 7:41 pm
JD Lobue
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Great to hear that the committee is concerned with abuses that have been experienced with Metro Districts in the past. I appreciate that some of the history of Metro Districts, both positive and negative, was shared by the committee members.

I have a few other comments.

1) I agree that the interest on the bonds charged to residents is one of the largest concerns with these districts.
2) If Metro Districts are allowed, there should be caps on how much debt/bonds can be issued.
3) If Metro Districts are allowed, their Boards (any and all that are involved in an area - financial, management and others) should be comprised of residents only. Initially, I know this is not possible. However, over time (within, say, a year or so after the first residents move in), that should be the case.
4) It would be helpful if there was some mechanism to ensure that Metro Districts are not solely used for home building. We need commercial development to take place, which will grow the city's tax base.

Thanks,
Leigh

09/17/2020 7:41 pm
Leigh Gallo
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In the Cardel application September 1 Jeffco staff raised a question in the staff report about whether or not it would be more cost effective to finance the costs of infrastructure through the cost of the lots (which is the traditional way and it appears from the Solterra study is still taking place in addition to the metro financing).

Jeffco Commissioners simply ignored this issue.

The very first question every applicant must answer under the statute is whether or not a district is needed - in other words why can't they finance the infrastructure in the traditional manner (which they appear to be doing anyway) through the cost of the lots.

Cardel should be prepared to answer this question and the Commissioners should have required an answer before considering approving a new district.

Additionally, I have not met anyone who wanted to live in a metro district. They just don't have a choice if they want to live in a newer home. Why would anyone want to be exposed to the multiple layers of debt where there is no accountability for how that money was spent.

Additionally, the service plan proposed before Jeffco contained all the same abusive provisions that were included in Solterra' service plan. Again, they were brought to the attention of the Commissioners and, unfortunately there was no response.

Also, the US Census has done a great job of summarizing how infrastructure is financed. It is cited in this report

09/17/2020 7:41 pm
John Henderson
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Per the Fossil Ridge Service Plan, Solterra residents were to be reimbursed $18M for Regional Projects, it will never be realized, just another Special District abuse to build for a bigger area while one community subsidizes the expense. Something the Council should really address!

09/17/2020 7:41 pm
Gary Greaser
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Is the issue more w/ developers that try to maximize loopholes in special district law for financial gain rather than with the creation of metro disticts?

09/17/2020 7:26 pm
JD Lobue
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thank you

09/17/2020 7:21 pm
JD Lobue
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Can we move on? It's apparent that Cardel does not want you to move their cheese. We get it.

09/17/2020 7:20 pm
JD Lobue
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So Cardel does not want to build the amenities of Solterra at Indigo, so where do they think those residents will go to enjoy outside their area? Part of the special district abuse is the undue burden on one Metro District to subsidize amenities for other Metro Districts. There are no gates between communities so Metro Districts like at Solterra take on the higher cost. Doggie Park, Alameda expansion, McIntyre, Yale, water, how lucky for Cardel to reduce their costs and appeal to new homeowners while other homeowners pay the bill that Cities and Counties should fund.

09/17/2020 7:18 pm
Gary Greaser
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One of the metro district "myths" is that metro districts provide funding for major infrastructure BEFORE the residents arrive. In fact, the developers have the money already. In Solterra for example and every metro district I have studied the developer had the money already. He did not need the metro district to generate the funding.

Indeed, during the ULI Seminar this past Spring, Tom George conceded that metro districts were there for only one purpose - to REPAY what was spent on infrastructure.

And that is the point. Where I lived before, residents could pay the $30,000 per lot in cash, or part cash and finance the rest. Or finance it all through the mortgage. All options are less expensive than metro districts.

09/17/2020 7:06 pm
John Henderson
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While the callers experience with Cardel may be the case w/ Cardel homes, they were not the case w/ Brookfield, the developer. I applaud your disclosure, however, as you mentioned, the complexity does not allow a potential resident to understand the potential abuses that have been occuring.

09/17/2020 6:51 pm
JD Lobue
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Hello,

Counsel member Bieda mentioned that there is nothing the counsel can do for Solterra. Can you elaborate on that and if there is nothing that we can do at the legislative level, what would you suggest? Is our only recourse at the Judicial level?

Thank you,

JD

09/17/2020 6:43 pm
JD Lobue
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Solterra’s Infrastructure Cost – Another example of Special District Abuse

For many years there has been an ongoing question as to what is owed to Brookfield for Solterra infrastructure cost. Different reports have been shared with the community and a few formal presentations were held.
• Brookfield made a formal presentation April 2017 that their developer loans amounted to $55M.
• The Fossil Ridge Metro District audit of 12/31/19 indicated Long-Term Obligation just at $76M.
• Brookfield communicated to the City of Lakewood in 2006 their cost to develop lots was $37.8M.

So what amount was really spent on infrastructure and have Solterra homeowners already paid the amount through lot fees when they purchased their home?

After conducting research via the Jefferson County’s Assessor public document site and, specifically, the Special Warranty Deed transactions between Carma/Solterra LLC/Brookfield to the Builder, there is formal proof Brookfield has already recovered lot fees of over $118M for occupied homes, with the total likely going to $141M after full build out.
In addition to the lot fees, Brookfield was given $30M in general obligation debt through current Bonds on Solterra residents and Brookfield is insisting on an additional $41M.

This unfairness to Lakewood Homeowners must stop, I urge City Council not to approve any additional Metro Districts.

Attached is a small Power Point recently shared with Solterra Homeowners.

Gary Greaser

09/17/2020 9:57 am
Gary Greaser
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Hi,

Let's assume that the City Council's primary responsibility is to operate the city in a way that serves the best interests of its current, and future, residents. If not that, then what?

So, how do Metro Districts benefit Lakewood residents? Metro Districts enable developers to finance their development with little/no risk given that the burden of the bonds they issue will be rest on the future occupants, both now and in the future. Additional taxation does not benefit any resident. Here are some of the issues with Metro Districts:

Metro Districts can create their own mill rates, and increase them when they want, irrespective of the views of the occupants of the development. In other words, taxation without representation.
In recent years, Metro Districts have been commonly been (maybe exclusively, I don't know) used to fund home development, not office buildings. Thus, Metro Districts are not supporting the city's vision of creating a "live and work" environment for residents.
Development is never risk free. By definition, there is always risk. In this case, the risk is assigned to future occupants rather than developers.
Creating mills assigned to development bring unexpected costs to homeowners that even a bank, at the time of a loan, cannot account for. For example, The Reporter Herald discussed a couple (Tlene and Tyler Sterkel) in Loveland. At closing, the taxes were $818 in 2014 yet that went to nearly $3,500 barely a year later, then $4,400 two years after that. Nearly half the Sterkels’ tax bill — and the reason it had shot up so quickly — went to Thompson Crossing Metropolitan District No. 4. The district’s tax levy was the only one to increase each year they were in their home. If that cost had been available to the homeowner before purchase, they may have walked away due to the expense, and the bank may have refused to approve the mortgage due to the higher overall cost relative to income/assets. Many Solterra residents have expressed the same surprise on their tax assessments. Taxation control should be in the hands of the government, not these quasi-government entities.

I have no doubt that restricting Metro Districts will not impede development. After all, developers were in business before Metro Districts were allowed in Colorado and they continue to build in states where there is no such development-aided vehicle. Even if development were impeded, why is that a problem? Voters have already indicated that they do not want more than 1% growth by instituting the growth cap. Furthermore, the focus on home development rather than mixed use/corporate development increases the burden to police, firefighters, etc. yet none of the extra mills assessed will go to support those institutions. How does that benefit the community? I can't see how.

Thanks for the time and consideration,
Leigh Gallo
Lakewood resident of 18 years

09/16/2020 2:07 pm
Leigh Gallo
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See below

09/16/2020 4:53 am
John Henderson
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See submission below

09/16/2020 4:50 am
John Henderson
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To: Lakewood Development Dialogue Ad Hoc Committee
Meeting Date: Thursday September 17, 2020

Dear Lakewood Development Dialogue Committee:

Hello. Let me introduce myself: I am Vince Harris, AICP, a senior owner with and currently working (last 14 years) at Baseline Engineering Corporation located in Golden, Colorado. I also have resided in Lakewood for the last 40 years. Baseline is essentially a full-service Civil Engineering, Land Planning & Land Surveying firm with 4 offices in the State with 50 employees.
This dates me, but prior to my private sector work with Baseline, I was a public sector planner and planning manager for 22 years with the Cities of Thornton (5 years) and Lakewood (16) years where I served as the Lakewood Planning Manager until 2006. During my tenure at Lakewood I oversaw the formation, review and approval of numerous Metro Districts (MD’s) within Lakewood. In addition, I have served on the Jefferson County Planning Commission from 2012 to 2018 and reviewed and made many recommendations to the Jeff Co Board of County Commissioners (BOCC) on a variety of Metro Districts applications throughout the County. In my role at Baseline, I now represent numerous landowners and their requests for metro districts. So, I have a unique perspective and over 36 years of experience of understanding the public sector and private sector needs of metro districts.

I appreciate the City of Lakewood’s desire to formally review the role of Metro Districts and establish guidelines and welcome the opportunity to offer my thoughts. Jay Hutchinson, Public Works Director, put together a report dated June 11, 2020 which I believe is a very useful and complete explanation and background of Metropolitan District’s as they relate to Lakewood (and State of Colorado). As you know, MD’s throughout the state are the principle way of assisting with the financing, maintenance and contractual obligations of development. State MD regulations are outlined in the Colorado Statutes and Lakewood can adopt additional expectations that at least don’t conflict with the Colorado Statutes and can provide further protection and clarity for future and existing property owners.

I sincerely believe that, provided there are specific and well-framed guidelines, MD’s are an important and necessary mechanism to support and protect all parties concerned (i.e. The city of Lakewood, the landowner/developer and existing and future residents) in the development or redevelopment of residential, commercial, office, or recreational uses. There are numerous examples of successful MD’s that have been created in Lakewood: Grant Ranch, Denver West, Colorado Mills, and Belmar, to name a few. And over time, the guidelines have changed as our experience with MD’s evolved. I can honestly say that the Lakewood process in the past (being on-staff years ago) and presently being on the proposing side of MD’s now in the private sector, has been and continues to be a very encompassing and thorough review. A process in which we all strive to improve the way Metro Districts can function.

The City of Lakewood has seen the value of supporting the formation of MD’s in the past as evidenced by numerous approved and operating MD’s in the City; and those properties and developments like Denver West, Colorado Mills, Grant Ranch, and BELMAR now provide and play a SIGNIFICANT financial role of providing revenue to the Lakewood budget each year. These communities are places we live in or visit and are now an integral part what has shaped the City of Lakewood into what it is today. Without these communities and without their positive impacts – Lakewood would look much different than it does today. Many of these communities are known for their quality of life and provide excellent services that we all get to use. I can honestly say that an integral part of their success is due largely because the land owner and the City Council’s in the past had the vision and foresight to utilize MD’s as a means to provide the infrastructure and services beyond what is normally required.

I strongly recommend and support the use of MD’s as a viable means of accommodating positive well managed growth in the City of Lakewood while protecting the property owners’ rights and obligations over time.
Please don’t hesitate to connect with me if you have any questions.

Sincerely,

Vincent Harris, AICP
Principal/Planning Director/Owner
Baseline Engineering Corporation
[email protected]
303-202-5010 x 217

CC. Kathy Hodgson, City Manager
Jay Hutchison, Public Works Director
Travis Parker, Planning Director
Lakewood City Council Members

09/15/2020 5:20 pm
Vincent Harris, AICP
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The bottom line is authorizing “metro districts” is a classic example of crony capitalism where government helps a favored business. Giving developers their own special government is a major financial benefit local governments don’t give to any other industry.

By creating a “special” pseudo-government (controlled by developers), the City is helping an out-of-town company get financing by (1) allowing them to borrow money at lower government interest rates AND (2) give them a way to repay this money they borrowed by allowing them to “tax" future residents. No other business is given permission to collect “taxes” to support their business. In this way, they claim “development pays its own way”, while in fact it is the consumers who actually pay the developer's costs.

Looking past all the red herrings, smoke and mirrors they throw out, metro districts only have one real purpose - get developers the money they need to build over the remaining undeveloped open areas.

09/15/2020 3:31 pm
David Wiechman
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