Much has been written recently about whether or not the Solterra Residents can do anything to stop the metro district abuse and in particular, stop paying Brookfield any more money without an independent forensic audit.
Here is a summary of the arguments, with reference to the Colorado Constitution, statutes, case law and documents.
1. Residents right to vote on tax/bond debt.
Here is what I published in 2018 explaining how the vote was stolen from us by Brookfield in 2006 and the authority for returning the vote to us.
Nothing has changed.
The Colorado Constitution says we have the right to vote on taxes/bond debt. Colorado Constitution Article X Section 20(4)(a) and (b)
CRS 32-1-1101 says so too – the metro district board must first get permission from the voters before issuing tax/bond debt. ( “(1.5.)(d) If taxes are to be levied or debt is to be created within an area of the special district, the board shall submit a ballot issue approving such taxes or debt to the eligible electors within such area at a regular special district election or at a special election . . . (1.5)(f) . If the issuance of general obligation bonds is approved at an election held pursuant to this subsection (2), the board shall be authorized to issue such bonds . . . [for a limited period of time – either 5 years or 20 years at which time the permission from the voters to the board expires] (emphasis added)
As the Colorado Court of Appeals stated, upheld by the Colorado Supreme Court:
“The purpose of requiring a district to gain approval from persons who own property within a district before it imposes a new tax is to allow the people who will have to pay the tax to decide whether the tax should be levied. See Huber v. Colo. Mining Ass’n, 264 P.3d 884, 890 (Colo. 2011) (“[TABOR’s] purpose is to protect citizens from unwarranted tax increases and to allow citizens to approve or disapprove the imposition of new tax burdens.“).”
Here is how Brookfield’s own bond counsel explained it in the 2016 Bond prospectus:
“Required Elections
Various State constitutional and statutory provisions require voter approval prior to the incurrence of general obligation indebtedness by the Districts. . . . [t]he Districts must have voter approval in advance for the creation of any multiple-fiscal year direct or indirect district debt.” 2016 Bond Issue, p. 60 (Emphasis added)
“Outstanding and Authorized but Unissued Debt.
At the 2006 Election, the qualified electors for each of the Districts voting at such election approved indebtedness for each of the Districts of $60,000,000 for public improvements in each of 10 infrastructure categories for a total of $600,000,000 in total debt authorization for each of the Districts (excluding refunding authorization), and a maximum repayment cost for such indebtedness of $4,920,000,000 for each of the Districts.” 2016 Bond Issue, p. 61 (emphasis added)
In 2006, 8 Brookfield employee voters gave the board authorization – permission – to issue tax/bond debt up to $600 million with permission to pay financing cost (principal of $600 million plus interest equal to) $4.9 billion.
But the Board has only spent $29 million in principal so far.
The permission – authority – to issue any more debt voted on in 2006 can easily be changed or repealed with another ballot issue vote – we can do in 2020 what they did in 2006 – vote on whether or not the board should continue to have this blank check for $600 million.
The permission voted on in 2006 can be changed – repealed.
In 2020 the 2000 real voters who actually live and pay taxes in Solterra can vote to take back that permission – cancel that permission for the board to issue up to $600 million in principal and $4.9 billion in principal and interest – and return the authority to issue any more bond debt to the voters.
Or, the board can simply decline to exercise the permission provided in 2006 and voluntarily return the right to vote on bond debt to the residents.
So, once the permission granted in 2006 is cancelled, if the board wants to issue bond debt, they first have to get permission from the voters. Just like in Ken Caryl, Lakewood and Jefferson County. The blank check, the credit card limit, set in 2006 is cancelled. The board has to get permission from the voters to increase tax/bond debt.
We have some examples of how this works. Ken Caryl residents have the right to vote on future tax/bond debt. The board does not have a blank check for $600 million principal and $4.9 billion including interest.
Ken Caryl Resident Vote on Bond Debt
Another example. This November, one of the ballot issues is repealing the Gallagher amendment which is related to TABOR limits. The right to pass legislation is the same right to repeal legislation – both are votes by the voters.
A third example. Two years ago, we all voted to give Lakewood permission to keep what was left over from the budget and spend it on certain specific areas but we all voted to deny the same permission to Jefferson County.
Some have argued that the Board makes all the decisions.
The Board, like the Lakewood City Council and the Jefferson County Commissioners administer the tax/bond debt process, do things and made decisions to implement the issuance of new debt.
But in all cases under TABOR, the Solterra board, the Lakewood Council and the Jeffco Commissioners all must get permission from the voters first.
The 2006 vote by the 8 Brookfield employees is a perfect example – in 2006 Brookfield’s employees “voted” to give Brookfield permission (as the board) to issue debt (a blank check up to $600 million in principal debt and $4.9 billion in principal and interest debt).
In 2006 the “voters” had to vote to give the Brookfield board permission to issue bonds.
After they get permission, the board does all the administrative work to implement the voters’ decision. But the voters have to approve it first.
Some have argued that the voters can’t change their mind. That the voters (2000+ in Solterra) in 2020 can’t change what the voters (8 employees of Brookfield) did in 2006.
If that was true, then how can the voters in 2020 change what they did in 1982. The Gallagher Amendment was passed in 1982 and we will vote in November, 2020 to repeal it (or not).
The power that the voters have to pass ballot measures by definition includes the power to pass ballot measures changing prior ballot measures.
See, for example: Margolis v District Court, 638 P2d 297, 306 (Colo 1981) (upholding the power of Colorado’s citizens to review rezoning decisions of municipal governments through referenda elections).
Here is another example. Longmont originally prohibited metro districts in residential development.
Then in 2018/2019, the developers persuaded them to change that ordinance to allow metro districts.
They changed their mind and the ordinance.
Then in 2019/2020, after the Post articles and further investigation and analysis, Longmont changed its mind again and voted to prohibit metro districts in residential development.
The prior decisions were not written in stone and unrepealable.
Finally, here are two law review articles that discuss legislative entrenchment – a prior vote forever binding future legislatures or voters.
Under the Constitution – United States and Colorado – as well as the common law: as a general rule a prior vote cannot bind a future vote from changing – repealing – prior legislation.
The following excerpt is from the first of the two articles:
https://core.ac.uk/download/pdf/234131607.pdf
https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1587&context=faculty_scholarship
“In a democracy, governments are not allowed to bind future governments.’ Ordinary legislation cannot be made unrepealable, and future governments are free to revisit the policy choices of their predecessors. The prohibition against entrenchment, as it is called in the academic literature, is meant to ensure that each government can be democratically responsive to its own electorate and is not bound by the preferences of the past. . . .”
Now is the time to repeal what was voted on in 2006 and vote to restore the residents’ right to vote on tax/bond debt.
One way to look at it. When we were out of the house, my teenage son voted to give himself and my teenage daughter permission to take my car and drive to California. When my wife and I, who owned the car, paid the taxes, gas and maintenance for the car – returned – my teenage son and daughter said it was too late – they had already voted. I think you know how that turned out. Their self interested vote to give themselves permission to drive my car to California was “repealed”.
And keep in mind, we are not talking about voting to reverse the bonds already issued. All we are talking about is reversing the 2006 vote to take away our right to vote on future (ie the new proposal to issue $10 million in new bond debt) tax/bond debt. The board has permission through the 2006 ballot issue and the Service Plan to finance debt up to $4.9 billion and pay up to $ 600 million in principal. But the board has only actually issued $29 million (principal) in bond debt so far.
Time to take another vote and repeal the blank check/credit card limit and have the board get permission as the “need” for any new debt comes up.
2. How can we decide to pay Brookfield more money if we don’t know we owe them more money.
New research based on the Jefferson County Assessor’s data establishes that Solterra Residents paid Brookfield at least $118 million which included $4.3 million for the land, $37.8 million to develop the land (infrastructure) and $75.9 million in profit to Brookfield.
New Research Discloses Brookfield’s Double Billing for Solterra Infrastructure Costs
Updated Data Demonstrating Brookfield Double Charged Solterra for the Cost of the Infrastructure
We already paid for the infrastructure.
An independent forensic financial audit would confirm we have already paid for the infrastructure.
But, if for some reason we owe Brookfield more money, we will pay what we owe. But we aren’t there yet.
We will save $500,000 a year for at least 30 years by refinancing our current bond debt of $29 million.
Lets take some time to decide how we want to spend that savings, including an independent audit that will not cost more than we have spent on legal fees or renovations for the Retreat.
The return on investment and potential savings are much greater for an audit than either our costs for our legal fees or Retreat renovations last year.
Some have argued that we agreed to pay Brookfield more money in our legal documents signed at closing.
But no documents have been produced to prove that statement.
And we all know from our own experiences, we did not sign a contract or loan agreement to pay Brookfield any money.
Some have argued that the agreements Brookfield signed for us are binding.
But binding as to what – to pay debt we don’t owe.
The agreements, even if they are binding, say we pay what we owe.
And without an independent forensic financial audit, particularly in light of the lot income research, it appears we don’t owe anything.
And there is no authority in the statutes or case law to support a claim that the agreements Brookfield signed for us without our permission are binding on us. The case law that does exist suggests the opposite is true:
“Second, the evidence of bad faith is substantial. We recognize, as the District has pointed out, that in the early stages, special district boards are generally made up of the developer’s representatives. But the representatives, when serving in their capacities as board members, may not take actions based on their own self-interests as the developer. See Geudner, 786 P.2d at 436-37. . . . In other words, the Developer spoke for the District and the District acted for the Developer. . . . The District’s circumvention of the statute reinforces our view that the condemnation proceedings were undertaken in bad faith.”
Page 19 here:
https://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2017/15CA1956-PD.pdf
See more detailed discussion here:
There are other issues of course and other arguments. And we can debate the issues publicly and then vote on whether or not to issue more debt to pay Brookfield more profit.
But first, lets get back the right to vote on that debt – cancel the blank check/credit card limit given to the board in 2006 – and have an independent forensic financial audit.
Then and only then the voters can decide whether or not to give the board permission to pay Brookfield any more money.
We have a choice. And since the board will not decline the permission voted on in 2006 and restore the residents’ right to vote before issuing additional tax/bond debt, the only choice they have left us is recall.
We don’t want to recall the directors off the board. This is not personal as to the board members.
The current board members inherited a blank check. The right thing to do is to voluntarily decline that permission and get voter approval from the residents before issuing more debt.
What we do want is to cancel the blank check “voted” on by 8 Brookfield employees in 2006 and restore the obligation of the board to get our permission first before issuing more tax/bond debt to pay Brookfield more profit.
Why is the board defending a vote by 8 Brookfield employees in 2006 and denying the right of 2000+ residents to vote in 2020.
John Henderson