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RV News December 10, 2022

 

 

On December 6, 2022, Brookfield sued Solterra for not paying bond debt faster.  Here is the lawsuit:

 

Solterra v. Fossil Ridge Metro Districts 12-6-22

 

 

  • Sadly it did not need to end this way.    

 

  • Sadly, the current metro district reform movement
    • that Solterra helped initiate and
    • has been so successful in other communities,
    • was obstructed and actually never took hold in Solterra.

 

In 2017 after we recalled the developers off the Solterra Board, Waterman  –  who was appointed to the board in 2015 by Brookfield to “take care of resident concerns” and who did not support the recall  –  appointed like minded friends to fill the now empty seats.  Waterman and his friends still sit on the board.

 

The community was at a crossroads in 2017.

  • Either tell Brookfield at that time the “Reimbursement Agreement” was legally unenforceable because it was a single party “agreement” entered into by the developer and himself when the developer had an express conflict of interest with the residents.  (And the residents never agreed to its terms.)
    • and tell Brookfield we weren’t paying any more debt until there was an independent forensic audit by experts retained by the resident board
      • an audit that said we owed the money
      • an audit that said we hadn’t already paid the money in the price we paid for our developed lot
      • an audit that explained how Brookfield  spent the previous bond debt issued by the developer board ($29 million)
  • Or, go along to get along and pay Brookfield whatever they wanted because, as one Waterman board member said, “be afraid of Brookfield.  If we don’t do what they want us to do, they will sue us”.
    • Don’t terminate the unenforceable “Reimbursement Agreement”.
    • Don’t do an independent forensic audit.
    • Don’t hold Brookfield accountable to prove we owed them any more money.

 

Waterman and his board made the second choice.  Go along to get along.

 

Turns out they couldn’t “giddy up” fast enough for Brookfield and ironically now the community is sued anyway.  Even though they had already agreed to go along to get along with Brookfield.

 

And sadly, because of the choice they made, the Waterman Board likely forfeited the winning arguments that would have virtually guaranteed Brookfield either would not sue or would surely lose when they did.

 

As the lawsuit alleges, Waterman and the Waterman board went along to get along:  [Brookfield calls itself Solterra LLC and sued the real Solterra through the District – FRMD – Fossil Ridge Metro District.  A little confusing and purposefully so when Brookfield decided to call itself Solterra]

 

“FRMD Admits Its Obligation to Repay Solterra Under the Reimbursement Agreement.
42. FRMD has repeatedly admitted and acknowledged the obligation to repay Solterra under the Reimbursement Agreement, the amounts owed to Solterra, and the obligations of FRMD Nos. 2 and 3 to finance the reimbursements. By way of example, in the Official Statement for the  2020 Bonds (the “2020 Official Statement”), FRMD makes the following admissions:  [a list of “go along to get along” statements and actions – see complaint below]”

 

The Waterman board gave up their best arguments.  

Because Brookfield relied on the residents going along to get along, the Waterman board are potentially stuck:

 

“88. FRMD No. 2 and FRMD No. 3 made promises and representations that they would issue debt to refund Solterra for Public Infrastructure that Solterra funded.
89. Solterra [Brookfield] relied to its detriment on the promises and representations made by FRMD
No. 2 and FRMD No. 3 and funded Public Infrastructure within FRMD.
90. FRMD No. 2 and FRMD No. 3 have received tremendous benefit from the Public
Infrastructure funded by Solterra.
91. Solterra [Brookfield]  has been damaged as a result of the promissory estoppel and is entitled to an award of damages in an amount proved at trial, but not less than $31,870,000.”

 

 

In sum, this part of Brookfield’s legal claim is that because the Waterman board went along with an otherwise unenforceable agreement, the community forfeited its objection to paying Brookfield based upon that otherwise unenforceable agreement.

 

To be sure, Brookfield is also arguing that the “Reimbursement Agreement” is enforceable.  But that argument will fail quickly.  Its not worth the paper its printed on, unless the Waterman board agreed that it was.

 

Here are the signature pages for the two agreements:

 

First, the agreement between the Developer District 1 (Master District) and he Resident Districts 2 and 3 (Servant Districts):

 

 

 

Here is the “Reimbursement Agreement” between the developer and the developer district 1 (Master):

 

 

Here is the letter from the Lakewood City Attorney at the time saying he was offering no opinion as to whether or not these agreements were enforceable:

 

 

 

There is more to the argument of course, but in essence,

  • an enforceable contract requires two or more parties
  • representing their own interests
  • agreeing to something by voluntarily exchanging promises
  • in an arms length transaction.

 

Here you have one party

  • agreeing with himself
  • to obligate someone else
  • (the unsuspecting and un-noticed residents)
  • who he has an express conflict of interest with,
  • to pay the one party signing the “agreement”
  • a whole lot of money.

 

Its unenforceable.  I can’t agree with myself to have my neighbor pay for something without his permission.  Just doesn’t work that way.

 

The Waterman Board also completely ignored a study prepared by a group of residents which showed that we had already paid Brookfield for the cost of the infrastructure PLUS $75 million in profit – even before any metro district bonds were issued by the developer board and imposed on the residents without their permission.

 

Here is that research and analysis:

 

Final CostNarrative.word4

 

Final Exhibits to Lot Analysis

 

 

Given the Waterman board’s decisions in 2017 and following, we can expect that his board  will negotiate to issue more bond debt ($30+ million) faster, “in order the save the costs of litigation”.   Spend more to save less.  Go along to get along.

 

 

Metro district reform has only been successful district by district.  Community by community.  Reform (and I) are still working on educating, identifying issues, identifying options, and helping residents figure it all out.

 

Unfortunately, it never took hold in Solterra.

 

At the end of the day someone will decide whether or not it was the right decision in 2017 to go along to get along and pay Brookfield whatever they wanted without objecting to the self-serving agreements and un-accounted for charges.

 

And they’ll decide whether or not to keep paying

 

or just move away.

Like so many of the original 26 heros who knocked on doors in 2017 for two months to restore the residents rights to self-government.

 

John Henderson

 

 

This of course is not the first time these issues were published.  Here are a couple previous blogs published at the time with more detail:

 

http://solterracommunity.org/index.php/2017/04/24/recall-some-numbers-why/

 

http://solterracommunity.org/index.php/2017/05/05/recall-paying-our-share/

http://solterracommunity.org/index.php/2017/06/30/board-resignations/

 

http://solterracommunity.org/index.php/2017/07/01/here-are-the-folks-who-made-it-happen/

 

http://solterracommunity.org/index.php/2017/10/21/independent-constructionfinance-audit-pro-and-con/

http://solterracommunity.org/index.php/2017/11/15/brookfield-recycled-and-repackaged-is-still-brookfield/

 

http://solterracommunity.org/index.php/2017/11/27/numbers-why-we-including-our-board-must-object-to-following-and-applying-brookfields-agreements-with-itself/

http://solterracommunity.org/index.php/2017/12/10/one-of-the-most-important-conversations-related-to-brookfield-and-the-bonds-frmd-meeting-with-guy-ford-last-monday-11-27-at-1030-a-m-foreshadowing-of-board-decisions-to-come-critical-to-un/

http://solterracommunity.org/index.php/2018/01/21/letter/

http://solterracommunity.org/index.php/2018/03/17/why-am-i-doing-this-chapter-1/

 

http://solterracommunity.org/index.php/2018/03/24/chapter-2-negotiations-with-brookfield-lakewood-and-brookfield-appointees/

 

http://solterracommunity.org/index.php/2018/03/20/solterra-vote-by-the-numbers-what-the-record-of-expenses-tells-us/

 

http://solterracommunity.org/index.php/2018/04/01/independent-audit-compare-and-contrast-postitions/

http://solterracommunity.org/index.php/2018/04/04/debate-brings-clarity-fear-of-expensive-litigation/

http://solterracommunity.org/index.php/2018/04/04/public-election-campaign-is-working-candidates-reveal-their-positions/

 

http://solterracommunity.org/index.php/2018/04/17/last-board-meeting-one-shooting-star/

 

 

http://solterracommunity.org/index.php/2018/04/21/return-the-right-to-vote-on-bonds-back-to-the-voters-here-is-how-it-happened-and-here-is-how-we-change-it/

http://solterracommunity.org/index.php/2018/09/13/new-information-from-the-annual-meeting-of-the-special-district-association-we-need-to-do-a-professional-audit-of-brookfield-plus-more/

http://solterracommunity.org/index.php/2018/10/07/objection-to-boards-statement-that-we-should-go-into-debt-to-pay-brookfield-more-money-for-unknown-expenses-and-upcoming-board-meeting-10-15-2018-with-or-without-a-board-packet/

Addressing Special District Abuse In Solterra – The Documents

 

Merry Special District Christmas

 

Solterra Board – Yes, we are going to issue more bonds to pay Brookfield more profit and you don’t have a vote on the matter.

 

Solterra – It is Time for An Independent Audit of Brookfield’s Income and Expenses

 

Solterra Board Follows Brookfield Model – Issue Developer Bond Debt and Suppress the Right of Residents to Vote

https://rooneyvalleynews.com/new-research-discloses-brookfields-double-billing-for-solterra-infrastructure-costs/

 

Updated Data Demonstrating Brookfield Double Charged Solterra for the Cost of the Infrastructure

Summary of Solterra Metro District Abuse and What We Can Do About It

Solterra Board Gives 3 Days Notice of Vote To Spend $72.5 Million at a Cost of $2.4 Million Each Year Until 2050

Solterra Board Continues to Mislead Residents About The Amount of Debt and Right to Vote

Solterra Board – Budget and Bond Debt