Subscribe to Our Newsletter
RV News September 6, 2020

The

 

The Solterra Board anonymously published “Response to Questions from the August 17, 2020 Board Meeting”.   The Board’s  supporters emailed residents with a letter dated August 26, 2020, imploring their neighbors to forfeit their right to vote and oppose the recall campaign.

 

Both documents and other commentary on Next Door continue to report myths about metro districts and the Solterra experience in particular.  Here is an attempt to correct this misinformation – with reference to the actual documents and statutes.

 

First a general observation.

There are neighbors who are passionate about restoring the residents right to vote on taxes/ bond debt.   They are not a small minority.  749 residents signed the recall petitions in 2017.  26 residents walked door to door to collect those signatures.   Restoring our right to vote is just the second step in that process of reversing 11 years of abuse by Brookfield which abuse began in 2006 – when Brookfield took away our right to vote on taxes and bond debt.

 

There are residents, most of whom opposed the recall in 2017 to remove the Brookfield employees off our our boards, who continue to favor or at least fear Brookfield and will personally attack their neighbors in order to make sure Brookfield is paid – not what they have earned – but what they simply demand with threats of litigation.

I collected 200 of the 749 recall signatures in 2017 and about 5% of the people I spoke to declined to sign the petitions.  5%.   The folks who loudly oppose restoring our right to vote likely represent only about 5% of the community on this issue.

 

But, of course, there is a sure fire way to find out which group represents the majority – put it to a vote – vote yes or no, “should we restore the residents right to vote by repealing the 2006 ballot measure that took away that right”.   Add it to the November ballot at minimal charge.  Then we’ll know.  Instead of competing in a digital shouting match – lets vote on it.

 

Reply to the Board

Here is the Board’s document:

Solterra Board Response to Questions Re 8-17-2020

The Solterra Board’s “Response to Questions from the August 17, 2020 Board Meeting” is significant more for what it doesn’t say than what it does say.

It never even attempts to answer the question – why not put the issue to a vote.  Do the residents want to restore their Constitutional right to vote that was eliminated by Brookfield in a “vote” by the Brookfield employees in 2006.

This is the most important question and the Solterra Board has refused to answer that question for 4 years.

 

What do we owe Brookfield.  The Solterra Board’s seriously misleading presentation of the facts here is disturbing.  Here is their chart:

They begin with $70 million from the Service Plan which is here:

Fossil Ridge Service Plan

Page 17, the Service Plan begins the discussion of the finances and as you can see here, the maximum amount of the debt principal is actually $91 million, not $70 million.

 

 

As you read further, you will see that the “lawyer speak” basically says there is “general obligation” debt and “revenue debt”.  The first is “general” infrastructure inside the Solterra boundary debt, the second refers to repaying regional improvements – i.e. Alameda McIntyre improvements outside the Solterra boundary.   In both cases, bonds can be issued to pay the debt.

 

But the more important discrepancy is that this is not the total amount Solterra residents could pay.

This is only the principal on two loans.   The Service Plan does not put a limit on the maximum amount of interest debt.

 

The Ballot issue – most clearly reported in the bond prospectus – does put a limit on the total repayment cost – including the interest – $4.9 billion:

Solterra Ballot Issue

2016 bond

 

Of course the point was made crystal clear when Brookfield told over 200 members of the community in April, 2017, that of the $28 million that Brookfield received in lump sums and the $28 million bond residents are repaying at over $2 million each year – of that $28 million – only $7 million went to pay down the principal and $21 million went to pay for interest.  Here is the slide from Brookfield’s presentation:

 

So, in this chart prepared by the Solterra Board, it is false to subtract the $28 million from the $70 million (should be $91 million) and it is false to subtract the $10 million from the $70 million.  The number being subtracted from the $70 million principal should be the $7 million principal shown in Brookfield’s presentation above.

The $70 million maximum is for principal only.  Brookfield has only subtracted $7 million in principal, not the $21 million in interest.   The $21 million in interest only gets subtracted from the repayment limit of . . . $4.9 billion.

And the “good news” is that the interest is still accruing on the $70/$91 million every day.

Significantly, the board has not said how much of the proposed $10 million will pay down the remaining principal.  How much will pay only interest.   So, too, the “unpaid balance” is much higher – so far we have only paid $7 million of principal so the starting unpaid balance $70 million minus $7 million is actually $63 million, not $41 million.

 

Footnote one to the chart includes this cryptic statement:  “Our legal counsel and District Engineer have determined that the $10 million has been reasonably justified”.  But every time we ask to see how they reached this conclusion, the Solterra Board says “its secret”.

Again, justified as what.  Payment of how much principal and how much interest.

And of course, the important point is that whether or not it is justified is not their decision to make.  We did not vote to have the attorney and engineer tell us whether or not it is “justified”.   These are our taxes; our decision.  That is our decision to make with a vote after considering all the relevant evidence.

Did the attorney and engineer consider that we already paid Brookfield at least $118 million for infrastructure and the cost of the land.

Did the attorney and engineer consider that Brookfield told Lakewood the total cost of the infrastructure would be $37.8 million.

Did the attorney and the engineer consider that the agreements establishing the two loans and two loans interest financing plan, including the 6% interest rate, were agreements made by Brookfield with itself when Brookfield had an expressly stated (in the Bond prospectus and audits) conflict of interest with the residents.

 

The Solterra Board goes on to talk about the consequences of not paying Brookfield.  They wring their hands and say that not issuing additional bonds would violate the loan agreement with Brookfield.

They are very concerned about “violating an agreement”.   But the agreement was to pay Brookfield back for the infrastructure.  And the Board doesn’t  want to know whether or not Brookfield has already been paid for the infrastructure.

See

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

 

Instead, for the Board its all about the “agreement” to pay whatever Brookfield says they should be paid – relying exclusively on Brookfield.

And as to the agreement, what they refuse to acknowledge publicly, but have acknowledged privately, is that the “agreement” is unenforceable.  Here it is again in all its glory:

 

 

Tom Morton, currently the principal Director for neighboring Big Sky Metro District, signed as both the developer Brookfield/Carma and as the President of the Solterra Board.

As a matter of simple contract law, I cannot agree with myself to require my neighbor to pay for my landscaping.

No one representing the residents’ interests gave Brookfield permission to enter into this “loan” on behalf of the residents.

Indeed, all the documents (bond prospectus, 11 years of audits) state that Morton and the other board members had a conflict of interest with the residents.  It is a sham agreement.  Unenforceable. No court has ever said these agreements are enforceable.

 

So, how does the Solterra Board propose to handle this situation where Brookfield is threatening to sue us if we don’t honor these unenforceable agreements.

They say that there might be a lawsuit which would be lengthy and expensive.

So, they conclude, we should pay Brookfield at least $500,000 a year for at least 30 years – by using our savings in refinancing the $29 million bond.  Just pay Brookfield $500,000 a year.  For 30 years.

 

But, think about it.  If we are going to save $500,000 and immediately throw it away to Brookfield (and who knows how much of the $10 million is interest and principal), why not spend a couple years of that savings on the lawyer (actual cost will be much less)  to hold Brookfield accountable and challenge Brookfield’s demands.

The money is lost to us under the Board’s proposal anyway.

Spend a couple years of the savings to find out if we owe any money and  have  a judge  tell us all, once and for all, is the Brookfield agreement with itself establishing the loan and 6% interest enforceable.

If it turns out we owe the money and the agreement is enforceable,  then pay the rest of the $500,000 a year for 30 years to Brookfield.  If the agreement is not enforceable, then we can put the $500,000 a year for 30 years back into our pockets or spend it on Solterra improvements.

We have absolutely nothing to lose by spending the $500,000 a year for a couple of years on us, not Brookfield.

Based upon my experience in commercial and land use litigation, I am pretty sure Brookfield does not want to throw the dice on having a judge rule on this agreement.  And I am pretty sure Brookfield does not want to submit its finances (when it was the district government from 2006 – 2017) to the court ordered disclosures that will be part of any litigation.

 

The Solterra Board then talks about the actual costs for the infrastructure.  The Board says Merrick, the District Engineer is looking at the costs based upon established plans.

 

The Board refuses to consider retaining an independent forensic financial audit firm to evaluate all the factors.  Merrick is an engineering firm that works for developers.  They will not bite the hand that feeds them.  Merrick is also not considering the fact that we have already paid for the infrastructure:

 

New Research Discloses Brookfield’s Double Billing for Solterra Infrastructure Costs

 

The board began to consider retaining an independent forensic auditor three years ago but abruptly stopped.  Then, over the following three years, as recently as this Spring, the Board provided several conflicting explanations for how they were handling this issue.

Now they say Merrick is looking at it.  The bottom line is that they consistently said it doesn’t matter because of all the principal and interest we might be obligated to pay ($4.9 billion).

They don’t really care whether we owe the money or not.   They are afraid that Brookfield will sue us.

Then we come full circle.   As noted above, we have absolutely nothing to lose by letting Brookfield sue us.

Spend the $500,000 a year saving on getting a decision from the Court on whether or not the agreement is enforceable and, after full discovery of Brookfield’s finances, what the cost actually was – and whether in fact we already paid it.

And I expect it won’t be lengthy – two years at most – summary judgment on the agreement and 6 months of discovery on Brookfield’s finances will take 12 months total for both.   That assumes Brookfield doesn’t walk away sooner – as they did in the face of the recall in 2017.

 

 

Now, lets talk about the August 26, 2020 emailed letter to residents opposed to restoring the residents’ right to vote.  Here it is:

Neighbors Opposing Vote

 

The first thing to note about this letter is the effort to personalize the issue as a personal attack on the board members.  The authors of course do this by personally attacking and attempting to minimalize the folks who support getting our right to vote back.

 

This is not about personalities or character.  It is about a simple issue – do you want the right to vote on taxes and bond debt.  The constitution says you have that right.  Brookfield took it away in 2006.  Do you want it back.

 

Again, if we put it to a vote we will find out in a hurry which position is favored by the majority of residents.  No one in this country should be afraid of a simple vote.

 

And, again, 749 residents signed the petition in 2017 to restore our right to the vote – getting Brookfield off the boards.  Reversing the “vote” in 2006 is just the next step.  749 signatures and 26 residents collecting signatures is not a minority interest.

 

So, lets consider who is leading this effort to restore our right to vote.

Linnea Hauser took the leadership role in 2015/2016 to galvanize a movement of over 22,000 citizens challenging a proposal to develop 4 mega car lots at Dinosaur Ridge.  Ms. Neil initially said she would represent Solterra in that fight but she switched sides a few months later and supported the development of car lots at Dinosaur Ridge.  Ms. Neil spoke in favor of the car lot development at the final hearing.  Then, when she lost, she tried to take credit for all of Ms. Hauser’s work in challenging the car lot development.   Ms.  Hauser was also one of the principal leaders of the 2017 recall to remove the Brookfield employees from the boards. During that first recall, Ms. Neil also tried to take credit for all the work by Ms. Hauser and those 26 residents collecting signatures.

Solterra is very fortunate to have such a hard worker and principled resident as Linnea Hauser fighting to give Solterra residents a choice.

Gary Greaser is another leader among the residents.  He worked hard on the first recall, has attended just about every Solterra Board meeting the past 4 years, is a frequent participant in the City of Lakewood meetings and hearings and most recently conducted independent research and analysis into the question – did we already pay for the Solterra infrastructure.  His consistent concern for the residents and financial health of the community has never waivered.

Alex Yuffa is also a leader in the community.  He has persistently, politely and respectfully  raised substantive questions about the handling of the snow removal fees for the townhomes, as well as metro district abuse.  He and his wife walked miles knocking on doors in 2017 and continue to provide valuable insight into democratic government having lived under an authoritarian government in Eastern Europe.

Paul Tessar is another leader.  His technical expertise, attention to detail and quick command of the fundamental concepts associated with metro district abuse have served this community in many ways.   The 2017 recall was built on his management of the data.

JD Lobue was present at the first Town Hall in 2017 where original research on the Solterra metro district abuses was disclosed.   When the suggestion was made that we should try to recall the three resident directors (minority) as well as the Brookfield employee directors (majority) in 2017, he stood strong that the residents were our neighbors and that we should work with them even though they opposed he recall.  He has never given up on taking the steps necessary to maintain respect for the Board and restore the residents’ rights.  He is also active in the state lobbying effort.

Victoria Hutson has been a supporter of restoring the residents rights from the beginning and is taking a more active role.  She provides new and valuable insight into the process and substance of the recall campaign.

Here is what I said about my involvement back in  March, 2018:

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

I have researched and published what I have learned about metro districts and metro district abuse for almost 4 years.  I have been recognized as an expert in metro district abuse by Longmont, Lakewood and the Denver Post.  I am working with numerous groups throughout the Front Range on metro district abuse, including a statewide lobbying effort.

I have represented corporations in large nationwide commercial and products liability litigation.  I have represented developers and residents in land use litigation.

I have advocated on behalf of citizens on local government and land uses issues for 40 years.

Perhaps my most significant experience was as a fellow with the Citizens Research Council of Michigan where I earned a masters in public administration and contributed to numerous studies regarding the efficient use of public funds in local government.

 

So, Solterra has the benefit of two groups of residents – those who oppose returning our right to vote and those who support returning our right to vote.  Both are passionate about their positions.  Both have unique qualities, experience and training to advocate their positions.

With a fair presentation by both sides, the residents are in the best position to decide for themselves – and vote on the issue.

 

The letter by the neighbors who oppose restoring the right to vote provides its author’s description of the recall campaign.   Predictably it is not an accurate statement of the goals of the recall campaign.

The goal is very simple.

Vote.

Restore the residents’ right to vote on tax and bond debt.  All the other issues will be addressed in the debate that precedes a ballot issue to vote on whether or not to spend more money on Brookfield bonds.

We come full circle to the question the Solterra Board will not answer – why not restore the residents’ right to vote on tax/bond debt.

Since the board will not restore the right to vote or will not put that question to a vote at an election – and since metro districts don’t have the right for citizen initiatives – the only choice the board leaves is recall.

Lets refinance the $29 million in bond debt we have now.  Everyone agrees that is a good idea.  We will save $500,000 a year for 30 years.

But, instead of just giving all the savings ($500,000 per year) to Brookfield to pay down some unknown principal on the remaining $63/$84 million of debt principal, lets use the money to find out once and for all time, do we actually owe them anything, is their agreement with themselves enforceable and what do Brookfield’s finances show about the actual costs and income for infrastructure.

 

Then, after we have more information (including an independent forensic financial evaluation), we can vote on whether or not to issue more bond debt to pay Brookfield more money.

 

The letter then provides a general description of metro districts but makes a glaringly false assertion: “When each of us purchase our homes, we signed documents regarding this repayment obligation”.

Never happened.  And of course, the letter fails to provide any reference to any document the authors may have signed “regarding this repayment obligation”.

Neither you or I ever signed a document that acknowledged we were entering into a loan to repay Brookfield up to $91 million at a total repayment cost (including interest) of $4.9 billion.  It is in the bond prospectus to potential bond investors, so they knew the number.  But Brookfield never included that number in any of the closing documents.

Neither you or I ever signed a document that disclosed our constitutional right to vote on tax/bond debt was eliminated by a vote of 8 Brookfield employees in 2006.

Neither you or I ever signed a document disclosing that we would have to pay Brookfield whatever they said we owed, without an independent accounting.

Neither you or I ever signed a document that acknowledged we would pay twice for infrastructure – once as part of the cost of our lot and once as part of Brookfield’s metro district financing plan.

Neither you or I ever signed a document agreeing that the Brookfield agreement with itself to have us pay its metro district  financing debts would be binding on us.

Neither you or I ever signed a document that we would pay interest on two separate loans – for up to a total repayment cost of $4.9 billion.

Never happened.  There is a reason the letter does not cite to anything you or I signed.  It does not exist.

 

And, those 1,819 other communities are beginning to wake up to the metro district abuse.  Longmont has now banned metro districts.  Lakewood and Aurora are looking at significant reforms.  Denver is under pressure to do the same.  Brighton is looking at reform efforts.  State legislators are hearing from their constituents about re-writing the statutes.  Regulators are questioning how it is that paying interest on two loans is more cost efficient than paying cash or paying in a mortgage loan with a lower interest rate and quicker pay off.

 

And, to be sure, Solterra has been a leader in this reform movement.

 

To suggest that holding Brookfield accountable is equal to defaulting on our home mortgages is an outrageous statement, even for those who favor or fear Brookfield.  Every single resident I have spoken with in four years has said the same thing.  If we owe the money, we will pay the money.

 

Problem is that the Solterra Board and the Brookfield supporters don’t want to know whether or not we owe the money.  They steadfastly refuse to consider that we have already paid for the infrastructure or that Brookfield has over charged (the figure to Lakewood City Council was $37.8 million – that grew to $160 million when speaking to the 200 residents in April, 2017).

Instead, the Solterra Board and the Brookfield supporters simply argue we can’t break the Brookfield agreement with itself.  We can of course, because it is a sham agreement – unenforceable.

But the agreement may not even matter.  If we owe – if Brookfield has not been paid for the infrastructure for Solterra – we will pay.  But one problem is that the Solterra Board and the Brookfield supporters don’t want an independent comprehensive assessment of whether or not we owe anything.

 

The letter goes on to inflate the “risks of default”.   Again, this characterization lacks any reasonable support.

$500,000 a year for 30 years  either goes to Brookfield without answering any of the questions (do we owe, is the agreement valid) or

$500,000 a year for two years goes to answering those questions and worst case, 28 years of $500,000 goes to Brookfield.

We literally have nothing to lose.

And wouldn’t you rather live in a community known for taking charge of making its own financial decisions instead of turning it over to Brookfield or an attorney or an engineer who works for developers.

Wouldn’t you rather live in a community known for holding its developer accountable instead of going along to get along – paying unknown interest up to a maximum of $4.9 billion – without ever obtaining an independent comprehensive answer to whether or not we owe anything.

 

Then the letter provides some interesting news about what the board is doing.  First, there is no reference.  This has never been discussed in a public meeting and it is inconsistent with what little has been said.  Previously the Board said this information was secret.  Do the authors have access to private information that the rest of the residents aren’t privy to.  If any of it is accurate, why isn’t the Board sharing the information and details with everyone in the community.  How much is this “extensive review” costing between the attorney and the accountants and engineers and bond professionals.  And based upon the Board’s report, why aren’t we using professionals who do this for a living – forensic independent financial audits – who are not part of the development community.   They are available.   The Board knows they are available.

 

The letter concludes by essentially arguing that the Solterra Board members are good neighbors.

 

We are too.  So, restore our right to vote, lets count the votes and move forward.

Once the right to vote is restored, there is no longer any reason for a recall.

We should not have to fight so hard to simply restore the right to vote that Brookfield took from us in 2006.

 

Someone suggested that I have an axe to grind.  I do.  Whenever people try to take away my right to vote I fight.  Just as hard as my grandfathers fought in WWI.  Just as hard as my Uncle fought in the pacific in WWII.  Just as hard as my father fought in WWII and the Korean War.

 

There has also been mention of this new idea, that the debt of up to $4.9 billion was already authorized.

All that means is that in 2006 the 8 Brookfield employees “voted” to give the board authority to go into repayment debt up to $4.9 billion in (principal and interest) and up to $91 million in principal.

But all it did is give the Board permission to issue that much debt.  They didn’t actually issue or commit to issue $4.9 billion in debt.

The debt is not issued until the board (or more properly the residents) vote to obligate the community by issuing bonds.

If the commitment was already made and the debt issued, there would be no need for the board or the voters to vote on it again, which the Brookfield has already done three times.

And the board at any time could decline the permission and say, we think the better policy is to have he voters decide whether or not to add more bond debt, consistent with the constitution.  Or the Board could put the question on the next ballot in November to decide whether or not to repeal the 2006 vote.

It is simple legislative arithmetic.  The “voters” in 2006 voted to do something.  Under the statutes the voters in 2020 can just as easily vote to change what was done in 2006.  That is the beauty of a democratic system.  The vote.

Again, the 2006 vote did not vote to issue actual bond debt.  It just gave permission to the board to do it later on, without a vote of all the residents.  The commitment – the debt – does not take place until the board – or more properly the voters – vote to issue to bonds.

Once the bonds are issued, then there is no going back.  The Castle Pines litigation settled that question.

That, issuing the bond debt,  is similar to a mortgage debt.  What happened in 2006 isn’t.

Giving permission for someone to do something (issue a debt obligation) is completely different from actually doing it.

 

Finally, there has also been a suggestion that the Colorado State Legislature passed a law authorizing and enforcing single party agreements – Brookfield’s agreement with itself signed by the same person when that person has a conflict of interest.  No one has ever legalized an agreement where I agree with myself to obligate my neighbor to pay for my landscaping.  I would like to see such a law.  It doesn’t exist.  And it never will.

 

And the argument that these agreements are normal because all the developers did them in all the metro districts is not logical.  Bank robberies happen every day throughout the country.  Does that make them “normal” and acceptable.

 

It is a challenge at times to see the choices that exist with all the fog swirling around this issue.

 

There will be a resident town hall Tuesday evening to answer questions you all may have – with reference to actual documents and the statutes.  We look forward to moving forward and, with a vote, deciding what is in our best interests as residents of the Solterra community.

 

John Henderson