In what has now become classic style for the Solterra Board, they opened the meeting Monday night with a carefully choreographed presentation of their position.
Each Board member had their script on a different topic. Each took as much time as they wanted to present the particular subject.
And, again, consistent with this Board’s practice of managing the message, avoiding questions and managing the residents, the Board ordered that there would be no question and answer – but if the residents had something to say, they had 3 minutes to say it – whatever it was . . . . as if it mattered.
The Board spoke and told the residents what they were going to do – before they heard from the residents. Not much listening going on there. Never has been. (There was a gratuitous remark by Mr. Dominic that “we are here for you” – sorry but actions speak louder than those words)
Later in the meeting, the chairperson of the finance committee invited questions as one would expect – and even though hands were raised – Waterman ordered that there would be no questions and answers. Don’t like to answer without a script and don’t like to engage in any dialogue. Decision made and communicated – that is how the Solterra meetings have worked from the beginning.
Bottom line – the Board still refuses to return our right to vote on bond debt – the right to vote on going into debt to write a check to Brookfield for $10 million and give us the bill – $10 million in principal and about an equal amount in interest over 30 or 40 years.
The Colorado Constitution gives us that right. 8 employees of Brookfield voted on a ballot issue in 2006 to take it away. We need to vote on a ballot issue in 2020 to get that right back. (See also, discussion at the conclusion of the blog)
So, the Board is willing to risk not being able to refinance the old bond debt at a lower rate – savings of $500,000 per year for 30 years – in order to guarantee payment to Brookfield of $10 million in new bond debt – debt to us – check to Brookfield.
Their loyalty to Brookfield is stronger than their loyalty to their own neighbors. Another reason to recall the current board to obtain real representation of the residents.
Since the Board did not permit equal time to respond to their scripted statements, here is a brief response:
1. Board – We have no choice but to follow state law to pay Brookfield. Since there are about 2,000 metro districts and they all owe their developer, it is “just the name of the game” to pay like everyone else does.
Response – State law says nothing about paying Brookfield money it is not owed. The state statutes anticipate that there will be a check and balance on Brookfield. That check and balance is us.
The state statutes anticipate that the residents will hold Brookfield accountable for any proposed debt. The state statutes anticipate, consistent with the Constitution, that the residents will not vote to go into debt unless they owe the debt. The state statutes anticipate that the residents will require the developer to prove money is owed before it is paid. And, the state statutes expressly provide provisions to recall the board members if they are not representing the residents. CRS 32-1-906 (accessible through google)
The Board cannot cite to any provision of Title 32 that says we must pay Brookfield if we don’t owe them any money. Of course such a provision would be absurd.
Saying that we have to do it because everyone else is doing it – is never a good argument. And in fact now that communities are waking up to the abuse, they are also holding their developers accountable – including Brookfield in other communities where they are behaving in the same manner.
So, do we owe Brookfield or not. Don’t know without an independent forensic audit.
2. Board: We are working on a “audit” using our “district engineer” . . . . but its very secret.
Response: Well, after the recall it won’t be secret any longer.
It is in the best interests of the residents to disclose whatever the Board thinks they have so the residents can make an informed decision. Earlier responses by the Board stated that they were not doing their own audit – the said they were relying on Brookfield’s Guy Ford. It will be interesting to see what this new response turns out to be.
Again, the Board’s concept of representative government and open government got turned upside down. Their philosophy is that they will hold all the information and make all the decisions and only share what little they want the residents to know.
And they will decide what the residents need to know.
They don’t want the residents to be informed about the issues. There is no transparency. It took a freedom of information request to get the letter from Brookfield received by the Board in November of last year.
Also, the district engineer isn’t going to even consider the full transaction that a forensic audit would include – particularly the cost of the land, infrastructure, lots and profit to Brookfield. Without more information there is no way to evaluate the quality and sufficiency of whatever it is the Board is doing.
We need an independent forensic financial audit – not a secret audit that is owned by the Board.
3. Board: The residents have the right to vote on the $10 million new bond debt.
Response: Uh, what? Then why are we having this discussion. If you intend to give us the right to vote on the $10 million bond debt, then just do it and we can move on to talking about an independent audit before we vote.
Being “cute” and telling us “you have the right to vote” because “you” voted in 2006 to give the Board a blank check up to $4.9 billion – is “misleading” at best.
We have never had the right to vote on future bond debt, the board controlled by Brookfield has always controlled the vote on future bond debt – all because of a “vote” in 2006 by 8 employees of Brookfield. (See also concluding discussion)
We get the right to vote back very easily – the Board can voluntarily say they will not approve any bond debt without a vote of the residents at an election. Or the board can put the question on the ballot in November – yes or no – do you vote to repeal the vote by Brookfield employees in 2006 and return your right to vote on new debt (ie the new bond debt of $10 million).
Brookfield took it away with a vote in 2006 – we can do the same thing and take it back in 2020. Just as simple for us as it was for them [Brookfield] to take it away from us.
The only reason the board wants to keep us from voting on the bond issue is because they, just like Brookfield, are afraid that the voters will decide they don’t want to use the $500,000 in savings from the bond debt to pay Brookfield more money.
But that is the point. Its not the board’s decision to make. Under the Colorado Constitution it is our decision, not the boards. Just like its our decision for jeffco taxes and Lakewood taxes – no new bond debt unless the residents vote to approve it.
4. Board: We can’t go against our “prior obligation”.
Response: Uh, what does that mean. If they are referring to the fact that the Brookfield board imposed $29 million in bond debt and we have to pay that – yes – thats true (unless we discover Brookfield overcharged us).
However, none of this discussion has anything whatsoever to do with the $29 million in bond debt we are now paying. The Board plans to refinance that debt and generate a savings of $500,000 which is good.
But taking that savings and spending it immediately on NEW bond debt is irresponsible without a full accounting and a vote by the residents.
If the Board is saying we can’t fight the Brookfield “agreements” with itself, they are simply wrong. And it won’t take very much time or money to have a court say so if Brookfield wants to fight it. I have blogged at length on that issue in the last week.
5. Board: We were elected and all these issues were debated during the election. The voters want to go into debt $10 million to pay Brookfield more money without holding them accountable and the voters don’t want the constitutional right to vote on new (ie $10 million) bond debt.
Response: Sorry, but I’m pretty sure that no candidate in May or at any time campaigned on a platform that said “vote for me and I will put you deeper into bond debt ($10 million) to pay Brookfield more money without an independent forensic financial audit – oh – and I will also refuse to return to you the right to vote on that new debt.
Maybe that is what the current board members were thinking when they ran, but they sure didn’t tell us.
No, if you look back at our elections what you will find is that when these issues were raised, the current board members would not make a commitment and relied instead on their social relationships, not the issues, to get the votes. The current members are largely supported by the members of the social club run by Waterman – the empty nesters.
6. Board: We have to pay Brookfield and issue bonds in 2020 because its in the Service Plan.
Response: No its not. The Service Plan does not require bond debt be paid in 2020. What they are referring to is the proposed financial plan attached to the Service Plan. As stated in the documents, the proposed financial plan was a sample of how the money might flow if Solterra was developed. When you look at the sample schedule for issuing bond debt, assuming the developer was owed any money, we have never followed what Brookfield wrote in that sample plan.
There is no requirement, period. And of course, there is no requirement if Brookfield isn’t owed any money.
Here is the full document:
Resident: Won’t the recall cost a lot of money.
Response: Not if our right to vote is returned to the residents. And if the Board continues to deny the residents the right to vote on new (ie $10 million) bond debt – then if we do the election in November, there is virtually no charge. And if we do it in May – same – we will already have an election scheduled.
Toward the end of the meeting Waterman asked the finance committee chairman a question about what impact the recall might have on issuing new bond debt ($10 million) and (separate event) refinancing the old bond debt ($29 million). Of course the residents were prohibited from asking their questions.
The chairman of the finance committee talked around the issue for awhile but finally noted that the bond market will look for stability and prudent decisions by the residents.
Prudent decision making by the residents.
Do you think it would be prudent to wait to issue new bond debt to pay Brookfield more money until after we have an independent forensic financial audit?
We started to do that in 2017 but the Board without any real explanation pulled the plug.
Do you think it would be prudent to follow the Constitution and have the residents vote on the issue.
Here is what all the bond prospectus’ say about that:
“Required Elections
Various State constitutional and statutory provisions require voter approval prior to the incurrence of general obligation indebtedness by the Districts. Among such provisions TABOR requires that, except for refinancing bonded debt at a lower interest rate and employee pension plan additions, the Districts must have voter approval in advance for the creation of any multiple-fiscal year direct or indirect district debt or other financial obligation whatsoever without adequate present cash reserves pledged irrevocably and held for payments in all future fiscal years.” 2016 Bond Issue, p. 60
The bond attorneys are telling the prospective new investors that before the residents can issue bonds, under the Constitution, they have to vote on it.
Here is how Brookfield and the Board “get cute” with this requirement.
“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.
Who “voted” in 2006 to authorize up to $4.9 billion in debt and give the board permission from the “voters” to spend that money.
8 employees of Brookfield.
But Brookfield and the bond attorneys don’t tell the potential investors in these bond prospectus’ that the voters were 8 employees of Brookfield with a conflict of interest with the actual residents who would be paying the bill.
So, if the bond attorneys and the bond investors think its important that the voters approve going into this debt, the prudent thing to do would be to have the 2000+ actual residents who pay the taxes vote on the issue, just like the constitution requires.
And we get the right to do that by taking back the right to vote that was taken away by Brookfield in 2006. All it takes is a voluntary action by the board or putting it on the ballot – just like Brookfield did in 2006.
Here is a tape of the meeting. The Board refuses to tape the meetings – so we will start to do it for them.
https://youtu.be/MTBeY8iNNl8
John Henderson