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Home My WebLink About20090487.tiffHEARING CERTIFICATION DOCKET NO. 2009-11 RE: HEARING TO CONSIDER APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO.1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF CERTAIN PROPERTY (2,266.118 ACRES OWNED BY REI, LLC) A public hearing was conducted on February 18, 2009, at 10:00 a.m., with the following present: Commissioner William F. Garcia, Chair Commissioner Douglas Rademacher, Pro-Tem Commissioner Sean P. Conway - EXCUSED Commissioner Barbara Kirkmeyer Commissioner David E. Long Also present: Acting Clerk to the Board, Esther Gesick County Attorney, Bruce Barker The following business was transacted: I hereby certify that pursuant to a notice dated January 30, 2009, and duly published February 6, 2009, in the Greeley Tribune, a public hearing was conducted to consider the Appeal of Decision of the Board of Directors of Beebe Draw Farms Metropolitan District No. 1 Regarding the Granting of a Petition for Exclusion of Certain Property (2,266.118 acres owned by REI, LLC). Bruce Barker, County Attorney, made this a matter of record. Commissioner Kirkmeyer stated during the past year, while conducting her campaign for a Commissioner seat, she did have the opportunity to meet with residents from the Beebe Draw Farms Metropolitan District, at which time she did discuss the formation of the District and current development taking place. She further stated she was a Commissioner in 1999, at which time she did vote to approve the existing Service Plan. In response to Mr. Barker, Commissioner Kirkmeyer confirmed she did gather informal information during her meetings with the District residents; however, she did not take a formal position, and she is confident she can remain impartial during the current proceedings. Richard Lyons, Bernard Lyons Gaddis and Kahn, P.C., stated he is the attorney for certain taxpaying residents of Beebe Draw Farms Metropolitan District No. 1, including Jeff Hare, Mick Welch, Rod Gantenbein, and Angie Powell. Paul Cockrel, Collins Cockrel and Cole, stated he represents the Metropolitan District Boards. MaryAnn McGeady, McGeady Sisneros, P.C., stated she represents the excluded property owner, REI, LLC. Chair Garcia explained this is an appeal hearing; the Board will not be taking new evidence or testimony, rather, comments should be limited to the issues of the appeal. Mr. Cockrel requested permission to supplement the record with the Order from the Board of Directors, which was approved on February 9, 2009, approving exclusion of the property. Mr. Lyons expressed opposition to the requested submission. He explained the packet is regarding actions that took place following the filing of this appeal, and there may be a separate action brought by his clients 2009-0487 SD0001 HEARING CERTIFICATION - APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF PROPERTY OWNED BY REI, LLC PAGE 2 regarding the matter referred to by Mr. Cockrel. In response to Chair Garcia, Mr. Lyons stated the existing file is complete. Mr. Cockrel clarified the order is being provided for informational purposes only. In response to Chair Garcia, Mr. Cockrel stated the submission does not add anything substantive to the record, rather, it simply concludes what was identified in the record as the beginning of the second proceeding, as referred to in the briefs. Mr. Barker stated the appeal which is being considered by the Board is allowed pursuant to Section 32-1-501(5)(b), C.R.S., which addresses the exclusion of property by the Beebe Draw Farms Metropolitan District Board of Directors and the record upon which the District Board made its decision. He stated the petition was not a part of the record which was presented before the District Board on October 20, 2008, or November 3, 2008. The Board agreed that the information is not necessary. Mr. Barker clarified there was no motion to accept the supplemental information. Chair Garcia explained each side of the issue will have one-half hour to speak. Mr. Lyons stated he will speak for twenty minutes, and reserve ten minutes for rebuttal. Mr. Cockrel stated Ms. McGeady will make the primary presentation and he will conclude at the last part of their half-hour segment. Mr. Lyons stated, in 1999, the Service Plan was approved, consisting of a constituent district (District #1) made up of all the property owners, and an overlapping developer district (District #2) which controls the services that are provided to the constituents. He stated, as property is sold by the developer, the lot is excluded from District #2, yet remains in District #1, which preserves the developers' control over District #2, by not allowing homeowners to vote regarding the developer district. Mr. Lyons explained in order to be a qualified voter, an individual must be a registered elector in the State of Colorado, and either own property, or live within the Special District. He stated District #1 had issued the general obligation debt, as well as all of the other financial debt agreements which paid for the improvements. He further stated Colorado law provides that a property which is part of a District at the time a debt is issued, remains subject to the debt even if excluded from the District. He stated, since all of the property was originally in District #1, it will always remain subject to the general obligation debt, regardless of whether it is excluded. Mr. Lyons stated the State legislature has granted the County general oversight responsibilities and duties with respect to Special Districts, including approval of the financial plan, facility description, etcetera, which did occur in 1999. He stated the Statute also provides that the County has general oversight to ensure compliance with the Service Plan, or result in a court action, which can be brought by the County or the taxpayers. Secondly, the taxpayers have the ability to appeal an exclusion to the Board of Commissioners, by way of a petition, pursuant to certain statutory criteria in order to be effective. Mr. Lyons clarified his clients are appealing the decision of the District Board based on various factors, and he specifically focused on the following: 1) whether the exclusion is in the best interest of District #1, and 2) whether the exclusion is in the best interest of Weld County. He stated the Brief also addresses some procedural defects and asserts the petitioner failed to meet the statutory requirement of posting the necessary deposit money to ensure the taxpayers do not pay for the exclusion. He further stated, if the Board finds that the petition was valid, it must also make the determination that the exclusion is in the best interest of District #1 and Weld County. Mr. Lyons stated the exclusion has been completed, recorded, and submitted to the District Court; however, the exclusion is not in the best interest of District #1 because it is contingent upon the following: 1) an amended Intergovernmental Agreement (IGA), 2) a successful election that still has to occur, and 3) a promise by the developer to re -include the 2009-0487 SD0001 HEARING CERTIFICATION - APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF PROPERTY OWNED BY REI, LLC PAGE 3 property some time in the future; however, the record does not bind the re -inclusion of the property back into District #1 after it is developed and sold. Responding to Chair Garcia, Mr. Lyons explained the IGA is between District #1 and #2, and there are no other legal documents in the record which require the re -inclusion of the property into District #1 upon development, which is contrary to the existing Service Plan. He stated the intent of the two overlapping districts is to ensure all of the property is subject to the general obligation debt, and to exclude property upon development so new homeowners will have no bearing on how the development will continue to occur. He further explained, under the existing plan, the property will always remain in District #1 and only be excluded from District #2, while remaining subject to the existing or future mill levies, and the property owner will always have a voice on the Board of District #1 and vote in the elections. He further stated the IGA results in District #2 issuing the debt and telling District #1 what the debt will be without the ability to vote, and also eliminates the obligation of the developer to re -include the property back into District #1. Responding to Commissioner Kirkmeyer, Mr. Lyons stated District #1 currently issues the 40.0 mill levy, and District #2 takes the money and implements the improvements. He stated the 40.0 mills has two components: 8.0 mills for debt and 32.0 mills for operations, therefore, if the property is excluded from District #1, it remains subject to the 8.0 mill levy debt obligation, but it is not subject to the general operations of 32.0 mills. He reiterated the IGA is suspect, since it is contingent upon future election events, therefore, it is not in the best interest of District #1. Mr. Lyons stated the exclusion is also not in the best interest of Weld County, since it sets a precedent for evading an established Service Plan, supplements the modification with an IGA, and strips accountability from the residents who can no longer hold the directors responsible. Susan McGeady, displayed a PowerPoint presentation, which she reviewed for the record. She stated the Beebe Draw Farms Metropolitan District was originally approximately 4,120 acres, there are 186 platted lots, fifty homes have been constructed, and the eventual full buildout will result in more than 800 single family residences, with an estimated population of 1,860 residents. She indicated the location of the REI property petitioned for exclusion, and stated the Metropolitan District was originally organized in 1986, to provide for various improvements. In 1999, the District was reorganized and a Consolidated Service Plan was approved for Districts #1 and #2. Ms. McGeady stated the purpose of the Consolidated Plan was to ensure that there would be a uniform property tax and a reasonable tax burden on all property within the development, ensure that the existing District #1 bonds were paid and that the public improvements would be provided and financed at the time that they were needed, and ensure that the capital and operations costs would be distributed evenly throughout the community. She stated the Consolidated Financing Plan anticipated the revenue generated by the 40.0 mills would be used first to pay the District #1 debt, with the remainder remitted to District #2 to pay all of the operations and maintenance costs, as well as the capital construction costs. In response to Commissioner Kirkmeyer, Ms. McGeady confirmed there are 186 platted lots, fifty lots have been developed, and all of the water, sewer, and drainage improvements are complete and available for Filing #1. She further stated the parks and recreation amenities are installed and complete, and District #2 has worked with the property owners to define how and when the future amenities of future phases will be completed. She stated the current Service Plan provides complete discretion to each of the District Boards for inclusions and exclusions, and District #2 has the power to impose property taxes within its boundaries and it is authorized to provide the public services and facilities throughout both Districts, thereby setting up a common service area in the entire development boundary. She further stated 2009-0487 SD0001 HEARING CERTIFICATION - APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF PROPERTY OWNED BY REI, LLC PAGE 4 the Service Plan also provides for future Intergovernmental Agreements between the two Districts to coordinate the provision of services. Ms. McGeady stated, in response to concern about friction in the community from a finite group of individuals, REI submitted a petition for exclusion for 2,226 acres of undeveloped property. She stated District #2 will be able to provide the services to the property more efficiently, while still being subject to the terms of the IGA, and the exclusion will continue to ensure uniform property taxes on the entire development and that future amenities will be provided to future residents. She further stated the record and facts presented support the exclusion of the REI property, and it is in the best interest of the property, District #1, and Weld County. She reiterated that the friction caused by a finite group of individuals could potentially cause future friction between the two Districts and frustrate the completion of the overall project. She stated the purpose of the two Districts working together was to ensure that District #2 had the ability to continue to install the improvements that were anticipated. She stated over $25 million of improvements are anticipated for the community, and many of the existing residents support the exclusion of the property and support the decisions of REI as a developer to continue the flow of funds and the installation of infrastructure to complete the community. Ms. McGeady stated upon review of the transcript of the District meeting conducted on October 20, 2008, there are no facts that support a denial of the exclusion, and the relative cost and benefit to the REI property also justify the exclusion, since District #1 will continue to provide services to the residents and no additional costs will be levied on the properties remaining in District #1 upon exclusion. She stated District #2 will be able to provide the services to the REI property more efficiently and at a more reasonable cost, and exclusion will have a positive impact on employment and other economic conditions within District #1 and the region as a whole. She further stated they feel the exclusion and amended IGA are necessary to ensure the intent of the Board of Commissioners under the Consolidated Service Plan and development in Filing #1, as well as future development, are facilitated to completion. Ms. McGeady stated the Consolidated Service Plan did not require a specific IGA, rather, it simply referenced that future agreements may be necessary. She stated Section 4 of the original agreement provides that District #1 is to impose a 40.0 mill levy, referred to as a required mill levy, and under the Amended IGA those terms do not change. She referred to the map of the Mill Levies upon Exclusion, included in the PowerPoint presentation, and explained the 40.0 mills will be imposed by District #1 in the yellow areas and by District #2 in the green areas. She stated REI became aware that there were title defects for the 39 -acre parcel, therefore, they corrected the title defects and submitted a separate petition for exclusion, which was also approved by the District #1 Board. She further stated REI, LLC, has paid for all of the costs incurred for the petition and the associated processes. Ms. McGeady stated the District #2 Board members, which executed the Amended IGA, are all REI related individuals, as well as the majority of the eligible electors in the community, therefore, it is reasonable to assume that the November election held before the limited set of voters would pass favorably. She requested the appeal of the exclusion be denied and that the Board find as listed in the Draft Resolution prepared by Beebe Draw Farms / REI. In response to Commissioner Kirkmeyer, Ms. McGeady stated Districts #1 and #2 must work together to use the revenues to complete the infrastructure required under the plan. She stated taxes from District #2 will be paid to District #2 to be used in the exact same way as before. Responding further to Commissioner Kirkmeyer, Ms. McGeady stated the Consolidated Service Plan also allowed for the inclusion and exclusion of properties by Districts #1 and #2, so there could be reconfiguration of the boundaries, and also provided for taxation powers to District #2 and authorized it to impose mill levies. Commissioner Kirkmeyer stated when the Consolidated Service Plan was approved, it was not anticipated that there would be such a major 2009-0487 SD0001 HEARING CERTIFICATION - APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF PROPERTY OWNED BY REI, LLC PAGE 5 exclusion of property, and for various reasons presented in 1999, the two overlapping districts were created. Ms. McGeady stated pursuant to the exclusion and amended IGA, there will still be two districts; however, there will not be undeveloped land owned by the developer within the constituent District #1. In response to Commissioner Kirkmeyer, Ms. McGeady stated she did not represent REI, LLC, in 1999; however, the Service Plan states inclusions and exclusions are allowed, District #2 is allowed to have a mill levy, and that the Districts may enter into agreements to coordinate the provision of services in the future. Commissioner Kirkmeyer stated at the time of approval, it was the intent to allow inclusions and exclusions with the understanding that there would be overlapping districts. Mr. Cockrel stated he recalls discussion, in 1999, regarding the concern of creating a developer district where the constituents could not vote; however, he does believe it was anticipated that there would be the potential for altering the district boundaries. He stated the Consolidated Service Plan intended to hold the entire District responsible for incurring all new debt, building new infrastructure, operating the Districts, and not imposing the responsibility upon the residents in an effort to protect their property tax base. Mr. Cockrel stated all of those issues have been addressed through the exclusion process and Amended IGA. He further stated the question of district size is irrelevant, and the amended IGA actually adds more protections to ensure the residents are not overtaxed and continue to receive the services that were promised to them. He stated the Commissioners are not judges; however, they must consider whether the exclusion should be approved based on certain State statute factors. He stated the statute does not delegate any authority to the Board to make legal decisions, and all of the procedural issues are outside of the jurisdiction of the Board. He stated REI, LLC, did pay directly for the cost of obtaining a transcript and for publication, etcetera. He stated Mr. Lyons cannot argue that the election may be disapproved until the election takes place, and his argument would be thrown out of a legal court. He stated there are also standards under the Special District Act which require substantial compliance when going through the proceedings. He stated the members of the District Board were presented with information and made a decision, and the appellants presented no hard evidence to controvert any of the evidence presented by REI, LLC. Mr. Cockrel stated the IGA preserves the intent of the Service Plan in that the Districts are operated in a consolidated manner, and that boundaries are irrelevant. He stated the excluded property will still be required to pay taxes, and the developer will be responsible for financing and building new infrastructure and carrying the tax load. He stated the whole issue is really over the District treasury and who controls it. He stated the change in boundaries does not constitute a material modification of the Service Plan, since it was authorized by the Plan. He further stated, during his 30 years of practicing Special District law, he has never heard that a boundary change constituted a material modification. In response to Chair Garcia, Mr. Cockrel confirmed the exclusion results in a boundary change and nothing else, other than there will be two taxing agencies. He clarified the amount of taxes received is the same, the tax rate remains unchanged, and the amended IGA builds in more protections. He stated there is no reason why the developer would not re -include the property, and there is no reason why the issue would not pass in an election. In response to Commissioner Kirkmeyer, Mr. Cockrel stated although there are two taxing entities, the Financing Plan has not been changed, since it recognized that the 40.0 mills would be used to pay outstanding District #1 bonds, and District #2 can use the revenue to issue bonds to build facilities. Responding further to Commissioner Kirkmeyer, Mr. Cockrel stated the IGA states all District residents will be allowed use of the community facilities without regard for where they are located within the development. 2009-0487 SD0001 HEARING CERTIFICATION - APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF PROPERTY OWNED BY REI, LLC PAGE 6 Mr. Lyons stated the use of the phrase "hostile course of action and source of friction" is not appropriate, since the constituents are acting upon their constitutional and statutory rights. He stated the Board of Commissioners determines what is in the best interest of Weld County, not the Board of District #1. He further stated the two taxing entities create taxation without representation, since District #2 may issue new debt and tell District #1 how much to pay. He further stated there is statutory guidance in Section 32-1-502 regarding the exclusion of more than 50 percent of the district property in a municipality. He stated, in this instance, the exclusion equates to 76 percent being excluded. Responding to Chair Garcia, Mr. Lyons stated the "material modification" issue is important in determining whether the exclusion is in the best interest of the District or Weld County. He stated he believes that completely removing and disenfranchising the constituents in District #1 is a material modification of the Service Plan. He stated the Board of Commissioners has general oversight of Special Districts, and allowing them to evade the general intent sets a bad precedent. Chair Garcia referred to Mr. Cockrel's brief and listed the four items which constitute a material modification, however, appellees contend that those items are met by the amended IGA. Mr. Lyons stated a material modification is not limited to the four that are listed, and the Statute provides for the Board to consider whether a massive restructuring of 76 percent of a District is appropriate. Responding to Commissioner Kirkmeyer, Mr. Lyons stated there is a basic duty to review the record to ensure the fundamental requirements of the statute have been adhered to. Chair Garcia stated the Board has received proposed resolutions from each of the parties indicating a desired outcome, and the members of the Board may take the matter under advisement to consider all of the information presented today and make its finding at the next regularly scheduled Board meeting. Commissioner Kirkmeyer stated she would prefer the opportunity to review and study all of the information provided, as well as the specific statutory references in making her determination. Commissioner Rademacher agreed additional time would be helpful. Commissioner Long stated he wants to ensure the Board is making a prudent decision within its scope of jurisdiction to ensure there is no means for a challenge. Mr. Barker advised the Board that they must not discuss the matter among themselves until they are on the record on Monday. Responding to Commissioner Kirkmeyer, Mr. Barker stated that would also limit discussions with legal counsel. In response to Commissioner Long, Mr. Barker stated the scope of authority of the Board is referenced in Section 32-1-501(2)(b), which he reviewed for the record. He stated the appeal was made in a timely manner, and clarified the statute indicates the Board shall consider the factors set forth in subsection 3 of the preceding Section, and shall make a determination of whether to exclude the property as petitioned, or uphold the appeal and overturn the decision of the District Board. He stated the statute indicates the determination must be based upon the record, and since it does not make a distinction between "de-novo" or "arbitrary and capricious," he believes the Board is making the determination based upon the record and the arguments provided today. Responding to Commissioner Kirkmeyer, Mr. Barker stated the argument was made whether, or not, the petition was valid and whether the deposit was adequate. He stated he agrees the District Board has the ability to make a decision on a property exclusion for which they did not have signatures, therefore, he believes the petition was proper in that it limited its decision to the portion of the property for which there was signatures. He further stated he does not believe not posting a bond constitutes a technical defect, since the District Board made the determination that it was not necessary. He stated those issues were not necessarily appealed to the Board, rather, the appeal is limited to the exclusion. Responding further to Commissioner Kirkmeyer, Mr. Barker stated it is not appropriate to review the record of the Consolidated Service 2009-0487 SD0001 HEARING CERTIFICATION - APPEAL OF DECISION OF THE BOARD OF DIRECTORS OF BEEBE DRAW FARMS METROPOLITAN DISTRICT NO. 1 REGARDING THE GRANTING OF A PETITION FOR EXCLUSION OF PROPERTY OWNED BY REI, LLC PAGE 7 Plan approved in 1999, since it was not previously made a part of the record before the District Board. Commissioner Kirkmeyer moved to continue the matter to Monday, February 23, 2009, at 9:00 a.m. The motion was seconded by Commissioner Rademacher. Chair Garcia clarified the continuance will allow additional time for individual review, and there will be no discussion among the Board members of counsel until that time. There being no further discussion, the motion carried unanimously, and the hearing was completed at 11:50 a.m. This Certification was approved on the 23rd day of February, 2009. APPROVED: BOARD OF COUNTY COMMISSIONERS WELDI Y, COLORADO /4. ATTEST: Weld County Clerk to the c( BY. Deputy Clerk to the illiam F. Garcia, Chair Douglas Rademacher, Pro-Tem EXCUSED Sean P. Conway alba/ ar ara Kirkmeyer l zA / David E. Long 2009-0487 SD0001 ATTENDANCE RECORD HEARINGS ARE AS FOLLOWS ON THIS 18TH DAY OF FEBRUARY, 2009: 0 W a W re LL LL O O a O • mg ~ O° )CmW 111 zw a al Q • am < r Qi T ch O • OO O 00 PLEASE legibly write or print your name and complete address. N t4 0G 123 Nowhere Street, City, State, Zip 4 Li .-i\ .4--.-4 V \C � O it- ,..,)__ �1 o3 (((N1 r \ 1^ . © �� k a �� 9 > _.,.v) 1J U\ J J 1`^\ `(\a�11` ^ \-Vt_`- � � i r ��1 `J I�V�v` k aJ U o --._t• rtfi� j F9 r� -9-' 0 5 c) C Do T` �V s 3 3(,&c S. LC 64ni Sr FA)bi(9nc to gOl _ ,� c ' U -S A r KIr c— (:).... v� J i -i _ NAME John Doe v Cilj%. 0 c‘)-C-.-C\'t*5 I id _ a L ii c: E It J P 1 , 2009-0487 ATTENDANCE RECORD HEARINGS ARE AS FOLLOWS ON THIS 18TH DAY OF FEBRUARY, 2009: Y U EE W O W U- LL LL O 2 O < I- ILI a O N a z 3 p - O u goo CO Ill < .0 O. Q •rnI Ch ol CI) CV C4 C4 O • 00 O OO PLEASE legibly write or print your name and complete address. 123 Nowhere Street, City, State, Zip ,. Y 0 A i 0 cc ti ., 0 � • a 7-''1-Th i o 3• (0 PAUL R. COCKREL ATTORNEY COLLINS COCKREL & COLE 303088-1 55 I A PROFE591oNALCOR10MTION BOO -354-5941 300 UNION BLVD., SUITE 400 FAX.. 303 -ROB -1755 DENVER, COLORADO 80228-1550 E-MAIL'. PCOCRREL@CCCFIRM. COM o a CJ 1 vi d S 4 4q^ 04 f�`f1 9......\ 1 �9 [NAME John Doe y l o Sd ,k, D J Hello