This story first appeared in The Outsider, the premium outdoor newsletter by Jason Blevins.
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Grand County’s Middle Park Times newspaper was extra hefty this week, with 10 pages of small-print legal notices.
The pages outlined the May 2 ballot issues for Granby Ranch’s metropolitan districts. The community has 10 special taxing districts and seven of them are undeveloped land without any homes. There are five voters connected to the property’s developer who will approve the 24 ballot measures in each of the Granby Ranch Metropolitan Districts No. 3 through 7 elections.
The lengthy ballots will ask the five voters in each district to authorize up to $2.11 billion in increased taxes and bonding authority — with interest as high as 14% and repayment exceeding $10 billion for each of the five districts — to pay for infrastructure improvements.
The developers’ directors of the five metro districts also serve as the only five voters in the districts because the owners of the property have inked option-to-buy contracts for one-sixth shares of remote lots inside the districts. So the five people will be the only voters in an election that could approve billions in debt for metro districts that don’t yet have any residents.
All of the ballot issues allocate an identical sum of $113.75 million to improvements including water, sewer, roads, security, transportation and recreational amenities. The debts have been previously approved in the early 2000s and in several amendments since. Each ballot measure notes repayment $750.75 million for the $113.75 million investment. One measure on each ballot, Ballot Measure R, which is the same for all five metro districts, asks for voter approval to increase debt by $796.25 million with a repayment cost of $5.3 billion for the purpose of “refunding, refinancing and defeasing any or all of the district’s debt.”
The measures add up to many billions in debt to finance infrastructure when including an interest rate up to 14% for an unknown number of future residents and homeowners at Granby Ranch. Add up all the debt repayment numbers for each ballot measure for all five districts and the total exceeds $50 billion.
The $50 billion number is misleading, said David Richardson, an attorney with Husch Blackwell, the law firm representing the developers of Granby Ranch. The ballot measures cannot add debt beyond what is authorized in the original documents that formed the districts in the early 2000s and several amendments. The level of debt proposed in each May 2 ballot issue is placed at the highest level in each category of infrastructure plans to allow the developer room to adjust investment.
“There is no event in which the districts could issue $113.75 million in all of, or even two or three of the categories,” Richardson said, noting the original service plans for the districts allowed that level of debt. “So, for example, it isn’t limited to $500,000 in street improvements or $1,000,000 in water related improvements. And when it comes time to issue the debt, if it was necessary to issue all $113.75 million … in one single category, that would be authorized.”
“It defies comprehension and reason,” said Natascha O’Flaherty, a longtime Granby Ranch homeowner and attorney who is clashing with the developers and running for one of three empty seats on the homeowner-controlled Granby Ranch Metro District.
Across Colorado, property taxes are set to spike after the surge in home prices last year. Imagine the tax bills that include repayment of $2 billion in debt, O’Flaherty said.
“This is the poster child for metro district abuses happening everywhere across the country,” she said.
Each of the Granby Ranch metro district ballot measures also carefully notes that voters are “de-Brucing” the districts, which leaves the district board of directors able to tax and spend without restrictions from Colorado’s tax-limiting Taxpayer’s Bill of Rights, or TABOR.
Blair Dickhoner is the attorney who represents the Granby Ranch Metro Districts No. 2 through No. 8 as well as the Headwaters Metro District.
“There is a logical explanation here,” said the attorney with White Bear Ankele Tanaka and Waldron, the Colorado law firm that represents many Colorado special taxing districts.
This is not new debt, Dickhoner said. These exact debt amounts were approved when the Granby Ranch Metro Districts No. 2 through 8 were first formed about 20 years ago. Those original service plan agreements approved by the Town of Granby’s Board of Trustees — which set the maximum debt for all the districts in Granby Ranch at $113.75 million — only last 20 years and this is “a refresh” of those authorizations, he said.
Each ballot measure hits that debt limit “for maximum flexibility at the outset of the project,” Dickhoner said.
“This is planning as much as possible for the future,” Dickhoner said.
The St. Louis-based developers of the community, Bob and David Glarner, bought the 5,000-acre Granby Ranch property in 2021 through their affiliate companies. (The sale price is unknown but the previous owner, Brazilian heiress Marise Cipriani, lost the property in 2020 to lenders who were owed $62 million.)
Two of employees of the Glarners serve as district board members for Granby Ranch Metro Districts No. 2 through 8 as well as the Headwaters Metro District. The other two directors of each district are Scott and Susanne Johnson. Stephen Johnson was elected to Districts No. 2 and No. 8.
The Colorado Secretary of State is investigating possible campaign finance violations after the homeowners’ metro district filed a complaint arguing the developers’ law firm, Husch Blackwell, was possibly working as an unregistered political action committee trying to get two company employees elected to the one metro district in Granby Ranch that is controlled by homeowners.
(Chris Beall, the deputy secretary of state, last month rejected his staff’s recommendation, arguing that the homeowner district’s allegations, if found to be true, “would support a factual and legal basis for finding a violation of campaign finance law by Husch Blackwell.”)
Filings with Colorado’s Department of Local Affairs show that in December, all but one of Granby Ranch Metro Districts No. 2 through No. 8 claimed inactive status and noted each “has not and shall not issue any debt, impose a mill levy, or conduct any other official business other than to conduct elections and to undertake procedures necessary to implement the district’s intention to return to active status.” The metro districts were returned to active status in February this year.
When Granby Ranch first took shape in the 1980s, the plan was to build about 5,000 homes. Only a fraction have been built.
“Tools with no public accountability”
Ballots issues like those in the May Granby Ranch metro district election, approved by friends and family of developers for debt paid down by future property taxes to pay back developers for investment in infrastructure, “are the same in each and every of the 2,000-plus metro districts in Colorado since 1982,” said John Henderson, a lawyer who co-founded the Coloradans for Metro District Reform group that is pushing state lawmakers to overhaul metro district governance.
Henderson said developers typically request debt authority that is about 10 times more than the debt outlined in each metro district’s service plan, so it works like a sort of credit card limit that developers rarely reach. The Granby Ranch Metro Districts ballot proposals also include debt accrued by special assessments and fees should property taxes not deliver enough money, which allows the developer to avoid caps on mill levies.
“The ability of the districts to impose special assessments is also contained in the existing authority granted by the service plan,” reads an email from Richardson with Husch Blackwell.
The part Henderson and other reformers dislike is that the debt, taxes and fees are not approved by the residents who will pay the bills. And the developers rarely detail every expenditure supporting their repayment from the borrowed millions.
“The goal of these ballot measures is to impose as much debt on the residents as the developer believes he is owed, with no accountability for how much and what for he spent the money on before the residents wake up and take control of the board,” said Henderson, who represents several communities where residents have rallied to wrest control of metro district boards from developers and their hand-picked directors. “One of the problems is there is no public accountability. Developers create these things which are governments and then use them as their tools with no public accountability.”
“How does Mr. Henderson know the goal or intent of these ballot measures? He was not present at the meeting in which the board of directors of the district voted to hold the election and has not spoken with the directors regarding their intent,” Richardson said.
Henderson’s first piece of advice to residents who seize control of metro district boards: craft new ballot measures that repeal the previous debt approvals and restore the TABOR-granted right to vote on all tax and debt increases.
“It is an outrageous abuse,” said Henderson, describing how developers will tell bond investors that voters in the metro district approved the debt when the election was held years before a home was built. “It’s insane.”
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It’s also completely legal. Special taxing districts are the most common form of governance in the U.S., but operate with little scrutiny or attention. New laws are coming around to address decades-old metro district shenanigans.
This month Gov. Jared Polis signed a new law — Senate Bill 110 — that requires new metro districts to set and publish a maximum tax rate that can be levied to pay debt and the maximum amount of debt a metro district will carry.
Also the proposed House Bill 1090 would require more transparency for metro district debt and prevent developers from buying debt they voted to approve. And House Bill 1065 expands the scope of the Colorado Independent Ethics Commission so it can review complaints involving special taxing districts.
The Granby Ranch Metro Districts No. 3 through No. 8 are managed by Community Resource Services, which also manages 37 other fire, water and metro districts in Colorado. Sue Blair, the CEO and head of elections for Community Resource Services, said it is not uncommon to see ballot issues authorizing debts in the billions, but mostly for districts that are just taking shape. The Granby Ranch metro districts No. 2 through No. 8 also are “just taking shape” and have “never issued any debt,” Richardson said.
Blair said her team is mailing out 650,000 ballots this week for May 2 special elections statewide. But only five are going to Granby Ranch.
The latest filings for the Granby Ranch districts show the directors approving $48,000 annual budgets for each district. Only two districts have any assessed value, per the Grand County Assessor’s Office. Granby Ranch Metro District No. 2 — 33 acres of empty land with four undeveloped homesites on five acres — was assessed at $44,610 in 2022. District No. 3 was assessed at $8,320. The other districts have an assessed value of zero dollars, per each district’s latest filings with the state.
“This is an egregious example of how far developers will go without any accountability,” O’Flaherty said.
CORRECTION: This story was updated at 5:35 p.m.on April 18, 2023 to change the number of Granby Ranch metro districts holding elections on May 2 to five and to reduce the combined debt repayments from the 24 ballot issues in each of the five districts to $50 billion. Also, filings posted online after the story published, show there are now five voters in the upcoming election renewing authorization for the debts. Perspective and quotes from a lawyer for the developers, David Richardson with Husch Blackwell, were also added to the article. Richardson also requested clearer language addressing the Secretary of State investigation into a complaint arguing his law firm was operating as an unregistered political action committee.