Review raised questions of debt obligations on homeowners

Following two heated hearings, the Granby town board accepted the service plan for Granby Ranch Metropolitan Districts 2-8 in a split vote.

The move concludes a quinquennial review process initiated earlier this year on all metro districts in Granby Ranch. The town board previously approved the financial plans for Granby Ranch Metropolitan District and Headwaters Metropolitan District without a hearing.

The board chose to move forward with a hearing for GRMD 2-8 because of a number of questions related to the more than $11 billion of authorized but unissued debt available for the seven districts. Trustees were wary about the amount.

The purpose of this type of hearing, according to state statute, was to determine if the districts’ service plan will result in the “reasonable and timely discharge of the general obligation debt,” meaning it would not put property owners at risk of having to shoulder an excessive tax burden.

Trustees could draw three conclusions from the hearing — determine this is true, allowing the districts to continue to authorize general obligation debt; determine this is not true and puts property owners at risk of excessive tax burden, allowing the board to deny the districts the ability to issue any of the remaining general obligation debt; or determine this is not true and require the metro districts to submit modified plans.

The hearing was set for May 11 and continued to June 22 at the request of the metro districts, which saw a change in board members on May 12 with Granby Ranch’s new ownership. At the June 22 hearing, attorney David Richardson spoke on behalf of the two new board members of GRMD 2-8.

According to Richardson, the previous board submitted those numbers allowing for $11 billion of authorized debt without the accompanying service plan that capped that number. The service plan for Granby Ranch limits the amount of debt able to be issued in the districts up to $94 million for infrastructure as well as $19.5 million for amenities.

Additionally, the metro districts in Granby Ranch cannot issue more than a total of 50 mills over 40 years on homeowners to finance these debts.

A financial analysis by Hilltop Securities and provided by GRMD 2-8 found that the districts could timely and reasonably discharge the capped $140 million in general obligation debt based on the developer’s initial development phase with a debt capacity of $169 million. The analysis found that the projected absorption rate would allow this financing.

However, Trustee Natascha O’Flaherty raised a number of issues, arguing that the district was being misleading. She expressed concerns based on her previous experience in Granby Ranch Metro District and its use of subordinate bonds, warning the town board to “not be bamboozled.”

The town continued the hearing to Tuesday to allow for further review of the documents.

On Tuesday, GRMD 2-8 provided additional information, including a projection of the debt capacity that would not include the issuance of subordinate bonds. This found the debt capacity of the districts to be $157 million, which would still allow for timely and reasonable debt issuance.

Richardson also provided an affidavit from Sheila Bailey, a Granby real estate agent, to justify the development’s projected absorption rates. Bailey found that the developer’s initial development phase to construct and sell 1,678 homes in Granby Ranch over the next 12.5 years is “reasonable and achievable.”

Trustee Kristie DeLay asked if there was any data to support the assertion Granby Ranch’s developer could sell an average of 11 homes per month over this time period. Richardson said he did not have the data, but maintained that Bailey was an experienced real estate agent with knowledge of the market.

O’Flaherty questioned Richardson on a number of details, often repeating questions that Richardson claimed were irrelevant to the hearing until other board members interrupted.

“I understand your frustrations and I understand the frustrations of others,” Mayor Josh Hardy told O’Flaherty. “My concern is we’re taking a new developer and trying to hold their feet to the fire over things that previous developers did.”

Eventually, O’Flaherty motioned to find that the district’s financial plan would not result in the timely and reasonable discharge of debt, but the motion failed with no second.

Trustee Nick Raible then motioned to find the district’s plan would result in the timely and reasonable discharge of debt, which was seconded. O’Flaherty asked the town board to consider requesting the districts modify their plan to protect homeowners, but her efforts were to no avail.

“I was here when this was set up,” Trustee Deb Shaw said before her vote. “It has worked fine. People who are buying out there need to read their bill of sale and beware. Buyer beware.”

Trustee Rebecca Quesada agreed with Shaw’s remarks, and Raible emphasized that debt issuance would be capped. O’Flaherty said that the trustees’ actions were irresponsible.

“For you trustees to even think of voting for this, it either shows you are ignorant or indifferent,” O’Flaherty said. “I am furious.”

The approval passed with O’Flaherty and DeLay dissenting. This means that GRMD 2-8 can continue with the financial and service plans as presented.

In other business:

• The town board did not discuss the police chief position, though trustees had extended an offer at last month’s meeting. According to the town manager, details are still being worked out and the topic should be on the agenda at the next scheduled board meeting. The town has not announced the chosen candidate.

• The board approved a bid of $269,251 from Acord Asphalt for the 2021 Asphalt Paving Project. The roadways to be paved include Eighth Street from Garnet Avenue to Topaz Avenue, Topaz Avenue from Eighth Street west to the end, New Church Avenue from Garnet to the end, New Church Circle from beginning to end, and Diamond Court from beginning to end. This item has been budgeted with the bid coming in about $6,000 under budget.

• Trustees approved an update to the code enforcement ordinance that allows the code enforcement officer more authority with violations and aligns with legislative changes coming this year that consider code enforcement officers to be more in line with police officers.

• The board approved a contract to update the town’s comprehensive plan, which has not been updated since 1985. The Colorado Department of Local Affairs awarded the town $85,000 to complete the project, $14,900 less than what was applied for. The town will be spending $100,000 in budgeted funds along with the $14,900 to make up the difference.