LovelandPolitics
| Loveland's Independent News Source |
Loveland, February 18, 2016
On Tuesday Loveland's City Council voted unanimously to grant San Ramon, California
developer The True Life Companies (formerly Americap Development Partners)
authority to organize a new taxing authority within the City of Loveland.
True Life Partners has an option to purchase 247 acres named "Lee Farms" just west of
Wilson Blvd. and north of Hunter's Run in Loveland. True Life proposes developing over
700 housing units with an estimated population of over 2,000 residents to occupy the
247 acres in west Loveland. The developer requested authority to create a taxing
district to use public financing for their proposed development.
The new taxing district, also called a 'metro district,' can acquire just under $40 million
in public debt using the authority granted to it by the City of Loveland to become a new
subdivision of local government. The proceeds from the public debt will be used to cover
costs normally paid by the developer as in roads, sewers and other common
infrastructure.
The public debt incurred by the developer will be repaid via additional property taxes
imposed on the homeowners in the subdivision of 50 mills on their annual tax bill. In
addition, 15 mills will also be collected by the district to offset the annual costs to
maintain a swimming pool and other amenities used to entice homeowners to buy
homes within the high-tax subdivision.
Most homeowners in Loveland outside special residential taxing districts pay 73 mills on
their annual property assessment which is 7.96% of their total property value. Lee
Farms residents will be taxed an additional 65 mills for a total of 138 mills or nearly
double the normal property tax in Loveland. For example, a neighboring property in
Hunter's Run like 2903 Sandord Circle will pay $1,787.97 in 2015 property taxes this
year. A home of equal value within Lee Farms will owe $3,384 (nearly double) for a
property of exactly the same assessment value.
Distorting Market Values
The difference in the example above is the cost of installing streets, sewers and other
public infrastructure for Hunter's Run was paid by the developer who than recaptured
those costs in the price of the parcel. The developer of Lee Farms has a lower over-all
cost, as the public debt will pay the infrastructure costs, thus can advertise an identical
property for some $10,000 to $20,000 less due to the public subsidy of the normal
development costs. Unsuspecting home buyers often don't compare property taxes
between two homes in the same city under the assumption the taxes will be the same.
(in this case True Life sells the lot to a builder who in-turn sells the final property)
This scheme of off-loading the upfront costs of the development onto future tax bills of
home buyers gives builders an advantage of advertising a much lower price for an
identical product that a non subsidized competitor cannot. Disclosure is normally not
made until after the potential buyer has decided to make an offer on the property.
Councilman Hugh McKean inquired whether the higher taxes can be disclosed in
advertising to which the developer and his attorney each gave answers claiming that
would not be practical.
Loveland's Policy On Metro Districts
Lee Farms constitutes the 12th Metro District within the City of Loveland. Unlike many
other cities in Colorado, Loveland has no set policy for approving Metro Districts which
largely depends on who is making the application. The California developer utilized two
common McWhinney representatives, Denver attorney Alan D. Pogue and the Pinnacle
Group represented by Chad Walker.
LovelandPolitics was informed all but one member of Loveland's City Council met in
advance of the meeting with The True Life Companies to hear their pitch in private.
During last Tuesday's public council meeting staff skipped any formal presentation as
did the developer saying the information was mostly in their packets or had already
been explained in earlier encounters. Anyone attending from the public would be at a
disadvantage given the information provided to most of the city council was conveyed in
private.
Councilman Troy Krenning, who did not meet privately in advance of the meeting with
the California developer, asked a number of questions regarding the liability of the
homeowner and city in the event the Metro District cannot pay its debts. Alan Krcmarik,
the city's executive fiscal advisor, underplayed a previous failure of a residential metro
district, Deer Meadows, as simply running into problems. In fact, it was bankrupted and
the only two houses built were vandalized among other problems for the adjacent
developments. Finally, under questioning from Councilman Hugh McKean, Krcmarik
acknowledged that failing residential metro districts can lower the city's rating for
public bonds thus costing taxpayers more money in the future to borrow public funds.
City Attorney Tami Yellico did contradict many staff and developer assurances to the City
Council that the city has no liability if a residential metro district fails. Yellico explained
that what "can happen" as she witnessed after 2008 is residents of the upside-down
project will look to the city to complete and maintain their roads and any other
infrastructure not completed when the project goes bust. She added, "than you would
have a decision to make." LINK TO VIDEO CLIP
False Information Given To Loveland's City Council
At one point in the meeting the developer's representatives bragged the residential
metro district means no HOA (Home Owner's Association) is necessary thus one must
consider that monthly fee saved by home owners forced to pay higher property taxes.
Mayor Cecil Gutierrez, an HOA board member of his own Alford Meadows subdivision,
giggled and began making comments to the effect that residential metro districts are
superior to HOA's for a variety of reasons not the least of which is collecting the
operating expenses from property owners for the pool and other facilities.
The developer's attorney later corrected that statement clarifying that the agreement
does allow for HOA's to maintain community property like condominiums where the
development will have multi-family housing.
In fact, contrary to information provided to Loveland's City Council for the purpose of
approving the higher taxing district with the assurance those same homeowners cannot
also face an HOA fee for maintaining recreational amenities, the agreement does indeed
allow for a common type HOA in addition to the extra property taxing district.
Below is a copy of the language approved by Loveland's City Council during the meeting,
"9. Property Owners Associations. Certain services may be provided within
the Districts by one or more property owners associations expected to be organized as
Colorado non-profit organizations comprised of all or a portion of the property
owners in the Districts. The associations may provide architectural control services,
community organizations, community events and activities, community marketing,
animal control, security, recreational amenity maintenance, common area
maintenance, and other programs which may be beyond the scope or financial
capacity of the Districts. The District(s), as further provided in Section II.B.10, also
have the power and authority, but not the obligation, to provide covenant
enforcement and design review services."
On Tuesday Loveland's City Council voted unanimously to grant San Ramon, California
developer The True Life Companies (formerly Americap Development Partners)
authority to organize a new taxing authority within the City of Loveland.
True Life Partners has an option to purchase 247 acres named "Lee Farms" just west of
Wilson Blvd. and north of Hunter's Run in Loveland. True Life proposes developing over
700 housing units with an estimated population of over 2,000 residents to occupy the
247 acres in west Loveland. The developer requested authority to create a taxing
district to use public financing for their proposed development.
The new taxing district, also called a 'metro district,' can acquire just under $40 million
in public debt using the authority granted to it by the City of Loveland to become a new
subdivision of local government. The proceeds from the public debt will be used to cover
costs normally paid by the developer as in roads, sewers and other common
infrastructure.
The public debt incurred by the developer will be repaid via additional property taxes
imposed on the homeowners in the subdivision of 50 mills on their annual tax bill. In
addition, 15 mills will also be collected by the district to offset the annual costs to
maintain a swimming pool and other amenities used to entice homeowners to buy
homes within the high-tax subdivision.
Most homeowners in Loveland outside special residential taxing districts pay 73 mills on
their annual property assessment which is 7.96% of their total property value. Lee
Farms residents will be taxed an additional 65 mills for a total of 138 mills or nearly
double the normal property tax in Loveland. For example, a neighboring property in
Hunter's Run like 2903 Sandord Circle will pay $1,787.97 in 2015 property taxes this
year. A home of equal value within Lee Farms will owe $3,384 (nearly double) for a
property of exactly the same assessment value.
Distorting Market Values
The difference in the example above is the cost of installing streets, sewers and other
public infrastructure for Hunter's Run was paid by the developer who than recaptured
those costs in the price of the parcel. The developer of Lee Farms has a lower over-all
cost, as the public debt will pay the infrastructure costs, thus can advertise an identical
property for some $10,000 to $20,000 less due to the public subsidy of the normal
development costs. Unsuspecting home buyers often don't compare property taxes
between two homes in the same city under the assumption the taxes will be the same.
(in this case True Life sells the lot to a builder who in-turn sells the final property)
This scheme of off-loading the upfront costs of the development onto future tax bills of
home buyers gives builders an advantage of advertising a much lower price for an
identical product that a non subsidized competitor cannot. Disclosure is normally not
made until after the potential buyer has decided to make an offer on the property.
Councilman Hugh McKean inquired whether the higher taxes can be disclosed in
advertising to which the developer and his attorney each gave answers claiming that
would not be practical.
Loveland's Policy On Metro Districts
Lee Farms constitutes the 12th Metro District within the City of Loveland. Unlike many
other cities in Colorado, Loveland has no set policy for approving Metro Districts which
largely depends on who is making the application. The California developer utilized two
common McWhinney representatives, Denver attorney Alan D. Pogue and the Pinnacle
Group represented by Chad Walker.
LovelandPolitics was informed all but one member of Loveland's City Council met in
advance of the meeting with The True Life Companies to hear their pitch in private.
During last Tuesday's public council meeting staff skipped any formal presentation as
did the developer saying the information was mostly in their packets or had already
been explained in earlier encounters. Anyone attending from the public would be at a
disadvantage given the information provided to most of the city council was conveyed in
private.
Councilman Troy Krenning, who did not meet privately in advance of the meeting with
the California developer, asked a number of questions regarding the liability of the
homeowner and city in the event the Metro District cannot pay its debts. Alan Krcmarik,
the city's executive fiscal advisor, underplayed a previous failure of a residential metro
district, Deer Meadows, as simply running into problems. In fact, it was bankrupted and
the only two houses built were vandalized among other problems for the adjacent
developments. Finally, under questioning from Councilman Hugh McKean, Krcmarik
acknowledged that failing residential metro districts can lower the city's rating for
public bonds thus costing taxpayers more money in the future to borrow public funds.
City Attorney Tami Yellico did contradict many staff and developer assurances to the City
Council that the city has no liability if a residential metro district fails. Yellico explained
that what "can happen" as she witnessed after 2008 is residents of the upside-down
project will look to the city to complete and maintain their roads and any other
infrastructure not completed when the project goes bust. She added, "than you would
have a decision to make." LINK TO VIDEO CLIP
False Information Given To Loveland's City Council
At one point in the meeting the developer's representatives bragged the residential
metro district means no HOA (Home Owner's Association) is necessary thus one must
consider that monthly fee saved by home owners forced to pay higher property taxes.
Mayor Cecil Gutierrez, an HOA board member of his own Alford Meadows subdivision,
giggled and began making comments to the effect that residential metro districts are
superior to HOA's for a variety of reasons not the least of which is collecting the
operating expenses from property owners for the pool and other facilities.
The developer's attorney later corrected that statement clarifying that the agreement
does allow for HOA's to maintain community property like condominiums where the
development will have multi-family housing.
In fact, contrary to information provided to Loveland's City Council for the purpose of
approving the higher taxing district with the assurance those same homeowners cannot
also face an HOA fee for maintaining recreational amenities, the agreement does indeed
allow for a common type HOA in addition to the extra property taxing district.
Below is a copy of the language approved by Loveland's City Council during the meeting,
"9. Property Owners Associations. Certain services may be provided within
the Districts by one or more property owners associations expected to be organized as
Colorado non-profit organizations comprised of all or a portion of the property
owners in the Districts. The associations may provide architectural control services,
community organizations, community events and activities, community marketing,
animal control, security, recreational amenity maintenance, common area
maintenance, and other programs which may be beyond the scope or financial
capacity of the Districts. The District(s), as further provided in Section II.B.10, also
have the power and authority, but not the obligation, to provide covenant
enforcement and design review services."
| California Developer Granted New Taxing Authority in Loveland |
| Archive of Loveland Residential Metro District Stories Deer Meadows Bankrupted Loveland Metro District January 2012 Council Narrowly Approves Dakota Ridge Metro District October 2007 KB Homes' Aspen Knolls Applies for Metro District but later denied August 2006 |