Litigation Updates

  

On December 08, 2022, the Reunion Metropolitan District (RMD) filed a lawsuit against North Range Metropolitan District No 1 (NRMD1) and North Range Metropolitan District No 2 (NRMD2) after NRMD1 and NRMD2 adopted budgets reflecting no property tax revenue be remitted to the RMD in 2023. RMD is demanding all property taxes NRMD1 and NRMD2 collect from the property owners within the Reunion Community be remitted to and spent by RMD (a "government" entity controlled by a collection of private developers - Clayton Properties Group II, Inc, Oakwood Homes and Shea Homes, LP and designed to prevent taxpayer representation on the RMD Board).  

 

Background

The Reunion Community is currently comprised of 4,438 single family and multi-family homes. In August 2000, Shea Homes, LP (SHLP) – the original land developer and home builder of the Reunion Community – petitioned Commerce City to create multiple property tax districts to finance the construction of public infrastructure (e.g. roads, sewer lines, water lines, street lights, etc) in and around the Reunion Community and to own and maintain the parks and recreation facilities servicing the Reunion Community.

The property tax districts currently serving the Reunion Community are as follows:

--North Range Metro District No 1 (NRMD1) – 2,064 homes

--North Range Metro District No 2 (NRMD2) – 1,171 homes

--North Range Metro District No 3 (NRMD3) – 1,203 homes

--Reunion Metro District (RMD) – 0 homes

The entire service boundaries of the Reunion Metro District comprise one 0.2-acre land tract located on the east side of E-470. This land tract was owned by SHLP until August 2018, when SHLP sold this land tract (as part of a much larger private land sale deal) to Clayton Properties Group II, Inc (CPG2), which owns several home builder brands including Oakwood Homes. Despite RMD using the “Reunion” name, none of the thousands of homeowners who live in the Reunion Community can serve on the RMD board because they do not own land within or reside within the 0.2-acre land tract. CPG2 has issued land purchase option contracts to its employees and to employees of its business partner, SHLP, for the purpose of allowing their employees to serve on the RMD board.

The Reunion Community contains approximately 129.5 acres of public parks and open spaces and is serviced by significant public recreational facilities including a recreation center, two swimming pools, eleven playgrounds, two sports fields, coffee house, concession building and over 12 miles of sidewalks and walking trails. Despite all of these public assets being located outside the boundaries of RMD, all of these public assets are owned by RMD.


Mill Levy Equalization and Pledge Agreement (MLEPA)


On June 3, 2016, NRMD1, NRMD2 NRMD3 and RMD entered into a Mill Levy Equalization and Pledge Agreement (MLEPA). At the time the MLEPA was ratified by all of these districts, all directors serving on RMD and NRMD2 and three of the five directors serving on NRMD1 were officers/employees of Shea Homes LP and all such directors had financial conflicts of interest regarding their service as directors on these boards.

Per the MELPA, NRMD1, NRMD2 and NRMD3 agreed to (1) levy property taxes each year in an amount as directed by RMD, (2) remit all property tax revenue and specific ownership tax revenue collected under the operating mill levy to RMD and (3) remit to RMD any property tax revenue and related specific ownership tax revenue collected under the districts’ respective debt mill levies in excess of the cash required to fund the annual payments due under each of the districts’ respective debt obligations.

For 2022, the estimated total property taxes fees and other revenue to be remitted by Reunion residents and property owners to RMD to fund the maintenance of public park and recreation services was $4.7 million.

Under the MLEPA, NRMD1, NRMD2 and NRMD3 are responsible for paying off the debt issued by RMD. In addition, per several statements made in 2022 by directors serving on the RMD board, RMD claims it can issue additional debt without needing permission from the taxpaying residents of the Reunion Community and the residents would solely be responsible for paying off such new debt through additional property taxes to be imposed by NRMD1, NRMD2 and NRMD3.  

None of the directors serving on the RMD board are elected by nor subject to recall by voters who live within the Reunion Community.

Per the terms of the MLEPA (which was ratified in 2016 when the majority of directors on all district boards was comprised of SHLP employees), RMD argues that the MLEPA cannot be amended or terminated without the consent of the RMD board – all of whom are employees of CPG2 and SHLP.

Operations Service Agreement (OSA) with Reunion Metro District

On June 3, 2016, NRMD1, NRMD2 and NRMD3 entered into an Operations Service Agreement (OSA) with RMD whereby RMD would own and operate all parks and recreational facilities located within the North Range Districts and provide all administrative, legal and accounting services to NRMD1, NRMD2 and NRMD3. In addition, NRMD1, NRMD2 and NRMD3 agreed to empower RMD to adopt rules and regulations that will be enforced upon the residents of the Reunion Community.

NRMD2 Debt Refinancing in 2017

In May 2017, the NRMD2 board (then comprised of directors who were all employed by SHLP) approved refinancing NRMD2’s bond debt – replacing $24.5 million of debt with $37.9 million in debt. Because NRMD2 did not generate sufficient property tax revenue to fund the annual interest payments due on the $24.5 million in debt issued by NRMD2 in 2007, SHLP “advanced” $9.1 million to NRMD2 to fund the annual interest payments due on the $24.5 million in debt. Thus, the “solution” the SHLP-controlled NRMD2 board implemented to address the $24.5 million in debt that NRMD2 could not afford was to increase the debt by 54% and pay over $9.1 million of the proceeds to SHLP as a reimbursement for prior year cash advances to NRMD2.

One of the ways that the NRMD2 board (which was controlled by SHLP) was able to refinance its debt was to implement a financial plan acceptable to the public bond markets where no property tax revenue would be forwarded to RMD over the next 30 years under the MPEPA to help pay off RMD’s debt. RMD (which was also controlled by SHLP) agreed to this financial plan – leaving homeowners in NRMD1 solely responsible for paying of RMD’s debt under the MLEPA.

Despite the consequences of the NRMD2 refinance transaction, RMD board members and its legal counsel have repeatedly stated in public meetings that (1) the purpose of the MLEPA is to ensure ALL taxpayers within the Reunion Community share in the financial burden of paying off the RMD debt and (2) the RMD debt was used to fund the construction of regional infrastructure benefitting the entire Reunion Community.


NRMD3 Debt Issuance in 2020

In December 2020, the NRMD3 board (then comprised of directors who were all employed by CPG2) approved issuing $55.6 million bond debt - $4.5 million of such debt is held by an affiliate of CPG2.

One of the reasons the NRMD3 board was able to issue such a large amount of debt was that it presented a long-term financial plan designed to ensure none of NRMD3’s property tax revenue would be forwarded to RMD under the MLEPA to pay off any debt held by RMD. RMD (which was controlled by CPG2 and SHLP) agreed to this financial plan – once again leaving homeowners in NRMD1 solely responsible for paying of RMD’s debt under the MLEPA.


Reunion HOA – Board Control

The Period of Declarant Control regarding the Reunion Homeowners Association, Inc. (“HOA”) terminated on August 27, 2022 – 20 years after the date the Declaration for Reunion Homeowners Association, Inc  (“HOA Declaration”) was recorded – and CPG2 no longer has the power to appoint officers to the Board of Directors of the HOA.  Per section 4.6 of the HOA Declaration, the HOA board must be elected by the homeowner members of the HOA upon the termination of the Period of Declarant Control.

The matter was brought to the attention of CPG2 executives, Bruce Rau and Brett Price, by homeowners who attended an RMD board meeting on February 01, 2022 – nearly 7 months prior to the Period of Declarant Control termination date. Despite receiving significant advance notice from the homeowners regarding the date the HOA board control turns over to the homeowners, CPG2 failed to relinquish control of the HOA board and the CPG2-controlled HOA board has failed to call a homeowner meeting to hold an election to fill the seats on the HOA board.

In November 2022, both NRMD1 and NRMD2 boards have sent letters to CPG2 demanding CPG2 to hold an election to elect homeowners to the HOA board. Thus far, CPG2 has not responded to those demand letters.

Public Hearing on the 2023 Budgets for NRMD1 and NRMD2

On November 29, 2022, the NRMD1 and NRMD2 boards met and held a public hearing to discuss and consider two budget options. The first budget option reflected NRMD1 and NRMD2 retaining all property tax revenue and funding the operations and maintenance of the parks and recreational facilities in 2023. The second budget option reflected both NRMD1 and NRMD2 continuing to operate under the direction of RMD in compliance with the MLEPA and OSA. After a nearly 5-hour meeting, both boards of directors (Reunion community homeowners) voted to adopt the “option 1” budget.

NRMD1 and NRMD2 notified RMD the following day regarding their adoption of the 2023 budgets. RMD filed a lawsuit against NRMD1 and NRMD2 on December 8th demanding NRMD1 and NRMD2 comply with the MLEPA and OSA and remit approximately $5.2 million to RMD in 2023.


2023 Budget – Fees vs Property Taxes

One of the considerations both the NRMD1 and NRMD2 boards discussed was whether to continue funding the maintenance and operations of public park and recreation facilities through a combination of fees and property taxes. Both boards noted that over $100,000 in additional state subsidies could be generated if funding was generated solely from property taxes. The “option 1” budget reflected funding the maintenance and operations of all park and recreational facilities solely from property taxes and additional state subsidies. This was one of the reasons why both boards adopted the “option 1” budget for 2023.

Other reasons both boards adopted the “option 1” budget for 2023 included the following:

  • Ensuring the maintenance and operation of public parks and recreational facilities serving the Reunion Community are managed by public officials elected by and accountable to the voters of the Reunion Community.
  •  
  • Begin the process of developing and funding a long-term repair and replacement program for major public assets (e.g. recreation center, swimming pools, 11 playgrounds, etc). Over the past 20 years, RMD has not adopted any formal financial plan to address the aging of major public assets that cost millions of taxpayer dollars to construct.
  •  
  • Eliminate the inherent conflict that has existed for years where public park and recreation facilities and land constructed by the developer are inspected by and subject to warranty claims submitted by RMD – which is also controlled by the developer
  •  
  • Reduce administrative overhead costs and invest such cost savings into repairing aging public park and recreation facilities (2023 budgets represent an approximate 25% reduction and legal, accounting and management fees)
  •  
  • Terminating the illegal MLEPA and the millions in taxpayer funds forwarded each year to a corporate-controlled “governmental” entity (RMD)
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  • Reflect planned improved financial results that are expected to occur when the developer-controlled Reunion HOA board is replaced with Reunion residents.  

 


For additional information, please refer to the pleadings in the case which will be posted to the District’s website and updated periodically.
  


Litigation Documents

Documents filed with Adams County District Court regarding the litigation between Reunion Metro District and North Range Metro District No 1, 2 and 3

  • All Documents
    • Litigation Documents (20)
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1079487632332 01 - Complaint filed by Reunion MD (12-08-22) 01 - Complaint filed by Reunion MD (12-08-22)4115 KB01 - Complaint filed by Reunion MD (12-08-22).pdf7/18/2023
2079487732332 01a - Amended Complaint filed by Reunion MD (12-22-22) 01a - Amended Complaint filed by Reunion MD (12-22-22)0131 KB01a - Amended Complaint filed by Reunion MD (12-22-22).pdf7/18/2023
3079487832332 02 - Emergency Relief Request by Reunion MD (12-08-22) 02 - Emergency Relief Request by Reunion MD (12-08-22)1143 KB02 - Emergency Relief Request by Reunion MD (12-08-22).pdf7/18/2023
4079487932332 03 - Stipulation and Joint Motion for Hearing (12-15-22) 03 - Stipulation and Joint Motion for Hearing (12-15-22)048 KB03 - Stipulation and Joint Motion for Hearing (12-15-22).pdf7/18/2023
5079488032332 04 - District Response to Motion for Receiver (01-23-23) 04 - District Response to Motion for Receiver (01-23-23)0245 KB04 - District Response to Motion for Receiver (01-23-23).pdf7/18/2023
6079488132332 05 - District Response and Counterclaim to RMD Complaint (01-23-23) 05 - District Response and Counterclaim to RMD Complaint (01-23-23)0246 KB05 - District Response and Counterclaim to RMD Complaint (01-23-23).pdf7/18/2023
7079488232332 06 - District Response to Amended Motion for Appointment of Receiver (01-23-23) 06 - District Response to Amended Motion for Appointment of Receiver (01-23-23)0257 KB06 - District Response to Amended Motion for Appointment of Receiver (01-23-23).pdf7/18/2023
8079488332332 07 - Reunion MD Reply in Support of Amended Motion for Appointment of Receiver (02-01-23) 07 - Reunion MD Reply in Support of Amended Motion for Appointment of Receiver (02-01-23)094 KB07 - Reunion MD Reply in Support of Amended Motion for Appointment of Receiver (02-01-23).pdf7/18/2023
9079488432332 08 - Reunion MD Motion to Dismiss Districts Counterclaims (02-21-23) 08 - Reunion MD Motion to Dismiss Districts Counterclaims (02-21-23)0453 KB08 - Reunion MD Motion to Dismiss Districts Counterclaims (02-21-23).pdf7/18/2023
10079488532332 09a - Joint Status Report and Submission of Proposed Orders (03-03-23) 09a - Joint Status Report and Submission of Proposed Orders (03-03-23)0236 KB09a - Joint Status Report and Submission of Proposed Orders (03-03-23).pdf7/18/2023
11079488632332 09b - District's Proposed Order Re Appointment of Receiver, Prelim Injunction and Mandamus (03-03-23) 09b - District's Proposed Order Re Appointment of Receiver, Prelim Injunction and Mandamus (03-03-23)0319 KB09b - District's Proposed Order Re Appointment of Receiver, Prelim Injunction and Mandamus (03-03-23).pdf7/18/2023
12079488732332 09c - Reunion MD's Proposed Order Re Appointment of Receiver, Prelim Injunction and Mandamus (03-03-23) 09c - Reunion MD's Proposed Order Re Appointment of Receiver, Prelim Injunction and Mandamus (03-03-23)0461 KB09c - Reunion MD's Proposed Order Re Appointment of Receiver, Prelim Injunction and Mandamus (03-03-23).pdf7/18/2023
13079488832332 10 - District's Response to Reunion MD's Motion to Dismiss Counterclaims (03-27-23) 10 - District's Response to Reunion MD's Motion to Dismiss Counterclaims (03-27-23)0257 KB10 - District's Response to Reunion MD's Motion to Dismiss Counterclaims (03-27-23).pdf7/18/2023
14079488932332 11 - Reunion MD Reply in Support of Motion to Dismiss (04-04-23) 11 - Reunion MD Reply in Support of Motion to Dismiss (04-04-23)0337 KB11 - Reunion MD Reply in Support of Motion to Dismiss (04-04-23).pdf7/18/2023
15079489032332 12 - District Court Order Granting Receivership of NRMD1 and NRMD2 (05-09-23) 12 - District Court Order Granting Receivership of NRMD1 and NRMD2 (05-09-23)2538 KB12 - District Court Order Granting Receivership of NRMD1 and NRMD2 (05-09-23).pdf7/18/2023