| NEWS BLOG |
Loveland - January 12, 2012
Granite counters, wood floors and incomparable views of the Mariana Butte Golf Course have failed to
entice potential buyers of Loveland’s best value custom homes on the market. Built in 2008, two custom
homes surrounded by empty lots in the Mariana Butte subdivision called Deer Meadows have been vacant
for years and stand today only as empty monuments to a failed Metro District approved by the city.
When Austin Signature Homes built both houses in 2008 on speculation, the custom home builder thought
it was a great idea. Custom lots surrounding Loveland’s newest 18 hole golf course was exactly what the
high end builder was looking for in Loveland’s housing market. Signature Homes built the two custom
homes located on the 500 block of Deer Mountain Drive only to see them sit vacant for years and finally
vandalized in 2011. According to Larimer County records, 50 of the lots remain undeveloped in the 500
acre Deer Meadows Mariana Butte neighborhood.
High Property Taxes Prevent Sale
The problem with these properties isn’t the homes themselves or lots but instead excessively high property
taxes. In order to develop the subdivision, the developer sought permission from the City of Loveland to
issue public bonds that would later be repaid by future home owners through a special Mill Levy on their
future property taxes. In 2011, no money was repaid on the now defaulted bond debt of $2.5 million. Deer
Meadow’s Mill Levy is 60 Mills (in addition to the other regular taxes) meaning an unsuspecting home buyer
would pay nearly $10,000 in property taxes every year after purchasing either home if assessed at the
current asking price.
In contrast, a comparable property for sale at 810 Deer Meadow Drive but located in the Mariana Butte
"The Reserve" subdivision just across the golf course pays only $3,000 in annual property taxes. The Deer
Meadows Metro District doubles the property taxes for potential owners without offering any benefit for the
extra expenses.
Metro Districts are technically a new level of local government allowed only if the property owners impacted
and city in which they operate approve of the formation of the district. Metro Districts comply with TABOR
(Taxpayer Bill of Rights) restrictions on raising taxes only through voter approval by holding the election
when only one entity can vote – the developer who owns the property. Developers have increasingly used
metro districts as a way to pay for public improvements using borrowed money (bond debt) the district
issues that must be repaid by the home buyers through future property taxes.
Developers have increasingly formed Metro Districts in Loveland as a way to avoid paying for the
installation of streets, sewers and other improvements previously paid as part of the development cost. By
forming a Metro District, the developer can than avoid adding those costs into the price of each home and
instead pass the debt payment onto future homebuyers via a special addition upon their property taxes.
Unsophisticated buyers will think they are getting more house for their dollar while not realizing the future
property taxes are higher for any houses within a Metro District thus resulting in a higher monthly cost of
ownership.
Who Approved Deer Meadows Metro District?
On September 20, 2005, Loveland City Attorney John Duval presented Loveland’s Council with a resolution
allowing the developer to organize a special taxing and service district within Loveland named the Deer
Meadows Metropolitan District. The resolution (#R-71-2005) allowing the special taxing district stated,
“The creation and ongoing existence of the District is in the best interests of the area proposed to
be served.” The same resolution made the legal finding,
“The District is capable of providing economical and sufficient service to the area within its
proposed boundaries….the area to be included in the District has, or will have, the financial ability
to discharge the proposed indebtedness on a reasonable basis.”
Loveland Councilman Steve Dozier moved for approval and was joined by Councilwoman Jan Brown who
seconded his motion during the September 2005 Loveland Council meeting. A roll call vote was taken with
the every councilor voting for the proposed special taxing district. During the time allowed for public
comment, no one from the public spoke on the matter. Mark Conner, representing the Mariana Butte
Development Company, lobbied the council to pass the resolution. David Bell, a financial consultant for the
project, answered council questions and assured the city the project was sound and the public bonds would
be repaid as projected.
In 2007, LovelandPolitics reported on the city’s methodology, or lack thereof, when approving Metropolitan
Districts (see story).
Deer Meadows' Bonds Fail
According to the Distressed Debt Securities newsletter, the Deer Meadows Bonds were in default by
December 2009. A local real estate broker claims a physician in California, who she names as the
developer, carried the interest on the bonds for several years at $60,000 per month before finally
defaulting on the entire project.
Ownership of the property passed to the loan holder, FirstTier Bank of Lousville, Colorado. However, Deer
Meadows wasn’t FirstTiers only bad loan decision and by January 2011 the Federal Government invaded
FirstTier Bank’s headquarters to take over the failing bank. Later, ownership passed to a holding company
and according to the attorney representing the Metro District he believes the properties are being sold to
the tax lien holders.
In the meantime, the two estate homes have lingered unsold and the open lots undeveloped. The current
bond debt in default now stands at $2.5 million. Real Estate brokers looking to attract buyers of the only
two homes built have asked the law firm managing the defunct Deer Meadows Metro District, Grimshaw &
Harring, to reduce the Mill Levy by 10 Mills. The Mill Levy consists of 10 Mills for operations of the Metro
District and its properties while 50 Mills account for the debt repayment for a total Metro District assessment
of 60 Mills. Seperating the two Mills may be only an academic distinction in any event as taxes haven’t
been paid on the property. Mathew Dalton, the attorney responsible for Deer Meadows Metro District and
sole member of the board of the Metro District, said there is no reason to convert the 10% for operations
into an HOA (Home Owners Association) fee.
Owners of Bond Holding Tight
The Bank of Durango located in Durango, Colorado owns 30% of the toxic Loveland bond debt while the
balance is owned by a REIT (Real Estate Investment Trust) located in the State of New York. As unpaid
interest accumulates the bond debt continues to climb. This could result in even higher additional property
taxes above the 60 Mills already assessed.
The only hope for selling the two large custom homes would be the development of the other empty lots by
the new owners thus increasing the overall value of the property within Deer Meadows Metro District. This
could eventually lead to a lower Mill Levy.
In the current slow real estate market such a surge in home building and investment appears unlikely in the
near future.
Granite counters, wood floors and incomparable views of the Mariana Butte Golf Course have failed to
entice potential buyers of Loveland’s best value custom homes on the market. Built in 2008, two custom
homes surrounded by empty lots in the Mariana Butte subdivision called Deer Meadows have been vacant
for years and stand today only as empty monuments to a failed Metro District approved by the city.
When Austin Signature Homes built both houses in 2008 on speculation, the custom home builder thought
it was a great idea. Custom lots surrounding Loveland’s newest 18 hole golf course was exactly what the
high end builder was looking for in Loveland’s housing market. Signature Homes built the two custom
homes located on the 500 block of Deer Mountain Drive only to see them sit vacant for years and finally
vandalized in 2011. According to Larimer County records, 50 of the lots remain undeveloped in the 500
acre Deer Meadows Mariana Butte neighborhood.
High Property Taxes Prevent Sale
The problem with these properties isn’t the homes themselves or lots but instead excessively high property
taxes. In order to develop the subdivision, the developer sought permission from the City of Loveland to
issue public bonds that would later be repaid by future home owners through a special Mill Levy on their
future property taxes. In 2011, no money was repaid on the now defaulted bond debt of $2.5 million. Deer
Meadow’s Mill Levy is 60 Mills (in addition to the other regular taxes) meaning an unsuspecting home buyer
would pay nearly $10,000 in property taxes every year after purchasing either home if assessed at the
current asking price.
In contrast, a comparable property for sale at 810 Deer Meadow Drive but located in the Mariana Butte
"The Reserve" subdivision just across the golf course pays only $3,000 in annual property taxes. The Deer
Meadows Metro District doubles the property taxes for potential owners without offering any benefit for the
extra expenses.
Metro Districts are technically a new level of local government allowed only if the property owners impacted
and city in which they operate approve of the formation of the district. Metro Districts comply with TABOR
(Taxpayer Bill of Rights) restrictions on raising taxes only through voter approval by holding the election
when only one entity can vote – the developer who owns the property. Developers have increasingly used
metro districts as a way to pay for public improvements using borrowed money (bond debt) the district
issues that must be repaid by the home buyers through future property taxes.
Developers have increasingly formed Metro Districts in Loveland as a way to avoid paying for the
installation of streets, sewers and other improvements previously paid as part of the development cost. By
forming a Metro District, the developer can than avoid adding those costs into the price of each home and
instead pass the debt payment onto future homebuyers via a special addition upon their property taxes.
Unsophisticated buyers will think they are getting more house for their dollar while not realizing the future
property taxes are higher for any houses within a Metro District thus resulting in a higher monthly cost of
ownership.
Who Approved Deer Meadows Metro District?
On September 20, 2005, Loveland City Attorney John Duval presented Loveland’s Council with a resolution
allowing the developer to organize a special taxing and service district within Loveland named the Deer
Meadows Metropolitan District. The resolution (#R-71-2005) allowing the special taxing district stated,
“The creation and ongoing existence of the District is in the best interests of the area proposed to
be served.” The same resolution made the legal finding,
“The District is capable of providing economical and sufficient service to the area within its
proposed boundaries….the area to be included in the District has, or will have, the financial ability
to discharge the proposed indebtedness on a reasonable basis.”
Loveland Councilman Steve Dozier moved for approval and was joined by Councilwoman Jan Brown who
seconded his motion during the September 2005 Loveland Council meeting. A roll call vote was taken with
the every councilor voting for the proposed special taxing district. During the time allowed for public
comment, no one from the public spoke on the matter. Mark Conner, representing the Mariana Butte
Development Company, lobbied the council to pass the resolution. David Bell, a financial consultant for the
project, answered council questions and assured the city the project was sound and the public bonds would
be repaid as projected.
In 2007, LovelandPolitics reported on the city’s methodology, or lack thereof, when approving Metropolitan
Districts (see story).
Deer Meadows' Bonds Fail
According to the Distressed Debt Securities newsletter, the Deer Meadows Bonds were in default by
December 2009. A local real estate broker claims a physician in California, who she names as the
developer, carried the interest on the bonds for several years at $60,000 per month before finally
defaulting on the entire project.
Ownership of the property passed to the loan holder, FirstTier Bank of Lousville, Colorado. However, Deer
Meadows wasn’t FirstTiers only bad loan decision and by January 2011 the Federal Government invaded
FirstTier Bank’s headquarters to take over the failing bank. Later, ownership passed to a holding company
and according to the attorney representing the Metro District he believes the properties are being sold to
the tax lien holders.
In the meantime, the two estate homes have lingered unsold and the open lots undeveloped. The current
bond debt in default now stands at $2.5 million. Real Estate brokers looking to attract buyers of the only
two homes built have asked the law firm managing the defunct Deer Meadows Metro District, Grimshaw &
Harring, to reduce the Mill Levy by 10 Mills. The Mill Levy consists of 10 Mills for operations of the Metro
District and its properties while 50 Mills account for the debt repayment for a total Metro District assessment
of 60 Mills. Seperating the two Mills may be only an academic distinction in any event as taxes haven’t
been paid on the property. Mathew Dalton, the attorney responsible for Deer Meadows Metro District and
sole member of the board of the Metro District, said there is no reason to convert the 10% for operations
into an HOA (Home Owners Association) fee.
Owners of Bond Holding Tight
The Bank of Durango located in Durango, Colorado owns 30% of the toxic Loveland bond debt while the
balance is owned by a REIT (Real Estate Investment Trust) located in the State of New York. As unpaid
interest accumulates the bond debt continues to climb. This could result in even higher additional property
taxes above the 60 Mills already assessed.
The only hope for selling the two large custom homes would be the development of the other empty lots by
the new owners thus increasing the overall value of the property within Deer Meadows Metro District. This
could eventually lead to a lower Mill Levy.
In the current slow real estate market such a surge in home building and investment appears unlikely in the
near future.
LovelandPolitics
| Loveland's Independent News Source |
| Loveland's Public Bond Default custom homes become monuments of failed Metro District |
| Annual Tax Bill On Home With Assessed Value of $53,000 |
| 530 Deer Mountain Drive Loveland, Colorado |
