Object lesson on the business model driving the developer and city plan to terminate the PHGC conservation agreement

Investment groups like Westside Investment Partners aren’t actually hands-on developers.  They are the financial wizards that seize opportunities to turn undeveloped properties into massive profits, supported by a devoted development ecosystem, which includes flipping the property to other companies that aren’t necessarily bound by the promises or agreements made to the city or other organizations.  Unlike most redevelopment of existing urban properties (including the two going up nearby from ULC and DelWest), greenfield developments in Colorado almost always rely on financing the missing infrastructure with a hefty property tax surcharge that, as in the case below, nearly doubles the effective property tax paid by future home buyers.
Here is the latest example of the business model that investor groups like Westside depend on. 

Proposed Metro Tax District by Oread Capital and Peak Development

Metro Tax Districts are taxing authorities created by subdivision developers, with the consent of the local government, for the sole purpose of selling government-like bonds to finance their projects. Repayment of the bonds is tied to future property taxes assessed to the homes that will eventually be built. The metro taxes are paid to the developers and their debts.

Metro Tax Districts give developers a risk-free opportunity by allowing them to not have to pay for infrastructure themselves and to develop with other people’s money. They have very little “skin in the game.”

The developers often vote on the future homeowners’ behalf to issue bonds that they themselves invest in, thereby earning interest on the bonds they voted to issue. These tax districts work mostly in the dark and are able to set arbitrary debt levels to pay for infrastructure costs that historically have been included in the cost of housing or were funded by the local government.

Uplands Development proposal includes a “Metro Special District”, and Oread Capital has already approached the city with a proposal to nearly double the Westminster allowed mill-levy for these tax districts.

Oread Capital is not new to Metro Tax Districts—Oread owner Jeff Handlin and his partners are the current Metro Tax District board of “The Canyons” District 6 in Castle Pines, CO.

Chad Ellington alone sits on eight different Metro Tax District boards across the Front Range.

To learn more about the workings of these Tax Districts and Developers, read the series from the Denver Post.

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