Avon loses tax battle to Traer Creek
July 18, 2012
AVON – It took four years and millions of dollars in legal fees, bu the Traer Creek Metropolitan District picked up one win Tuesday in its legal battle with the town of AvonA judge ruled the town cannot collect the developers fees from its big box stores until the money borrowed to build them, and the millions of dollars of infrastructure around them, is paid off.Avon had argued that its 1998 tax agreement with Traer Creek expires after 25 years, and that the town should start getting the 4 percent development fee, whether or not the debt is paid, when that agreement expires.District Court Judge Tom Moorhead disagreed Tuesday morning, ruling that until the debt is paid, Avon cannot have the money – the metro district gets it.That money now goes to pay off the $46 million the metro district still owes on the infrastructure it built as part of the project.International banking firm BNP Paribas holds the letter of credit backed by those bonds.Tuesday’s ruling is a big win for the developers in their ongoing legal battle with the town. They said they hope it will speed the settlement talks.”Our goal has always been to get the town council and the planning and zoning commission to sit down and settle this so it’s mutually beneficial,” said Michael Lindholm, of Traer Creek.
So far, the town has spent an estimated $2 million in legal fees. The case includes two lawsuits, 49 clients and four years of litigation. The parties signed a “settlement term sheet” – laying out the framework of a deal to settle the suits – in October of last year.The parties are now under a self-imposed deadline coming this fall. If the parties fail to settle the case, the lawsuits begin again.Brandee Caswell, an attorney representing BNP Paribas, has said reviving the lawsuits could result in another five to seven years of litigation.BNP Paribas is also waiting for a settlement. Unless the bank agrees to extend current terms of the letter of credit to Traer Creek, the interest rate on thebonds goes from 1.5 percent to 7.25 percent, according to court documents.
Moorhead’s ruling protects the revenue stream that flows from retail transactions at Traer Creek,allowing the metro district to pay back the money borrowed from B&P to get the project off the ground.If you spend $100 at Wal-Mart, Home Depot or one of the other stores in Traer Creek, $4 goes to the metro district to pay down that development debt.If Avon had won, it could have collected that $4 fee, starting in 2023. But Moorhead ruled that as long as there’s debt to be paid, Avon doesn’t get the money.The town is still weighing its options.”The town council has not had a chance to review the ruling, so we cannot comment at this time,” said Jamie Walker, Avon’s public information officer.As the two sides have battled, the development has stalled, along with the revenue it generates. The debt, however, has not gone away.Staff Writer Randy Wyrick can be reached at 970-748-2935 or firstname.lastname@example.org.