Town of Avon’s costly decision to sue
Avon, CO, Colorado
As you might have read in this newspaper, the town of Avon is suing the Traer Creek Metropolitan District because the town claims it is owed approximately $650,000.
The district’s position, as articulated to the town when it adopted its 2008 budget, is that the district is taking credits for amounts owed to it by the town because the town has overcharged the district for asphalt overlay costs and lighting costs and has retained monies to which the district is entitled under the Annexation and Development Agreement.
As you may or may not be aware, the district is a quasi-municipal corporation and political subdivision. The town’s residents have benefited greatly from the financial contributions of the district. The district has helped finance the construction of infrastructure at the Village at Avon by issuing bonds tied to current and future tax revenues within the village’s planned unit development. The district is also responsible for funding the maintenance of the infrastructure, as well as police services, among other things
To this point, the district has issued two series of revenue bonds totaling $52.1 million to finance and build the village’s infrastructure, which includes but is not limited to the roads, bridges, I-70 interchange, sewers and parks (Traer Creek LLC, the developer, has also advanced more than $15 million toward this infrastructure
Within the Village at Avon are the Home Depot, the Wal-Mart Supercenter and Traer Creek Plaza, with many more commercial, residential and public amenities planned.
Furthermore, the district has met its other financial obligations to the town, including the payment of $1.8 million out of the $2 million owed for the east Avon exaction and $100,000 for the Chapel Place exaction. Consequently, the district has complied with its contractual obligations to the town.
The district’s board of directors acts as a fiduciary to a governmental entity and its constituents, as well as having obligations to the district’s bond holders and the letter of credit provider that backs the bonds. As fiduciaries, the board is required to make sure that monies are spent appropriately according to the agreement between the district and the town and as required in the bond documents
Prior to taking the credits, the district had in good faith attempted to amicably address these issues with the town but was unable to resolve the issues. In addition, for many months in 2008 the district has attempted to amicably discuss these issues with the town.
The district has legitimate claims allowing it to take the credits it has and continues to be willing to work amicably with the town.
Unfortunately, the town has determined to commence litigation, which will force both governmental entities to spend taxpayer funds on lawyers instead of coming to a mutually acceptable arrangement.
The district would like to remind everyone that it has been more than reasonable in addressing concerns raised by the town. For example, in 2004 the parties were able to resolve a concern that the town raised regarding revisions to the police services cost reimbursement formula. The district was not legally obligated to revise the formula, which resulted in a substantial increase in cost to the district, but it was done because it was the right thing to do.
The district is hopeful that despite the costly decision of the town to pursue litigation, the parties can quickly meet to resolve the legitimate claims of the district.
Dan Leary is the president of the Traer Creek Metropolitan District.