Central Park residents have been concerned and confused by letters they received this fall about “an issue which will negatively affect the financial health of Central Park both in the near and long term.” The issue? Refinancing bonds for Central Park infrastructure construction at a lower rate—a move that could save Central Park property owners $65-70 million in interest over the life of bonds. Until refinancing occurs, the delay is being projected to cost Central Park residents $10,000 a day. Refinancing is in jeopardy due to a threat of litigation. Understanding the benefits of refinancing is easy enough. Understanding the three organizations described here—and why there’s a threat of litigation—is more complex.
Three Organizations behind Central Park’s Development
The Stapleton Airport closed down when DIA opened. There would be a new use of the land, but Denver taxpayers did not want its development to be done with City tax funds. Structures to govern a public-private partnership (PPP) had to be created. Westerly Creek Metro District (WCMD) was formed to collect the proceeds of the special district mill levy to fund infrastructure construction. A separate special district, Park Creek Metro District (PCMD), was formed to manage financing and construction of the infrastructure. A third organization, the private non-profit Stapleton Development Corporation (SDC), is composed of community members selected by the mayor and the Denver Urban Redevelopment Authority to carry out three primary tasks on behalf of the City. The 1998 SDC/City agreement gives SDC the authority to select a master developer and sell parcels of the city-owned land to the developer for uses consistent with the Stapleton Development Plan (approved by City Council in 1995). The SDC was also given the authority to select the five PCMD board members.
SDC’s mandate to select those five board members is at the heart of the current refinancing issue.
WCMD’s View—Taxation Without Representation
Before Central Park was built and for a number of years, representatives of the developer sat on the WCMD Board. Once the board seats were filled by residents, they started raising the question, “Why do we have a structure where WCMD, populated with elected residents, is required to turn over the tax proceeds to PCMD, which is populated by non-residents who are appointed, not elected by residents of the taxing district?” They say it’s taxation without representation.
A January 2017 Front Porch article and video at FrontPorchNE.com documents the first public confrontation between the two groups over this issue—and they’ve been hashing it out for much of the past five years. Now WCMD and PCMD have come to an agreement that is also acceptable to the current developer, Brookfield. WCMD Board Member Dave Ungemah described this agreement in an email to Front Porch. “All we have asked, and is shown within these agreements, is that once the infrastructure is done and the developer debt is refinanced, Central Park residents will have the right to vote for the directors that control the tax dollars and debt obligations for Central Park.
“The stumbling block has been SDC,” says Ungemah. “We are saddened that we’ve come so far, and yet SDC cannot agree to this without various meetings and strategic planning in 2022. Agreeing to qualify PCMD directors who have been elected from the Central Park community…does not require meetings and deliberations, just a signature, as an agreement has already been provided to SDC that would accomplish this.
“Because the meaningful right to self-control is so important to Central Park residents, we have no choice but to unfortunately wait until SDC agrees….we stand ready to sign the agreements among all parties at the earliest moment if SDC wishes to engage us in such an agreement.”
Brookfield’s View on Getting the Financing Done
Jim Chrisman, senior vice president for Brookfield, said at the Dec. 14 Central Park United Neighbors (CPUN) meeting, “If WCMD would agree to rescind their threatened lawsuit, PCMD can issue the debt. Then SDC, over the next 30-90 days can figure out the best way its stakeholders, including WCMD, can best ensure citizen representation on the PCMD board by the end of 2023. We ask that you, the other property owners within Central Park, join us in contacting the Westerly Creek Board and suggesting they rescind the threatened lawsuit.”
In response to a question, Chrisman responded that SDC’s role to qualify members to the SDC Board “still needs to be resolved. That really only came to SDC’s attention, maybe 45 days ago or so. It has not been mediated. I will say, I do believe they genuinely want to solve this problem, but I also think the process that they put forth to solve it may take a long, long time—and I don’t think this problem is, honestly, that complicated. And the longer time, you know—$10,000 a day, things do add up.”
What Does SDC Say?
The president and CEO of SDC, Tammi Holloway clarified that SDC has done what’s necessary for the refinancing to proceed—provide a Certificate of No Threatened or Pending Litigation. “WCMD has offered to remove their threat of litigation and issue a certificate if SDC (and other parties) agrees to demands that WCMD has made that are not part of a bond transaction. Their demand [regarding who is appointed to PCMD] is a separate matter from the bond transaction.”
The chair of the SDC Board, Pat Teegarden, did not respond to three requests from Front Porch to explain the SDC Board’s delay in accepting the agreement between WCMD and PCMD on citizen representation in the PCMD Board.
What can residents do about the impasse?
SDC’s lack of response means relevant information is missing at a time residents are struggling to understand the issues. Given the years WCMD and PCMD have spent addressing the issue of PCMD Board appointees, they might ask SDC, “Why did your only learn about this financing delay 45 days ago? The same issue threatened to delay bond financing in 2017. And what is the process SDC still needs to go through before signing the agreement? Chrisman described it as ‘not that complicated.’”
Brookfield has called for Central Park residents to contact the WCMD Board and encourage them to rescind the threatened lawsuit so refinancing can proceed. Or residents might choose to contact SDC to encourage them to quickly sign the WCMD/PCMD agreement. Or they might encourage Brookfield to encourage SDC to quickly approve the agreement? Each resident will need to weigh the options and choose the response they believe is best for the community.
For Central Park residents who would like more information on these three organizations (WCMD, PCMD, and SDC,) and a link to the January 2017 article documenting the beginning of WCMD’s efforts to give residents a role in decisions about WCMD’s revenue.
Why two special districts for Stapleton?
The following explanation of Central Park’s special districts was originally printed in the Jan. 2017 Front Porch. (https://frontporchne.com/article/special-district-dispute-nearly-derails-stapleton-bond-issue/)
The Park Creek and Westerly Creek Metropolitan Districts were created in 2000 to establish governmental entities that would fund and construct infrastructure for the redevelopment of the abandoned Stapleton airport. These are quasi-municipal entities similar in many ways to local governments. Each district plays a different role and is governed by a separate board.
Park Creek is solely responsible for the financing and construction of public infrastructure at Stapleton including roads, drainage, landscaping, water and sewer lines and parks. It uses bond proceeds and developer advances (loans) to pay for these improvements. It has five board members, two selected by the developer (previously Forest City, now Brookfield) and three by the Stapleton Development Corporation (now called SDC, an arm of the City of Denver). SDC is responsible for the sale of Stapleton Airport land to the developer and for oversight of its redevelopment. The Park Creek District consists of 16 acres of land south of I-70 west of Havana Street.
Westerly Creek Metropolitan District (WCMD) is the entity that taxes commercial and residential land in Stapleton to pay for local infrastructure. Approximately 3% of the total mill levy goes for maintenance and operating costs of Park Creek and Westerly Creek while 97% of the tax revenue is used by Park Creek to pay for debt service and infrastructure. Westerly Creek board members are selected through a biannual vote of Central Park property owners. The WCMD board is legally obligated to bring into its boundaries all the old Stapleton airport land Brookfield purchases from Denver. Eventually, the Westerly Creek district will include all of redeveloped Central Park. In 2016, for the first time, all WCMD board members are residential Stapleton property owners not affiliated with the developer.
The need for this two-district structure arose partly from circumstances at the beginning of Stapleton’s redevelopment—there were no Stapleton residents at that time. But apart from that, the developer and SDC appointees were given full control of the PCMD board to minimize the risk that non-developer interests would oppose and potentially stop infrastructure financing and construction plans. Only the five members of the PCMD board could ever have a share of the 16-acre property that geographically defines their district (and therefore the right to vote on the PCMD board).
Westerly Creek was created to establish a taxing entity that encompassed the entire district. The funds generated by this entity are used to retire debt incurred by Park Creek as it develops Central Park’s local infrastructure (neighborhood streets, alleys, pocket parks, pools). There is no ending date for the WCMD tax, although the majority of the mills (97%) would go away when Park Creek has repaid all its debt. Park Creek uses tax increment financing to pay for regional infrastructure from 2000 to 2025, after which WCMD funds will be used for any remaining infrastructure development.
This master/servant district structure, where one district has power and the other doesn’t, is common early in developments, but many evolve as projects approach buildout. Options can include consolidation of districts or dissolution of one of the districts. Stapleton is nearing 80% build-out and the WCMD board has signaled its intent to re-evaluate the two-district structure by undertaking a “strategic planning process” and a desire to renegotiate its 16-year old intergovernmental agreement with Park Creek that defines the respective roles of the two districts.