The two service districts charged with financing and constructing Stapleton’s infrastructure clashed at a special meeting on Dec. 19. The Park Creek Metropolitan District (Park Creek) was seeking the signature of the Westerly Creek Metro District (Westerly Creek) on a “factual” certificate needed to permit issuance of $28 million in bonds to repay Forest City Stapleton for cash advances made by the developer. Westerly Creek was objecting to Park Creek’s request on several grounds including an alleged failure to provide the Westerly Creek board sufficient information for them to judge that the bond issue is in the best interests of Stapleton taxpayers.
In the end and following a 20 minute executive session, the Westerly Creek board voted 5-0 to authorize its chair, Tom Downey, to sign the “General and No-Litigation Certificate” permitting the bonds to go to market. A bond closing was accomplished two days later on Dec. 21. The Westerly Creek board made its decision following comments by Forest City and a City of Denver representative that failure to sign the certificate would scuttle the bond issuance, resulting in a financial “disaster” for Stapleton. Park Creek chair King Harris said such a decision would “spook the market” and ultimately lead to higher financing costs for Stapleton infrastructure.
Westerly Creek board members, all Stapleton residents, criticized Park Creek for providing minimal notice of the need to sign the certificate and with providing no background information on the bond issuance. They said that without legal and financial analysis of the proposed bond issue they could not be sure that they were fulfilling their fiduciary responsibility to Stapleton taxpayers. At the meeting, the bond issue was generally described as a conversion of developer advances earning 8.5 percent to bonds at 4 to 5 percent.
The City of Denver representative, Andrew Johnston, Manager of Financial Development, told the board that he believed the deal was in the district’s best interests and further, that Denver’s chief financial officer had signed a letter to that effect.
In its motion authorizing Downey’s signature on the certificate, Westerly Creek board members emphasized that Johnston’s comments were persuasive in their decision to move forward on the bonds.
The board passed a second motion finding Park Creek “in default” of its obligations to provide Westerly Creek with legal and financial services under section 4.4 of the intergovernmental agreement (IGA) between the two districts. Downey said under the IGA (the Intergovernmental Financing and Construction Agreement of 2001) that Park Creek has 30 days to cure the default.
The board also stated its intention to proceed with a process set in motion six months ago to hire its own legal counsel. Currently the board has to rely on Paul Cockrel for legal services. Cockrel also serves as Park Creek’s legal counsel. When asked at Monday’s meeting who he was representing, Cockrel said it was Park Creek. Cockrel has appeared at other Westerly Creek meetings purporting to represent Westerly Creek. Downey has previously criticized the arrangement, saying it’s a conflict of interest for Cockrel to serve as the attorney for both boards for issues between them.
Monday’s meeting was also called to address a “cease and desist” letter issued by Park Creek under King Harris’ signature (dated Dec. 6) requesting that Westerly Creek not seek to “engage its own legal counsel”. The letter said that legal services to Westerly Creek are under the authority of Park Creek. At Monday’s meeting, Downey differed on this point, saying the IGA language does not force Westerly Creek to receive legal counsel from an individual selected by Park Creek although the payments for legal counsel are made by Park Creek under the current budgeting arrangement.
Several times at Monday’s meeting, Westerly Creek board members asked King Harris if he would rescind his cease and desist letter. Each time, Harris responded, “Ain’t gonna happen.”
Ironically, the certificate that Downey was being asked to sign certifies, among other things, that there is no legal dispute that would “adversely affect” the Park Creek/Westerly Creek IGA. When pressed by Johnston as to whether Westerly Creek’s “notice of default” to Park Creek constitutes litigation, Downey said no, that Park Creek has 30 days to cure the default. Presumably, the cure would be effected by Park Creek agreeing to pay for the independent legal services sought by Westerly Creek. The Westerly Creek board has interviewed three attorneys to replace Cockrel and hopes to have that individual under contract very soon. At this point, it appears to be an open question as to whether Park Creek will pay invoices incurred by Westerly Creek for any legal service expenses the latter board incurs.
Monday’s meeting was tense with several exchanges of angry words. Harris said he felt the Westerly Creek board was “blackmailing and extorting” him in holding up the bond issue in return for a rescission of the cease and desist letter. Westerly Creek board members expressed “astonishment” that Park Creek would seek to deny them their own legal counsel. They repeatedly asserted their need for independent legal counsel and financial analysis to enable them to carry out their duties to Stapleton taxpayers.
King Harris and fellow Park Creek board member John Moye apologized to Westerly Creek for not providing the requested information. Moye invited Westerly Creek to attend Park Creek’s January meeting to make the case that it needs such independent advice. For its part, Westerly Creek appears to be moving toward a larger goal – a renegotiation of its IGA with Park Creek. In fact, item number one on Monday’s agenda was titled “Termination of Intergovernmental Agreement with the Park Creek Metropolitan District.