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1/22/2020 Denver Post investigation into Colorado's metro districts reveals billions in debt paid by homeowners <br />Of the five members of the district's board of directors to approve the <br />bonds and sale to the investor, two worked for Lennar and two others for <br />the developer, TCIRATO LLC, according to conflict of interest statements <br />filed with the Colorado secretary of state. <br />"This seems to be a common theme lately, where developers are cashing in <br />on their investments by purchasing their own bonds at ridiculously high <br />rates," Wolfersberger said. "The returns on the investment, what they're <br />charging homeowners, borders on usury abuse." <br />Lennar representatives did not respond to emails from The Post regarding <br />this story. <br />The Post found dozens of similar examples across the state, with <br />developers buying a district's tax-free junior bonds - essentially loaning <br />themselves money at huge returns on the backs of future homeowners <br />who buy into the development. <br />It happened at the Banning Lewis Metropolitan District No. 4 in Colorado <br />Springs last year. The district, the projected site of 3,581 homes, issued <br />more than $9.4 million in bonds to start development. Records show its <br />developer, Oakwood Homes, which also controls the metro district board <br />that issued the bonds, has an interest in $1.9 million of junior bonds with <br />an expected payday of more than $10 million. <br />RELATED. How developers use bonds, mill levies to ensure they are <br />repaid <br />"Developers take the risks to take on those bonds and get paid back over <br />time," Rau explained. <br />The same is true at Amber Creek Metropolitan District in Thornton, which <br />issued $17 million in senior bonds in 2017 to investors at varying interest <br />rates up to 7.75%. Another $1.7 million in junior bonds went to its <br />developer/builder, Lennar Colorado, at 10.7% interest with an expected <br />payday of $25.8 million over 30 years, bond documents show. The effective <br />interest rate: 39.6%. <br />Though many say the repayments are not guaranteed - the junior bonds <br />are often referred to as "hope bonds" - and typically have an expiration <br />date that wipes the debt clean if the bonds are not paid in time, bond <br />documents reviewed by The Post show in nearly every case a one -sentence <br />clause buried deep within hundreds of pages of bond paperwork requires a <br />https://www.denverpost.com/2019/12/05/metro-districts-debt-democracy-colorado-housing-development/ 37 11 /19 <br />