Litigation Updates

  

On March 29, 2021, Lennar Colorado, LLC (“Lennar”) and Stratus Amber Creek, LLC (“Stratus”) filed suit against Amber Creek Metropolitan District collectively seeking nearly $4 million in damages from the District. Lennar and Stratus claim they are owed reimbursement under three agreements and amendments thereto they and their predecessor developer entered into with the District while the District was under their control, specifically the (1) 2004 Capital Reimbursement and Facility Fee Agreement, the (2) Lennar Facilities Acquisition Agreement and the (3) Subordinate Facilities Acquisition Agreement.

The District has filed a motion to dismiss on account of Lennar and Stratus’s failure to obtain requisite voter approval for any of the agreements under the Colorado Taxpayer Bill of Rights (“TABOR”), which requires advance voter approval for any multiple-year fiscal obligation. Alternatively, the District has moved to dismiss the claims because the monies owed to Lennar and Stratus are subject to annual appropriations and the District has not appropriated any money for repayment under these obligations. The District also intends to argue that all three agreements are void because Stratus and Lennar controlled the District while all three agreements or amendments thereto were adopted. Stratus and Lennar’s directors breached their fiduciary duties to the taxpayers of the District in adopting these no-bid/high-interest contracts with their employers/principals.

2021 satellite view of the Amber Creek Subdivision.
On April 30, 2021, the District filed a Cross-Complaint against Lennar, Stratus and eight of their employees/principals who previously served as directors on the District’s board, alleging that their years-long control of the District for the benefit of Stratus and Lennar breached their fiduciary duties to the District. Amongst other wrongdoing, the District alleges that Stratus and Lennar used their control over the District to engineer a number of transactions for their own benefit and not the benefit of the District and its taxpayers. This includes the agreements at issue in Stratus and Lennar’s complaint as well as a 2017 bond issuance which overleveraged the District to Stratus and Lennar’s benefit. The District issued millions of dollars in unnecessary debt and has incurred hundreds of thousands of dollars in unnecessary interest payments. Worst of all, included in the 2017 bond issuance are 2017C Junior Lien Bonds issued to Lennar. The face value of these 2017C Junior Lien Bonds is only $1,752,000, but Lennar expects to ultimately be repaid $25,778,853 by 2051 for these bonds owing to usurious compound interest. Additionally, Stratus director and then-District president Richard Dean secretly authorized payment of approximately $6 million to Lennar in July 2018 without the knowledge of homeowner board members who had recently won seats on the District’s board.

In addition to breach of fiduciary duty, the District also alleges that Stratus and Lennar’s self-interested control of the District constituted a racketeering enterprise in violation of the Colorado Organized Crime Control Act (“COCCA”), violated the Colorado securities laws and constituted a civil conspiracy. Finally, the District seeks declaratory relief that a number of agreements between Stratus and Lennar and the District, as well as a number of transactions approved by the District to benefit Stratus and Lennar, are null and void.

For additional information, please refer to the pleadings in the case which will be posted to the District’s website and updated periodically.


DISTRICT COURT FILINGS

March 29, 2021 - Lennar & Stratus Amber Creek complaint filed against the District in Adams County district court. [Filing]

April 30, 2021 - District's motion to dismiss Lennar/Stratus complaint against the District. [Filing]

April 30, 2021 - District's cross complaint against Lennar/Stratus and 8 former individuals who served on the District's board [Filing]


Amber Creek in the News

The following news articles directly mention or are related to Amber Creek:

May 12, 2021 - Denver Post
Developer sues metro district over payments; district counter-sues claiming it was abused

March 16, 2021 - Northglenn Thornton Sentinel
Serving lawfully? Questions about corporate authority in Thornton subdivision

December 27, 2020 - Denver Post
Debt & Democracy: Metro district reform group targeting conflicts of interest

January 31, 2020 - Denver Post
Metro district residents, municipalities, legislators, stakeholders seek changes, greater voice in how districts work

December 05, 2019 - Denver Post
Colorado metro districts and developers create billions in debt, leaving homeowners with soaring tax bills


Amber Creek Metro District's Junior Lien Bond

In October 2017, the Amber Creek Metro District Board approved issuance of a $1.7 million junior lien bond to Lennar Colorado, LLC. At the time this bond was issued, three of the five directors serving on the Board were employees/directors of Lennar Colorado, LLC and one director on the Board was the owner of Stratus Amber Creek, LLC.

Below is the projected schedule of payments to Lennar on this bond (per the bond offering document). Interest and principal payments are funded from the annual property taxes assessed on the homeowners living in Amber Creek.

The projected annual net effective interest rate on this bond is 39.4%.