DALLAS Owners of luxury condominiums in two suburban Denver residential towers will not be required to pay taxes supporting a $30.5 million bond issue, an Arapahoe County District Court judge ruled.
Owners of the 270 condos, represented in court as Landmark Towers Association, will also receive $384,611 in refunds under a plan outlined by Arapahoe County Judge Donald Marshall.
Marshall ruled on Sept. 6 that special assessment taxes were imposed on the condo buyers without their approval after they had already purchased the properties in the two towers, known as Landmark and Meridian.
The Marin Metropolitan District was created after the condos were sold, but promoters of the project incorporated the new property owners in the tax base without their consent, Marshall found. That violated provisions of Colorado’s Taxpayer Bill of Rights (Tabor), he said.
“The assessment of taxes by Marin Metropolitan District to pay its obligations under the general obligation bonds it issued and sold to Colorado Bondshares is illegal as it concerns Landmark,” Marshall wrote in the ruling. “An injunction is now entered preventing Marin from making any such assessment in the future.”
As with many so-called “dirt bonds,” creation of the Marin district and its debt were approved in a 2007 election by a small number of developers who bought property in the proposed district for a small down payment.
Colorado Bondshares, a mutual fund, bought all of the 2008 bonds in a deal with Piper Jaffray. The 2008 bonds with maturities in 2028 paid 7.72%.
Plaintiffs alleged that the interest on the bonds exceeded the 12% legal limit under the Tabor because only a portion of the bond proceeds were distributed for the project. But Marshall found that not to be the case.
Landmark developer Zachary Davidson created the special district to help fund a second phase he planned called the European Village in Greenwood Village, an affluent suburb of Denver.
Davidson committed suicide in Florida in 2012 after a Colorado grand jury indicted him on 20 felony counts for misappropriation of Marin district funds.
Davidson stole or misdirected more than $3.1 million in public funds from the Marin Metropolitan District between July 2008 and April 2010, according to the indictment.
Davidson created 13 companies after arriving in Denver in 2005 to develop the $255 million Landmark Project that included the European Village, the Landmark Tower and Meridian Tower.
The Landmark Tower sold out the day it went on the market, and the Meridian Tower also found buyers. Despite signs of economic turbulence, Davidson proceeded with plans in 2008 to build the European Village that was to include 161 manor homes and 60 brownstones.
Davidson filed business and personal bankruptcies after the European Village phase of the development failed to materialize. The land went into receivership.
In addition to the Marin district, respondents in the lawsuit were UMB Bank, Cede & Co., and Colorado Bondshares.