Nicholas English saw the newly created Aurora Highlands along eastern E-470 as a chance to get in on a planned community from the first turned spades of dirt.
Though he and his wife, Nancy, were still one child away from being empty nesters, the couple figured they’d spend a few years at the Highlands before heading further south for something smaller.
The Englishes closed the deal on a $587,000 home in March 2021 — the 10th house of the first phase of what is promised to become a community of 41,000 people over the next two decades.
“The only thing out there when I purchased were four model homes,” English recalled.
From his neatly appointed back yard, English today watches construction crews lay the foundations for homes of neighbors he’s not yet met, and smooth over dirt where sidewalks will eventually appear for kids to play and dogs to be walked.
What English says he didn’t know when he bought into the development was that he and everyone else who buys a home there, whether today or 20 years from now, will be paying higher property taxes than other Aurorans for at least the next 50 years to help pay for it all — and no one ever clearly laid that out to him or ever asked if it was OK.
“The developers will sell all the parcels and they can walk away with billions of dollars in profits, tax free, saddled on all of us,” English said. “What’s really frustrating is there isn’t a damn thing we can do about it.”
Like thousands of other Coloradans, the Englishes live in a metropolitan district, a quasi-governmental operation that's allowed to borrow money against the future property taxes of the homes to be built, sometimes thousands of them. Metro districts are run by a board of directors, not unlike a city council, that is usually made up of people connected to the developer of the subdivision project. The borrowed money comes from the sale of municipal bonds and is used to reimburse the developers for their expenses on the project's public improvements such as sidewalks, sewers and streets.
The entire 2,500-acre bucolic Aurora Highlands development is expected to include single- and multi-family housing, retail shops, businesses, schools, parks, a hospital and other commercial spaces in a swarth of farmland south of Denver International Airport. It sits within a much larger plan known as Aerotropolis, a massive 27,000-acre development concept with DIA at its center and long espoused by Denver's Mayor Michael Hancock and other regional officials.
Aurora Highlands is Colorado’s largest residential development in decades and is expected to put Aurora’s population over the 400,000 mark when finished.
The project isn’t expected to be completed until about 2046 — long after the Englishes are likely retired and moved away — and will cost billions of dollars to build.
On Dec. 16, the development’s Aurora Highlands Community Authority Board that controls all the metro districts that make up the project — its membership composed entirely of people tied to the project’s developers — is expected to unanimously approve up to $515 million in municipal bonds to partly finance the project’s first phase. It will be the largest bond issue statewide since Denver voters approved a $937 million package in 2017.
The key difference: Unlike Denver, the residents of Aurora Highlands will never get to vote on any of it.
And the Englishes and every single one of their neighbors who eventually move in will have to pay every dime of it back without ever getting a chance to approve it in the first place.
That's because the metro district's original board of directors — the developers — was allowed to decide how much debt the district could take on, all of it to be paid by future residents and all of it to reimburse the developer for taking on the project before a single home was ever built.
"We have studied and researched dozens of metro districts in Colorado and this is the worst we have seen," said attorney John Henderson, who is a member of Coloradans for Metro District Reform (CMDR). "Issuing over $500 million in debt, arrogantly dismissive of the residents' unanimous objections and pleas to at least slow down the process so they can wrap their heads around this tax debt the developer is cramming down their throats, is unconscionable."
Homeowners have little say
Aurora Highlands is the latest focus in a years-long battle by CMDR to reign in the seemingly limitless powers metro district developers wield by running the show themselves — all of it allowed under state law.
In that fight, the homebuilding industry last year was instrumental in the passage of several pieces of legislation to better inform home buyers about metro districts, including a requirement beginning in January 2022 that any new home sale within a metro district disclose the debt obligations of the development and an estimate of property taxes to be paid.
But CMDR is intent on adding to what it perceives as corrective measures during the upcoming legislative session, including proposals to increase resident control of metro districts, a curb on future debt without votes by the residents, and other fixes designed to change how districts can operate.
“Reform focuses on ensuring residents have taxation with representation and eliminating wasteful, abusive practices by developer-controlled districts,” according to the group’s latest mailer to metro district residents statewide.
Developers form metro districts with the permission of city or county officials mostly to keep the costs of a project contained to its own footprint. It typically happens many years before any homes are built — Aurora Highlands used to be part of the Green Valley Ranch project formed more than a decade ago. “Development should pay for itself” has long been a mantra of the industry, different from years ago when cities and their residents would help pay for the streets and sewers of a new subdivision through property taxes that were shared equally.
A metro district’s primary purpose is to reimburse developers for the costs of their work. When a metro district initially issues municipal bonds to fund the project, the developers frequently purchase them — essentially loaning their own money to themselves with a guarantee of repayment since the bonds are tied to property tax revenues on all homes that are eventually built in the district.
Metro district homeowners nearly always pay higher property taxes than others who don't live in one. For example, the tax bill for a home in the Aurora Highlands has an additional tax rate tacked on: Some of it to pay off the bonds the district sold to reimburse the developers and the rest to cover district operation costs. The metro district's extra tax rate, called a millage, sits at 78.5 — nearly 40% of the Englishes total property tax rate of 201.5 mills. A comparable home in the nearby Tower Triangle area of Aurora that is not in a metro district and receives the same city and school services is taxed at just 118 mills.
Although the millage rate to repay the bonds doesn't change, as more homes are built and property values increase, so do the tax bills.
“I love creating business to make money and I’ve no problem with that,” said English, a salesman with an MBA. “But that’s not what this is. This is a scam. One hundred percent of the developer’s costs and interest on the money they spend is covered by these bonds that we have to pay back. And the board that approves it all in our name is tied to the developer.
“I’m not okay with that,” he said.
Board tied to main developer
Not long after the Englishes moved into their new home — “It had that great new smell,” he said — a few things weren’t quite what they expected. Sketchy trash service and slower progress building the other homes in the small pocket he’d bought into among them.
English said he approached the development’s management at a nearby trailer office.
“I was basically told not to worry, they got it,” English remembered. “In a nice way, it was pretty much shut up and go away.”
With some more research, English learned his neighborhood was run by six people who make up the Aurora Highlands Community Authority Board — all of them tied in some way with Carlo Ferreira, the project’s main developer in Las Vegas and his company, Aurora Highlands LLC. The CAB, as it is called, sits over several other metro districts, including the Aurora Highlands Metropolitan District No. 1, where English lives.
Efforts to reach Ferreira were unsuccessful.
English said he’d never heard of the board, its members or its purpose.
“CAB who?” English said, recalling a recent meeting he attended. “I saw this guy and his wife, this other guy and his wife. I’d never seen them before, and we’re only a few houses here. There was something fishy when the entire board of directors of the community board is made up of husbands and wives who don’t even live there.”
Neighbor Tyler Dean, 24, said he first learned he was living in a metro district when a member of the CMDR reform group came to his doorstep last month to let him know of the upcoming bond issue. He and his wife had moved into their home in August, a month ahead of their wedding, and knew nothing about a metro district, bond issues or how they were impacted by them.
By law, the hundreds of pages of mortgage paperwork must contain a paragraph that tells buyers they might live in a metro district and should research whether they do. New laws that go into effect in 2022 require the disclosures to be more detailed, but not necessarily any easier to find.
“We were going through so much paperwork when we bought, I don’t recall seeing any of that in there,” he said, admitting that “no doubt we were just excited and trying to get going on the process.”
Dean said he started to read up on the project after CMDR's visit and saw that bond interest rates at the district could be as high as 12%.
“My jaw hit the floor,” said Dean, who works as a finance consultant.
For his part, English said he was uneasy with what he was learning and asked in the developer’s office why a community board had no community representation. He was quickly told the developer’s daughter and CAB member, Carla Ferreira, was also a resident.
She’s also vice president of her father’s company, records show.
What he didn’t know was how the other board members were also tied to Carlo Ferreira: CAB president Matt Hopper, a Denver-based consultant, works for Carlo Ferreira; Hopper’s wife, Deanna, is a retired healthcare worker; attorney Michael Sheldon is a land-use counsel for the senior Ferreira; Sheldon’s wife, Kathleen, is a homemaker; and Cynthia Shearon, a former attorney, is an executive with two Ferreira-owned companies.
None live in the Aurora Highlands.
“Shouldn’t a community board have a member of the community?” he asked.
Comments 'obviously regrettable'
At a recent CAB meeting to discuss whether to approve the $515 million in bonds, about a dozen residents attended in order to voice their concerns and discomfort.
After some back and forth, Carla Ferreira made it clear the residents had no obligation to live in the Aurora Highlands.
“You should ask if this is in a metro district before you buy,” Ferreira said, in remarks observed at the time by The Gazette on Zoom. “If it’s not clear to you … you’re welcome to buy a home anywhere else you want. And in most of Colorado, it’s mostly metro districts and this is how it works.”
English said he was stunned.
“Every one of the dozen or so in that room was like, what in hell did we just witness?” he said. “She did no favors with that diatribe and we all left that meeting (expletive) pissed. This is not okay. None of this is okay.”
CAB president Hopper told The Gazette in an email that Ferreira's comments were "obviously regrettable and do not in any way reflect the opinion of the board."
English said he's irked even more over how six people none of the residents ever elected can be solely responsible for putting him and dozens of other inaugural homeowners of The Aurora Highlands — and hundreds more to come — into debt for at least the next half century.
That’s because metropolitan districts in Colorado — virtually the sole method of new housing in the state — are designed to borrow billions of dollars to help build them with little to no financial risk to the developer.
In essence, state laws allow metro district boards stacked with people beholden to the developer to work both sides of what’s supposed to be a two-party contract, according to CMDR's Henderson.
It would be as if the members of a city council all worked at the same construction company owned by the mayor and approved a multi-million-dollar city contract with that company to install new streets, all of it to be paid by city residents.
And to ensure future homeowners can’t change the formula, metro district boards authorize billions of dollars in bonding authority — few actually use the limit — when a district is first formed, when nothing but open space and dirt exists.
As a project moves along, the boards approve bond sales tied to future property taxes within the development, never needing another vote of property owners, no matter how many begin to arrive.
“The idea of no vote, it feels shady,” said Dean. “It’s definitely scary to be in such a new development knowing I’m the one helping them front the risk if it all flops. It’s not their risk, it’s mine.”
Hopper said the Highlands metro board has been "forthcoming and transparent with respect to the community vision, long-term capital plan and the financing of the public infrastructure."
Still, he admitted the recent meeting residents attended made it "apparent … that we can and will do a better job of answering our residents' questions so they have a complete understanding of everyone's responsibilities for making The Aurora Highlands a safe, comfortable, and inviting neighborhood for many years to come."
'Democracy is dead'
At each of the several metropolitan districts that make up The Aurora Highlands Community Authority Board — there are six — developer-controlled boards have already authorized to repay up to $40 billion in bonds the CAB approves, although only about $200 million has been issued.
“These residents will be lucky if their grandchildren see the end of the debt,” Henderson said. “Democracy is dead in many metro districts, and billions of unaccounted for dollars are being taxed out of our residents’ pockets to pay more profit.”
The boards of each metro district that comprises the CAB — The Aurora Highlands Nos. 1-3, ATEC Nos. 1-2, and the AACMD — is made up of the same people who sit on the CAB, records show.
Then there's the Aerotropolis Area Coordinating Metropolitan District that sits above all of that and has the authority to issue another $8 billion in bonds for other public improvements that will link the other districts. All of its members are also the same people on the CAB.
There's also the Aerotropolis Regional Transportation Authority that is already collecting another 5 mills on residents for future development of the entire Aerotropolis concept.
The CAB and the AACMD are the only entities that can issue bonds while the others collect the property taxes that will pay for them. The metro district and finance industries refer to the arrangement as a master-servant agreement, where the servant districts provide the cash flow to the master district, which oversees all the development.
“In the agreement setting up the CAB, the other metro districts essentially gave CAB the ability to impose taxes for it and each promised to pledge whatever revenues to pay those bonds,” attorney and metro district expert Brian Matise said. “With other master-servant metro districts, at least the metro district has to issue the bonds and impose its own taxes. Here, the CAB seems to control virtually everything, including district operations, outside of any resident control.”
At the helm of all the boards is Hopper, whose company, Summit Strategies, is paid about $45,000 a month by Ferreira’s development firm to consult on the project, records show.
Money from CAB bonds that Hopper and other board members approve reimburses Ferreira for payments his companies have made to Hopper’s firm.
Hopper said board members "are very transparent" and follow state law by disclosing their conflicts of interest at each meeting and with the Colorado Secretary of State's office.
"In exercising our duties as board members we are responsible to assure we make decisions that conform with the parameters of the (metro district) service plans approved by the city," Hopper said in an email to The Gazette.
The financial web that ties all the metro districts and the companies behind them together is extensive, according to records reviewed by The Gazette.
For instance, Oxnard Financial is a Las Vegas company that was largely behind the first $197 million in bonds the CAB approved. It is managed by another company there, Investment Manager Inc., that is run by Lawrence Canarelli, who owned homebuilding behemoth American West Homes and helped build Green Valley Ranch in east Denver.
Canarelli sold American West to PulteGroup in 2019 for an undisclosed amount. Pulte is one of the main builders at Aurora Highlands, as well as in Sterling Ranch.
Developer Ferreira’s Aurora Highlands LLC was also behind some of the CAB-approved bonds, records show.
The new bonds CAB is expected to approve in December will partly go to refund the bonds Oxnard/Ferreira own as well as new expenses, although it’s unclear who will be its financier. Another portion is expected to be sold privately, which means it could be to the developers.
“The developers keep using the loopholes the law gives them,” said JD Lobue, a member of the reform group. “This is how development works. It’s simply false that they can’t build these communities any other way. With all the people moving into Colorado, they’re chomping like piranhas.”
David Migoya can be reached at email@example.com