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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 05/04/2021 - RESOLUTION 2021-054 APPOINTING DIRECTORS TO FILL V Agenda Item 17 Item # 17 Page 1 AGENDA ITEM SUMMARY May 4, 2021 City Council STAFF Clay Frickey, Redevelopment Program Manager John Duval, Legal SUBJECT Resolution 2021-054 Appointing Directors to Fill Vacancies on the Foothills Metropolitan District Board of Directors. EXECUTIVE SUMMARY The purpose of this item is to appoint three directors to the Foothills Metropolitan District Board of Directors (Board). In December 2020, the Foothills Mall, owned by Walton Foothills Holding VI LLC (Walton), went into foreclosure and a receiver was appointed by the courts to control the property during the pendency of the foreclosure (Receiver). As a result, two representatives of the Receiver became directors on the Board. In late 2020, Walton mistakenly transferred a parce l of real property to the Foothills Metropolitan District (District), in which property these two directors, as well as the Board’s other director, had a contractual interest. It was these directors’ contractual interests in the property that qualified th em to serve on the District’s Board. The effect of this conveyance was to disqualify these three directors from serving on the Board resulting in a vacant Board. To remedy this, the property has been reconveyed to Walton, and the District is asking Counc il to adopt this Resolution to appoint these three past directors to serve again on the Board. State law authorizes Council to make these appointments when a metropolitan district’s board of directors becomes vacant in a situation like this, but it also requires the newly appointed Board to call within six months of its appointment for the nomination of new directors and to hold a special election for these offices. Without these temporary appointments, the District will be hindered from providing its s ervices to the residents and businesses in the District. These appointments are also needed because Walton currently has a contract with McWhinney Enterprises (McWhinney) to sell the Foothills Mall to McWhinney and this sale cannot be completed until the District’s Board is fully operational. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The District is a metropolitan district established pursuant to Colorado’s Special District Act (the “Special District Act”) under the Amended and Restated Service Plan for the Foothills Metropolitan District approved by City Council on May 7, 2013, in Resolution 2013-044 (Service Plan). The District is located entirely within the City’s boundaries and was organized to provide public improvements and services for the redeveloped Foothills Mall. The District is governed by a board of directors (Board), the directors of which are elected by the District’s “eligible electors.” For a person to qualify under the Special District A ct to be a director on the Board, the person must an “eligible elector” of the District. The Special District Act defines an “eligible elector” of a metropolitan district to be a registered voter in Colorado who is a resident in the District or is the fee title Agenda Item 17 Item # 17 Page 2 owner of taxable real or personal property in the district or is a person who is under contract to purchase taxable property in the district and obligated under that contract to pay property taxes for the property. Until recently, the qualified directors on the District’s Board were Patrick Bunyard, Suni Devitt and Michael Staheli (Past Directors). These Past Directors were qualified to serve as directors on the Board based on them having a contract to purchase a certain parcel of real property (Pro perty) within the District and being obligated under that contract to pay the property taxes for the Property (Purchase Contract). The Past Directors recently lost their qualifications to serve as directors on the Board when the Property was inadvertently conveyed by Walton to the District and, as result, the Past Directors lost their qualifying interest in the Property under the Purchase Contract. Section 32-1-905(1)((d) of the Special District Act provides that a director’s office on the board of a metropolitan district “shall be deemed to be vacant . . . if the person who was duly elected . . . ceases to be qualified for the [director’s] office.” However, Section 32-1-905(2.5) of the Special District Act provides that when there are no duly elected directors on the board of a metropolitan district and the failure to appoint a new board will result in the interruption of the district’s services, the governing body of the municipality within which the district is located “may appoint all directors from the pool of duly qualified, willing candidates.” Also, within six months of such appointments, the newly appointed board must call for nominations for a special election to be held in accordance the Act and applicable Colorado election laws to elect directors . The City recently received a letter (Attachment 1) from the District’s lawyer asking Council to exercise its authority under the Special District Act to appoint directors to the District’s now vacant Board so that the District’s ability to continue to provide its public services will not be hindered. The District’s lawyer advises that the District and Walton have recently recorded a correction deed to reverse the conveyance of the Property from Walton to the District so the Past Directors are again quali fied to serve as directors on the Board and may do so if appointed by Council as authorized in Section 32-1-905(2.5). She also advises that the Past Directors are willing to serve again as the directors. The District is therefore asking that the Past Directors (Patrick Bunyard, Suni Devitt and Michael Staheli) be appointed to the Board by Council. And, as already mentioned, if Council adopts the Resolution making these appointments, the Special District Act requires the new Board to call an election within the next six months for the election of directors. It is also the case, as indicated by the District’s lawyer, that Walton has defaulted on its financing for the Foothills Mall, so the Mall is now in foreclosure and being operated by a court -appointed receiver. In an apparent attempt to avoid this foreclosure, Walton has a contract with McWhinney to sell the Foothills Mall to it and the currently closing date for the sale is mid -May. However, this closing will apparently not occur until new directors are appointed to the Board. It should also be noted that Past Directors Suni Devitt and Michael Staheli are also representatives and agents of the court-appointed receiver now operating the Foothills Mall. ATTACHMENTS 1. Letter of Request (PDF) WILLIAM P. ANKELE, JR. JENNIFER GRUBER TANAKA CLINT C. WALDRON KRISTIN BOWERS TOMPKINS ROBERT G. ROGERS BLAIR M. DICKHONER GEORGE M. ROWLEY OF COUNSEL: KRISTEN D. BEAR K. SEAN ALLEN ZACHARY P. WHITE TRISHA K. HARRIS HEATHER L. HARTUNG MEGAN J. MURPHY EVE M. G. VELASCO LAURA S. HEINRICH AUDREY G. JOHNSON LISA CANCANON CAREY S. SMITH V ERIN K. STUTZ April 26, 2021 Via Email: jduval@fcgov.com City of Fort Collins c/o Mr. John Duval, Deputy City Attorney RE: Foothills Metropolitan District/Board of Director Reappointment Request Dear Mr. Duval: White Bear Ankele Tanaka & Waldron currently serves as general counsel to Foothills Metropolitan District (the “District”). The District was organized in accordance with the provisions of Article 1, Title 32, Colorado Revised Statutes (the “Special District Act”) and operates pursuant to the Amended and Restated Service Plan for the District approved by the City Council (the “City Council”) of Fort Collins (the “City”) on or about May 7, 2013. Pursuant to the Special District Act, to qualify as a director of a special district, a person must be an “eligible elector” which is defined as a registered voter of Colorado and either (1) a resident of the special district, or (2) the owner (or spouse or civil union partner of the owner) of taxable real or personal property situated in the special district. For purposes of (2) above, a person who is under contract to purchase taxable property in the special district and is obligated to pay taxes prior to closing is consider an “owner.” It is our understanding that the property within the Foothills development is currently in receivership, though there is a potential sale pending of the property that is anticipated to close in mid-May. As a consequence of the receivership, two representatives of the receiver were recently placed upon the Board of the Directors of the District -- Suni Devitt and Michael L. Staheli. Each of those representatives were qualified as eligible electors pursuant to certain purchase and sale agreements (the “PSA”) for property located within the District between each representative and Walton Foothills Holdings, VI, LLC, the current owner of the property within the District (“Walton”). In addition to the two representatives of the receiver, one additional representative of Walton serves as board member -- Patrick Bunyard. However, it has recently come to our attention that Walton conveyed certain public property to the District for the purposes of ownership, operation and maintenance (the “Transfer”). The legal description included in the Transfer mistakenly included the parcel of property identified in the PSA described above. As a consequence, the three board members were immediately disqualified as “eligible electors,” and the Board of Directors of the District was inadvertently vacated. Walton is in the process 2154 E. Commons Ave., Ste. 2000 | Centennial, CO 80122| P 303.858.1800 F 303.858.1801 | WhiteBearAnkele.com ATTACHMENT 1 1266:0011:11177989 City of Fort Collins Page 2 April 26, 2021 of executing a correction deed that corrects the underlying legal description of the property conveyed to the District by deleting the parcel of property described in the PSA. Upon delivery of the correction deed, the following persons will be qualified as eligible electors of the District: Patrick Bunyard Suni Devitt Michael L. Staheli In a situation such as this where a board is vacated, the Special District Act (at § 32-1-905(2.5), C.R.S.) authorizes the governing jurisdiction, in this case the City Council, to appoint qualified electors to serve on the Board of Directors of the District, subject to a directors’ election held within six months of the appointment. Pursuant to this statutory authorization, we are requesting the above individuals be appointed to the Board of Directors of the Foothills Metropolitan District by the City Council. Because of the timing associated with the potential closing of the property to a new entity, it is critical that the appointment of the qualified individuals named above occur as soon as possible. This will enable the Board to continue its normal functioning, meet its statutory and contractual obligations, and otherwise handle any District related matters that are necessary for the successful transition of the property to the new owner. On behalf of the District, we respectfully request that the City Council approve the Resolution Appointing Directors to Fill Vacancies on the Foothills Metropolitan Board of Directors at the City Council meeting to be held on May 4, 2021. We have enclosed a proposed draft Resolution for your consideration. Sincerely, WHITE BEAR ANKELE TANAKA & WALDRON Kristen D. Bear Of Counsel Cc: Clay Frickey | Redevelopment Program Manager, cfrickey@fcgov.com Enclosure 3 A RESOLUTION APPOINTING DIRECTORS TO FILL VACANCIES ON THE FOOTHILLS METROPOLITAN DISTRICT BOARD OF DIRECTORS WHEREAS, Foothills Metropolitan District (the "District") is duly created pursuant to statute and exists as a quasi-governmental entity pursuant to Title 32 of the Colorado Revised Statutes and the Amended and Restated Service Plan for the District (the "Service Plan") as approved by the City Council (the "City Council") on May 7, 2013; and WHEREAS, the District is located entirely within the boundaries of the City; and WHEREAS, the property upon which the directors of the District held interests sufficient to constitute their positions as eligible electors of the District was inadvertently included within a legal description conveying property from Walton to the District (the “Transfer”), resulting in the District's Board of Directors (the "Board") being vacated; and WHEREAS, a correction deed was subsequently recorded correcting the Transfer legal description and the following persons are qualified and willing to serve on the District’s Board of Directors: Patrick Bunyard, Suni Devitt and Michael Staheli (the “Proposed Directors”); and WHEREAS, pursuant to Section 32-1-905(2.5), C.R.S., if there are no duly elected Directors of the District and the ongoing services provided by the District will be interrupted as a result thereof, the governing body of the municipality which approved the organization petition may appoint all directors from the pool of duly qualified, willing candidates; and WHEREAS, the Proposed Directors are willing to serve on the Board of the District and provide continuity in its governance as to ongoing matters; and WHEREAS, appointment of the Proposed Directors is necessary in order for the Board to carry out its various powers and responsibilities under Article 1 of Title 32, C.R.S. (the "Special District Act"), and Article 13.5 of Title 1, C.R.S. (the "Election Code"); and WHEREAS, the City Council of the City of Fort Collins, having been advised of the need to make such appointments and having been advised that the candidates are duly qualified and willing to serve as members of the Board of Directors, has agreed to appoint such elector candidates to the Board of Directors. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fort Collins , Colorado as follows: 1266:0011:11177989 Section 1. Appointment of Directors. The City Council of the City of Fort Collins, in accordance with Section 32-1-905(2.5), C.R.S., hereby appoints the following qualified and willing eligible electors of the District to the Board of Directors to be effective immediately, to serve until their successors are duly elected or appointed as provided by statute: Patrick Bunyard, Suni Devitt and Michael Staheli. Section 2. Special Election. Pursuant to the requirements of Section 32-1-905(2.5), C.R.S., the Board of Directors of the Foothills Metropolitan District shall call for an election within six (6) months hereof for the purpose of electing members to the Board of Directors in accordance with all statutory requirements. Section 3. Board Action Required. A copy of this Resolution shall be delivered to each Director appointed hereunder. The Board of Directors and each member thereof shall take all other actions in connection with this matter as may be required under the Special District Act and the Election Code. 5 ADOPTED this _____ day of May, 2021. CITY OF FORT COLLINS By: ____________________________________ Name: __________________________________ Title: ___________________________________ ATTEST: ________________________________ -1- RESOLUTION NO. 2021-054 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPOINTING DIRECTORS TO FILL VACANCIES ON THE FOOTHILLS METROPOLITAN DISTRICT BOARD OF DIRECTORS WHEREAS, the Foothills Metropolitan District (the “District”) is a metropolitan district duly established under Colorado’s Special District Act (the “Act”) in Title 32 of the Colorado Revised Statutes (“C.R.S.”) under the Amended and Restated Service Plan for the Foothills Metropolitan District approved by City Council on May 7, 2013, in Resolution 2013-044 (the “Service Plan”); and WHEREAS, the District is located entirely within the City’s boundaries and was organized to provide public improvements and services for the development known as the Foothills Mall; and WHEREAS, in order for a person to qualify under the Act to be a director on the board of directors of a metropolitan district, the person must an “eligible elector,” which the Act defines as a registered voter in Colorado who is a resident in the district or is the fee title owner o f taxable real or personal property in the district or is a person who is under contract to purchase taxable property in the district and obligated under that contract to pay property taxes for the property; and WHEREAS, until recently, the qualified directors on the District’s board of directors (the “Board”) were Patrick Bunyard, Suni Devitt and Michael Staheli (collectively, the “Past Directors”); and WHEREAS, the Past Directors were qualified to serve as directors on the Board based on them having a contract to purchase a certain parcel of real property (the “Property”) within the District and being obligated under that contract to pay the property taxes for the Property (the “Purchase Contract”); and WHEREAS, the Past Directors recently lost their qualifications to serve as directors on the Board when the Property was inadvertently conveyed in fee title to the District by the previous fee title owner of the Property, Walton Foothills Holdings, VI, LLC (“Walton”) and, as result of this conveyance, the Past Directors lost their qualifying interest in the Property under the Purchase Contract; and WHEREAS, C.R.S. Section 32-1-905(1)(d) provides that a director’s office on the board of a metropolitan district “shall be deemed to be vacant . . . if the person w ho was duly elected. . . ceases to be qualified for the [director’s] office”; and WHEREAS, C.R.S. Section 32-1-905(2.5) provides that when there are no duly elected directors on the board of a metropolitan district and the failure to appoint a new board wi ll result in the interruption of the district’s services, the governing body of the municipality within which the district is located “may appoint all directors from the pool of duly qualified, willing candidates” and within six months of such appointments the newly appointed board must call for -2- nominations for a special election to be held in accordance the Act and applicable Colorado election laws; and WHEREAS, the District and Walton have recently recorded a correction deed to reverse the conveyance of the Property from Walton to the District so the Past Directors are again qualified to serve as directors on the Board and may do so if appointed by the City Council as authorized in C.R.S. Section 32-1-905(2.5); and WHEREAS, the Property is part of the Foothills Mall development, which development is owned by Walton, however the development is currently being foreclosed upon by Walton’s lender, MUFG Union Bank (the “Lender”) and in control of a court-appointed receiver, Cordes & Company LLP (the “Receiver”); and WHEREAS, two of the Past Directors, Suni Devitt and Michael L. Staheli, are representatives and agents of the Receiver; and WHEREAS, the current lack of directors on the Board will cause an interruption of the District’s services and will interfere with a current contract between Walton, the Lender and a third party for the third party to purchase the Foothills Mall in lieu of the foreclosure; and WHEREAS, the Past Directors are currently eligible electors of the District and therefore qualified to serve on the Board and are willing to do so to provide continuity in the District’s governance as to its ongoing matters, including the pending potential sale of the Foothills Mall; and WHEREAS, the City Council, having been advised of the need to make the a ppointment of new directors to the District’s Board and having been advised that the Past Directors are duly qualified and willing to serve as directors on the Board, finds that it is in the best interests of the City and the District that the Past Directors be appointed to serve as directors on the Board as authorized in C.R.S. Section 32-1-905(2.5). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT COLLINS, COLORADO as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby appoints, in accordance with C.R.S. Section 32-1-905(2.5), Patrick Bunyard, Suni Devitt and Michael Staheli to serve as directors on the Board until their successors are duly elected as provided in C.R.S. Section 32-1- 905(2.5). Section 3. That pursuant to the requirements of C.R.S. Section 32-1-905(2.5), the Board shall call for an election within six (6) months hereof for the purpose of electing directors to the Board in accordance with the Act and all other applicable statutory requirements. -3- Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 4th day of May, A.D. 2021. _________________________________ Mayor ATTEST: _____________________________ City Clerk