Letter to "The Villager" Editor: How Cherry Hills Took On $11.4 M in Multi-Year Debt Without a Vote
To the Editor:
The Colorado Constitution prohibits local governments from assuming multiple-year debt obligations without a taxpayer vote. Ordinarily, municipalities ask voters in an election year to approve the issuance of multiple-year general obligation revenue bonds to finance construction of new public buildings. Last year, the City of Cherry Hills Village, apparently impatient to construct the new City Hall building, found a way to by-pass voter approval by using something called Certificates of Participation (COPs). Under this arrangement, a bank will own and lease the building to the City, and the City will in turn make rental payments to the bank that match the COP payments (about $750,000 per year for 20 years) to bond investors. Because the lease is technically up for annual renewal, the City avoided entering a “multiple-year debt” and avoided the Constitutional requirement for taxpayer approval. This City intends, according to its 2018 Annual Budget, to repay the bank and investors by using new annual revenue (also about $750,000) that the City will enjoy starting in 2020 from the voter’s decision to withdraw from South Suburban Park and Recreation District. There is little chance of default on the lease payments or the COPs since the City cannot function without City Hall. But what was missed by circumventing taxpayer approval was the opportunity for real citizen involvement and robust discussion of the City’s priorities. Especially in our small Village, long-term debt obligations should be put to a vote of the people responsible for paying the bills.
10 Sandy Lake Road
Cherry Hills Village