Update Re capital facility fee litigation

INFORMATION TO GRANBY RANCH PROPERTY OWNERS
AND RESIDENTS REGARDING CURRENT LITIGATION

September 30, 2024

What is the Lawsuit About?

On May 26, 2023, GRCO, LLC – a property owner and taxpayer within the District – filed a complaint in the United States District Court for the District of Colorado against the District captioned GRCO, LLC v. Granby Ranch Metropolitan District, Civil Action No. 23-cv-01351-RMR-STV (the "2023 Lawsuit"). The 2023 Lawsuit challenges the District’s imposition of Capital Facility Fees pursuant to the 2006 Amended and Restated Amended and Restated Joint Resolution with Headwaters Metropolitan District establishing Capital Facility Fees (See NOTE 2) subsequent to the District refinancing its debt in May 2018. Specifically, GRCO, LLC’s complaint demands (1) declaratory and injunctive relief regarding the District’s alleged violation of the 2006 Facilities Fee Resolution, (2) declaratory and injunctive relief regarding the District’s alleged violation of CRS 32-1-1001(1)(j) by levying Capital Facilities Fees for the purpose of repaying the District’s debt, the proceeds of which GRCO claims funded public infrastructure that did not benefit GRCO’s lots, (3) declaratory and injunctive relief for depositing Capital Facility Fees into the District’s general fund in alleged violation of CRS 29-1-803(1), (4) declaratory and injunctive relief due to the District allegedly materially modifying the District’s Service Plan by levying Capital Facility Fees allegedly not allowed per the District’s service plan, (5) damages under 42 USC 1983 for the District’s alleged violation of GRCO, LLC’s rights under the Fifth Amendment to the United States Constitution, (6) declaratory and injunctive relief for the District’s alleged continuing violation of 42 USC 1983 and the Fifth Amendment to the United States Constitution, (7) damages for the District’s alleged Due Process violations under the United States and Colorado Constitutions and damages under 42 U.S.C. § 1983, (8) declaratory and injunctive relief for the District’s alleged continuing Due Process violations of the United States and Colorado Constitutions and attorneys’ fees under 42 U.S.C. § 1983 and (9) declaratory and injunctive relief to prevent the District’s collection of Capital Facilities Fees under the alleged extinguished 2006 Facilities Fee Resolution. GRCO, LLC is seeking relief including a return of $125,100 in Capital Facility Fees it has already paid to the District.

On February 26, 2024, District Court dismissed four of GRCO’s nine claims (i.e. claims 3, 4, 6 and 9).

On March 22, 2024, GRCO amended it complaint and added an additional claim - declaratory and injunctive relief for the District’s alleged violation of C.R.S. § 32-1-503 and the 2006 Facilities Fee Resolution by collecting capital facility fees on lots located outside of the District’s service boundaries (but still subject to the District’s 2018 Bond debt lien).

The District believes that the claims asserted in the 2023 Lawsuit are without merit under Colorado law that allows the District to assess and recover fees to defray the cost of public improvements. The District further believes that the claims are time-barred by the statute of limitations. The District intends to assert other defenses and to seek prompt dismissal of the action. Assessing and predicting the outcome of this matter involves substantial uncertainties. The District believes no amount is due to GRCO, LLC and denies any wrongdoing. It remains possible that despite the District current belief, material differences in actual outcomes or changes in the District’s evaluation or predictions could arise that could have a material adverse effect on the District’s financial condition, results of operations, or cash flows.