2019 Capital Pledge Agreement

On October 23, 2019, the District entered into a capital pledge agreement with SCFMD3 where the District has agreed to levy a debt mill levy and remit the property tax revenues from such collections to the Bond Trustee for SCFMD3's 2019 bonds. The Pledge Agreement requires the District to levy the Maximum Allowed Debt Mill Levy (as defined above) each year.

This Agreement states that it is a multiple fiscal year financial obligation of the District within the meaning of Article X, Section 20 of the Colorado Constitution (TABOR). Per the Pledge Agreement, the amount of property taxes actually collected under the District’s debt mill levy and remitted to SCFMD3 each year is credited towards total voter authorized borrowing power granted to the District to fund multiple-year intergovernmental agreements. The amount credited against the District’s remaining unused voter-authorized borrowing power is determined annually and tax revenues budgeted and pledged each year to SCFMD3 under the Pledge Agreement shall not exceed the District’s voter-authorized borrowing limits related to funding multiple year intergovernmental agreements.

In November 2005, SEVEN individuals (all qualified by the Developer to vote in the TABOR election) unanimously approved a District-referred ballot issue asking to voters to authorize the District to enter into multiple-year intergovernmental agreements and commit up to $70 million of tax revenue to fund such agreements. In May 2014, TWO individuals (all qualified by the Developer to vote in the TABOR election) unanimously approved a District-referred ballot issue asking to voters to authorize the District to enter into multiple-year intergovernmental agreements and commit up to $70 million of tax revenue to fund such agreements.

The District is prohibited from prepaying its obligations to SCFMD3 under the Pledge Agreement.

The Pledge Agreement will terminate when all bonds issued by SCFMD3 are no longer outstanding. The following bonds have been issued by SCFMD3:

Per the 2019 bond offering document, a portion of the 2019A and 2019B bond proceeds was used to purchase water rights that were then attached to the Developer’s home lots, which were then sold by the Developer to Richmond American Homes.

SCFMD3 2019 Bond Terms: Per SCFMD3’s 2019 Bond Offering Memorandum, SCFMD3 has pledged towards the repayment of such bonds (1) all revenue from the imposition of the “Senior Required Mill Levy” on all real property within SCFMD3 and (2) revenue received from SCFMD2 under the Pledge Agreement.  

The occurrence of an Event of Non-Compliance by the District under the Pledge Agreement does not constitute a 2019A Senior Indenture Event of Default or a 2019B Subordinate Indenture Event of Default, even if such Event of Non-Compliance causes SCFMD3 to be unable to pay the current amounts due on the 2019A and 2019 B Bonds. The Pledge Agreement provides that upon the occurrence and continuance of an Event of Non-Compliance, any party may proceed to protect and enforce its rights against the party or parties causing such Event of Non-Compliance by mandamus or such other suit, action or special proceedings in equity or at law, in any court of competent jurisdiction, including an action for specific performance. The 2019A Senior Indenture Trustee and the 2019B Subordinate Indenture Trustee are third party beneficiaries of the Pledge Agreement for the benefit of the Owners of the Bonds, but solely with respect to the District’s Payment Obligation (as defined in the Pledge Agreement) and the obligation of the District to impose, collect and enforce the collection of the Maximum Allowed Debt Mill Levy as provided in the Pledge Agreement.