A restructuring plan proposed for the Mariposa Public Improvement District bonds has spurred a heated email exchange between a resident who is suing the developer and residents who want to accept the deal.
When Brian Crumbaker, the attorney representing the bondholders, outlined a plan to Mariposa residents that would lower payments residents pay toward the bond debt, he made it clear that the deal could not proceed unless some aspects – he wouldn’t give specifics – of the lawsuit were changed.
Many of the roughly 50 residents who attended Crumbaker’s presentation last week welcomed Crumbaker’s proposal.
But David Wheeler, one of 26 plaintiffs in the lawsuit filed against Mariposa developer High Desert Investment Corp., its corporate officers and owner Albuquerque Academy, the Mariposa Public Improvement District and the city of Rio Rancho, was adamant that the restructuring plan should be considered separately from the lawsuit.
“No one will interfere with my right to due process under the rule of law. Not governing officials, not other residents, nor ANY law firm, nor lawyers performing theatrics,” Wheeler said in an email to Mariposa resident Brendan Coghlan.
Wheeler had learned of an email Coghlan sent last week to Christopher Bauman, the attorney representing Wheeler and the others plaintiffs. In the email, Coghlan asked Bauman to contact Crumbaker quickly to “resolve the bondholders concerns related to your lawsuit so they can move forward with his proposal.”
In his response, Wheeler also blasted Coghlan, claiming he was attempting to “intimidate” the plaintiffs collective efforts to due process under the law.
Their exchange – widely circulated among residents of the subdivision in far north Rio Rancho – provoked a stream of email responses.
Jon Hartenberger, one of the plaintiffs, said the PID bond payment crisis has earned Mariposa a negative reputation, which will continue to affect home values there. He questioned whether residents were getting sufficient information about the restructuring deal to make informed decisions.
Another resident, Andrew Pascal, argued property prices would rebound if restructuring proceeded.
Richard Nelson pointed out that until the restructuring moves forward residents cannot refinance their mortgages and risk seeing their PID tax skyrocket to the full amount needed to cover the bond payments.
David Diaz accused Wheeler and the other plaintiffs of jeopardizing Mariposa residents’ chance for a reasonable solution.
“All we want to do now is put this behind us and move on with our lives,”Diaz said in an email to Wheeler and other residents.
In an interview on Friday Wheeler said he didn’t attend Crumbaker’s presentation and was “caught off guard” by his stipulation that the lawsuit would have to be changed for the restructuring to proceed.
He believes restructuring the bonds would benefit Mariposa residents, the city and the bondholders, but he thinks the city or PID board should be handling the restructuring arrangements, not the bondholders.
The crisis arose because High Desert sold $16 million in bonds using the PID, or Public Improvement District, process that allows developers to issue bonds backed by payments from property owners for infrastructure.
The developer pulled out of Mariposa last summer, leaving residents responsible for the bond payments, a situation that would raise the PID tax from $9 per $1,000 of a home’s taxable value to $110 per $1,000.
Bondholders in August agreed to forego demanding the full increase needed to cover the bond payments, but only for one year.
Wheeler and the other plaintiffs filed their lawsuit in the fall, alleging breach of contract, fraud and civil conspiracy among other things. It claimed High Desert provided last-minute cash flow projections to the bond purchasers that grossly overestimated home prices and the number of homes they could sell at Mariposa, while the City Council relied on separate, lower figures, when they approved creating the PID. It sought the revocation of the homeowners’ purchase agreements.
The lawsuit also claims the plaintiffs should be part of the negotiations involving the use of assets that could reduce the bond debt. Under the forbearance agreement, High Desert agreed to turn over about 800 acres of land it still owned at Mariposa to a bondholder controlled company and the land is for sale.