Litigation Settlement / Update

On March 29, 2021, Lennar Colorado, LLC (“Lennar”) and Stratus Amber Creek, LLC (“Stratus”) filed suit against Amber Creek Metropolitan District collectively seeking nearly $4 million in damages from the District. Lennar and Stratus claim they are owed reimbursement under three agreements and amendments thereto they and their predecessor developer entered into with the District while the District was under their control, specifically the (1) 2004 Capital Reimbursement and Facility Fee Agreement, the (2) Lennar Facilities Acquisition Agreement and the (3) Subordinate Facilities Acquisition Agreement.

On April 30, 2021, the District filed a Cross-Complaint against Lennar, Stratus and eight of their employees/principals who previously served as directors on the District’s board, alleging that their years-long control of the District for the benefit of Stratus and Lennar breached their fiduciary duties to the District.

On December 09, 2023, District Court dismissed most of the District's counterclaims against Lennar and Stratus and related individuals but did not dismiss the District's claim of securities fraud related to the issuance of the District's $18.9 million in bond debt.

On February 07, 2023, the bond trustee filed a lawsuit against the District demanding the District be placed in receivership to prevent the District from funding its litigation costs related to the securities fraud claims. District Court granted this request on May 02, 2023.

On August 18, 2023, the District entered into an agreement with Lennar and Stratus to settle all outstanding litigation and claims between these parties. The District paid $1.25 million to Lennar Colorado, LLC and $1.25 million to Stratus Amber Creek, LLC. In exchange, Lennar Colorado, LLC – the holder of the Series 2017C Junior Lien Bonds – agreed to extinguish the Series 2017C Junior Lien Bonds and both Lennar Colorado, LLC and Stratus Amber Creek, LLC agreed to extinguish all other claims against the District.

The District recognized a $899,579 gain from the extinguishment of the Series 2017C Junior Lien Bonds and eliminated approximately $24 million in projected accrued interest payable on the 2017C Junior Lien Bonds. 

All excess cash in the Subordinate B bond project fund - totaling $543,000 - was applied towards accrued unpaid interest on the Subordinate B bonds. This cash would have been released to Lennar/Stratus had the District lost the lawsuit.  

Also, the District entered into a settlement agreement with UMB Bank. Per the terms of the agreement, the District's tax revenue collected under the District's debt mill levy will be managed by a receiver for 12 months beginning in October 2023. UMB Bank agreed to allow the District to  allocate up to $15,000 per year in District administrative costs to the debt fund. (The District was originally allocating approximately $32,000 in administrative costs per year to the debt fund.) UMB Bank also agreed to allow the District's litigation costs incurred since 2021 to be funded from bond proceeds held by UMB Bank.

DISTRICT COURT FILINGS

March 29, 2021 - Lennar & Stratus Amber Creek complaint filed against the District in Adams County district court. [Filing]

April 30, 2021 - District's motion to dismiss Lennar/Stratus complaint against the District. [Filing]

April 30, 2021 - District's cross complaint against Lennar/Stratus and 8 former individuals who served on the District's board [Filing]

June 04, 2021 - Lennar Stratus response to District's motion to dismiss Lennar Stratus Complaint [Filing]

July 02, 2021 - Lennar Stratus Rule 12(b)(1) motion to dismiss District's claims [Filing]

July 02, 2021 - Lennar Stratus Rule 12(b)(5) motion to dismiss District's claims [Filing]

July 21, 2021 - Court Order denying District's motion to dismiss Lennar Stratus claims [Filing]

October 08, 2021 - Lennar responses and objections to District's requests for production of docs [Filing]

October 08, 2021 - Stratus responses and objections to District's requests for production of docs [Filing]

December 09, 2022 - Court Order Re Lennar Stratus 12(b)(1) motion to dismiss [Filing]

December 09, 2022 - Court Order Re Lennar Stratus 12(b)(5) motion to dismiss [Filing]

December 09, 2022 - Court Order denying District's evidentiary objections re John Cheney declaration [Filing]

December 09, 2022 - Court Order granting District's motion to seal and strike [Filing]

January 25, 2023 - District appeal re district court's rulings [Filing]

March 02, 2023 - District Court Order Granting Stay Pending Appeals Court Ruling [Filing]

August 31, 2023 - District Court order dismissing Lennar/Stratus lawsuit against the District [Filing]

August 31, 2023 - District Court order dismissing the District's lawsuit against Lennar/Stratus [Filing]

Amber Creek Metro District's Junior Lien Bond

In October 2017, the Amber Creek Metro District Board approved issuance of a $1.7 million junior lien bond to Lennar Colorado, LLC. At the time this bond was issued, three of the five directors serving on the Board were employees/directors of Lennar Colorado, LLC and one director on the Board was the owner of Stratus Amber Creek, LLC. Below is the projected schedule of payments to Lennar on this bond (per the bond offering document). Interest and principal payments are funded from the annual property taxes assessed on the homeowners living in Amber Creek. The projected annual net effective interest rate on this bond is 39.4%.