Stagecoach After years of work, the Morrison Creek Metropolitan Water and Sanitation District successfully completed paying of its 22-year-old, $3.8 million debt on Tuesday, thanks to an elaborate bankruptcy plan that was the first of its kind.
In the winter of 1973, people were excited about the Stagecoach development and had no reason not to be.
Stagecoach Ski Area was up and running with a working lift. There were plans to build Stagecoach Reservoir, which landowners expected to improve their investments even more, and three subdivisions in the 1,500-lot development had water and sewer lines managed by a newly formed Morrison Creek Metropolitan Water and Sanitation District.
But the next year, Woodmoor Corporation, which was funding all of the water and sewer infrastructure and building the roads to the remaining properties, had declared bankruptcy, leaving Morrison Creek with the sole responsibility of paying back the 725 bond holders.
In 1977, Morrison Creek couldn't handle the financial burden without Woodmoor funding the expansion of its infrastructure, and filed for bankruptcy.
"We were probably one of the first districts to file for Chapter Nine," Morrison Creek Attorney Tom Sharp said.
Chapter Nine is a legal process that was initiated in the early '70s when New York City was having problems with its financial issues. Until then, no one had even thought of a municipality going bankrupt, Sharp said.
When private businesses file for bankruptcy, they are liquidated by the government. But municipalities, like the water district, have to show a U.S. District Court judge how they plan to pay off bond-holders. That job fell into the hands of Sharp.
Sharp showed the judge how he would raise $954,000, and then invest that money into a U.S. treasury bond at a 7 percent yield. The interest earned would be reinvested at 6 percent for 22 years, eventually paying the $3.8 million by Aug. 22, 2000.
So how did the $954,000 get raised? The district had $154,000 already, Sharp said, so all that was needed was $800,000.
The district invented a contribution certificate, which was $1,000 note that was good for a $1,500 tap fee hookup to the district. The district sold 800 of them.
With the $954,000 in hand, the district then reissued $5,000 bonds. The mill levy was set at 40 mills, 20 of which was dedicated to buying back the bonds at 7.5 percent interest.
While doing that, the district offered to buy back the bonds for 25 cents on the dollar for those who didn't want to risk any more.
One-third of the bond holders took the deal, chopping the debt down to $2.6 million and the $954,000 to $650,000 for investing.
Sharp began investing, and to his surprise was able to reinvest the money at a higher rate than first estimated.
With that extra money earned, the district issued a "blind call," Sharp said. That meant all the bond holders were asked if they wanted to set a price to sell their bonds, and the district bought as many at good prices as it could afford.
That happened about four times in 22 years. As of today, there are 124 bond-holders left, out of 725 originally equaling a debt of $620,000.
On Tuesday, those bond-holders were paid $5,000.
"It's sort of interesting to be at the beginning and the end of it," Sharp said.
Now that the debt is paid off, what is the future of Stagecoach?
"It's up to the metro district board to figure out what that means and where it wants to go from here," Routt County Commissioner Nancy Stahoviak said.
From the county's perspective, a future that is similar to the Stagecoach Community Plan it finished drafting last year would be the most logical step.
"I feel that we worked really hard with the Stagecoach Property Owners Association in drafting that plan. I would hope that whatever the metro. district decided to do would make the best since economically," Stahoviak said.
Water board member Greg Hermann said the biggest concern he sees for the water district is to get more people hooked onto the system.
"We certainly have to get our service rates and tax fees properly," he said.
Right now the district has 242 customers, which is well below its capacity. More paying customers means more financial security for the district.
"I'm certainly hopeful," Hermann said.
So is Chris Wittemeyer, who is part owner of the existing Stagecoach Ski Corp. and has a hand in development in the area.
"It's got great potential with all the recreational opportunities," he said.
Plus, with at least three developments on the horizon, one of which is a golf course in the area, the future looks to be painted black.
To reach Doug Crowl call 871-4206 or e-mail firstname.lastname@example.org