It is very enjoyable to write about success stories. So today I am sharing an update on Falcon Vista Estates – a visual, financial and area success story for sure.Just south of the intersection of Highway 24 and Meridian Road sits Falcon Vista Estates, a duplex community that has been plagued from its beginnings by the dealings of a dishonest and now convicted felon by the name of Michael Dryer. From the county’s perspective, just about everything that could have gone wrong with this development did go wrong, and it has been a challenge to salvage the project and restore the community.In the fall of 2004, the El Paso County Board of County Commissioners approved an application by Mile High Capital (Michael Dryer was one of the principals) for a 122-lot subdivision. One half duplex was allowed per lot, which actually meant that one duplex meant two lots owned by one owner. Approximately 60 people, many of whom were seeking investment rental property, made purchases. Those same folks stood to lose everything in what turned out to be a Ponzi scheme perpetrated by Mile High Capital.The final plat on the development was recorded in the spring of 2005, and in the first quarter of 2006, MHC declared bankruptcy. Thus began the decline and dilapidation of the development.Mr. Dryer left the subdivision with only partially finished duplexes and unfinished infrastructure in the form of streets, curbs and gutters, sidewalks, street lights, street signs, water, sewer, telephone and cable television. It didn’t take long for nature and vandals to take control and turn the area into a Third World landscape, negatively impacting the Falcon area.In 2006, a group of the defrauded investors and banks who held construction loans contacted the County in an effort to call the letter of credit that had been put in place at the time of approval. It was quickly discovered that the letter of credit had not been drawn on a bank but on a subsidiary of MHC, thereby rendering the collateral worthless.At that time, the County proposed the formation of a Local Improvement District. This is a financing mechanism approved by the General Assembly to provide a way to pay for infrastructure in small areas and to attract investors. It helps pay for things like central water and sewer, streets, lights, curbs and gutters, etc.Upon contacting the individual property owners, the County found overwhelming support for the formation of the LID and began the work of seeking $1.1 million from private banks to complete construction under Falcon Vista LLC.At that point, the property owners voted to assess themselves, under the LLC, $1.3 million in bonds at 6 percent interest over 20 years to repay the banks that advanced the $1.1 million. Essentially, each owner agreed to raise their property tax bill by about $1,250 per lot ($2,500 per duplex) per year in order to pay off the cost of the infrastructure. (Notice the difference here between a government bailout of bad private investments and a structured approach for the private investors to assess themselves the cost of recovery and salvage the project.)In the summer of 2008, all was going along well when the County encountered its most difficult hiccup. One of the construction contractors threatened to lien the project because the LLC failed to pay him $185,000. One of the project managers allegedly pocketed the money instead of paying one of the major subcontractors on the project, which had serious consequences to the entire project.In negotiations, the subcontractor agreed to accept $90,000 as settlement. The problem was that the banks couldn’t get approval for anymore cash injection into the project and so the County injected the $90,000, relying upon the now active criminal case and civil law collection case pending against the project manager for recovery of the dollars. Without this financial participation from the County, all the work done up to that point would have been lost and the project would have remained in that Third World condition.In October 2008, the infrastructure was all completed and installed, allowing property owners to begin work on the duplexes themselves. In January 2009, the first LID installment payments were included on the owners’ property tax bills. By the end of the year, the majority of the owners had paid and the LID’s repayment of the financing was on track!Today, only one duplex is incomplete, but almost ready for its certificate of occupancy. The development looks entirely different than it did just 18 months ago – now a burgeoning new neighborhood. Gone is an embarrassment to the Falcon area and gone is the devaluation of surrounding property because of the wreck that Falcon Vista was just a few short months ago.This project has certainly been an example of all that can go wrong. As a result, the County has changed policy on its collateral procedures and has been instrumental in shepherding a private market resolution.Amy LathenVice-ChairEl Paso County Commissioner, District 2520-6412
