The Castle Pines North Metropolitan District has filed an appeal of a May state court decision that accelerates principal and interest payments for $46 million of defaulted debt.
Central Bank of Denver, acting as trustee for 1,100 bondholders, had successfully sued Castle Pines in state district court after efforts to work out a repayment were unsuccessful in federal bankruptcy court.
Castle Pines said it had no choice but to appeal the district court decision in which the judge said he did not have the power to order a settlement and that the debt must be repaid immediately. Meanwhile, Castle Pines has turned over $500,000 in reserve funds, as ordered, to the trustee to distribute to bondholders and pay legal fees.
About 450 home owners face property taxes upward of $80,000 each to settle the debt. The original $38 million unrated general obligation issue was sold in 1986 to pay for roads, utilities, and other improvements in the district just south of Denver, but the development did not fare as well as projected and the bonds defaulted in 1990.
Central Bank vice president Jon Stevens said that despite the favorable ruling for bondholders, he continues to meet with Castle Pines officials to work out a settlement.
"We have given them a position paper of things we would consider." Stevens said. "But we can't ignore we now have a mandamus. We can't turn back the clock."
