PLATTEVILLE — An anonymous letter, signed by someone calling themselves Richard Marks, appeared in mailboxes in December throughout the Bebee Draw Farms neighborhood in Weld County, telling neighbors they were swindled in a secretive land deal approved by an elected board that oversees the 186-home subdivision.
That board, known as the BeBee Draw Farms Authority, sold approximately 400 acres of open space owned by the community for $10 to REI LLC, the company that built the subdivision and had plans to add a second phase. The problem, the letter said, was that one of REI’s co-owners was the development’s general manager and also sat on the board that approved the sale.
Within six months of the sale, Farmer’s Reservoir and Irrigation Company, one of the largest water management companies along the Front Range, bought REI LLC — including the additional 400 acres it now owned — for an undisclosed amount. The irrigation company not only wanted the land for a dredging project, but it also was expanding its interests to real estate, said Scott Edgar, the irrigation company’s executive director.
REI LLC’s general manager, Christine Hethcock, knew the irrigation company wanted to dredge the reservoir and that it would need land for the project, the letter said.
“Imagine you own 422 acres of land, and your business manager has been approached by a company to lease or buy the land,” the letter said. “Instead of working out the best deal for you, your business manager deeds the property to herself and then sells it, leaving you with no land or money. How would you feel? What would you do about it?
“I wish I could tell you that this is a fictional story, but it is not,” the anonymous letter stated.
The anonymous letter alarmed residents in the rural subdivision about 15 minutes south of Greeley in Weld County known for its large lots, lakes, horse trails and wild birds, including white pelicans who nest there. The roughly 400 acres served primarily as open space for the community with promises to use it for amenities such as scenic overlooks and horse jumps.
The land never should have been given back to REI LLC because it was meant to be a benefit to families who bought homes in the neighborhood, the Richard Marks letter said. Now, the property manager had orchestrated a deal to enrich herself and other investors while allowing what was once beautiful land to be ruined by the irrigation company’s lake dredging project.
“What can you do about this? Do not let this fly under the radar,” the letter, which was obtained by The Denver Post, warned.
Since the letter was placed in mailboxes in December, the subdivisions’ residents have packed various board meetings as they tried to figure out how the land slipped away with little notice and what they can do to regain what they lost.
The saga of the $10 land deal at Bebee Draw Farms is complex, and the community has a history of disputes between residents and elected boards that date back more than 13 years. The story’s layers involve Colorado’s controversial system of metro districts and complex water rights.
Along with anger over the land transfer, residents are upset about the dredging project on Milton Reservoir, a 1,500-acre lake adjacent to Bebee Draw Farms that is owned by the Farmers Reservoir and Irrigation Company. Many also oppose plans to build new homes as part of a second phase of the subdivision’s development, which is why the developer said it needed the open space back.
Metro districts that govern the subdivision are involved in all of it.
Bebee Draw Farms is unusual in that it has two elected metro districts and an authority board, which is a third governing entity, that make decisions on how land is used, how much residents are taxed and how that tax revenue is spent. There also is a property owners association, funded by dues and fees for violations of community covenants.
Metro districts, which are taxing authorities created by subdivision developers, have come under scrutiny in Colorado because they give developers enormous power to raise taxes to pay for their projects and often are used as an avenue for developers to line their own pockets. A 2019 investigation by The Postfound they often are troubled by a lack of voter oversight, conflicts of interest and financial insolvency.
John Henderson, a member of the Coloradans for Metro District Reform, said the situation at Bebee Draw Farms is a classic example of how developers make up rules and use metro districts to their financial benefit. Without voters watching every move those elected boards make, abuse happens.
“The first lesson of metro district law is just do it and if no one objects, it’s legal,” Henderson said.
But Hethcock, who is a co-owner of REI LLC and was the Bebee Draw Farms development’s general manager at the time of the land transfer, told The Post that everything about the land deal was above board and within Colorado law.
Her company gave the open space to the community more than 20 years ago for free and it was never utilized or improved, she said. Now REI was reclaiming it for future development. Hethcock and residents disagree on how much land was actually handed over in the $10 transaction last year; residents say it was 422 acres while Hethcock says they are mistakenly including land around a small lake on the property and the acreage was actually 398.
While Hethcock is an elected member of Metro District 2 and sits on the Bebee Draw Farms Authority board, she recused herself from the vote that transferred the land to REI LLC because she had a conflict of interest.
Edgar, general manager of Farmers Reservoir and Irrigation Company, also said nothing illegal or underhanded was done, especially since the development company donated the land to the community in the first place. Still, he met in March with the community to discuss why his company bought REI LLC. He offered a settlement, but the metro districts and property owners association declined while they seek an appraisal for the 400 acres.
“Given the residents and their tax dollars did not pay a dime for that land it would be fool-hearted to gloss over or ignore that,” Edgar said.
A nice place to live
The subdivision once was a cattle ranch, but the landowner sold 4,200 acres in the early 1980s to a developer, who had the idea to build a rural neighborhood where people could buy big homes on lots large enough to house horses with plenty of trails for riding and hiking. The land’s proximity to Milton Reservoir also would be a big draw.
Bebee Draw Farms needed the metro districts and their ability to tax so there would be money for water lines, roads and other infrastructure, Hethcock said. It was expensive to bring those utilities to the community because it was so far away from Greeley or Platteville, the closest municipality.
The original owners with the big idea for Bebee Draw Farms went bankrupt before the first home was built. REI LLC bought the property and built the first homes in 1999. REI LLC, which is no relation to the outdoor recreation retailer, is not a big player in Colorado real estate; Bebee Draw Farms is its only project, Hethcock said.
Over the years, those who co-own REI have come and gone as people retire or decide to do something else with their money, but its investors almost always have been secretive.
Today there are 186 homes, and plans are under consideration with the Weld County Planning and Zoning Department to add another 1,200 single-family lots. While Bebee Draw Farms is the legal name, the development also is known as Pelican Lake Ranch, a name created to better market the subdivision.
The rural setting and large lots attracted Kent Lewis, a retired engineer, when he and his wife moved to the neighborhood in February 2021. Lewis enjoys running his three German short-haired pointers through the open space and birdwatching from the deck of his two-story house.
But the fallout from the land deal is changing the nature of the neighborhood, he said.
“The developer has harmed the people of this community,” Lewis said.
Since the irrigation company began its dredging project, the company has heaped sand and slurry from Milton Reservoir’s bottom into a massive pile that now is nicknamed “Mount Milton” by residents. Although the pile sits on acreage owned by the reservoir company it blocks Lewis’s view of the lake.
Sand that has been spread across open space is killing vegetation, Lewis said. Heavy trucks damage the roads that the community pays to maintain.
“You talk about a wind erosion problem,” he said. “When the wind blows you wake up in the morning and go to the furniture and it’s dusty in the house.”
Even as Lewis shared his gripes about what has happened, he stopped to point out a red tail hawk flying overhead and rambled off a list of birds that he sees almost daily.
“I mean this is a nice place to live,” he said. “It’s just the broken promises. It takes a big set of cojones to deed yourself 422 acres.”
An unusual structure
Like many other subdivisions across Colorado, Bebee Draw Farms’ infrastructure, maintenance and amenities are overseen by metro districts, which raise money by taxing homeowners and other land users.
But BeBee Draw Farms has a more complicated structure than most other districts.
Weld County established the first metro districts for the development in 1986 when plans for it were first drawn and a second district was created in 1999 when the first homes were built. Metro District 1 represents the homeowners while Metro District 2 represents the developer-controlled land that does not have houses. Each metro district has five elected members.
The two metro districts have a history of conflict.
In 2009, homeowners filed a lawsuit, saying REI LLC controlled both district boards and had too much power over how tax dollars were spent. That lawsuit resulted in a 2011 settlement called the Bebee Draw Farms Authority Establishment Agreement, which created a third governing body for the development. That third body is now known as the authority board.
Under the settlement agreement, each metro district appoints two of its five elected members to the authority board. The taxes collected by each metro district flow to the authority board, which makes decisions on how the money will be spent — whether that is to buy street lamps, repair the swimming pool or build a new walking path.
Authority boards are one of the tools developers employ when they want to exert their influence and power over metro districts, said Henderson, who advocates for statewide metro district reform. Developers can still stack the deck so that the majority of members on an authority board can vote in favor of the developer’s plans.
“It’s pretty rare,” Henderson said of the authority board structure. “You find it almost exclusively in districts where there’s a significant amount of money involved and you have fairly sophisticated players.”
Henderson argues that authority boards are illegal under Title 32, the Colorado statute that sets the rules for metro districts, although that hasn’t stopped developers from creating them.
“There’s nothing in Title 32 that says they can do this,” he said. “The way Title 32 is written there should be only one district. Period.”
When the authority board voted in January 2022 to transfer the 400 acres back to the development company, REI LLC, Hethcock recused herself and the sale was approved 3-0.
Although Hethcock didn’t participate, the authority board was stacked in her favor, said Crystal Clark, a Bebee Draw Farms resident and a member of property owners association. Two of the three people who voted included the spouse of one of REI’s employees who had done contract work for REI and a consultant who did work on behalf of REI, she said. A third member, who was a resident and long-time Metro District 1 board member, also voted in favor.
Hethcock and another person who voted in favor of the land transfer stepped down from the authority board earlier this year but remain elected members of Metro District 2. The other two no longer serve on the authority board or metro district. Edgar, who runs the irrigation company, now has a seat on Metro District 2 and the authority board.
The residents who led the battle back in 2009 had moved away and the community became lackadaisical by not attending public meetings to keep an eye on the governance, Clark said. Most residents did not realize the deal had been approved until months later.
Clark, who has researched the deal and has a thick folder of documents, said the authority board’s vote was not legitimate. The $10 sale was approved with just one round of voting instead of two, which is in violation of the authority board’s rules. She said she has asked for more than a year to see proof of a second reading.
“This got passed on a first reading,” she said. “They’re saying it got a second reading but there’s no minutes. There’s no proof anywhere.”
Clark also believes the land deal should have been sent to each of the two metro districts for approval since it involved what is considered an amenity for homeowners. She said the only exception under the governance rules would have been if the land sale was a “bona fide emergency.”
“Giving the land away for free is not a bona fide emergency action,” Clark said.
The developer wanted the land back in its hands because of development plans.
Hethcock, however, said the land deal had two readings — once in July 2021 and again in January 2022 when it was approved. She said there was a lot of discussion in January about why they wanted to transfer the land away from the authority and back to REI. All five members of the metro district that represented homeowners attended and no one objected to the deal, she said.
“It made sense to everybody,” Hethcock said.
But Henderson saidHethcock never should have been involved in any discussions that came before the authority board. And anyone closely affiliated with the development company also should have recused themselves.
“You’ve got to completely remove yourself from the conversation,” he said.
In July 2022, six months after the authority board sold the 400 acres back to REI, the authority board announced that REI had been sold to the irrigation company. Farmers Reservoir and Irrigation Company now owns all of the undeveloped land and is in charge of building phase two.
Word spread through the neighborhood that Hethcock had cut herself a sweet deal by convincing her fellow authority board members to sell the land at a cheap price back to the development company that she co-owned, boosting the value of its holdings. Because she also served as Bebee Draw Farms general manager, she knew the irrigation company wanted the land and then negotiated REI’s sale, making a nice profit for herself, Clark and others maintain.
“Back in the old days you called it ‘back room, cigar smoking deals’ and no meeting minutes were required,” said Todd Sundeen, a Bebee Draw Farms resident. “This is how this happened. It’s a result of a lack of transparency.”
But Hethcock said those accusations are overblown.
She said she never owned more than a 15% interest in REI, which was not enough to unilaterally force a sale. The deal was approved by two shareholders who owned a much larger interest and wanted to sell. The irrigation company bought a majority stake and now is the controlling interest on what happens with Bebee Draw Farms’ undeveloped land, not her.
“I never would have had an ability to sell the whole thing,” Hethcock said. “I’ve never had a controlling interest.”
Hethcock, who said she now owns 3% of REI, said she is retiring from the company as soon as Edgar, the irrigation company’s director, finds her replacement as manager of the development.
Hethcock and Edgar declined to say how much the irrigation company paid for REI. Neither would disclose who the majority shareholders are in either entity because both are privately held.
Dredging up a conflict
The irrigation company wanted the land because it needed to dredge Milton Reservoir, Edgar said.
“We are dredging Milton Reservoir and part of the arrangement for the purchase of REI allowed us to use the REI land for our project,” he said.
Farmers Reservoir and Irrigation Company was founded in 1902 and owns four major reservoirs in Colorado and it owns 400 miles of canals. The company built Milton Reservoir in 1909 and it is fed water through a series of sandy ditches, Edgar said.
But after 115 years of operation, the sand caused the lake to become more shallow.
“We’re reclaiming lost capacity by doing maintenance on the lake,” he said.
Hethcock said she had one meeting with Edgar about the dredging project prior to the $10 land transfer and the 400-acre parcel was not part of the conversation.
By owning the nearby Bebee Draw Farms property, the irrigation company does not have to drive the dredging spoils long distances and pay someone else to take the dirt.
The irrigation project created multiple retaining ponds on the Bebee Draw Farms property, trucks and heavy equipment run all day and residents notice large holes get dug in various places and then filled with dirt, Lewis said.
When Bebee Draw Farms was first developed it held a lease to use Milton Reservoir and its surrounding lakefront. The metro district spent tax dollars to build a retaining wall and a boat ramp, and residents were allowed to fish and boat on the lake.
But several years ago, FRICO put the water usage out for bid and Heritage Sporting Club won the lease. The club’s members use it for boating and camping in the summer and duck and bird hunting in the fall.
Bebee Draw Farms residents now can only look at the water even as they watch trucks haul sand from the lake bottom around their land and dump it in piles.
“It would not surprise me if you said folks were concerned about that,” Edgar said.
The irrigation company also is adding real estate development to its portfolio, which added to the company’s interest in REI. Edgar declined to disclose other developments his company is involved in.
Edgar admitted all of the controversy at Bebee Draw Farms caught him off guard, saying his 15-year-old daughter had less drama in her life.
“It’s fair to say the passion of some of the residents was not disclosed,” Edgar said. “That’s OK. We’ll work through it.”
In March, Edgar met with the residents to talk about FRICO’s ownership and explain the company’s intent.
“As a starting point, nothing was done illegally or wrong,” Edgar said at the beginning of the March 7 meeting. “Maybe things could have been done better.”
He also acknowledged that FRICO had upset residents seven years ago when it awarded the water lease to the sporting club.
“I may have a bit of a reputation in Pelican Lake Ranch,” he said at the meeting. “I took Milton Lake away from the neighborhood. I would do it again.”
Edgar offered the metro districts three options to settle at that March meeting that involved various revenue-sharing plans from future home sales and donations of additional open space. One option was a one-time $375,000 payment to an amenity fund for the community.
Edgar would not further discuss those offers with The Post.
“This may end in litigation and as such I need to be a little bit more careful on this topic,” he said. “I certainly hope not. That was the purpose of the settlement offer.”
Residents have not accepted an offer and now are hiring an appraiser to assess the value of the 400 acres, Clark said. No one wanted to settle until they understood the actual financial value of what they had lost.
Lost trust
Jeff Heley and his family moved to Bebee Draw Farms in October 2019 because they wanted to raise their sons in a rural setting. They also needed a house big enough for his mother and mother-in-law to live with them.
They wanted to own horses and looked forward to the recreation opportunities at Milton Reservoir, which they were promised access to, he said.
The Heleys learned once they moved in that Milton Reservoir was closed to residents because of the sporting club agreement. Heley said that was the first time they were misled by the developer.
Heley said they also were told additional houses would be built across the street and then construction would stop but the latest plans show more homes much closer to his.
When rumors started bubbling up about REI LLC’s land transfer people at first were upset over the future of an RV storage lot and an equestrian center — two amenities for residents that were on the 400 acres.
“People were up in arms over the equestrian center and no one asked how the land was transferred,” he said.
People eventually started asking about the land transfer, and Heley said he tried to find old minutes from past metro district board meetings to figure out what had happened. Then the letter that spelled out the $10 deal — signed by a fictitious Richard Marks — appeared in mailboxes.
“They were acting like everybody knew about it and everybody was informed,” he said. “The Richard Marks letter filled in some blanks.”
The land transfer caused Heley to lose all faith in the developer and the metro districts.
“They showed their interest was personal and not for the metro districts,” he said.
The metro district system in Colorado needs more oversight and they need to be held accountable for their record-keeping, Heley said.
“They’re comprised of controlling interests who are there to make money,” he said.
Originally Published: June 16, 2024 at 6:00 a.m.
