By Nicole C. Brambila | Denver Gazette
After arguing in court filings that its lease-financing structure is legal because a nonprofit organization — not the district — incurred the debt without voter approval, Denver Public Schools now contends the same corporation is a “public entity” entitled to governmental immunity from lawsuits.
The contradiction is more than semantics.
If the Denver School Facilities Leasing Corporation (DSFLC) is deemed a public entity, it would be subject to Colorado’s open records and public meetings laws, an attorney and a watch dog group said.
DPS has denied a public information request for documents in the corporation’s possession, suggesting district officials, despite their legal arguments, recognize DSFLC as a private organization.
Scott Pribble, a DPS spokesperson, echoed the points raised by the district’s legal team but did not explain why The Denver Gazette’s Colorado Open Records Act request was denied — particularly in light of the district’s position that Leasing Corporation is a public entity.
“Neither DPS nor the DSFLC possess the COPs (certificates of participation) that you are requesting,” Pribble said in an email. “They are maintained by the purchasing agent until the debt is satisfied.”
Pribble explained the COPs are similar to a car title being held until the loan is paid off.
But while a car title may be withheld until the loan is paid in full, the lender still retains access to the loan documents, payment terms and ownership records. Here the district is arguing that neither DPS nor Leasing Corporation possesses any records of the COPs, which represent a major debt obligation.
If the leasing entity is indeed an “instrumentality of DPS,” the stakes reach beyond this case.
Such a designation would effectively undercut the district’s own rationale for bypassing the constitutional requirement for voter approval — an implicit admission that the nonprofit has functioned as a workaround all along.
The outcome of this case could reverberate across Colorado, where this widely used — and little understood — financing structure underpins billions of dollars in public borrowing.
That is, the legal scaffolding that supports Colorado’s lease-financing system could start to collapse, according to one analysis.
“They said the quiet part out loud,” said Lisi Owen, the attorney representing Mamás de DPS, a parent advocacy group, in its legal challenge against the district.
Owen, who ran for Denver district attorney in 2023, is founder of Vanguard Justice LLC, which describes its work as “anti-corruption.”
Owen argued the leasing arrangements violate the state constitution. The constitutional ban against acquiring debt without voter approval also includes secured debt, such as using public buildings as collateral.
‘A really clever circumvention’
The Colorado Constitution prohibits public agencies from doing what Leasing Corporation did as a private entity: assume debt without voter approval. While an accepted practice in public finance circles, some argued the district’s leasing strategy is generally understood as a way to sidestep the ban.
“This seems to me like a really clever circumvention of the voters,” Deborah Carroll, director of the Government Finance Research Center and a public administration professor at the University of Illinois at Chicago, has said.
Here’s how it works: The district transfers ownership of dozens of schools to the nonprofit organization for a nominal price — typically $10, according to publicly available warranty deeds. Leasing Corporation then uses the school buildings as collateral to raise capital from investors through a financial instrument called certificates of participation or COPs. The schools district uses the raised money to fund various projects and then repays the debt through annual lease payments to the nonprofit organization.
The district has employed this tactic since at least 1984.