Refi proceeds taxable??

[wizard]

I am a limited member of an LLC that owns a building. the managing member has refinanced the building and is planning on distributing the proceeds as a dividend of 10% per year rather than a return of capital. The 10% is a preferred return to the investor ( as per the operating agreement) and a hurdle for the manager. Does this make it a taxable event and if so is this proper?
Thanks for any feedback
David