This story by Robert Davis appeared on Colorado Newsline on February 14, 2025
Colorado’s state auditor has recommended the Department of Local Affairs (DOLA) take a closer look at 21 of the state’s metro districts because of self-reported financial issues that could make it difficult for them to pay back the debts they’ve incurred.
The State Auditor’s Office measured the financial health of 1,598 metro districts against 11 criteria, including their debt-to-income levels and the values of properties contained in their boundaries. In all, there are 2,337 active metro districts in Colorado, according to DOLA. The December audit only measured the health of those formed after July 1, 1991, were active between 2020 and 2022, and those that submitted financial reports to DOLA.
“While these watch indicators alone may not indicate fiscal stress, we believe that they may help to anticipate potential problems in the future,” the audit says.
State law requires metro districts to report changes to their jurisdictional boundaries, construction activity, intergovernmental agreements, and financial health to DOLA. However, many metro districts file exemption forms for their financial reports.
Metro districts that self-reported having difficulty repaying their debts include the Conifer Metro District in Jefferson County, the Lowell Metro District in Colorado Springs, and the Murphy Creek Metro District in Aurora. According to their latest audited financial statements, the Conifer district had more than $41.6 million in debt compared to just $3.2 million in assets. The Lowell district had $11.8 million in debt compared to just $370,000 in assets, and Murphy Creek had $32 million in debt compared to $3.7 million in revenues.
Another 16 metro districts had four or more warning indicators that “prompt the need for further examination,” according to the audit. One of the most common warning indicators was low financial reserve levels, with 13 of the 16 metro districts triggering this indicator. Some of the districts that triggered that indicator were the 9th Ave. Metro District 1 in Denver, Flatiron Meadows Metro District in Boulder, and the Mountain Sky Metro District in Weld County.
The audit found that debt repayment obligations were also an area of concern for 10 of the 16 metro districts with the most warning indicators. Seven of the 10 metro districts had debt obligations ranging between $1.1 million and $30.1 million, although none had repayment obligations during the three-year review period. Only one district had repayments starting in 2025.
Calls for reform
Colorado has relied heavily on metro districts to unlock financing for real estate development since 2000. Metro districts are special-purpose governments that can levy additional taxes on homeowners to finance public projects like street, transportation, and water infrastructure. Outside of increasing property taxes, metro districts can raise funds by selling bonds, collecting developer fees, and signing revenue-sharing agreements with other districts.
According to the Colorado Association of Home Builders, the idea is to make new developments “pay their own way” instead of relying on municipal funding for construction and maintenance.
The ability of metro districts to levy additional fees and taxes has been a point of contention between homeowners and the districts over the last several years. The General Assembly has passed bills that cap property tax increases in metro districts and prevent them from foreclosing on a home for unpaid fees. But other reform measures, like prohibiting metro districts from issuing debt to members of their board of directors and giving the Independent Ethics Commission authority to investigate metro districts, have stalled.
A 2019 investigation by the Denver Post revealed that state laws allow metro districts to finance billions in debt and shovel the liability onto homeowners and businesses. There are also no laws that prevent developers from appointing themselves to run metro districts, purchasing the district’s debt, and then collecting compounding interest payments for decades. This system has saddled thousands of homeowners with additional property taxes and caused some metro districts to be financially underwater.
Despite the documented issues that exist for metro districts, calls for reform have been relatively mixed. Advocacy groups like Coloradans for Metro District Reform and local officials appear to favor incremental reform. However, some residents advocate more aggressive measures.
“Sometimes the only answer to responsible development is to honestly tell people the cost,” Karen Gordey, a Lakewood resident who runs the news opinion website Lakewood Informer, told Colorado Newsline in an email. “Go back to traditional models where people buy the house with the infrastructure cost included so that people don’t get stuck and districts don’t fail. If it’s too expensive for the end client, don’t start building until market conditions are more favorable. Other states still do it this way. It is possible.”
“I don’t think we need to reinvent the wheel entirely,” Adams County Commissioner Steve O’Dorisio said in a report concerning metro district reforms. “And I don’t think we need to throw it out either, the baby with the bathwater. I think we’ve effectively identified how we can better leverage some of the existing tools and techniques that we already have.”
Aerotropolis metro districts
Over the next several years, the thousands of acres of vacant land surrounding Denver International Airport could become a sprawling aerotropolis — a city built around a major airport. The overall financial health of Colorado’s metro districts appears to raise questions about the future impact of the Colorado Aerotropolis on local homeowners and businesses.
Large construction firms like AECOM, JHL Constructors, and Kiewit Infrastructure are already building visual models, grading the land for future development, and designing future transportation systems for the site. The development’s goal is to attract forward-looking industries like AI, advanced manufacturing companies, and agricultural and health care innovators to Colorado.
About 12,000 residential units across eight villages are planned to be built at the aerotropolis, along with 3 to 4 million square feet of commercial and retail space, Colorado Construction and Design reported. Given its ambitious plans to attract new businesses and residents, the aerotropolis will be one of Colorado’s most consequential developments in decades and stands to reshape the area surrounding DIA.
Eight metropolitan districts are contributing to the financing of the aerotropolis development. Other districts are responsible for coordinating infrastructure and transportation improvements.
A spokesperson for the state auditor confirmed that none of the metro districts associated with the aerotropolis development have financial indicators that would lead the office to question their current financial viability.
Six metro districts involved in the aerotropolis development have voter-authorized debt exceeding $50 billion each. The Aerotropolis Area Coordinating Metro District holds the largest authorized but unissued debt, totaling $104 billion.
While issuing debt is an attractive option for metro districts because it can attract significant amounts of capital, it can also pose significant financial risks. For instance, the audit noted a “substantial doubt” about the ability of the Lowell Metropolitan District in Colorado Springs to continue operating because property values have not kept up with the accrued interest from its bond sales.
Homeowners often face increased property taxes when metro districts issue bonds, which increase the monthly costs of owning homes in the districts. For instance, homeowners in the Lowell Metro District pay a little more than 58 mills in property tax to support the district’s debt, which is among the highest in El Paso County, according to the local assessor’s office. Each “mill” equates to $1 of tax per $1,000 of a property’s assessed value.