The two-story, five-bedroom home just east of Loveland was as sweet as Tlene and Tyler Sterkel dreamed it would be, from the custom finishes in the basement to the granite countertops and the en-suite master bedroom.
Then their first property tax bill arrived. Already on a tight budget, they stared at a bill that had gone from $818 at their closing in 2014 to nearly $3,500 barely a year later, then $4,400 two years after that…
— from “Colorado metro districts and developers create billions in debt, leaving homeowners with soaring tax bills” by journalist David Migoya in the Denver Post, June 2020.
The two boards most involved in land uses and development projects within the Town of Pagosa Springs — the Town Council and the Town Planning Commission — will meet tonight at 5:15pm at Town Hall, to discuss a proposal never before discussed by these two boards in a joint meeting: the creation of new regulations that might allow a developer to establish a metropolitan district within the town limits.
Several metro districts exist within the unincorporated Archuleta County, but metro districts are not currently allowed within the Town of Pagosa Springs boundaries.
The joint meeting will be available via Zoom, if all goes well with the internet connections.
REMOTE PARTICIPATION
A zoom link is made available, however the Town does not and cannot guarantee internet service or online broadcasting. Remote attendance is at the risk of the attendee as the public meeting will continue in person regardless of the Town’s broadcast capability.
Join Zoom Meeting By Computer – https://zoom.us/j/88653351165
Dial by Phone – 1-669-900-6833 US – Meeting ID: 886 5335 1165
The proposal under discussion is related to the possible development of a 100-acre parcel facing Highway 160, across from the City Market shopping center, and currently bearing the name ‘Pagosa West’.
The discussion is also related to a common American business practice: using other people’s money to make oneself richer.
On April 15, theTown Council showed some interest in idea of allowing metro, districts within the town’s boundaries. But the only developer pushing this idea, at the moment, is ArenaLabs LLC, owned by the Montrose-based Dragoo family. At the April 15 meeting, Development Director James Dickhoff explained that a ‘Pagosa West’ metro district would be used as a “financing tool” for the multi-phase subdivision project.
Sounds harmless, right?
Here’s the description of ‘Pagosa West’ as briefly summarized in the 112-page ‘Housing Needs Assessment’ recently adopted by the Town Council, and also adopted by the Archuleta Board of County Commissioners.
Pagosa West Subdivision
Located at 100 S. Pagosa Blvd, is a 100-acre major subdivision proposing a mix of residential and commercial, located in the uptown core area, walkable to businesses, services and trails. Approximately 160 multifamily apartments are planned with Pagosa Peaks Apartment 88 units to break ground in late 2025, serving 60%-140% of AMI with a project average under 90% of AMI. An additional 148 Single family home lots included with potential to deed restrict 10% for workforce ownership housing units. DOLA More Housing Now Grant awarded to Town for public infrastructure to serve the Pagosa Springs apartments.
Building a new suburban mixed-use development isn’t easy in our inflation-prone times, and could become even more difficult if the Trump administration persists in a trade war with the rest of the world. So a clever developer might want to burden someone else with his development costs, and a town government looking to promote ‘growth’ might want to cooperate, to help him do just that.
We kicked off this editorial with a quote from a Denver Post article that discusses what can go terribly wrong with metro districts, and we’ll get into some of those frightening details. But first, a quick overview. What is a metro district?
A metropolitan district is a particular type of ‘special district’ that serves a defined geographical area such as, for example, ‘Pagosa West’.
Colorado allows for the creation of various types of ‘special districts’ that operate independently of town, county, and state government. These special districts are allowed to collect property taxes to help fund their operations, and have independent boards of directors who decide how those tax revenues will be spent.
Here in Archuleta County, the following are special districts, each with its own ‘service plan’ and constituency:
- Pagosa Area Water and Sanitation District
- Upper San Juan Health Service District (DBA Pagosa Springs Medical Center)
- Pagosa Fire Protection District
- Upper San Juan Library District
- San Juan Water Conservancy District
We also have several metro districts in Archuleta County, all of them located outside the town limits.
- Aspen Springs Metro District
- Colorado Timber Ridge Metro District
- Loma Linda Metro District
- Alpha Rock Ridge Metro District
- San Juan River Village Metro District
- Piedra Park Metro District
Most of these local metro districts use the property tax revenues to maintain their subdivision roads, but a metro district must perform at least two public purposes, which might include water treatment, wastewater treatment, parks, solid waste, or another appropriate public service.
The metro districts impose a property tax mill levy, with voter approval, to pay for the necessary maintenance. Here in Archuleta County, Aspen Springs Metro District pays the highest mill levy — about 15 mills — and Piedra Park pays the lowest — about 7 mills.
Back in the 1970s, and 1980s, when subdivisions were popping up like mushrooms all over Archuleta County, the developers typically financed the new subdivision infrastructure out of their own pockets, but sometimes they created a metro district to finance the maintenance of the roads and other infrastructure. In other cases, the subdivision residents themselves created the metro district at a later date, by popular vote.
Road maintenance is ongoing, of course, so the mill levy never goes away.
But something very different has been going on in Colorado over the past 20 years. Developers have been creating metro districts to finance the actual subdivision development, instead of paying for the development out of pocket. In other words, the developer takes out a massive bonded debt, with the promise that the future homeowners and businesses within the subdivision will pay off the debt with their metro district mill levy.
This approach has gone horribly wrong in some Colorado subdivisions. Horribly wrong for the new homeowners, that is.
A Denver Post investigation into the inner workings of the state’s 1,800 metro districts found a governmental system that operates without the usual oversight of voters, without the usual restrictions on conflicts of interest, and without the usual checks and balances to ensure communities won’t spiral into insolvency.
Read Part Two, tomorrow…