While researching the impacts of metro districts, I came across a website hosted by MetroDistrictReform.org, a political group pushing to reform the laws controlling how metro districts operate in Colorado.
I assume some of the group’s organizers have personally suffered financial harm from metro district practices.
On the home page were links to news sources related to the effects of metro districts, and, to my surprise, one of those links led to a 2023 article published in the Pagosa Daily Post.
Colorado Subdivisions Drowning in Debt
We had republished that article, written by Ben Abramson, after it originally appeared on StrongTowns.org.
Mr. Abramson noted:
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.
I sent the link to that 2020 Denver Post article to some of the Town Council members and Town Planning Commission members on Monday. For their information.
As mentioned in Part One, the Pagosa Springs Town Council and its appointed advisory board, the Town Planning Commission, met in a joint work session yesterday evening, Tuesday April 29, to discuss the request from a developer group — ArenaLabs LLC — to begin allowing subdivision developers to create metropolitan districts within the town limits.
Metro districts are currently not allowed within the town limits. Perhaps for good reasons.
For one thing, a metro district would create an additional “layer” of government and taxation within a new subdivision such as the proposed ‘Pagosa West’ subdivision. Some might argue, for instance, that we already have enough layers of government and taxation in our community.
Some might also argue that we have enough government debt. I might even make that argument myself — while acknowledging that, since I’ve served on the Pagosa Area Water and Sanitation District (PAWSD) board of directors, the board has authorized about $50 million in new debt, for water and wastewater upgrades… debt that will have to be paid off with customer fees.
Could some of that PAWSD debt be paid by a large new subdivision, such as the proposed 100-acre ‘Pagosa West’ project adjacent to the Pagosa Springs Medical Center? Probably so.
But would the overall impact of yet another suburban subdivision benefit a community struggling with low wages and outrageous housing costs? Maybe not.
Those questions play into the same dynamic discussed by Strong Towns founder Chuck Marohn in yesterday’s op-ed: “The Opposite of ‘Strong’ Isn’t ‘Weak’… It’s ‘Dependent’.” When a government agency goes into debt, they often become dependent upon ‘growth’ to make the debt payments. Or else, they may become dependent on state and federal grants.
Or on higher taxes.
As 2025 is slowly unfolding, we’re realizing the dangers inherent in depending on federal grants, which can apparently disappear with the stroke of a pen. We’re also hearing about a proposed new sales tax to fund downtown sewer repairs, a proposed new property tax to fund brand new, replacement school buildings, and a new multi-million-dollar County administration building. And maybe a tax increase for the Pagosa Springs Medical Center.
As mentioned, the three-hour work session at Town Hall last night focused on one specific topic. Does the Town Council want to change our local laws to allow “metropolitan districts” with the town limits?
Although the discussion remained fairly generalized, we all knew why this idea was under discussion. The Montrose-based Dragoo family, acting as ArenaLabs LLC, has proposed to develop a mixed-use, partly-commercial-partly-residential subdivision and would like to use the ‘tool’ known as a ‘metro district’ to allow them to acquire tax-exempt bonds to pay for the streets and other subdivision infrastructure.
Because a metro district is a form of ‘government’ in Colorado, the district (meaning, initially, the developer) can benefit from tax-exempt bonds, which typically bear a lower interest rate than other types of financing.
As far as I know, no previous subdivision built in Archuleta County has used a metro district scheme to finance tax-exempt bonds. But the scheme is being used all around Colorado.
I started this editorial series yesterday with a quote from a 2020 article by David Migoya in the Denver Post: “Colorado metro districts and developers create billions in debt, leaving homeowners with soaring tax bills”. His article discussed some of the unsettling financial surprises experienced by home buyers in Colorado, when unscrupulous developers use ‘metro districts’ to fund their projects.
“We were suddenly buried in property taxes we couldn’t afford,” Tlene Sterkel said. “The mortgage on the house we could afford just fine. But the taxes murdered us. We never saw it coming.”
Their $312,000 home was one of more than 1,900 planned for a community known as Thompson River Ranch, a 650-acre development on the edge of Johnstown. About 650 of those houses are finished today.
Nearly half the Sterkels’ tax bill — and the reason it had shot up so quickly — went to Thompson Crossing Metropolitan District No. 4, the quasi-government metro district that controls the area where they purchased. The district’s tax levy was the only one to increase each year they were in their home…
When they closed on the purchase of their new house in Thompson River Ranch, the Sterkels’ property tax bill had been $818. Within two years, their tax bill had increased to $4,400. They ultimately lost their home to foreclosure.
Colorado law permits developers to elect themselves to serve on a district’s board of directors, then use that position to approve tens of millions of dollars in public financing for their businesses, and leverage the property taxes on homes they haven’t yet built. No regulations stop these developer-controlled boards from approving arrangements that are financially advantageous to their business, allowing them to finance overly ambitious plans without fear of liability, knowing future homeowners ultimately shoulder the burden.
Why might the Town of Pagosa Springs want to change its laws to potentially allow this sort of thing to happen here?
That’s what I was curious to hear about last night.
What I heard, instead, was a seemingly interminable explanation from the Town’s legal counsel, Bob Cole, about certain details and subtle nuances that could be written into a future metro district policy.
I’m not saying that Mr. Cole was purposely trying to confuse the Council and Planning Commission members with details, while basically ignoring the central question. He’s a lawyer, and lawyers are typically fascinated by confusing details.
Finally, near the end of the joint meeting, we heard Planning Commission member Mark Weiler begin to open the discussion to the most crucial question: why would the Town want to allow a problematic form of government that can end up doubling the property tax burdens for homeowners?
Read Part Three, tomorrow…