EDITORIAL: An Unsettling Story About Colorado Metro Districts, Part Six

Image courtesy Coloradans for Metro District Reform.

Read Part One

We are sharing a letter from Pagosa resident Kelly Evans this morning… (which incidentally links back to this editorial series.)

We don’t typically get reader feedback on Daily Post articles. Some news outlets include a ‘comments’ option at the conclusion to their articles and op-columns, to facilitate instant reader feedback. When I designed the Daily Post, I purposely avoided a ‘comments’ feature because

1. I spend enough time researching and writing my editorials, and didn’t want to spend time moderating ‘spam’ or ‘troll’ comments; and

2. I hoped readers would stop and think about what they wanted to write — and maybe even do some research — before submitting comments via email. (You can email us a pagosadailypost@gmail.com)

At any rate, we don’t typically get many comments from our readers, but this particular editorial series has generated more emails, I believe, than any previous editorial series. One of those emails came from John Henderson, who does research for the Coloradans for Metro District Reform. He provided a 19-page ‘Handbook for Residents and City/County on Metro District Reform’, which you can download here.

He also sent me a link to a video presentation that explains the ethical problems — we might even call them criminal actions — inherent in the way Colorado developers have co-opted Colorado special district law to greatly increase the profits they extract when creating a new subdivision.

Amazingly enough, those profits flow to the developers in the form of (sometimes perpetual) property taxes, laid on top of the purchase price for the vacant subdivision parcels.

You can view the one-hour video here.

The Handbook begins like this:

On November 5, 2013, 5 employees and family members of a developer “voted” to give the developer authority to impose debt on future homebuyers of $21.6 billion.

The developer also “voted” to eliminate the right of those future homebuyers to vote on actually imposing that authorized debt.

Once residents began to arrive, the developer issued bond debt of over $139 million. The same developer used proceeds from a 2019 bond issue of $35 million to write himself a check in 2019 for $27 million to repay part of his “advances”.

Now the homebuyers owe more to pay the developers’ debts than the assessed value of their homes. The debt is 137% of the assessed value of their homes. (According to the Colorado Department of Local Affairs 2006 publication, concerns about financial health of the community begin at 20%.)

The residents are paying 170.9 mills in total property taxes. 89.1 mills pays for developer debt… 52% of their total property tax bill.  Residents pay more in taxes for developer debt than they do schools, county, city, fire, library and storm drainage taxes combined.

And the homebuyers didn’t have clue. Neither did the county in approving the creation of this developer-run government.

There are almost 2000 metro districts in Colorado exhibiting the same abuses — with different numbers — but always the same abuses.

How did this happen?

Colorado developers quickly abandoned the traditional model of financing subdivision development when they discovered metro districts and amended the law in 1982 to pave the way for risk-free development. Very expensive to the homebuyer… Extraordinarily profitable to the developer.

At a recent symposium sponsored by ULI, one industry spokesperson explained that the sole reason for metro districts was to repay the developer money he used to pay for developing raw land into a subdivision. Another industry spokesperson explained that amending the law to provide for these metro districts shifted the risk of failed development from the developer to the residents.

Along the way, the state legislature and development community abandoned simple constitutional truths we cherish — including the right to vote on taxes, and the checks and balances vital to the integrity of self government…

After receiving the information from Mr. Henderson, and his offer to help advise the Pagosa Springs Town Council and the Town Planning Commission, I emailed him a note.

Thanks John.  If I sense an interest from the Town leadership, I will certainly recommend a presentation by you. To be honest, I hope the Town Council ultimately decides to let development occur as it will, without any allowance whatsoever for developer-created metro districts.

I’ve written about a lot of apparent corruption in Pagosa Springs and in Colorado, but this legally-allowed but unethical, immoral process probably takes the cake.
My heart goes out to the residents in The Meadows.
Mr. Henderson had been interviewed in a CBS story about The Meadows subdivision in Castle Rock… the poster child, it would appear, for the unethical way metro districts are being used in Colorado. I had a chance to speak yesterday with Olivia Young, the journalist who has been following the attempts by the subdivision homeowners to finally take control of the government entity they’ve been paying property taxes to since 1989.

According to the Meadows metro districts, they issued $70 million in bonds in 1989 to finance roads and infrastructure in the community. That debt was to be paid by the residents, to the developer, through property taxes.

In 1993, the bonds were restructured when a new developer took over and capped the property tax rate at 35 mills.

According to financial statements, at the end of 2023, the total outstanding bond debt for the districts had ballooned to nearly $434 million. In 2023, the subdivision metro districts — there are multiple districts within the same development — collected nearly $14 million from homeowners in property taxes, plus over $1 million in car registrations. But despite that revenue, the metro district debt increased by more than $20 million that year.

The principal — the original $70 million bonded debt from 1989 — has never been reduced. The remaining $364 million is interest owed. At the rate things are going, the property owners’ debt may soon reach $1 billion.

Does the Pagosa Springs government want to facilitate a system like this, in our rural community?

Read Part Seven, tomorrow…

Bill Hudson

Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can't seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.