The developer for the proposed Pagosa West project (100 acres facing Highway 160, across from City Market) is urging the Town of Pagosa to allow Metro Districts to operate within the Town’s boundaries.
A Metro District is a Special District that qualifies as a form of local government in Colorado. That means it has the taxing powers granted to these government entities. So, like our Fire District, School District and others, it can set mill levies which are collected as property taxes — additional property taxes levied on property owners within the Metro District, potentially resulting in significantly higher taxes.
A Metro District is different in one major respect. On undeveloped property, the developer is the only property owner. This creates a situation where the developer can petition the County or Town to allow him to form a Metro District. If granted, the developer can set up a Board comprised of himself and four of his closest friends/family members.
This then gives the developer the ability to obtain lower interest, tax-exempt bonds as a government entity and set mill levies to pay for those bonds—placing this obligation on future property owners who do not have any input or recourse. Additionally, as a government entity, the developer pays no taxes on materials and services it purchases to develop the property.
In theory, with low interest bonds and no taxes to pay, the cost of development is lower, but those savings do not have to be passed on to future owners of the property. In fact, historically, property owners in Metro Districts pay higher taxes than their neighbors in a subdivision that does not operate as a Metro District. The difference in savings typically goes to the developer who has taken no risk but reaps the rewards.
To make matters worse, a developer who forms a Metro District can use his Board to vote to be released from TABOR restrictions which then can increase debt authority and set interest rates between 12-18% on bond rates for up to 20 years!
These abuses can and do occur in Colorado. While there are ways to curb these abuses, it requires a savvy, well-informed local government to either prohibit Metro Districts outright or place serious restrictions on them.
The Town Council and Town Planning Commission have received guidance from the Town Attorney, Bob Cole, who has a background in developing Metro Districts. Before the Town votes on whether to permit Metro Districts within Town limits, wouldn’t it be prudent to hear from other experts who have suffered the abuses of Metro Districts? Such an expert with legal and public planning experience has offered to provide the “other side of the story” to the Town Council and Planning Commission at no cost. This is potentially one of the most consequential votes our local government will be making for future development projects in Pagosa. I urge them to seek public input and to hear from other experts.
Let’s take the time to do it right.
Sharon Carter
Pagosa Springs, CO