The Town of Pagosa Springs is considering whether to allow Metro Districts within Township borders, and will be holding a work session on this topic tomorrow, Thursday May 29, at 5pm at Town Hall.
The primary purpose of Metro Districts is to provide a financial mechanism to construct or maintain public improvements that are otherwise not being provided. As a reminder, Metro Districts are a local government entity with all of the powers granted to other Special Districts. like the Fire District or the School District, including the power to levy taxes and issue bonds. They are popular in Colorado as a means for a developer to obtain funding for the construction and operation of infrastructure.
Because the developer is the only property owner in the beginning, he can form his own Board of Directors and obtain tax-exempt bonds at low interest rates, while obligating future property owners to pay off the bonds at much higher rates.
If Metro Districts exist for the purpose of public improvements, what exactly constitutes a public improvement? When a fire district or school district puts forth a ballot measure to improve their service, the entire community served by it potentially receives the benefit. The decision to fund is made through a community-wide ballot initiative.
In a Metro District, the supposed public improvement, usually infrastructure in undeveloped land, is not approved by future property owners, but by the Metro District Board who, at the time of its formation, consists of the developer and his family and friends.
And the public benefit? Is there one? And if so, to whom does the benefit accrue? The answer: primarily the developer.
Thus, Colorado law permits a local government entity to enrich developers over the interests of future property owners and the public at large.
The Town of Pagosa wants — and some would argue, needs — development, especially that which would make housing more affordable. However, without important limitations on Metro Districts, the cost of housing development will be higher, not lower. The tax advantages can be captured by the developer but not necessarily passed on to future property owners.
With proper restrictions, however, the developer can receive a fair profit and future property owners avoid excessive taxation without representation. Here are some of the restrictions recommended by the Coloradoans for Metro District Reform for the Town to consider:
Require verifiable documentation of the cost of infrastructure.
1. Require review and approval of ballot issues and agreements until board of directors is 100% actual residents with no affiliation to the developer.
2. Provide the debt to be limited to one half the verifiable cost of infrastructure. If more is needed, modify service plan and prove with verifiable documentation how the money was spent.
3. Prohibit any mill levy higher than 35 mills total.
4. Provide that the creation of a Metro District be conditioned upon Town approval of its financial management until the Board is 100% actual resident taxpayers.
5. Provide that every potential homebuyer receive full disclosure at the time of first inquiry, at the time an offer is made, and at the closing.
With restrictions like these in place, everyone wins and abuse can be thwarted.
Sharon Carter
Pagosa Springs, CO
EDITOR’S NOTE: A Zoom link to the Town work session will be 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/86981697102
Dial by Phone – 1-669-900-6833 US – Meeting ID: 869 8169 7102