At a Dec. 19 Pagosa Springs Town Council meeting, Development Director James Dickhoff introduced the idea of allowing metropolitan districts within the town’s limits.
A metropolitan district, also known as a metro district, is a special-purpose district allowed in the state under the Colorado Special District Act.
An agenda document on the matter states that a “metro district has the ability to provide any two or more services within its boundaries,” including street improvements, water facilities and services, sanitation facilities and services, and park and recreation facilities.
“Throughout Colorado, developers establish metro districts in order to issue tax-exempt bonds to finance public infrastructure and amenities necessary to support a new master planned community. Subsequently, the new community’s future residents will pay for the infrastructure through property taxes,” the document states.
Currently, the town has no metro districts within its boundaries, but Archuleta County has several within its boundaries, Dickhoff explained, adding that, in the future, the town should decide if it wants to allow or prohibit metro districts within its boundaries.
Dickhoff pointed to a few examples of metro districts within the county, saying that Alpha Rock Ridge operated as one, “mainly for maintaining roads,” and that Aspen Springs and Timber Ridge are other examples of metro districts.
He added that metro districts “are becoming more and more common,” and can serve as an “essential tool” to serve growth that town resources can’t provide.
He explained that the purpose of such districts “is really to fund and oversee, and sometimes operate and maintain, critical public infrastructure necessary for new residential and commercial developments.”
If the council decided to allow metro districts, the best approach would be to develop a clear policy, setting the ground rules for any development proposing such a district, he added.
A metro district is required to abide by the policies set for metro districts within the jurisdiction where it resides, but it would operate as an independent unit of government that exists separately from the town or county, according to the document.
“Much like Town Council, the metro district board is accountable to the taxpayers in the metro district and must follow similar requirements,” the document states.
A metro district, for example, is required to conduct elections for its governing board, hold public meetings and keep records and minutes of these meetings, adopt annual budgets, submit to annual financial audits and comply with the Taxpayer’ Bill of Rights, also known as TABOR.
“Accordingly, the Town would not assume any of the rights or responsibilities of the metro districts within its boundaries. The Colorado Department of Local Affairs is the agency that regulates metro district activities, and it maintains a Special District Repository of individual metro district documents,” the document states.
Dickhoff told the council that he could bring the topic up again in January 2025, when Town Attorney Bob Cole could attend the meeting.
He explained that Cole has a lot of experience with metro districts and could offer the council important insight into the positives and negatives of such special districts.
He said that typically metro districts are formed “in the very early stages of development” as a means of paying for infrastructure.
He explained that a would-be metro district would need to submit a detailed service plan for the council’s consideration and, if approved, that plan would serve as the district’s “governing document, similar to a town charter.”
“So, it’s very specific to the district boundaries within, and it’s a governing document for those districts,” he said, adding that a service plan would set “the amount of debt that can be issued, set maximum levels of taxation and a maximum time period over which a tax can be imposed, among other things.”
Once the council approves a service plan for a metro district, the property owners would then “file a petition for organization with the district court,” Dickhoff said.
“The court would hold a public hearing on behalf of the proposed metro district, and if the majority of property owners within that district approve,” the court would then order the organization of that metro district “and, at that time, a board is formed who will then make the decisions and manage the metro district,” Dickhoff said.
He then walked the council through some of the “pros and cons” of metro districts.
He noted that some of the positives are the promotion of development and the ability to “take on tax-exempt bonds, which lowers the cost of infrastructure.”
He said that in this scenario “development pays for its own way, because it only impacts the properties within this development, and it may provide higher grade amenities” than the town can provide, “whether it’s more parks, or recreation facilities within that subdivision.”
Some of the negatives that he listed were higher property taxes to “pay down those loans,” adding that “finance costs can shift to the owners after the developer is out of the picture.”
He also noted that “it can create confusion for property owners,” because “some property owners are not aware that they are buying into a metro district until they get to the table at the closing” and then find out about “the additional property taxes.”
Dickhoff explained that the council could decide if it wants to allow all types of metro districts, allow only certain types or restrict all metro districts within town limits.
“Some are commercial only. Some are residential only. You can certainly consider both, mixed developments, for example, versus residential,” he said, adding that if the council chose to allow metro districts that it should “outline various elements” allowed in a district’s service plan that would align with “the town council’s goals and priorities.”
Dickhoff’s recommendation to the council was not to wait until a specific development applies for metro district status, but to, instead, take preliminary action on the issue before any specific development proposal comes to the table.
The council should look at “developing a policy” that would meet its “goals and objectives,” he recommended.
“We can really guide how we would approve metro districts. What would be acceptable? How are they formed? What would they fund? We could put caps and limits on some of the taxation and borrowing mechanisms that they can pursue,” he said.
The “potential pitfalls” of metro districts could be avoided, Dickhoff suggested, if the council spearheaded a policy with “guardrails,” structuring a policy “to avoid those pitfalls.”
Council member Brooks Lindner asked if a metro district within town limits would be required to abide by the town’s Land Use and Development Code (LUDC).
Dickhoff answered, “They would certainly have to follow our code for development, but they could add more-stringent codes on top of that, just like [a homeowners association].”
derek@pagosasun.com
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