On April 15, the Pagosa Springs Town Council showed receptiveness to the idea of allowing metropolitan, or metro, districts within the town’s boundaries.
Development Director James Dickhoff explained that the creation of a metro district is being pursued by the developers of the proposed Pagosa West subdivision, across the highway from City Market, as a “financing tool” for the multiple phase subdivision project.
An agenda document describes Pagosa West as “a residential and mixed-use commercial development located in Pagosa Springs, situated on a +/- 100-acre site along the south frontage of US Highway 160, between South Pagosa Blvd and Pinon Causeway.”
The applicant, listed as Montrose-based Arena Labs LLC, represented at several public meetings by David and Heidi Dragoo, proposes “a multi-phased subdivision development with full build-out occurring over the next 10 plus years,” the document states.
An 88-unit workforce housing apartment complex is being proposed on a section called Lot R, within the Mixed-Use Residential section of the subdivision.
Dickhoff explained that there was some urgency for the council to decide if it wants to allow metro districts — and, if so, decide what types of metro districts to allow — in order to give the developers enough time to go through the stages of the legal process before November’s election.
Town Attorney Bob Cole was on hand to guide the council through the weeds of such districts, explaining that metro districts are considered special districts in Colorado.
They are a type of local government entity that can operate within a jurisdiction, such as a town, and they provide specific services, such as road maintenance, parks, water and sanitation, and have authority to levy taxes (with voter approval) to pay for such services, Cole explained.
They have become one of the primary financial tools for the construction of public improvements in Colorado, and can finance and construct public improvements that county or town governments are unable or unwilling to provide, Cole noted.
A presentation shown states that there are approximately 2,473 metro districts in Colorado currently.
Several metro districts exist within Archuleta County (Alpha Rock Ridge, Aspen Springs and Timber Ridge, for example), but there are no such districts currently within the town boundaries.
Dickhoff explained that metro districts are a tool that can help make it easier to finance developments that are “hard to make pencil,” such as workforce housing developments.
Mayor Shari Pierce asked about the crunched timeline for the legal process, considering that the Pagosa West developers would need to make necessary court filings before November’s election.
Cole explained that the first step would be for the council to decide if it wants to allow metro districts or not, and then decide if it wants to put limitations on such districts, creating a clear policy or blueprint for metro districts to follow that matches the council’s goals and plans.
The developer would then draft a “service plan” that would come before the council for approval or rejection in a public hearing, he stated.
If the service plan is approved by the council, the developer would then need to file a petition to organize a metro district with the district court. The court would then hold a public hearing and order an election for the organization of the metro district, he added.
If a majority of the metro district property owners vote to organize a district, then the court would issue an order and decree organizing the district, which is recorded against all property within the district, allowing property taxes to be collected by the district, he explained.
If this couldn’t all get done by this November, the developers would need to wait until November 2026 or May 2027, he noted.
“That’s one of the challenges,” Cole explained.
He also explained that once a metro district is ordered and decreed by the court, “it’s outside of the town’s hands,” emphasizing the importance for the town to set limitations upfront on what is allowed and what is not allowed before any metro districts are created.
“The town can impose requirements and protections that are consistent with your goals and your plans,” Cole explained.
Examples of limitations that municipalities can impose on metro districts include capping the mill levy and amount of debt a district can incur, as well as limiting or removing the power of eminent domain, limiting boundaries and types of grants districts can pursue, he explained.
He then walked the council through a long list of pros and cons for municipalities with regard to allowing metro districts.
Ultimately, Cole concluded that metro districts could be a useful tool for the town to spur development and would be a positive thing as long as the town has the foresight to put in place a clear policy with proper limitations.
Pierce wanted to gauge the council’s appetite for allowing metro districts, with the majority expressing that they were open to the idea, but with some saying that they needed more time to weigh the pros and cons and the possible limitations the town could impose.
Council member Gary Williams expressed that when the idea was first brought to the council in December 2024 he was against it because he thought that the town “would lose control over development,” but indicated that he might be changing his tune.
He asked what town staff thought about the idea.
Town Manager David Harris said, “I think we need more tools in our toolbox,” generally expressing his favor for allowing them.
“We’d be foolish” not to add this tool, he said.
Dickhoff stated that he likes the idea, but with certain restrictions imposed by the town, adding that he thinks metro districts are most appropriate for mixed-use areas with commercial development in mind.
“You don’t really want to burden homeowners with that extra tax burden. You really want to generate it mostly with commercial. That’s where a commercial district is really important, so a mixed-use district makes a lot of sense for me,” he said.
Town Clerk April Hessman suggested that she thinks it is “a very beneficial way” for a developer to come in, but wondered if “we have flexibility” when drafting limitations, so that “we won’t hinder a developer” with different needs than another developer.
Williams noted that his gut was to trust town staff on this issue.
Council member Mat deGraaf suggested that the council should include the town’s planning commission in the conversation about metro districts, and it was generally agreed to bring this before both entities at a joint work session on April 29.
deGraaf also expressed that he’d like to craft the town’s policy around metro districts to include housing as part of any phase-one development since workers in the commercial spaces will need somewhere to live.
He voiced concern about developments that were “commercial upfront, and then maybe 12 years later we will get a couple of apartments,” urging “some sort of housing requirement in phase one.”
Cole explained that what the council and planning commission would really need to dive into at the upcoming work session is crafting a model service plan or policy that meets the town’s goals and objectives, and that a housing requirement could be part of that.
He added this is where any limitations on metro districts would be drafted, and urged the council to study up on Title 22 of the sample ordinance drafted for the council’s consideration.
Pierce asked for a show of hands “if you’re comfortable moving forward with metros?”
Some said that they were still on the fence, but wanted to move forward to another work session that included the planning commission.
Then emerged a general consensus that the council wanted to “utilize metro districts to achieve the town’s goals and priorities for growth and development,” as Pierce stated, with Cole saying, “Let us take that and do a little modification to this sample” after the work session so the policy would match the desires of the council.
The allowance of metro districts within town boundaries and the approval of a model service plan policy for the town to follow would need to be passed in ordinance form before a developer could file a petition in district court for a special district, Cole explained.
derek@pagosasun.com
