Metro District Education Coalition: FAQs on Colorado’s Metro Districts

How many people in Colorado live in metro districts?

With over 2,200 metro districts in Colorado, millions of individuals are current, future, or past residents of a metro district.

Why Are there so many metro districts in Colorado?

There are several reasons why metro districts are prevalent in Colorado.

#1: Metro districts are a cost-efficient way to build housing developments. Colorado has experienced high demand for housing for decades and metro districts use low interest financing to build the public infrastructure and amenities needed to support large-scale residential communities with a diversity of housing.

‍#2: TABOR makes it difficult for cities and towns to build infrastructure. To pay for infrastructure (the new streets, sidewalks, water systems, sewer lines, etc.) needed to support new neighborhoods, cities would have to raise taxes on all of their residents – and that’s not feasible or fair.

‍#3: Growth pays its own way. Only residents within the boundary of a metro district pay higher property taxes – a system that ensures their non-metro district neighbors are not unduly burdened.

‍#4: Costs are spread out, keeping home prices lower. Residents of a metro district pay their share in the cost of the extra amenities and critical infrastructure over time through annual property taxes. This keeps their purchase price lower. If residents were to pay for these costs up front, this would result in a higher purchase price of $30,000 or more.

How are metro districts regulated?

Just like any form of government, it’s critical to have checks and balances – and metro districts are no different. They’ve been operating in Colorado under a state regulatory framework since 1949, so there’s a lot of history. And as they’ve become the public financing tool of choice to build residential communities, it’s important that all stakeholders involved have insight to how they operate. The state regulates the framework: Under Title 32, Article 1 of the Colorado Revised Statutes, metro districts are independent governmental entities formed to finance, design, acquire, install, construct, operate and/or maintain public improvements that are not otherwise being provided.

Only public infrastructure is allowed to be constructed by law.
State law requires notice of purchasing a home in a metro district during various stages of the real estate transaction.

Local governments set limits and can add any additional requirements in their agreement with a new metro district when it’s formed. For example:

Property tax mill levies and maximum terms for debt are capped by the city or county.
Additional disclosures for homebuyers.

How do metro districts help address Colorado’s housing shortage?

The state demographer has found that Colorado needs to build at least 500,000 more places for people to live between now and 2030. Well-planned communities full of amenities people desire are the most effective way to begin to close the housing gap. And it’s metro districts that finance, build, and manage all the critical infrastructure needed (streets, sidewalks, water systems, sewer lines, etc) to support a new neighborhood.

Why aren’t local governments building housing and infrastructure?

Local governments provide the framework for housing to be built in the form of policies, zoning code, land use planning, permitting, inspections, etc. But it’s property owners, developers, and builders that actually construct housing and neighborhoods.

And it takes millions of dollars in infrastructure to build a new neighborhood. For decades, local governments have turned to metro districts as the financing mechanism of choice because they don’t have the funding to pay for it all. The only alternatives are to build the cost into the purchase price of the home, which can price many people out of the market or put a question on the ballot to raise taxes for the entire city – and that’s not a popular option among property owners.

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Who assumes the risk if the district cannot repay the debt?

The investor that purchases the bond assumes the risk. The local jurisdiction that has oversight of the metro district builds in protections for homeowners to limit the mill levies and the total debt amount.

Who is MDEC?

The Metro District Education Coalition is a nonprofit, nonpartisan network of financial, legal, and technical experts who provide subject matter expertise on metro districts. We promote improved transparency and accountability on behalf of homeowners and advocate for best practices in the formation and operations of metro districts.

What does MDEC do?

Colorado now has more than 2,200 metro districts, each of which is locally controlled and independent. MDEC was created to identify and catalog best practices across those metro districts, and to work with policy-makers, legislators, homeowners, and real estate brokers to make sure that people understand the benefits, and have the resources to make metro districts operate as successfully as they can.

What is MDEC’s impact?

Because of MDEC, each metro district in Colorado is required to meet enhanced requirements for public disclosures and transparency. This includes a mandated public-facing website, an annual report, disclosures/notice to residents prior to and during the home buying process, and public notices to every taxpayer within a metro district on upcoming board elections.

Are there required disclosures about metro districts for homebuyers?

In Colorado there are a number of disclosures that happen at various times throughout the homebuying process. To see a full list of the disclosures that are required by law, click here.

FAQs

Below are some of the most common questions asked about Metro Districts.

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