HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/24/2017 - METROPOLITAN DISTRICT POLICY CHANGES (PART ONE)DATE:
STAFF:
October 24, 2017
Patrick Rowe, Redevelopment Program Coordinator
Josh Birks, Economic Health Director
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Metropolitan District Policy Changes. (Part One)
EXECUTIVE SUMMARY
The purpose of this item is to review and consider changes to the City policy concerning Service Plans for Title 32
Metropolitan (Metro) Districts to better align City policy with desired outcomes. This is part one of a two part
discussion. Part One will emphasize how metro districts function and how other communities are utilizing metro
districts.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Staff is seeking general direction from Council on what areas of Metropolitan District policy still need additional
clarification and what Council would like to see brought before them at the November 28 work session regarding
Metropolitan Districts. The second work session will be more specifically focused on considering policy changes
to the current Metropolitan District policy in the City of Fort Collins.
Specific questions to be answered by Council are as follows:
1. What does City Council want to achieve with the City's Metropolitan District Policy?
2. What, if any, additional information would City Council request staff to provide on Metro Districts?
BACKGROUND / DISCUSSION
Metro districts are a preferred public financing tool used to pay for public infrastructure and/or services which the
municipality is not able or unwilling to provide, or provide in a reasonable time frame, address challenging site
conditions, and/or allow for unique and amenitized development. More broadly, the tool may be used to further
community specific objectives through private development, such as a specific form of land use pattern,
sustainability goals, and other community goals. The following is a list of potential community benefits that may
be achieved with metro districts:
Public Infrastructure. Finance and construct critical and necessary public infrastructure. When a metro
district finances the cost of the infrastructure, that cost is borne by the residents and businesses that benefit
directly from the infrastructure and development. As per the City’s existing policy, the public infrastructure to
be financed and built by a metro district should not be that which is basic and normally required to be financed
and built by a developer (i.e., the intention is to address extraordinary infrastructure, enhancements and/or
challenges).
Deliver on City Plan, subarea plan objectives for public and private development. The City is a planned
community with high standards and expectations for development. A metro district may be used to support
those community outcomes, as specified by City planning and strategic policy documents. This assistance is
more critical in today’s high-cost and challenging re/development environment. Used judiciously, a metro
district may allow the City to leverage greater public outcomes consistent with community objectives.
Development Efficiency (financial and other). A metro district may be used to enable efficiencies financial
or otherwise. Financial efficiency is achieved through lower financing costs (tax exempt bond issues, and
October 24, 2017 Page 2
generally, financing that is an alternative to equity financing). Development efficiency may not be the primary
reason for City support, but it’s a notable outcome. Other efficiencies may be particular to a development
project, e.g., a non-potable water irrigation system that significantly reduces the demand for treated water.
Sustainability (environmental, social, economic) Outcomes. Sustainability is a top priority for the City
and a metro district may be utilized to support these objectives, examples include: net zero development,
solar/geo thermal facilities, higher portion and/or quality of open space, development which results in high
value job creation that will catalyze other economic activity, etc.
Unique Community and/or Amenitized Development. A metro district may be utilized to enable a unique
development opportunity (e.g., Foothills Mall redevelopment, substantial community facility such as a stadium
development, or other pubic facility) and/or development with significant amenity offerings.
A number of development projects are currently considering the use of a metropolitan district (“metro district”) to
offset various infrastructure, public improvement costs, and to achieve other development outcomes. Many of
these requests are for projects where a majority or significant component of the development includes residential.
The current Metropolitan District Policy (“Policy”) adopted by City Council discourages residential projects from
using this public finance tool. Additionally, there are other Policy elements that Council may want to revisit.
Full City Policy Summary
In July 2008, the City Council adopted Resolution 2008-069 establishing the guidelines and parameters under
which City staff is to review and evaluate metro district service plans filed with the City (the Policy) (Attachment
1). While the Policy provides guidance to the Council in making its decision of whether or not to approve a
service plan, the Policy makes it clear that it is intended to only be a guide for Council and that nothing in the
Policy “is intended, nor shall it be construed, to limit the discretion of City Council, which retains full discretion
and authority regarding the terms and limitations of all District Service Plans.”
The guidelines and parameters set in the Policy for evaluating metro district service plans include:
Total assessed value of the taxable improvements within the metro district at full build-out should be at
least $10 million plus CPI increases since 2008
Development should be “predominantly commercial,” meaning no less than 90% non-residential and no
more than 10% residential
Bias against using metro district to fund “basic infrastructure improvements normally required from new
development”
Service plan should “enumerate and describe all powers” of the district for which there is a demonstrated
need and those powers not needed should not be approved in the plan
The district should not have the power of eminent domain
40 mills should be the “Maximum Mill Levy” for both debt service and district operations and
maintenance
District’s “Financial Plan” should be prepared by an investment bank or financial advisor listed in “Bond
Buyer’s Market Place.”
Financial plan should include a “Total Debt Limitation” for the district that should not exceed “100% at
projected maximum debt capacity as shown in the Financial Plan”
Service plan should include an “Infrastructure Preliminary Development Plan”
October 24, 2017 Page 3
No development fees may be charged by the district unless identified with particularity in service and
financial plan.
Bonded indebtedness should be limited to what can be serviced by the Maximum Mill Levy
All debt under financial plan should be issued within 15 years of the district’s formation
Debt issued should have a 30-year maximum maturity date, except for a refunding that results in net
present value savings
All debt should be paid and district dissolved no more than 40 years after service plan approved
Service plans should require additional Council approval 20 years after district formation and every 10
years thereafter if the district is to continue to provide operation and maintenance services
No issuance of additional debt if district is in default in payment of existing debt, except to refund debt
If multiple districts are to be used, the proposed absorption of the project and the improvements to be
financed should be reasonably projected to occur over an extended period of time or it should be a
mixed- use project with a minimum of its assessed value derived from non-residential uses
Certain “Material Modifications” of the service plan should be defined in the plan, as well as what are not
considered “Material Modifications” (“Material Modification” to a service plan require prior Council
approval under the Special District Act)
Service plan should require the district to provide the City with an annual report
Service plan should expressly allow City to impose certain sanctions if district is in material default of the
service plan
Again, the Policy provides that it “is intended as a guide only” and not intended “to limit the discretion of
the City Council.” Consequently, the Council is free to waive any of the requirements and limitations
listed above, as well as impose any other reasonable requirements or limitations in the service plan as a
condition of its approval
Metro District General Information Overview
A metro district is a type of special district derived from Colorado’s Special District Act (Title 32, Article 1,
Colorado Revised Statutes). In practice, metro districts are a preferred public financing tool used to pay for public
infrastructure and/or services which the municipality is not able or unwilling to provide, or provide in a reasonable
time frame, address challenging site conditions, and/or allow for unique and amenitized development. More
broadly, the tool may be used to further community specific objectives through private development, such as a
specific form of land use pattern, sustainability goals, and other community goals.
Formation
A metro district is a quasi-governmental entity formed by a district court process following the approval of the
district(s) service plan by the governing body (municipal or county). The process is outlined below:
Step 1: Application of Service Plan Consideration to City
Step 2: City Review/Consideration/Approval
Step 3: Petition by District Electors Filed with Court
Step 4: District Court Hearing - court orders election on organization (board election and financial
matters)
October 24, 2017 Page 4
Step 5: Election - authorizes the creation and elects the district’s first board of directors
*TABOR election and process is also required before a district may take on multiple-fiscal year debt and
levy property taxes.
City Role
When a district is proposed to be organized within the City, the City Council has the authority to approve, approve
with conditions or disapprove the service plan. In exercising this authority, the Council has considerable discretion
and the Council’s decision is subject to judicial review only on the basis that its decision was “arbitrary, capricious
or unreasonable result.”
Through this approval process, the City also has the authority to limit the metro district’s powers and operations
under its service plan, such as by limiting the public infrastructure and services that the district can finance and
provide under the service plan. The City can also require in the service plan that some or all of the public
infrastructure to be constructed be dedicated to the City. For example, utility improvements and streets are
typically dedicated to the municipality, but park and recreation improvements are often not. The City can also
impose in the service plan a maximum cap on the metro district’s mill levy and on the amount of bonds and other
debt the district can issue.
If a metro district takes an action that is a material departure from the requirements or limitations of the approved
service plan, the municipality approving the plan may file an action in court to enjoin that action. Also, the
approved service plan can grant additional enforcement remedies to the municipality.
District Powers/Authorized Uses
State law permits metro districts to be utilized for a broad range of purposes including the construction and
financing of public improvements -transportation, water, sanitary systems, parks and recreation improvements,
and others - and/or the operation and maintenance of these public improvements. They may also perform some
of the functions that property-owner and homeowner associations typically perform, such as covenant
enforcement.
And, unless limited in the service plan, a metro district has these powers: (a) to levy property taxes; (b) impose
fees and other charges for the facilities and services it provides; (c) issue debt, like bonds; (d) exercise the
power of eminent domain; (e) construct authorized public improvements both within and outside its boundaries;
and (f) to provide its services directly or through intergovernmental agreements with other governmental entities,
such as a municipality, county or other metro district.
While metro districts are often used to provide ongoing services, they are more often used to finance public
improvements for the use and benefit of the district’s property owners and residents. Eligible capital costs are
usually financed through the district’s issuance of general obligation bonds paid from the property taxes levied by
the district. When its bonds are properly issued and used for eligible public purposes, the income earned from
them by a bond purchaser can be exempt from the purchaser’s federal and state income taxes. It should be
noted that the municipality is not financially liable for any financial obligations made by a metro district.
The tax-exempt nature of metro district bonds usually results in lower infrastructure financing costs than would
be the case with private financing alternatives. Once the initial infrastructure has been completed, a metro
district will continue to exist while the infrastructure bonds are being paid, but are often dissolved once the bonds
are retired. However, a metro district is permitted, again unless limited by its service plan, to exist in perpetuity in
order to provide certain ongoing services to the district’s inhabitants, such as: trash removal and recycling;
security services; architectural design review and covenant enforcement; maintenance and administration of the
common areas; and the operation and maintenance of the district’s facilities.
Governance, Election Process, and Public Participation
A metro district is a separate governmental entity governed by its elected board of directors (5 or 7 individuals),
subject to the requirements and limitations of its approved service plans, the Special District Act, and other
applicable law. The electors of a district are those individuals who are registered to vote in Colorado who either:
October 24, 2017 Page 5
(1) reside in the district, or (2) own taxable real or personal property within the district (i.e., those that will be
paying the tax within the district).
As a quasi-municipal entity, a Metro district is subject to many of the same transparency and accountability laws
required of a municipality and other Colorado governmental entities, including: Colorado Open Records Act,
Taxpayer Bill of Rights (TABOR), and Title 1, C.R.S. pertaining to elections. Elections are held each November or
in May of even-numbered years. A notice of election must be provided to eligible electors, designate the location
for regular meetings, current financial information, and the date of election. In practice, a developer will typically
have control of the district(s) through the buildout phase of a project, after which point it's common for residents
and/or business owners to assume control.
The public has various opportunities to interface with the board. Metro District boards have regular open meetings
and publish regular annual and financial reports that are available to the public. These reports are submitted to
the Colorado Department of Local Affairs (DOLA) for review.
Additionally, if a property is purchased by a new resident, disclosure of special taxes, debt obligation, and location
in a Metro District must be provided to the buyer upon time of sale (38-36.7-101, C.R.S; 10-11-122 C.R.S).
Miscellaneous
Metro Districts vs. Homeowner’s Associations (HOAs)
o Metro districts and HOA’s are similar, but ultimately differ in their legal structure and outcomes
that can be achieved. A key difference between the two organizations is that a metro district is a
public entity, subject to public accountability requirements of the state. This includes Colorado
Open Meeting Laws (§24-6-402, C.R.S.), Colorado Open Records Act (CORA), requirements for
the adoption and publishing of annual budgets (§29-1-106, C.R.S.), the provision of public
information regarding the district (§32-1-809, C.R.S.), and the district is subject to Colorado’s
Taxpayer Bill of Rights (TABOR). As a private, non-profit corporation, a HOA is only accountable
to its membership and is not subjected to the public accountability laws listed above. The
adoption of an annual budget is required, but audits are only required after reaching certain
financial thresholds.
o Metro districts have a broader focus on the public benefit of financed amenities. Under a metro
district, all district facilities must generally remain open to the public. With this stipulation in mind,
metro districts are authorized to construct, maintain, and operate public improvements such as
streets, water, sewer, infrastructure, park and recreational improvements, which a HOA is not
generally tasked with. HOA improvements are primarily focused on covenant enforcement,
design review, trash removal, and general upkeep services.
o Revenue generation is also a key difference between the two entity types. In a metro district,
revenue can be generated through ad valorem property taxes, which are tax deductible by
residents. These districts also have the ability to issue tax exempt bonds and are eligible for a
variety of government grants that can potentially lower the costs of funding. In an HOA, revenue
is generated primarily through fees and assessments on residents within the community.
Whereas property tax is much easier to collect, there is a greater chance that HOA fees will go
unpaid.
o These differences between metro districts and HOAs allow them to be used for different desired
outcomes. A metro district, with its taxing authority, public accountability standards, public benefit
requirements, and legal protections, make it a preferable mechanism to fund public infrastructure
projects such as streets, water, sanitation, and other public goods in a district. An HOA,
conversely, is better suited to provide beatification and improvements to private property within a
residential community.
Risk Considerations
o Municipal Risk: The City has no legal or obligation for any financial obligations of a metro district.
Legal and industry financial professionals are not aware of any instances where metro district
October 24, 2017 Page 6
default/failure/distress has indirectly impacted a municipality’s credit rating.
o Risk of Failure: Due in part to changes in state law pertaining to special districts, the risk of
failure is very low. As per Colorado Department of Local Affairs records, there has been only one
recorded bankruptcy filing for a metropolitan district since 2000 (and this petition was later
rejected by the court).
o Financial Distress: Financial distress can occur, however, the effect of financial distress is most
often a non-event. As per state law, with few exceptions metro districts can only commit a limited
tax revenue stream (i.e., a limited mill levy) to service debt. If a payment is unable to be made,
the unpaid principal and interest is added to the principal balance of the debt. This means that as
long as a district is levying at the maximum authorized rate and complying with other loan
covenants, the bonds are generally not in default. This contrasts with what occurred in the late
1980’s and early 1990’s following an economic down turn when approximately one dozen districts
filed for bankruptcy. At that time, metro district debt was a general obligation and not limited by a
specific mill levy. This resulted in districts being forced to dramatically raise mill levies in an
attempt to meet required debt service and forestall default, which in the midst of a market down
turn, very likely exacerbated the situation.
o Political Risk: As stated above, the risk of failure is very low and the impact of a financially
distressed district may largely be limited to the extension of the payment term. That said, should
a metro district fail to deliver on its commitments, residents/property owners may have an
expectation that the municipality will step in to assume the district’s responsibilities and the
residents could bring political pressure on the City’s leaders to do so.
Further, with the higher property taxes from metro districts it has been hypothesized that citizens
may be less willing to pass additional local tax initiatives. There are a number of communities
that utilize metro districts to a significant degree (see Regional and State Wide Use, below) and
yet evidence of this relationship has not been produced. With limited and focused use this
hypothetical risk would seem even more remote for Fort Collins.
o Other Risk Considerations.
Underwriting / Market Requirements: There are considerable underwriting and market
requirements for district debt issuance. The earlier in the development process the
greater the risk and associated market/underwriting requirements - greater debt coverage
and reserves, higher interest rates, etc.
Basic Infrastructure Assurances: The city requires development to construct essential
infrastructure according to the obligations of the Development Agreement and the
Development Construction Permit and approved construction plans. This is assured with
a bond, letter of credit, or cash, according to City requirements. A district service plan
also requires that the infrastructure be constructed to the City’s standards.
Financial Phasing: For financial and other reasons it’s very common for metro districts to
phase both the financing and construction of improvements. This phasing can mitigate
risk through the incremental financing and construction of improvements.
Development Plan Changes: The nature of a majority of the proposed improvements is
such that they may be scaled down to account for buildout / product absorption issues
(e.g., a community center may be delayed, downsized, or eliminated in response to
market conditions).
Regional and Statewide Use
o Metro districts are the most common special district utilized in Colorado. Currently there are
approximately 1,576 metro districts active state wide. Use of metro districts is most highly
concentrated in Adams and Arapahoe County, immediately east of Denver. In these two counties
alone, there are 454 metro districts.
o The use of metro districts by communities can generally be divides into two categories: 1)
utilization as part of the normal course of development to provide basic infrastructure in addition
to enhancements and community amenities; 2) targeted utilization for enhanced development
outcomes, including delivering non-basic infrastructure, providing development amenities,
achieving mixed-use development, and/or other land-use outcomes.
October 24, 2017 Page 7
Metro district usage varies significantly by community. The following table highlights usage by
community on an land area basis (metro district land area to total municipal land area):
% of municipal land area # of metro districts
Regional
Fort Collins 0.5% 3
Loveland 13% 26
Greeley 2% 3
Johnstown 22% 18
Timnath 50% 18
Windsor 42% 52
State
Aurora 27% 205
Denver 10% 45
Littleton 8% 6
Longmont 1% 3
Challenges of the Current Policy
The following policy points have been highlighted for potential consideration for modification:
Commercial v. Residential Use - Existing policy largely limits the use of metro districts to commercial
development, excluding residential and even most mixed-use projects.
Mill Levy Cap - Existing Policy limits the maximum total mill levy for both debt service and operation and
maintenance to 40 mills. This cap is more conservative than most other communities that were benchmarked
and may preclude utilizing metro districts for more substantial infrastructure undertakings (e.g., non-potable
water irrigation systems, substantial road improvements, etc.). According to those communities that were
researched, community limits are more typically 50-65 mills.
District Dissolved after 40 years and ongoing Council Approvals - Existing policy states that all debt must be
paid and the district must be dissolved no more than 40 years after service plan approval. The policy also
states that a service plan will be subject re-approval by City Council 20 years after district formation and every
10 years thereafter if the district is to continue to provide operation and maintenance services. These
provisions largely preclude districts with ongoing operations and maintenance, e.g., a non-potable water
irrigation system, community centers, pools, or other instances where there is a definite need for ongoing
operations and maintenance.
Staff Evaluation Framework - The Policy provides a number of explicit policy provisions, but otherwise lacks
guidance for Staff’s evaluation. Much of this can be formalized within internal procedures with reference to
the Policy at a more general, principled level. Specifically, the Policy could be updated to include and
improve community outcomes with metro districts.
Other Process Improvements - To facilitate a metro district application and review, a number of process
improvements may be made. These may include utilization of a model service plan to streamline legal
review, formal application and process to facilitate staff review, schedule requirements to set review and
timeline expectations, and an updated fee schedule to help address the resource needs associated with
increased interest and use of metro districts.
October 24, 2017 Page 8
ATTACHMENTS
1. Metro District Policy Summary (PDF)
2. DOLA Metro Districts Overview (PDF)
3. Powerpoint presentation (PDF)
ATTACHMENT 1
z METROPOLITAN DISTRICTS
BRIEF OVERVIEW
Metro District Study Session – City of Loveland
July 11, 2017
ATTACHMENT 2
COLORADO LOCAL GOVERNMENTS
3,734 Active Local
Governments (07/05/17)
Source: DOLA Local Government Information
62 Counties
2 City & Counties
270 Municipalities
178 School Districts
1,576 Metropolitan Districts
254 Fire Districts
270 Water, Sanitation, or Water &
Sanitation Districts
56 Library Districts
1,060+ other districts of more than 60
different types
TITLE 32, ARTICLE 1
SPECIAL DISTRICTS
9 Ambulance
254 Fire Protection
38 Health Service
1,576 Metropolitan Districts
55 Park & Recreation
69 Sanitation
78 Water
123 Water & Sanitation
Available Fire District Boundaries
TITLE 32, ARTICLE 1
METROPOLITAN DISTRICTS
Two or more of the following services:
• Fire protection
• Mosquito control
• Parks and recreation;
• Safety protection
• Sanitation
• Solid waste
disposal/collection/transportation
• Street improvement
• Television relay and translation
• Transportation
• Water Available Metropolitan District Boundaries
TITLE 32 ARTICLE 1 SPECIAL DISTRICTS
Legislative Declaration of Colorado’s “Special District Act”
To serve a public use and promote the health, safety, prosperity,
security, and general welfare of the inhabitants of such district and
of the people of the state of Colorado. C.R.S. 32-1-102
TITLE 32 ARTICLE 1 SPECIAL DISTRICTS
Through an election and by District Court Order, a governmental
entity (political subdivision) is formed which is separate from the city
or county.
Independent governmental body elected by the eligible electors of
the district with ability to:
• charge rates, tolls, fees and levy taxes
• enter into contracts
• incur debt
• apply for grants
TITLE 32 ARTICLE 1 SPECIAL DISTRICTS
Formation of District Approved at an Election of Eligible Electors
Eligible Elector:
• An elector is a person not a corporation, partnership, or trust.
• A registered voter in the State of Colorado and
• A resident of the district OR
• Owner (or spouse/civil union partner) of taxable real or
personal property within boundaries of the district.
• A person who is obligated to pay taxes under a contract to
purchase taxable property in the boundaries of the district.
TITLE 32 ARTICLE 1 SPECIAL DISTRICTS
Entity exists in perpetuity unless ...
• Dissolution: district board, elector petition, municipal application
or petition
• Consolidation
• DLG administrative dissolution for specific statutory failings
TITLE 32 ARTICLE 1 SPECIAL DISTRICTS
Special Districts must comply with State requirements including:
• Audits
• Budgets
• Elections and Governing Body (Board of Directors)
• Service Plan
• Open Records and Meetings
• Annual Notice to Electors (a.k.a. Transparency Notice)
• TABOR
TITLE 32 ARTICLE 1 SPECIAL DISTRICTS
DOLA/DLG has limited oversight of Special Districts
• Annual Budgets and Regular Elections
• Annual Levy (Statutory Property Tax Revenue Limit / “5.5% Limit)
• DLG may administratively dissolve district for missing budgets,
elections, audits (as long as no outstanding financial obligations)
• Approving Authority has limited oversight; typically reserved to
approval of and requirements in Service Plan
DOLA & DIVISION OF LOCAL GOVERNMENT: DOLA.COLORADO.GOV
LOCAL GOVERNMENT INFORMATION SYSTEM (LGIS)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
New 32‐1 Districts 17 54 24 62 51 96 43 160 131 229 102 112 61 53 28 35 59 65 64 104
Total 32‐1 Districts 913 956 967 1,018 1,065 1,150 1,178 1,330 1,448 1,667 1,753 1,857 1,893 1,939 1,954 1,985 2,031 2,086 2,133 2,227
‐
500
1,000
1,500
2,000
2,500
Growth in Number of 32‐1 Special Districts 1997 to 2016
New 32‐1 Districts
Total 32‐1 Districts
Top 5 Counties for Title 32-1’s
Ambulance
Districts
Fire
Protection
Districts
Health
Service
Districts
(Hospital)
Metro-
politan
Districts
Park &
Recreation
Districts
Sanitation
Districts
Water &
San
Districts
Water
Districts Total
Arapahoe 9 228 7 9 17 6 273
Weld 25 231 3 2 1 7 267
Adams 10 226 5 14 3 253
Douglas 1 9 193 2 1 15 3 215
El Paso 20 161 5 6 8 191
(7)
Larimer 16 3 106 2 5 1 8 141
1
Metro District Policy Discussion
Josh Birks and Tom Leeson
10-24-17
ATTACHMENT 3
Questions for Council Finance Committee
• What does City Council want to achieve with the City's Metropolitan
District Policy?
• What, if any, additional information would City Council like staff to
provide on Metro Districts?
2
Introduction
3
5/15 Council
Finance Committee
• Direction to bring additional info
and potential policy changes
8/29 Council
Finance Committee
• Preview options; solicit input
from the Committee
10/24 Work Session • Education to Council
11/28 Work Session
• Discussion of policy
changes with Council
Metro District Basics
A Special District that can be used to finance,
construct, operate public improvements and/or
services
Examples:
• Critical/lacking street infrastructure
• Non-potable water systems
• Sanitation facilities/infrastructure
• Parks/Recreation facilities
• Parking structures
• Operations and maintenance
4
How Do Metro Districts Work?
5
Service Plan Submittal to City District Court Petition
Election held
Districts are authorized to levy taxes and fees, issue
debt, construct public improvements, provide services,
and have the powers of eminent domain, if authorized
Governed by a 5 or 7 member elected board from
among the district electorate (reside in the district, own
taxable real/personal property within the district)
Formation
Authority
Governance
Prevalence
• 1,576 metro districts state wide
• Commonly used for:
• normal process of
development and to
provide basic
infrastructure;
-OR-
• enhanced outcomes /
public services;
6
% of municipal land area # of metro districts
Regional
Fort Collins 0.5% 3
Loveland 13% 26
Greeley 2% 3
Johnstown 22% 18
Timnath 50% 18
Windsor 42% 52
State
Aurora 27% 205
Denver 10% 45
Littleton 8% 6
Longmont 1% 3
Example: Stapleton
• Used to finance local streets,
drainage, pocket parks and
community amenities
• Focused use of metro district
to achieve desired community
outcomes
7
Photo Credit: Denise Gammon, Holland Partner Group
Financial Risk Considerations
• Metro district finances are separate – No City
obligation/recourse
• Low risk of failure and distress (commensurate
political risk)
• Limited tax obligation, not general obligation
• Underwriting / Market requirements
• Existing development/construction
assurances
• Phasing and adaptability
• Audits and independent certification
8
City Role
• Considerable discretion to limit Metro District
powers and operations
• Mill levy limit;
• Limit public infrastructure and services that can
be provided;
• Limit powers and operations;
• Can require that some or all of public
infrastructure be dedicated to the City
• May use court process to enforce service plan
compliance
9
Governance
10
• Elections conducted biannually
• Eligible electors must reside or own
taxable personal property in the district
• Governed by a 5 or 7 member Board of
Directors
• Often developer controlled through
buildout
Transparency
• Subject to many of the same transparency
and accountability rules and regulations as
other Colorado governmental entities
• Regular public meetings, open records, and
annual reports
• Disclosure requirements associated with real
estate purchase
11
November Policy Discussion
Metro District Policy Objectives:
• Deliver on City Plan and sub-area
plan objectives
• Advance sustainability goals
• Facilitate unique community
development
• Finance and construct critical and
lacking public infrastructure
12
Questions for Council Finance Committee
• What does City Council want to achieve with the City's Metropolitan
District Policy?
• What, if any, additional information would City Council request staff to
provide on Metro Districts?
13
14
BACKUPS
Challenges of Current Policy
Opportunities
15
• Address past exemptions
• Proactively develop policy that
accommodates future district
applications
• Align policy with community goals
and priorities
• Allow for new infrastructure and
services to be provided in districts
Opportunities
for
Improvement
Many past
exemptions
have been
made
District
opportunities
limited by
90/10 ratio
Future
exemption
requests are
expected to
increase
Metro Districts vs. HOAs
16
Metropolitan Districts HOAs
Political subdivisions of the state of Colorado Private, non-profit corporations
District subject to all public accountability
requirements of the City of Fort Collins (i.e. open
meeting laws, open records requests, etc.)
Accountability only to dues paying members
District subject to all financial accountability
requirements of the City of Fort Collins
Adoption of an annual budget required
All district facilities must generally remain open
to the public
Exists as a private entity, can limit membership
and use of facilities
Revenue can be generated through property tax,
which are tax deductible by residents
Revenue generated through fees
Existing Policy Highlights
17
Commercial/Residential Ratio
Mill Levy Caps
Debt
Limitations
Funding
Limitations
Development should be predominately
commercial (greater than 90%)
Maximum mill levy set at 40 mills
All debt must be paid and district dissolved
after no more than 40 years
Bias against using districts to fund basic
infrastructure improvements