SUBJECT:
Title
Special District Review & Policy
Department
DEPARTMENT: Town Manager's Office
Planning & Development
Presenter
PRESENTER(S): Melissa Wiley, Deputy Town Manager
Sarah Nurmela, Planning & Development Director, AICP
end Melissa Buck, Senior Vice President, UMB Bank
end
Time
TIME ESTIMATE: 60 minutes
end
For time estimate: please put 0 for Consent items.
Fiscal
FISCAL SUMMARY:
N/A
Policy
POLICY ISSUES:
The Town’s Special District Policy outlines criteria for evaluation and approval of metro districts proposed to facilitate financing of new development. The intent of the policy is to provide greater awareness of and parameters for new districts in the Town. The Town Council will evaluate the scope of the policy and provide direction on whether any changes or updates are desired.
Recommendation
STAFF RECOMMENDATION:
Staff recommend receiving this information and presentation.
Body
SUMMARY/KEY POINTS
• The Town’s Policy for Reviewing Service Plans for Special Districts was adopted in July 2022 to establish criteria for evaluating and approving Service Plans for metro districts.
• The policy includes a point system that emphasizes alignment with the Town’s goals for Housing Diversity, Sustainability Outcomes, Economic Health and Vitality, and Equity, Health, and Culture.
• The policy is intended to be a living document updated to reflect evolving Town goals and policies and as changes in development trends, economy, and legislation occur over time.
BACKGROUND OF SUBJECT MATTER:
The Town adopted the Policy for Reviewing Service Plans for Special Districts in July 2022 to establish criteria for evaluating and approving Service Plans for metro districts (see Attachment 1). Metropolitan Districts, or metro districts, are a common tool used by developers in Colorado to finance new development. Metro districts assess property taxes over a set period to enable new development to “pay its own way” without imposing new financial burdens on the existing community.
While developers strongly support the use of metro districts, the extent of additional taxes, notification and resident access to district boards, and overall lack of awareness are key concerns for property owners and municipalities. The Town’s Policy lays out specific objectives and expectations for metro district submittals and Service Plans to ensure greater awareness, resident access, and clear parameters for metro districts established in the Town.
Metro Districts - an Overview
What is a metro district? A metro district is a type of special district in Colorado - an independent local government entity authorized under Colorado law - created to finance public infrastructure for a new development.
What does a metro district do? As multi-purpose districts, they typically provide a range of services and facilities within their boundaries. In practice, many metro districts are responsible for constructing and maintaining a development’s internal infrastructure and managing shared amenities (e.g. neighborhood parks, trails, playgrounds, clubhouses, pools), and they may also provide limited services such as trash collection or streetlighting - all funded through the district’s own taxes, fees, or bond proceeds.
Why are they established? Metro districts are one of several tools for financing growth. Metro district financing typically covers the upfront capital costs of infrastructure for a new subdivision. This can include major public works - streets, water and sewer lines, storm drainage systems - as well as community amenities for residents such as parks, trails, recreation centers, or neighborhood clubhouses and pools. The district often continues to maintain certain improvements within the neighborhood (for example, parks, landscaping, or other common areas) by levying an ongoing operations mill levy or collecting resident fees.
Essentially, metro districts let new development “pay its own way” by funding roads, utilities, parks, and other improvements up front with money raised through bonds and a dedicated property tax on that development. This approach reduces the need for direct Town funding or broader taxpayer support for new infrastructure, but it typically means homeowners in the district pay higher property taxes over time to cover those costs. Metro districts provide a useful financing tool for growth, yet their use also raises concerns about transparency and long-term tax burdens on residents within the district.
What are their typical powers/services? Metro districts have broad authority under State law to provide public improvements and services for new communities. They can levy their own property tax (a dedicated mill levy) and issue bonds to finance infrastructure such as streets, water and sewer lines, storm drainage systems, and similar projects. Many districts also construct parks, trails, and amenities like playgrounds, pools, or clubhouses, and they often handle ongoing tasks like maintaining common landscaping or street lighting in the neighborhood. In some cases, a metro district can even enforce neighborhood covenants (acting similar to a homeowners’ association) if that role is approved in its Service Plan.
Once established, a metro district is governed by its own board of directors separate from Town Council, with oversight constrained to the provisions of its Service Plan (the governing document approved by the Town). This structure allows the new community to finance and govern its infrastructure independently, under the parameters initially set by the Town-approved Service Plan.
What is the life cycle of a district? A metro district’s life cycle begins with Town Council approval of a Service Plan, which establishes the district’s purpose, powers, and financial limits. Once formed, the district is initially governed by a Board of Directors typically made up of the developer’s representatives (since no residents live there yet) and can start issuing debt and levying the approved tax to build the infrastructure. As the development progresses and families move in, those residents start paying the district’s taxes and gain the ability to vote in district elections, gradually shifting control of the board from the developer to the community. When the neighborhood is complete and the district’s debt is paid off, the metro district may either continue operating in a limited capacity to maintain any remaining community services or be dissolved if its job is done - at which point the district’s extra property tax would end.
How many are located in Erie? Currently, 46 metro districts operate within Erie, as listed in Attachment 2 on this agenda item. Several neighborhoods have more than one district. Attachment 2 includes the name, date formed, outstanding debt, mill rates, and links to information maintained by the Colorado Department of Local Affairs on each metro district.
Town of Erie Policy for Reviewing Service Plans for Special Districts
The Town developed the Policy over the course of 14 months, with multiple Town Council (Board of Trustees) study sessions in 2021 and 2022. The process also included targeted outreach with stakeholders and developers in late 2021. The intent of the policy is to:
• Protect current Town residents from paying costs associated with new development;
• Ensure that prospective buyers of property in a metro district are made aware of the taxes they will be subject to, as well as how they will be able to participate in governance of the District;
• Confirm that taxes imposed by a metro district on future residents of the district will result in clear public benefits, are reasonable, and not used as a means to generate excessive profits for developers of property in the district; and
• Promote development that reflects the Town’s strategic priorities.
Key elements of the policy include:
• Notification, time, and location requirements for metro district board meetings so property owners within the district have improved access to meetings;
• Disclosure and information requirements to ensure prospective property owners within the metro district are aware of the tax levy amount and financial impact to homeownership in the district;
• Composition requirements of metro district boards to ensure property owners have representation on the district boards;
• Maximum mill levy limit for infrastructure and maintenance to ensure future residents of the district are not overly burdened by property tax levies within the district; and
• Specific criteria identified in a point system that represent the Town’s strategic priorities for Housing Diversity, Sustainability Outcomes, Economic Health and Vitality, and Equity, Health and Culture.
Town staff intended to periodically update the Policy as needed, to ensure the requirements were consistent with and reflected changing market conditions, new State and Federal legislation, and evolving Town goals and policies. Since the Policy’s adoption and implementation, staff find there are multiple updates that could be considered. These include evaluation of the maximum mill levy amount based on market conditions, edits to procedures, district structures and fees, and an update to the point system criteria to reflect changing State requirements and legislation for sustainability and housing. Additionally, some criteria in the point system are difficult to track through development-these should also be evaluated in any update to the Policy.
Service Plan Review and Implementation
The Service Plan review process includes an application that includes a Letter of Interest, Service Plan, Finance Plan, and description of how the proposed project meets the point system criteria. Upon receipt of a submittal, Town staff initiate an inter-departmental review of the Service Plan against the Policy. The Service Plan is also reviewed by a third-party consultant to evaluate the Finance Plan, proposed mills, and financial feasibility of the district. Town staff may request additional submittals in response to comments before making a recommendation to Town Council. A public hearing is then held with Town Council for approval or denial of the Service Plan. If denied, an applicant may re-submit with recommended updates.
Implementation of the metro district Service Plan and commitments outlined in the review process are documented in a development agreement or similar vehicle. Annual fees and reporting apply to all metro districts. For specific criteria, like provision of solar panels or affordable housing units, for example, Town staff will track as development occurs.
priorities
TOWN COUNCIL PRIORITY(S) ADDRESSED:
☒ Attractive Community Amenities
☒ Engaged and Diverse Community
☐ Prosperous Economy
☐ Well-Maintained Transportation Infrastructure
☐ Small Town Feel
☒ Safe and Healthy Community
☒ Effective Governance
☐ Environmentally Sustainable
☒ Fiscally Responsible
attachments
ATTACHMENT(S):
1. Town of Erie Policy for Reviewing Service Plans for Special Districts
2. List of Existing Metro Districts in Erie
3. Presentation