Metropolitan and Special Districts are authorized by
Article-1 of Title-32 of the Colorado state statutes. Districts are units
of local government. A special district provides public improvements and
services to its property owners and residents. A metropolitan district is
a special district that provides two or more types of improvements and
Services typically provided by Districts include:
Parks and Recreation
Sanitation Sewer and Storm Water Improvements
Traffic and Safety Controls
Water System Improvements
Television Relay and Translation Systems
Fiber Optic Communications Systems
A district may provide both on-site and off-site
improvements. Districts have the power to perform services directly or
through Intergovernmental Agreements (IGA’s) with other governmental
entities such as a City, County, or another District. IGA’s are a very
powerful tool to facilitate the most cost-effective delivery of District
Districts primarily exist to finance public
improvements for the use and benefit of the District’s property owners and
residents. Eligible operating and capital costs may be financed through
the authorization and sale of general obligation bonds which are secured
by property taxes from the property within the District. Tax revenues may
be coupled with one-time development fees on property within the District
and ongoing fees and charges for improvements and services furnished by
the District. When properly issued and used for eligible public purposes,
income earned from District’s bonds can be exempt from federal and state
income taxes to the bond purchaser.
The tax-exempt nature of the bonds generally result
in significantly lower infrastructure financing costs than would be the
case with private financing alternatives.
Eligible costs for reimbursement with bond proceeds
usually include all amounts associated with organizing the District plus
engineering, design, administration, legal, accounting, construction
management costs associated with the construction of public infrastructure
within the District. Off-site infrastructure necessa4ry to serve the
District is also eligible for financing with District bonds. The purchase
of right-of-way or land which would otherwise be required to be dedicated
for public purpose is not an eligible District expenditure.
Typically, the District’s infrastructure (streets,
drainage, water, sewer, parks, landscaping, etc.) are built to the
standards and specifications of the City or County in which the District
exists. The City or County usually accepts the improvements for ownership
and maintenance once the District has constructed them. In many cases,
landscape medians, ROW, infrastructure and small parks and open space
tracts remain the ownership of the District with on-going maintenance
responsibility. The specific infrastructure to be retained in District
ownership is a function of negotiation with the cit or County during the
service plan approval process.
Districts are initiated by filing a “service plan”
for the proposed district within the City or County that has
jurisdiction. If the district is within a City, the City Council has the
authority to approve or disapprove the service plan. If the district is
thin the unincorporated area of a County, the Board of County
Commissioners has the authority to approve o disapprove the service plan.
Colorado law requires public notice and hearing process if the County is
the approving agency. The process is more flexible if a City is the
approval agency. Following the City or County’s approval of the service
plan the land owners sign a petition for organization, this is filed with
the District Court of the County in which the District is located.
Following public notice, the Court holds a public hearing and authorizes
an election. The election authorizes the creation of the District, elects
the first Board of Directors, and approves the authority to issue bonds
and other financial matters.
District services and powers are outlined in a
service plan which must be prepared and submitted to the City/County for
review and approval. A District’s Service Plan is similar to a City
Charter, State Constitution, or contract in that it describes I detail the
District’s authority. A service plan typically consists of the following
General Introduction and District Description
Location of the District, Map
General Plans for Development (e.g., proposed services, existing
governments and services, need for proposed services, compliance with
City/County comprehensive plan and compliance with other long-range
Assessed Valuation and Population
Financial Plan (e.g., proposed bond financing projected property tax
mill levies, specific ownership taxes, fees and charges, development
fees, capitalized interest and investment issues, proposed capital
expenditures and proposed operations and maintenance costs and initial
Preliminary Engineering Survey and Facilities Plan
Compliance with City Standards Specifications
Combined District Organization, TABOR and Debt Election Schedule
Statutory Criteria for City or County approval.
The amount of detail required depends on the amount
of information requested by the City or County.
TIMEFRAME FOR APPROVAL
Service plans may require from 3 months to one year
for City/County review and approval or denial, depending on the
jurisdiction. The procedure is generally faster for a district entity
inside an incorporated city or town. District Court approval generally
occurs 20 to 40 days after approval by the City or County. The District’s
initial organizational election, TABOR election and debt election may then
be held. District organizational elections may be held as specified in
Court order, usually in February, May, August or November of any year.
District financial and bond elections may be held only in November of any
year or May of even numbered years. Elections may be combined to reduce
BOND ISSUE TIMING
In most cases, bonds may be issued 30 to 45 days
following the organizational bond authorization elections.
Districts are governed by an elected five member
Board of Directors. District meetings are typically held monthly. For
most metropolitan districts, it is not cost-effective to hire professional
contractors who serve at the pleasure of the Board. A District Manager
may be retained to represent the Board in planning, directing,
coordinating and organizing all of the District’s contractors, services,
and contracts with other governments, residents, and property owners.
The District Board adopts an annual budget by
December 15th of each year for the following calendar year. At
this time, the Board establishes the property tax rate and level of fees
and charges, if any, for the property within the District. The District
relies on the County Assessor’s Office for certification of assessed
values within the District. The preliminary assessed valuation is
received by August 25th of each year, and the final assessed
valuation is received by December 10th. The District Board of
Directors establishes the property tax rate based on these values.
The property tax rate consists of two components:
1. Operations and Maintenance
The operations and
maintenance mill levy provides for the on-going operations and maintenance
of the District.
2. Debt Service.
The debt service levy
revenue is dedicated to payment of the principal and interest of the
District’s outstanding bonds, if any.
An annual audit of the District’s financial
statements must be prepared annually and filed with the Colorado Division
of Local Government and bondholders, if any. In some cases, an exemption
from the annual audit requirement may apply.
In most cases, Special Districts and Metropolitan
Districts in Colorado are viewed as an excellent vehicle for financing
required public improvements with double tax-exempt general obligation
bonds secured by the property taxes to be collected from future increases
in assessed valuation of property within the District as it develops.
This use of District bond financing can provide real savings to the
District’s developers and landowners which allows a reduction in the price
of lots and/or the availability of funds for additional amenities for the
Please note that this summary provides a brief
description of the responsibilities, powers, and opportunities for special
districts and metropolitan districts in Colorado, as outlined in the
Special District Act, Article 1, Title 32, and related statutes. Specific
application to any District proposal should be reviewed and consulted with
legal counsel and a law firm experienced in District matters.
Bob Blodgett and Bob Brooks
R.S.Wells LLC for supplying the information and material for this