Metropolitan districts, often called metro districts, are special districts in Colorado providing at least two types of services like fire, sanitation, street improvement, safety protection, and parks and recreation. Metro districts are independent governmental entities that are formed to finance, design, build and maintain public improvements that are not otherwise being provided. For developers, metro districts provide a critical alternative to forming a homeowners association.
Metro districts have grown in popularity with Colorado developers because they’re an avenue to meet the demands for attainable development. In Colorado, state and local governments don’t fund public infrastructure for public development. Additionally, over the past 20 years, many local governments have faced budget constraints. This lack of funds often means that capital improvement projects within developments get short-changed.
As Northern Colorado’s population booms, there’s a growing number of developers choosing to use metro districts to meet the increasing demands of housing. In particular, attainable housing. As a project gets underway, developers face an initial decision about whether to form a homeowners association or metro district to meet the funding gap. If they decide to move forward with a metro district, they must then identify the types of services the community will provide.
Many developers find that metro districts spread the cost of public infrastructure improvements out over time because the residents repay them through long-term property tax payments. Jason Sherrill, CEO of Landmark Homes, says metro districts have been a great asset because they deliver much-needed amenities to homeowners at a much lower cost.
Landon Hoover, CEO of Hartford Homes, says development on any bigger of a scale than 100 units can’t happen in Northern Colorado without a metro district right now. He says metro districts enable developers to bring supply to the market. Hoover adds that metro districts keep local developers in the game. As bank financing requirements have changed, projects require a larger capital investment that many local companies can’t meet. Metro districts are a tool for local builders to pursue to have the ability to finance these large projects.
While developers understand the important benefits of metro districts, Coloradans might not. Kammy Tinney, with Pinnacle Consulting Group, says one of the biggest misconceptions is that metro districts are new when in fact, they’re very prevalent for years. She says people need to understand metro districts are a tool to help homeowners pay for the cost of the growth and development of their community. But it’s done in a way that allows for attainable housing.
Metro districts also provide tax benefits to homeowners. Because funding is collected in the form of property taxes, not HOA dues, there’s a tax benefit. This helps the county as well. Property taxes are much easier to collect than HOA dues, so less revenue is wasted paying consultants to write late fees and collect outstanding HOA dues.
As Northern Colorado sees an increasing need for housing, developers say metro districts are an important tool to being able to provide homeowners with much-needed development projects in their areas.