IRESis’ latest system update includes the addition of a new, required field called “In Metro Tax District: Y or N?” We asked IRES MLS Government Affairs Director Barbara Koelzer to provide insight into Metro Districts and their impact on our market.
What Brokers Need to Know about Metro Districts
What is a Metro District?
A metropolitan district is a development financing tool which is growing in popularity across Northern Colorado. Originally intended to provide urban-like services to developments outside municipal limits, they have evolved to be a preferred technique to provide financing for public improvements inside city limits to offset the rising cost of infrastructure such as streets, water and storm drainage, as well as amenities such as swimming pools and trails. Metro districts may finance residential, commercial or mixed-use developments.
Like all special districts, Metropolitan Districts are authorized by Article-1 of Title-32 of the Colorado state statutes. Such districts are defined as units of local government. A special district provides public improvements and services to its property owners and residents. By state statute, a metropolitan district provides two or more types of improvements and services, for example parks and recreation, sewer, street improvements, water or fire protection.
As of 2017 Larimer County had more than 106 metro districts and Weld County had over 231, according to the State’s Department of Local Affairs (DOLA) — and the number is growing every year. Currently there are over 20 metro districts in Loveland, including eight in Centerra alone. Both Greeley and Fort Collins approved multiple metro districts in 2018.
Why should brokers care?
Metro districts finance improvements and services by issuing municipal bonds, which are redeemed by special property taxes. The amount of the additional property tax varies district to district, but the implications to a homeowner can be substantial. For example, property owners in Thompson Crossing (Johnstown) pay an additional 81 mills in property tax. Real estate professionals need to know if a property is located within a metro district so they can educate prospective buyers appropriately.
Colorado statute does not require a specific disclosure for metro districts although there is a general disclosure related to special districts in the Colorado Contract to Buy/Sell Real Estate. Since metro districts are becoming more prevalent, IRES has decided to add a check off “yes or no” where brokers will indicate if a property is in a metro district in the property listing. Metro district information is also included in public records, however homes in new districts may not include complete information unless the property tax assessment has been finalized.
Is there additional information?
Metro districts are required to file various documents with DOLA, including a service plan, annual audits and an annual budget. For more information concerning what a prospective buyer should know about metro districts, DOLA published Special Districts: A Brief Guide for Prospective Homeowners in 2009. Access the guide here: https://tinyurl.com/y5v8ropp
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How do we get this information, especially if it’s a new development? Maybe it’s a re-sale in a new development and tax info. isn’t posted on taxes yet. Will this info be on tax info through Realist?
Hi Eleanor! You should contact the county assessor office. IRES has links that can be found here: https://ires-net.com/ires-mls/public-records-links/ While it may not be reflected in Realist, it should be available with the county assessor. Metro Districts are required to file paperwork with the local gov’t orgs.
Reblogged this on Bev West, Broker/Owner and commented:
Metro Districts-Are you buying in one? This is important information to know. It will make a difference in your taxes.
Thanks for the re-post!
2019.05.09
Thank you Barbara for the informative and timely piece on metro district financing. Taxes for most homes in FC are literally half of that charged by many of the new districts. Realtor/Buyer metro-district-taxation discussions should take place early in the agency relationship such that buyers understand the significance of metro district financing. Our Colorado contract is quite explicit (all caps) in explaining the possibility of metro district taxation; but as these taxes increase I see a day in the not-to-distant future where we Realtors will need to present another disclosure form specifically addressing metro district taxation.
Thanks again for this value-added information 🙂
Roger Dittus RE/MAX Alliance
You’re welcome, Roger. The Colorado contract to buy/sell real estate does include a disclaimer about special districts, however, consumers don’t necessarily read it or understand what a “special district” is, and that’s why it is so important for brokers to educate their clients.
Is this metro tax going to be a permanent tax rate on the home even after the home is over a year old? New home buyers, such as me, that already committed to the home to be built with the down payment, then found out from our mortgage company that our taxes were going to raise our mortgage payment by at least $100.00 more a month. We asked before buying what
the taxes would be, and no one could give us a straight answer. Wish we had known sooner.
I think it might also be important to note that the Metro district is governed by a Board of Directors, but when the Metro district is set up, there are no residents of the subdivision yet, so the Board of Directors is the developer and cronies. So the fox is watching the henhouse. The developer uses the money from the Metro district to do all the street and utility improvements and then shifts the burden of paying for all that back by increasing the property taxes through the county. Most of those funds are raised by selling 30 year bonds which means it takes 30 years to pay them off and if in the meantime the streets need improvement or the sidewalks or sewer line etc. they will need to sell more bonds which increases the amount of time it takes residence to pay back. In other words it probably never goes away. There was a large article on this in the December 5 Denver Post of 2019. It’s a very good article to read.
Ross, the Denver Post series was interesting but written by a reporter who had an ax to grind. He was careful to mention only metro districts that did not have service plans that protected buyers. I would take some of the comments in that series with a large grain of salt, understanding there are nearly 2,000 metro districts in Colorado at this point in time. They are not all “bad.” That said, it is vital that consumers educate themselves carefully when considering a purchase in a metro district.
I was trying to find out when bonds are paid off and taxes go back to normal, is there such a thing?
Pres, it depends on the metro district’s service plan. Generally speaking, metro districts exist until the bonds are paid off, which is typically between 30 and 40 years. Each district is different, and that’s why I would advise agents to make sure buyers read all the documentation thoroughly (especially the service plans) to be sure they understand what they are committing to if they buy into a metro district.