A Metro District Reform Bill
Senate Bill 21-262 would reform Metro Districts in our state including requiring greater transparency. Here is what this bill as proposed would do—
· Section 1 requires better publication of upcoming elections. But, the Metro District Board only needs to disclose by way of 2 of the 5 methods—publication in a local newspaper and posting written notices in at least 3 areas of the community. These 2 methods have been in place for many years and the only difference is posting the election notice in 3 areas, instead of just 1. They can also disclose on a website, in a newsletter or annual report, or by separate mailing. I don’t think these last 3 methods will be used at all as they might actually be EFFECTIVE and the Metro District Board doesn’t want that. This bill needs to be changed to require a separate mailing.
· Section 3 requires the placement of much of the info from the DOLA website to a specific website for the named metro district. Requires buyers to be shown where to obtain copies of a district’s formation plans as well as how much debt has been authorized by the board.
· Section 4 stated that the state auditor shall review the annual report and report any apparent decrease in the financial ability of the district to discharge its existing or proposed indebtedness in accordance with the service plan to the division. I am hopeful this section will provide some measure of financial accountability; but it will depend on how much “power” the state auditor has.
· Section 5 requires—“THE COSTS OF PUBLIC IMPROVEMENTS ARE REASONABLE 27 COMPARED TO MARKET CONDITIONS THAT EXISTED AT THE TIME OF -10- SB21-262 1 CONSTRUCTION FOR SIMILAR IMPROVEMENTS IN A SUBSTANTIALLY 2 SIMILAR AREA AS THE SPECIAL DISTRICT.”
· I am hopeful this will lead to fewer cost overruns that often lead to Junior Debt being issued and held by the developer or builder. But, I may be dreaming.
· In Section 7, beginning in January 2022 builders/developers would be required to disclose the maximum debt obligations of that district. And the builder/developer must disclose the estimated mill levies and tax bills based on the completed home value for the subject property and this tax estimate must include taxes for both the debt service and general obligation expenses of the metro district. This tax estimate must also include the tax bill for all the other taxing entities the homeowner will be required to pay.
· This is a good start; but, I am seeing some metro districts whose Senior Debt is being repaid with interest only payments or even negative amortizing loan terms. This means that tax bills will have to SOAR to repay the principal in the near future. And this needs to be prominently disclosed to new homeowners..
To read this bill in it’s entirety click the link below—
http://leg.colorado.gov/sites/default/files/documents/2021A/bills/2021a_262_01.pdf