“I would hire another manager,” a Burger King franchisee told me when I asked what else he could do with the additional property tax he would have to pay to one of Colorado’s many special taxing districts. He didn’t have any doubts about the districts and their functions; he was just frustrated about not knowing if he would be getting value for tax payments that never seemed to end.
In my experience, evaluating and financially analyzing such districts for clients and municipalities, many have this same feeling. Most districts — which cities and counties authorize developers to create to pay for infrastructure using future taxpayer dollars — are properly planned, transparent, and only seek revenues to pay off necessary bonds. The development may have had enormous grading problems, contaminated ground, huge drainage problems or needed fancy amenities. The bonds issued to fund these challenges are paid back only by homeowners and businesses, so new development “pays its own way.”
But, like anything else in life, the 80/20 rule has some districts giving everyone else a bad rap.
I was evaluating a new site for a Burger King restaurant a few years ago in Commerce City near a competitor. When I found out that the North Range Metropolitan District was imposing 88 mills on the land in addition to 27 mills from another district, the Commerce City North Infrastructure General Improvement District, I brought to the franchisee’s attention that his competitor was paying $56,000 a year to quasi-municipal districts. That’s over and above the $50,000 paid for schools, fire, water and sewer, libraries, and the city and county. At 218 mills, the property taxes were consuming 21.8% of the assessed value of that business! This was a payment his Burger King operation could not afford so he passed on the site.
