Special Taxing Districts-The Good, The Bad & The Ugly

Part I: Creating Special Districts: What are they and what are the steps for the creation of one?

According to McGeady Becher, Special District Law:

          “A special district is a quasi-municipal corporation and political subdivision of the State of Colorado formed to provide necessary public services that the county or municipality cannot otherwise provide. It is essentially a tax-exempt financing mechanism used for the installation, operation and maintenance of public infrastructure.”

City Council Training on Creating & Supporting Special Districts

Due to questions about special districts from councilmembers and city staff, the Colorado Springs City Council conducted a series of training sessions, started in September 2019. The training was to educate and inform the council and public on all aspects of special districts. The training included an overview of the 2006 Special District Policy, business improvement districts (BIDs), metropolitan districts, Title 31 districts, special improvement maintenance districts (SIMDs), district powers, authority and functions, district dissolution and conversion to resident held boards, and the impact of special districts.

But was it enough? Did the council receive the depth of knowledge they need to make informed decisions on future formation of special districts?  In a series of upcoming articles, The Maverick Observer is going to peel back the onion and share our research about Colorado Springs special districts. It’s our hope the city council reads the series of articles and research before they approve any more districts. But let’s start with background on special districts.

Business Improvement & Metro Districts

We are going to discuss two main types of special districts: business improvement and metro districts. The main difference is metro districts are where we live, and business improvement districts are where we shop. Both have qualities that set them apart but start the process of creation in the same way.

The districts are formed by a service plan outlining district powers as a government-entity and the financial structure used to pay for the development or district. Within city borders, the city council approves the service plan and developers highlighting the financial plan, but also asking for an authorized debt limit, not yet issued to get the ball rolling.

At this point there is no board, the developer is making all the decisions and requesting all the financing for the development. The developer files a Petition of Organization with the District Attorney requesting the Court to order an election to form the district, but who is in the district?

Creating Special District Boards

The developer creates a board using either his associates or partners. As long as they own a minimal amount of property in the district, they are eligible district voters. Across the board, all 15 BIDs in Colorado Springs de-TABOR’d and waived term limits at their first election. This means the district keeps the money they receive from property taxes and fees imposed without refunding excess back to the homeowners and businesses.

Since there are no businesses or residents established in the district yet and the board is controlled by the developer, decisions are made without future input from business owners or residents. Sound fair?

First, let’s go back to the service plan approved by the city council. The plan discusses services the metro district may provide:

• Fire Protection
• Mosquito Control
• Parks and Recreation
• Safety Protection
• Sanitation and Water
• Solid Waste Disposal Facilities
• Street Improvements
• Television Relay and Translation
• Transportation
• Covenant Enforcement

Business districts may provide the following services:

• Capital Improvements
• Construction of Pedestrian and Streetscape Enhancements
• Marketing the Area
• Providing Security

The plan agrees to provide the services, but who enforces and oversees the services outside of the district board? No one! The district is its own government entity with all the intended powers as a subdivision of the State of Colorado. It controls the taxpayers’ monies without future input from the businesses and residents.

So, we’ve got a service plan, formed a district, elected a board of directors and are ready to develop, but we need money. In the next part, we will discuss the finances of a district and the impact on you as a homeowner or business owner in a district.

The Maverick Observer, or “The Moe” as we affectionately call it, is an online free-thinking publication interested in the happenings in our town. We launched in February 2020 to hold our politicians and businesses accountable. We hope to educate, inform, entertain, and infuse you with a sense of community.