Special Taxing Districts: The Good, The Bad and The Ugly?

Part II: Special Districts Revenue – Where does all the money come from?

How does a special taxing district pay for its service plan? With bonds and developer advances, of course!

Authorized Debt Limit Not Yet Issued

Remember the authorized debt limit not yet issued originally approved by the city council, the district (developer) now asks the city council for a bond issuance. In April 1993 voters approved a limit on special taxing district debt and Colorado Springs City Charter, paragraph 7-100, http://coloradospringsforward.org/12_04_14_colorado_springs_city_charter/, was adopted:

(a) Any district so formed shall not become indebted for any purpose or in any manner for an amount, which, including existing indebtedness of the district, shall exceed ten percent (10%) of the total assessed valuation of the taxable property within the district unless approved by at least a two-thirds (2/3) vote of the entire Council. (1993)

(b) The district shall not issue any debt instrument for any purpose other than construction of capital improvements with a public purpose necessary for development. (1993)

(c) The City Council and Mayor shall make available to the public all essential data and information regarding the financial condition and status of any and all districts established pursuant to title 31, C.R.S. (Colorado Revised Statutes). (1993; 2010)

10% of $0 Total Assessed Valuation = $0

What is 10% of $0 total assessed valuation of taxable property? Zero!

The developer tells the city council how much the property is going to be worth, how much revenue, sales tax or value it will generate and then discusses the cost of development and construction and requests bond issuance for this amount.

According to documents filed by the districts with the Colorado Department of Local Affairs, Colorado Springs has 77 metro districts and 15 BIDs. The numbers below reflect their current total assessed valuation by the 2019 County Assessor website, https://assessor.elpasoco.com/abstract-assessment-understanding-value/, and the approximate debt.

Lack of Detailed Info in the Financial Documents

Now, we say approximate debt because the financial documents do not clearly spell out the developer advances or where the district stands in paying back the developer for services provided.

What happened to the existing indebtedness of the district not exceeding 10%? The city council only needed two-thirds of the vote of the entire council to blow right past that part of the charter and approve the bond issuance.

• Metro Districts:
  • total assessed valuation of $718,382,800
  • approximately $643.435.961 in issued debt of 90% of their assessed value
  • authorized debt limit not yet issued is $2,664,376,353 or 371% of their assessed value
• Business Improvement Districts:
  • total assessed value of $224,373,880
  • approximately $204,039,650 in issued debt of 91% of their assessed value
  • authorized debt limit not yet issued is $412,425,000 or 184% of their assessed value

This is like having a $10 million credit limit on your credit card, but only needing $10,000.

But how does this impact you and your wallet? Pure and simple, it is taxation without representation. You didn’t get a chance to vote on the bond issuance or the amount. You are the recipient of a mill levy imposed by the district to pay back the debt incurred to pay for services. And you have this debt for the life of the bond, sometimes up to 40 years. If you don’t live in the BID you may be paying a Public Improvement Fee (PIF) every time you shop or dine in an establishment – check your receipt.

Property Tax Statements – Read Them

This means if you live in one of the districts below, you will receive a property tax statement to pay the following. Please note these are actual property tax bills with homeowner information removed.

Gold Hill Mesa:

$489,322 (actual value) x 7.19% (taxable percentage) = $35,230 (assessed value)

38.146 mill levy = $35,230 (assessed value) x 0.038146 (mill levy) = $1,343.88 to Gold Hill Mesa Metro District #2.

This equals $1,343.88 x 30 years (life of bond) = $40,316.40 with the potential for more taxes as your actual value on your home goes up.

Flying Horse:

$1,739,950 (actual value) x 7.19% (taxable percentage) = $124,400 (assessed value)

43.644 mill levy = $124,400 (assessed value) x 0.043644 (mill levy) = $5,429.31 to Flying House Metro District #2.

This equals $5,429.31 x 30 years (life of bond) = $162,879.30 with the potential for more taxes as your actual value on your home goes up.

Unfortunately, this is not all the money you pay in these two districts – this is only the money for the metro districts. In Gold Hill Mesa you pay a total of 111.521 mill levies with monies broken down below:

In Flying Horse you pay a total of 120.324 mill levies with the following breakdown:

What do you get for this money? Please don’t confuse it with your Homeowners Association (HOA). These districts may have desirable amenities, such as a clubhouse, pool, trails, or fitness center, but do you pay an annual fee to maintain and use the facilities? Service charges and annual fees are added to your financial burden.

We’ve got a service plan, formed a district, elected a board of directors, started developing, and issued bond debt, now what? In the next part, we will discuss the board of directors, elections and when do homeowners and business owners take over and have a voice.

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.