Guest Post by Alex Plotkin
One of the fundamental jobs that a government has is to ensure that businesses act ethically. In theory, the government, local, state or federal will pass regulations which keep corporations from exposing thousands of residents to cancer-causing chemicals. In theory, having learned just how abusive metro districts can be, a government would, maybe, outlaw them? Some cities, such as Longmont and Westminster, have taken such a stand but Lakewood is still working on ways to enable formation of metro districts.
Metro Districts are a type of special district especially for developers. It is not a government of the people, by the people for the people, because THERE ARE NO PEOPLE. There is only a developer, making deals with himself to have future people pay increasing amounts of taxes and fees. Not surprisingly, granting governmental immunity and taxing abilities to a developer who is only accountable to himself, has caused problems (see this district with toxic sludge for a recent example.)
On May 6th 2024, Lakewood City Council had a workshop to study a proposed ordinance on Metro Districts in Lakewood. The ordinance was first proposed in 2021 and it was immediately obvious that it’s more of a “see, we did something for the good of the public”, while allowing the big money they shill for to continue to make profit, at any cost.
City Council Members seemed very aware of all the pitfalls of metro districts, asking pertinent questions about how Lakewood could possibly limit some of the abuses, while at the same time neglecting limiting districts altogether.
Allegedly, according the Director of Planning, Travis Parker, the need to implement “something” was due to the recently passed Senate Bills 21-262 and 23-110:
In reality, it would be better to do nothing and simply follow the state’s statutes, instead of crafting a faulty ordinance, designed to offer the developers a plethora of loopholes to perpetuate further financial abuses (at least, in Lakewood).
Furthermore, when the Lakewood City Council tried to push through the same, flawed, piece of legislature in 2021, its numerous flaws were covered in great detail by Mr. John Henderson, who, for years, has been leading the fight against Metro District abuse in Colorado. Mr. Henderson sent a detailed analysis of the proposed ordinance with specific areas of concern pointed out to the Council.
There is a narrative, pushed by Metro District lobbyists, that metro districts make housing more affordable. We are still waiting for a logical, three sentence (or less) explanation, as to how a house that costs $500,000 and has $8,000 worth of mill levies is more affordable than a house that costs $530,000 and has $4000 worth of mill levies per year. In this situation, the $500,000 house has extra mill levies in a metro district, rather than the upfront cost of the infrastructure. The $30,000 decrease in cost is financed through the developer, who earns interest. If the resident bought the house for $530,000, their mortgage would pay that cost off in 8 years of equivalent mill levy payments, but the resident will be paying that levy forever. Decades of $4,000 per year, per house, in extra fees that go directly to the developer.
The extra mill levies do not go toward schools, fire departments and other services normally paid for by taxes. Instead, they go towards the basic infrastructure that usually comes with your house but you pay for decades to come. And those mill levies could go up even more, without residents having a say, because there are no residents involved from the beginning to be fairly represented. Only the developer will vote for the mill levy other people will pay.
The reality is that paying the total house cost through a mortgage is more affordable for residents.
One of the many claims is that the metro districts make development possible (and affordable). For who? For those who need the housing or for those who will profit, immensely, from selling it? Most other states in the U.S. do not utilize metro districts to finance development. A developer, well, develops the land. A builder purchases the developed land from the developer. A builder builds the house and sells it to a buyer for a profit. End of transaction. They do not continue to collect cash from the buyer for decades to come.
Metro districts are not mandated to provide affordable housing as a condition to receiving government status. Developers do not pretend to provide affordable housing. Instead, some claim that metro districts make housing more affordable than traditional development. The financial difference is upfront costs versus costs stretched out over time and what interest rate you are getting. Typical mill rates levied are the equivalent of 18% interest, which is more than the average home loan.
Lakewood City Council, who recently has moved general public comment to the “back of line” to make it even harder for the public to speak up during the city council meetings, DID NOT invite anyone to represent the public concerns to the workshop. Stories of flat-out financial abuse are well-documented but experts known to the city were not invited. The city did, however, invite the Metro District top lobbyist, Kristy Pollard from the Metro District Education Coalition. She was the sole outsider to answer questions MDEC’s hypocrisy was covered by Mr. Henderson as well.
One of the city councilors, Rich Olver, did voice a concern of “who invited this person, while not having anyone in the room to represent the other side of the argument.” One. The rest of the councilors proceeded under the forgone conclusion of “well, we gotta pass something.” The truth is – you don’t. You could, simply, make metro districts illegal.
Councilor Nystrom ardently kept stating that more disclosure was always better, while Councilor Shahrezaei kept saying that the city will most likely not be able to enforce the failures to properly disclose and notify the potential buyers of a property within a Metro District. While Councilor Sinks stopped short of calling the prospective buyers idiots and that the onus was on them.
So, as your eyes glaze over after flipping through the first four pages of a hundred page contract (or whatever it is up to in Colorado now), remember – it is your fault that you get financially screwed by an army of lobbyists, lawyers and government representatives who enable the passing of policies designed to extract cash flow from the thousands (millions?) of buyers who just happened not to be a lawyer, or a financial wizard, or… well pretty much any other occupation vital to our communities.
Conveniently, the lobbyist kept bringing up the Service Plan Templates from other cities (such as Aurora, Colorado Springs and Fort Collins) as something that the Council should be looking at. Conveniently, she forgot to mention that some of those templates were written by developers, with hardly any concessions to the public input.
Longmont passed a responsible alternative in 2020:
that says:
“C. Residential districts. The city council will not approve the formation of districts to fund capital improvements in developments containing residential uses, except mixed-use residential districts, for the following reasons:
- All existing Longmont residential development was funded without districts, so the lack of these districts will not adversely affect Longmont residential development.
- Creation of a residential district creates a differential property tax structure among similar residential developments, and the district resident would pay significantly more property tax without any commensurate public benefit.
- The higher mill levy in district projects may make these residents less inclined to support other city property tax increases.
- Buyers of homes in district projects are often unaware of the higher property taxes in their development and may become upset when property taxes increase. Residents may be surprised to find out the price of their homes did not include the price of streets and utilities in their development and that they must pay for this over a 30 or more year period through their property taxes.”
This ordinance is easily understood by most residents and non-lawyers. Longmont city council has listened to their constituents and has decided to step in, despite at times contentious exchanges on the topic, and did what a government body should do – and that is to ensure that a business interest is kept in check, instead of making excuses under the guise of “affordable housing” or “property rights.”
Longmont was not the only municipality who listened to their constituents. City of Westminster also found that (according to their Policies and Procedures for Title 32 District Formation):
“Residential MSDs: In general the City is opposed to the creation of MSD’s to fund capital construction of residential developments for the following reasons:
1. Virtually all existing Westminster residential development was funded without MSD’s. So the lack of these districts has not adversely affected Westminster residential development.
2. Creation of a residential MSD creates a differential property tax structure among similar residential developments where the MSD resident is paying significantly more property tax without any commensurate public benefit.
3. The higher mill levy in MSD projects may make these residents less inclined to support property tax increases.
4. Buyers of homes in MSD projects are generally unaware of the higher property taxes in their development but can become upset when they later discover this. Residents may be surprised to find out the price of their home did not include the price of streets and utilities in their development which they repay over a 30 or more year period through their property taxes versus the vast majority of Westminster homes where this is not the case.
5. There would be an arguable public benefit if home prices were lower in MSD projects, reflecting the developers lower capital cost. Studies have shown that this is not the case.
In summary, there is generally not a compelling public purpose and benefit to form residential districts…”
Lakewood City Council majority is moving full speed ahead to ensure that large business interests can continue to profit, instead of working on actual economic development to enable more Lakewood residents to prosper and be able to actually afford a place to live.
Lakewood Informer 