Tag: metro district

$$$ Financing Deals

The Bend: A Government Financing Trade Deal

Written by Lakewood News from Karen on .

Lakewood may be forcing a property owner to blight their own land in a backroom trade deal wherein staff pledged a positive vote from City Council for a metro district. The deal would give The Bend development city financing in exchange for metro district status.

In January 2025, a representative for The Bend developer made the following public comment:

“The city is actually only allowing a Metro District to be put in place if the URA (Urban Renewal Area) passes so that it is a vehicle for this infrastructure and tax increment financing. They actually would not pass our Metro District standalone. They’ve made that very clear.” – Allie Meister, Lincoln Properties, at Green Mountain Water Board Meeting, min 40:13.

This deal illuminates why Lakewood is rushing through a URA and metro district public hearing on the same night. Staff presentations have repeatedly touted the advantages of doing both the URA and the metro district at the same time. They claim these are complementary structures.

But they are not complementary. Rather, these are essentially overlapping structures that could finance the same set of infrastructures. Apparently, financing public infrastructure is a profit center.

Overlapping financing is duplicative. Even worse, for The Bend, neither metro district nor URA is appropriate. The Bend is not a “serious and growing menace” to the public health, safety, morals, and welfare, which is the statutory reason for Urban Renewal. The Bend does not provide public services, which is necessary for a metro district. The metro district will only be used for financing. Therefore, the most appropriate government assistance, if any, would be a Business Improvement District (BID).  BIDs are the more accountable, less powerful, way to achieve development financing but no one is advocating for its use.

Instead, developers prefer to form metro districts. This initially involves the developer loaning money to the new metro district.  Then the metro district issues a bond, with interest, to pay back the loan. Since the developer and the metro district are the same people (different legal entity), the developer has now gained itself government immunity, as well as millions of dollars of interest payments. In many cases, the interest payments never end – they only continue to grow. This outcome isn’t possible with a BID.

(See Denver Post series “Metro Districts: Debt & Democracy” by David Migoya for more in-depth information on metro district abuses)

Therefore, developers generally want that metro district as a profit center, rather than as a way to finance development, since they front the funds in either case.

A URA is also meant to fund public infrastructure. Much of the public infrastructure was repeated under both the URA and metro district justification. Only one method is needed to finance infrastructure, and, as noted, the developer will provide the base funds in any event. As Karen Gordey reported in the Lakewood Informer, there was no required financial gap analysis completed to show that city funding was required. Therefore, with a metro district there is no need for a URA. This conclusion is also shared by a report from the Independence Institute. A URA has not required a metro district in the past.

However, Lakewood can trade URA financing for affordable housing. Lakewood is not allowed to pay for housing directly. Lakewood is not even supposed to demand any percentage of affordable housing. There is no zoning or ordinance that requires it.  The irony is that Lakewood City Council itself sunset the Strategic Growth Initiative ordinance. Under that ordinance, this development would have fallen under the allocation review system wherein Lakewood could have asked for affordable housing to permit this many units in a TRANSPARENT process. Instead, the city is now working behind the scenes to make this same thing happen.

So, through the URA, Lakewood will gain affordable housing, aka government housing or government-subsidized housing. Those units can be used to qualify for state grants for even more development in Lakewood.

“Without the Urban Renewal plan, in our case, we wouldn’t be able to deliver kind of what they want to see or their vision for this piece of land which includes housing retail and affordable housing they you know both the state and the city and the county do have a desire to have a portion of the site have affordable housing in it.“ Allie Meister, Lincoln Properties, Jan 28 2025, min 35:57

Lakewood residents will pay for The Bend development by giving the developer financing. The new taxes from that development are diverted out of the general fund, which pays for Lakewood resident services like police, and instead will pay for The Bend development responsibilities like streets and pipes.

The decision for an Urban Renewal Area is very separate from the decision to approve a metro district. The developer did not originally desire to be in an Urban Renewal Area and Lakewood may not approve a metro district as a standalone decision. But, operating together, the developer and city can trade financial incentives that residents throughout Lakewood will pay for.  The developer offers blight and gets metro district status and financing. The city offers URA financing to indirectly offset affordable housing units and gets a basis for more state grant funding.

“Municipalities are using a tool (URA) meant only for serious threats to the public as a tool for gaining a competitive advantage in economic development. Which, essentially, is a way to financially reward development partners and a method to force the public into a future desired by government planners.” -From The Empty Promise and Untold Cost of Urban Renewal in Colorado

Just like Lakewood’s deal to buy Emory Elementary, residents should know the full plan to leverage this deal for more high-density development using state grant funds from the affordable housing units. Without that knowledge, which has not been disclosed, neither the URA nor the metro district decision makes any sense.

There will be a City Council vote on the metro district and URA on Monday, May 12 that is open to public comment.

The representative from Lincoln Properties, Allie Meister, did not reply to requests for comment.

This article is written as the personal beliefs of Karen Morgan under the Lakewood Informer banner.

National Motorist Association logo

Council Passes Metro District Ordinance

Written by Lakewood News from Karen on .

Lakewood voted unanimously to pass a new ordinance for metropolitan districts on January 13, 2025. The overwhelming feeling was that Council truly believes that this ordinance is better at regulating metro districts than the basic state law. Almost every City Council Member spoke of the multiple meetings they held to work on the ordinance, which was started years earlier when a metro district was expected. In fact, former City Council Member Dave Skilling was apparently advising current Council Members, according to publicly made comments.   The new ordinance included an underlying assumption that cities had to allow metro districts. This belief was voiced by city attorneys and Councilor Rein. Several other Councilors deferred to Rein’s contributions on crafting this ordinance. Only Councilor Cruz voiced the opinion that Council could still vote “no” on a metro district application, but even she voted to approve this new ordinance.

Councilor Rein led the charge to prove Lakewood was not able to “ban” metro districts. He started the discussion by asking city attorney Lauren Stanek about banning metro districts. Although Stanek said that it couldn’t be done, there are several mechanisms other cities have used to “ban” metro districts.  Any of these mechanisms below, or none of them, allow the city to vote against metro district creation.

  1. Commerce City passed a moratorium on metro districts.
  2. Longmont passed a bill limiting metro districts to non-residential development (the vast majority of metro districts are for residential development)
  3. Westminster passed a policy of opposition.

Lakewood staff never presented any of these options, or even just the option of voting no, to City Council. However, Councilor Cruz pointed out that this ordinance does not bind Council to approving new metro districts.

As attorney Stanek* advocated, the Lakewood ordinance has some extra provisions that Lakewood hopes will provide extra safety to future residents. However, as Lakewood Informer news pointed out previously, many of those protections are limited.

*It is difficult to confirm any Lakewood staff title. In response to a request for an org chart, Lakewood Informer was told that the city didn’t have one because “it is all embedded into our HRIS system and doesn’t print out in a org chart manner“. No substitute was offered. Very few names, titles or phone numbers are located on the website.

Most Council Members agreed that these extra provisions made passing the ordinance worthwhile. They all seemed very cognizant of the dangers that metro districts pose. The hope is that future residents will do their own homework and discover anything they might object to before purchasing a home (ex. terms of extra taxes). This is more difficult than Lakewood disallowing objectionable items, but the information will be there.

Councilors Shahrezaei and Rein offered changes for additional transparency including:

  1. Hosting copies of annual reports on the city website
  2. Eliminating the possibility of a study session before approving a metro district
  3. Disclosure requirements for any board candidate that has ties to the developer

Mayor Strom said she is very supportive of this new ordinance. She says, “This is really an opportunity for the city to make sure that development is paying their own way so that our newer residents are paying and it’s through a financing mechanism that allows a developer to not have to sell a house with an extra $30,000 on top because of the sidewalks that they had to put in.”

Strom’s base assumption – that metro district housing is more affordable – has been proved untrue overall by the Anderson Economic Group. They “found that issuing bonds to finance metropolitan district infrastructure costs reduces the typical home buyer’s down payment by an average of 4% relative to a scenario in which that same home is built outside of a metropolitan district. We further projected that a homeowner’s long-term housing costs will be 2% higher over the course of a 30-year mortgage due to the debt service property taxes levied in metropolitan districts. Additionally, we found that a metropolitan district’s housing costs may be even higher…”

So they found that a metro district adds at least 2% more total costs than traditional development but developers can say the cost is 4% lower at time of sale. Someone has to pay for the sidewalks but that will ultimately be the homeowners, not the developer. This metro district bill has nothing to do with making developers “pay their own way.”

A cheaper alternative would be for the city not to demand improvements like extensive sidewalks and bike lanes. There may be people who would like to have homes with fewer infrastructure amenities in exchange for a lower cost. Or if tens of thousands is the true cost and extensive infrastructure is universally desired, telling people upfront what the cost of total home package is might allow them to finance it themselves at more favorable prices. But those options were not presented either.

Councilor LaBure echoed the “affordable housing” narrative by saying that without metro districts, Lakewood would not have any development. Other Councilors have made similar statements in past meetings. This is the official talking point of the developer-run Metro District Education Coalition (MDEC). MDEC was the only outside expert invited to City Council study sessions last year.  Competing grassroots organizations who know the dangers of metro districts were not involved.

These statements show that at its base, metro districts help developers and all Lakewood can do is try to minimize the harm to residents. Public comment online was unanimously against the creation of metro districts.

Scorecard: Regulating Metropolitan Districts

Strom: Aye

Shahrezaei: Aye

Sinks: Aye

Mayott-Guerrero: Aye

Cruz: Aye

Low: Aye

Rein: Aye

LaBure: Aye

Nystrom: Aye

Lakewood Informer

Resident generated news for Lakewood, Colorado.

Subscribe

© 2022 Lakewood Informer | All Rights Reserved
Designed by Mile High Web Designs