The city of Thornton regulates metropolitan districts very little, which developers have taken advantage of. So, the city is looking to close several loopholes, city staff explained at a city council …
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The city of Thornton regulates metropolitan districts very little, which developers have taken advantage of. So, the city is looking to close several loopholes, city staff explained at a city council planning session July 6.
Thornton staff presented to city council seven of 14 total major changes to the city’s metro district rules. Most revolved around the various mechanisms used to assess homeowners’ property taxes to ultimately generate revenue to pay off the debt for building a subdivision but that also often profits developers.
A developer takes out debt to build a new subdivision, and metro districts, a small government entity, collects the property tax revenue to pay off that debt. When a metro district is formed, employees of the developer building that subdivision are on the metro district board, though the goal is to ultimately give control to homeowners.
Because the developer controls the cost of construction and thus, how much debt it takes out, and the metro district that pays back the debt, the developer oversees both ends of the deal.
The proposed changes to Thornton’s metro district rules presented at the recent planning session seek to minimize those opportunities for abuse, primarily through regulating the taxes and fees that developer-controlled metro districts impose on homeowners.
“The collective impact of the regulations will significantly reduce the opportunity for abuse,” said Jeff Coder, deputy city manager of city development, at the planning session.
Thornton has a metro district mill levy cap — mills are the tool used to calculate a homeowners’ property tax — of 55 mills. However, if a metro district’s debt is less than or equal to 50 percent of the subdivision’s total assessed value, the mill levy cap becomes unlimited, thus potentially raising property taxes. A proposed change from city staff is to keep the cap of 55 mills and, if there is a transition to unlimited mills, that city council or homeowners (depending on how many people are living in the subdivision) must approve it first.
Another proposed rule change is to clarify the definition of debt to limit the items for which developers can tax homeowners. The new rules would regulate the operating mill levy, or taxes that generate revenue for the neighborhood’s maintenance, and fees that developers will assess to homeowners for miscellaneous costs.
With the city being stricter about mill levies, Coder said it’s also crucial to regulate fees because developers might impose additional fees to compensate for declines in mill levy-generated tax revenue.
Other proposed rule changes would require to be better about engaging homeowners and disclosing important information about taxes and fees.
Councilors were pleased with the proposed changes that staff presented at the planning session. “I mean, we know the reality. The developer, they don’t want any rules. So, this is somewhere in between,” said Councilman Sam Nizam.
Some of the proposed rules include exceptions for developers, but only with approval from city council. Nizam added, “It’s going to come back to the council and the council will decide if there’s overreach or if they (developers) need more money.”
Councilor Julia Marvin asked if any of the proposed changes prevent developer employees on metro district boards from disincentivizing homeowners to run for the board, a tactic the Northglenn-Thornton Sentinel and Colorado Politics investigated in the Willow Bend Metro District.
Coder replied that the changes don’t directly prevent that, but “with these recommended limitations and requirements, I think it would be less attractive for developers to stay on the board because there isn’t anything left on the table.”
City staff plan to present the remaining proposed metro district rule changes to council at a future planning session. After that, staff will draft an ordinance for council’s formal vote.
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