The outrageous cost of buying a home in a Metro Tax District in Colorado

The outrageous cost of buying a home in a Metro Tax District in Colorado

What would you do if you came to closing on your new home, only to discover that a special tax was going to launch your tax bill to a ridiculously high price? Imagine having your taxes go from $818 to $3,500 in just one year. That’s what’s happening in the Denver area, and it’s the outrageous cost that comes with buying a home in a Metro Tax District.

These Metro Tax DIstricts—also known as Special Taxing Districts—are created by developers as a means of recouping the cost of infrastructure creation and the risks associated with development. A district can be established for a variety of reasons: to manage water resources and fire protection, for example. In the case of a Metro Tax District, the developer creates and serves on a metro district board and approves multi-million-dollar bonds. The homeowners in the district are then responsible for repaying the bonds through their property taxes. 

Doesn’t this sound like a conflict of interest? Well, if you ask the homeowners who are carrying the financial burden of what seems like deceitful developer practices, these Metro Tax Districts are bordering on a scam. The law allows developers to elect themselves to serve on the governing boards for these tax districts. Once on the board, they have the power to approve millions of dollars in bonds that property owners will be required to repay. In addition, these developers can give friends, family members, and employees the option to buy property in that district, which makes them eligible to sit on the board as well, without actually owning property there.

A 1,000% tax increase

Gail Bell was told that she could expect her property taxes at her Green Valley Ranch home to be about $50 a month. In reality, her bill was $500 a month!

"Even though people can afford to buy these houses, many of them can't afford to continue to live in them because of the taxes," Gail said. "[It’s] a system of taxation without representation that we have virtually no voice about how our tax money is spent.…There doesn't appear to be any entity who actually holds these districts accountable when there are issues such as conflicts of interests."

In fact,  the loophole-ridden law presents no requirements that the board divulge how the bond’s funds will be spent or who manages the money. The taxpayers also have no say in how the monies are disbursed, according to an investigation by The Denver Post.

According to the report, “The rates homeowners pay on those bonds are frequently higher than if the cost had been built into their mortgage. The Post found cases in which developers purchased the bonds themselves, near-guarantees of hefty profits with tax-free returns.”

Prior to a recent change in the laws, buyers were not advised of the tax burden. Now, the seller is required to disclose the fact that the property resides in a special tax district.

Property owners have begun to fight back against the financial burden of these special tax districts. Many of them are seeking seats on the boards in order to offset the imbalance of developer influence there.

Village PatioHomes: We fund our own communities!

At Village PatioHomes, we believe the cost of a community’s infrastructure—roads, sidewalks, sewer, water, and amenities—shouldn’t be buried deep within a loophole. We are fully funded for developing land, without the need for additional bonds at the homeowners’ expense!

We operate under state laws for Homeowners Associations (HOA), subject to the Colorado Common Interest Ownership Act (CCIOA). Homebuyers know the monthly HOA fee before buying a townhome in one of our neighborhoods. There’s nothing secretive, no shocking tax bills. We hold ourselves to a higher standard for ethics and integrity, and we will have no connection with a Metro Tax District project. That’s our promise to homebuyers, because we believe you should enter into this agreement with total transparency.

When a developer boasts that they function without an HOA, ask them how they fund the infrastructure—specifically, “so, do you have a Metro Tax DIstrict or Special Taxing District?”

If the answer is “yes”, beware! Your cost of ownership will likely far exceed your estimation. Rather than an HOA fee of about $250 per month, you could be looking at a tax bill of $9,000 per year.

We invite you to look at our energy-efficient, new construction townhomes and all the benefits they offer, including NO special taxes. We’re currently building in the Denver suburbs of Lakewood, Wheat Ridge, and Arvada. Make plans to experience the quality of our townhomes and neighborhoods, so you can fully appreciate the lasting value of your investment—rather than a lasting burden of outrageous taxes!