Metro districts help builders pay for roads, utility extensions in new Pueblo developments

Pueblo developers are turning more and more to the use of metropolitan districts to help fund costly infrastructure like streets, water and sewer lines that can make proposed developments a financial reality. 

Those costs are then paid through an additional property tax assessed on owners of new residences and new businesses located in the subdivisions. 

Pueblo City Council approved metro districts for three developments at its Sept. 13 meeting. The metro districts will operate in the Pikes Peak Park, Pastora Ranch and Villa Bella subdivisions. 

Pikes Peak Park is a 74-acre site located north of West 24th Street and east of Pueblo Boulevard which is owned by NeighborWorks Southern Colorado and was annexed into the city in 1965 and 1973. 

The development will feature some affordable homes. 

Pastora Ranch is a 100-acre site annexed in 2004. It is located south of El Camino at the far southwest end of the city and Bandera Boulevard will be extended to serve the subdivision. 

Villa Bella is a 562-acre residential development that initially was approved by Pueblo City Council in 2008. It is owned by Landhuis and is located east of Colorado State University Pueblo campus. 

All three developments are opting for metro districts which are quasi-governmental districts authorized by state statute. The reason is simple: the districts have the ability to apply for low-cost bond financing. 

According to Denver attorney Blair Dickhoner, who drafted service plans for all three of the subdivisions, the attraction to form the districts comes when no other public entity, such as the City of Pueblo, is willing or able to fund the public improvements necessary for the new development. 

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Bond financing can be repaid over a maximum of 30 years while conventional construction financing through a bank has to be paid back in three to five years, said Scott Hobson, acting director for Pueblo Planning and Community Development. 

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Metro district residents will pay more property tax

With a metro district, homeowners or business owners who buy into the subdivisions will pay an additional property tax mill levy in addition to regular, city, school and other taxes on their annual property tax bills. The property owner pays the property tax to the metro district and the district uses that money to repay the bonds, Hobson said. 

An advantage of that is “a resident pays property taxes to help pay for infrastructure only in the general area where they live,” Hobson said. 

If developers don’t go the metro district route to pay for infrastructure, they would have to pass the costs on upfront when selling the lots, Hobson explained. 

“These are districts where the people still have to vote to tax themselves and there is typically a mill levy cap and guidelines for collecting taxes,” Hobson said. 

Pueblo already has a couple of metro districts within city limits, one of which encompasses Thunder Village, the commercial area of Villa Bella still owned by Dan DeRose and the 90 residential lots which were purchased by Richmond Homes for development. 

North Vista Highlands subdivision also has metro districts. Bonds were issued to help cover the cost of extending Walking Stick Boulevard, as well as utility extensions and stormwater ponds. 

Living in newer subdivisions with metro districts "does make it more expensive,” Hobson said. 

“If you are going to be moving into these new developments, a lot of them have metro districts where, as a property owner you are paying additional property taxes. The other option is if you weren’t in a metro district you would be paying for that infrastructure on a lot-by-lot basis — it's built into the price of the lot,” he said. 

“You are not getting off the hook as a buyer paying your share of what it cost to put the road in,” Hobson said. 

Metro district residents will still get city services

Those residents also will continue to pay Pueblo city property tax to cover police and fire services because the metro districts are not allowed to duplicate services provided by the city, Hobson said. 

"Some of these developments they are going to build and operate their own parks – smaller-scale neighborhood parks,” Hobson said, and metro district taxes would pay for their upkeep as well. 

What it all boils down to is Pueblo is growing. 

“There is a need for residential homes in Pueblo that exists today that may not have been as prevalent (when the subdivisions initially were annexed years ago). We are seeing more building permits,” Hobson said, pointing out 18 single-family home permits were recently applied for within a one-week period. 

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Chieftain reporter Tracy Harmon covers business news. She can be reached by email at tharmon@chieftain.com or via Twitter at twitter.com/tracywumps.