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CHAPTER 1-B |
SECTION
14.0 PUBLIC FINANCE DISTRICTS |
- BACKGROUND
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- Many facilities and services
addressed in Sections 9.0 Transportation, 8.0 Parks and Open
Space, 10.0 Water and Wastewater and 12.0 Other Utilities and
Services of this Plan are provided and funded through separate
public financing rather than through County government. In many
cases, the County may not have the authority under statute to
provide these functions. In other situations, the County could
directly provide or maintain facilities, but public
financing districts are the preferred mechanism because they
allow specifically defined areas to pay the cost of facilities
and services which are considered to uniquely benefit them. A
listing of public financing
districts currently in use in this County is included in
the appendix.
- Special districts organized
under Title 32 of the Colorado Revised Statutes, are the most
common form of public financing utilized in unincorporated areas.
Altogether, a total of 47 special districts operate in some capacity
in the County. These include single and double-purpose districts
such as fire, water and sanitation districts or metropolitan
districts which are authorized to provide two or more services.
Almost all unincorporated residents are served by one or more
special districts. Unless specifically limited at the time of
their formation, these districts have the authority to construct
and maintain facilities, annex and condemn property, incur general
obligation and revenue bond debt, and collect property tax through
a mill levy. The process of formation requires approval of a
service plan by the Board
of County Commissioners and District Court prior to an election
participated in by affected property owners. Once they are formed,
special districts are governed by a board of directors elected
from among district residents.
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- Local Improvement District
(LID’s) have traditionally been used to some extent in the
County to finance the construction of improvements (such as roads)
which benefit certain defined areas. The powers of LID’s
are much more narrowly defined than those of special districts.
Because LID’s do not have the power to impose any taxes,
their value is primarily for one-time capital improvement projects
which do not have the requirements for ongoing maintenance or
administration through the district. LID’s are not governed
by independent boards of directors but rather by the Board of
County Commissioners.
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- Other financing mechanisms
which may be available for use by unincorporated areas include
development exaction’s or charges, regional services authorities,
certain special assessments and charges, and public improvement
districts. These options are discussed to some extent in the
technical appendix.
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- ISSUE 14.1 Effectively
Use Special Districts
- Special Districts are
a proven mechanism for providing needed facilities and services
to unincorporated areas. They provide a potential for local government
control and representation and the flexibility to respond to
the unique needs of different sub-areas of the County.
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- One important concern
with special districts is that this mechanism has been used in
the past to fund major infrastructure for undeveloped areas in
anticipation of future tax revenues. In cases where development
has not occurred at the rate originally projected, the result
has been very high tax exposure to new residents and bankruptcies
in some cases. A related disadvantage is that the County has
very limited influence over special districts once their service plans are approved.
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- Finally, there may be
some inefficiencies and inequities associated with multiple special
districts. These include the inability to capture economies of
scale in the case of numerous small districts, and equity issues
associated with whether a property is located inside or outside
of a district which financially supports a facility or service
of regional benefit such as a major roadway.
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- Goal 14.1
Recognize
and promote the essential role of special financing districts
in the provision and maintenance of public facilities and services
in unincorporated areas.
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- Policy 14.1.1
- Include input from existing
special districts as an integral part of the development review
process.
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- Policy 14.1.2
- Encourage coordination
among existing and potential future special districts, municipalities,
utilities and other entities in order to provide needed facilities
and services in the most cost-effective, equitable and environmentally
sensitive way possible.
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- Policy 14.1.3
- Discourage the use of
special districts as a vehicle to fund substantial amounts of
required infrastructure in predominantly undeveloped areas, and
require the conservative phasing of infrastructure construction
during the initial phases of development.
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- Policy 14.1.4
- Encourage special districts
to comprehensively plan for the resources and facilities they
will need to accommodate potential future growth.
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- Policy 14.1.5
- Encourage the careful
preparation and review of special district service
plans in order to ensure that development and financial assumptions
are reasonable, all plausible alternatives have been considered,
services and boundaries are well- defined, and contingencies
have been anticipated.
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- Policy 14.1.6
- Encourage the expansion
of existing special districts to serve additional areas or provide
additional functions as feasible.
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- Policy 14.1.7
- Discourage the creation
of new or expanded special districts which may have the effect
of stimulating more growth or higher densities than those which
are acceptable in adopted Small Area and other plans.
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- ISSUE 14.2 Consider
Local Improvement Districts
- LID’s have been successfully
used over many years in the County to fund the upgrading of specific
facilities, often for acceptance into the County maintenance
system. They can work effectively in those cases where another
mechanism is in place for administration and maintenance; however,
there have been problems with larger LID’s which have been
set up to fund major regional road improvements. Buildout has
not always occurred as anticipated, resulting in nonperformance
of bonds. In cases where it is not possible to clearly allocate
all benefits from an improvement to specific properties, there
have also been concerns with funding equity. Another aspect of
this same issue arises when general fund public resources are
used to finance an improvement, such as a regional roadway, in
one area, while a LID is used in another similar area. Amendment
One (TABOR) also now complicates the process of creating
and operating LID’s because district financing counts toward
the County’s revenue and spending limitations and because
elections can only be held at prescribed times. TABOR and other
requirements may not make it cost-effective to use LID’s
for projects of limited financial scope.
- Goal 14.2 Judiciously support the use of Local Improvement
Districts.
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- Policy 14.2.1
- Support the use of Local
Improvement Districts (LID’s) in situations where there
is an existing deficiency, if it can be demonstrated that the
benefits of the improvements will accrue primarily to those properties
which are being assessed, and a mechanism will be in place for
future maintenance and operations.
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- Policy 14.2.2
- Carefully design LID boundaries
and assessment methodologies to ensure there is a direct linkage
between assessment costs and benefits to properties.
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- Policy 14.2.3
- In the case of improvements
which may partially benefit a larger regional area, encourage
the use of improvement districts in combination with other revenue
sources.
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- Policy 14.2.4
- Effectively include all
potentially impacted property owners in decisions regarding the
creation or modification of LID’s.
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- Issue 14.3 Facilitate
Alternative Public Financing
Methods
- As noted in Issues 14.1
and 14.2, special districts, and to a lesser degree, local improvement
districts, provide excellent mechanisms for provision and maintenance
of many types of facilities and services in the unincorporated
County; however, these financing vehicles each have limitations.
Special districts often do not lend themselves to projects of
limited scope and may result in a perception of "too much
government" for some applications. Conversely, local improvement
districts have limited powers, and therefore are not flexible
enough to address some financing needs. For example, local improvement
districts cannot provide for operation and maintenance of facilities.
- Although County powers
are limited, State statutes do allow a variety of additional
mechanisms for the financing or operation of infrastructure.
These include development exactions and certain impact fees,
special assessments, special/service fees (utility charges),
public improvement districts, associations and arrangements with
municipalities.
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- Goal 14.3 Support the use of equitable and reasonable
alternative public financing
approaches in situations where special or local improvement district
mechanisms are not feasible.
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- Policy 14.3.1
- Support alternative public
financing approaches which promote a user pay philosophy where
feasible and appropriate.
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