EL PASO COUNTY POLICY PLAN


 CHAPTER 1-B

 SECTION 14.0 PUBLIC FINANCE DISTRICTS

BACKGROUND
 
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.
 
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.
 
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.
 
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.
 
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.
 
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.
 
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.
 
Policy 14.1.1
Include input from existing special districts as an integral part of the development review process.
 
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.
 
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.
 
Policy 14.1.4
Encourage special districts to comprehensively plan for the resources and facilities they will need to accommodate potential future growth.
 
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.
 
Policy 14.1.6
Encourage the expansion of existing special districts to serve additional areas or provide additional functions as feasible.
 
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.
 
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.
 
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.
 
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.
 
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.
 
Policy 14.2.4
Effectively include all potentially impacted property owners in decisions regarding the creation or modification of LID’s.
 
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.
 
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.
 
Policy 14.3.1
Support alternative public financing approaches which promote a user pay philosophy where feasible and appropriate.
 


To Next Page

To Previous Page

To Index Page