Metropolitan districts created by developers in the Denver area have been empowered to issue $255 billion in new debt, the state auditor reported Monday.
That debt capacity amounts to 36 times what Denver has invested in infrastructure and buildings during the past 25 years.
This “authorized but unissued debt” averages almost $1 billion per district and “is likely understated for the Denver metropolitan area,” the auditor reported, because about 130 of those districts – about a third – did not report their unissued debt.
In Colorado, metropolitan districts provide two or more services, such as fire protection, street improvements and water and sewer lines, to people moving into new subdivisions.
The auditor also reported that the number of metropolitan districts statewide has grown 15-fold to 653 since 1980.
The governments overseeing these districts often get incomplete reports or none at all on district finances, the auditor said.
“The large amounts of authorized but unissued debt is a concern,” the audit said, “because it can potentially lead to unanticipated tax increases” for people moving into a new district.
Local governments must approve creation of a district, but the power to issue bonds usually rests with five electors, often the developer and four associates.
The districts also have the power to levy property taxes and fees to repay their debts.
The audit on government oversight of the districts was presented Monday to members of the Legislative Audit Committee.
Committee members said they were astonished at the level of debt that developer districts could impose on taxpayers.
“Those are staggering numbers to me,” committee chairman Sen. Jack Taylor said. “Are we walking down the path of concern, if not disaster?”
The growth in the number of districts is concentrated in Adams, Arapahoe, Douglas, El Paso and Weld counties, where 255 new districts were formed between 2000 and 2004.
The audit said the districts are not consistently submitting financial reports to the governments that approved them, that some governments are not requesting them and that they perform “limited and in some cases no review” of the reports they do receive.
The audit did not cite any abuses of taxpayers by metropolitan districts. It did provide one example, “based on an actual situation,” where the owner of a $300,000 home was hit with a $513 tax increase in one year from a new district.
The report urged the state Department of Local Affairs to work with local governments to strengthen oversight of these special districts.
The audit also recommended legislation requiring annual reports from districts with unissued debt and allowing local governments to cancel unneeded debt capacity.
Staff writer David Olinger can be reached at 303-954-1498 or dolinger@denverpost.com.
Great Outdoors divvies up grants
The Great Outdoors Colorado Trust Fund issued almost $500,000 in new grants for parks, open space and wildlife preservation projects in fiscal 2006 – which ended in June.
The fund – created in 1992 to funnel half of state lottery revenues into preservation and open space projects – was close to meeting its goals, according to a state audit released Monday.
The $500,000 in new grants was almost equally divided among wildlife, state parks, open space and local government projects – as required by law, the audit said.
The fund was criticized in previous audits for not equally distributing the money.
The audit report said that while the trust has “made progress in recent years, further effort is needed.”
The total grant expenditures for the year – reflecting all projects – was $57.5 million, according to the audit.
Lottery revenues for fiscal 2006 were $50.2 million.
The difference came from accrued funds which now stand at $41.4 million.
– Mark Jaffe
