Here is the full series by the Denver Post on Special Districts plus commentary articles and letters to the editor.
Thank you Megan Shrader and David Migoya, your editors and the Denver Post.
With Friday deadline looming, scores of metro district residents are running for board seats
Faced with resident takeovers, metro district developers secure their position — and pocketbooks
Faced with resident takeovers, metro district developers secure their position — and pocketbooks
Colorado metro district debts can take homeowners decades to pay off
How developers use bonds, mill levies to ensure they are repaid
There is little transparency for metro district fees that are supposed to benefit the community
Carroll: In the Wild West of Colorado’s metropolitan districts, developers can take land by force
Guest Commentary: City officials must heed the red flags flying over Colorado’s special districts
Editorial: Rein in the unlimited taxing powers of developers
http://digital.olivesoftware.com/Olive/ODN/DenverPost/Default.aspx
John Henderson
Denver Post Editorial: Disclose metropolitan district tax rates on real estate listings
Colorado lawmakers will return to the Capitol’s iconic gold dome in Denver next month, and they should make protecting Colorado homebuyers and increasing home affordability a top priority.
The Denver Post’s David Migoya uncovered a massive fault line in Colorado’s home and condo building: Almost every new home in this state is encumbered by a developer-created and -controlled metropolitan district. Many of those districts have abused taxing and bonding authority, maximizing the developer’s return on investment and encumbering future homeowners with millions in undisclosed debt. The payments on that debt, done through property taxes, can make a monthly mortgage payment unexpectedly unaffordable if homebuyers are not prepared. In extreme cases, the extra tax payments can force someone to sell only a year or two after moving in or even to go into foreclosure.
The debt is for infrastructure in the new neighborhood, townhome or condo building — water mains, sewer, streets, sidewalks, etc. — but there is no evidence that developers are reducing the prices of homes for sale. Part of the reason for the lack of price adjustment is that homeowners simply aren’t aware of the added costs in these areas, especially in newly formed metropolitan districts where there is no prior tax record to rely upon.
Fortunately, the first of many steps to rein in these out-of-control metropolitan districts is the easiest, and it should garner the support of developers, real estate professionals and consumer advocates. Lawmakers should pass a bill requiring disclosure of the property tax rate — also known as the mill levy — on all real estate listings, including a “check-the-box” disclosure if the home is in a special taxing district. In lot sales or new construction sales, the disclosure should include the developer or homebuilder’s anticipated metro district tax rate, something they have set themselves while controlling the district and issuing debt.
We know this could be onerous to real estate professionals, but it’s important enough for buyers to have this information upfront that it should be mandatory. The Colorado Division of Real Estate could make rules for seller disclosure that ensures transparency while not being overly burdensome to the seller or the real estate professional.
Already, most real estate listings include disclosures of homeowners association (HOA) fees, essential information when considering how much home in a neighborhood a person can afford. Adding mill levy information will simply give homebuyers more control over the most important financial decision of their life.
For example, a home in older, not-redeveloped areas of the city and county of Denver would have this disclosure:
City and County of Denver: 28.3 mills
School District #1: 48.2 mills
Urban Drainage & Flood Control District: .8 mills
Total: 77.3 mills
A home that is in the city and county of Denver but also in the Stapleton development would have this disclosure:
Westerly Creek Metro: 60.2 mills
City and County of Denver: 28.3 mills
School District #1: 48.2 mills
Urban Drainage & Flood Control District: .8 mills
Total: 137.5 mills
A homebuyer then could do an easy calculation: Take the asking price of a home — let’s say it’s $500,000 — and multiply it by the state’s assessment rate and then by the tax rate. So outside of Stapleton, the taxes would cost $2,763 a year or $230 a month for a mortgage that rolls property taxes into a monthly escrow payment. Inside Stapleton, the taxes would be $4,915, or about $409 a month. Assuming no change in down payment, that extra $180 a month in a 30-year mortgage could pay for an additional $35,000 outside of Stapleton at a 4% interest rate.
Some homebuyers save for years to have just enough to cover a down payment and closing costs. If these additional costs are being disclosed at closing or a few days before, it’s too late for a buyer who has already invested hundreds of dollars into an inspection and appraisal. The time for disclosure is at the very beginning of the process when someone is picking houses in their price range to tour.
To send a letter to the editor about this article, submit online or check out our guidelines for how to submit by email or mail.
Editorial in today’s Denver Post:
Denver Post Editorial: Disclose metropolitan district tax rates on real estate listings
Colorado lawmakers will return to the Capitol’s iconic gold dome in Denver next month, and they should make protecting Colorado homebuyers and increasing home affordability a top priority.
The Denver Post’s David Migoya uncovered a massive fault line in Colorado’s home and condo building: Almost every new home in this state is encumbered by a developer-created and -controlled metropolitan district. Many of those districts have abused taxing and bonding authority, maximizing the developer’s return on investment and encumbering future homeowners with millions in undisclosed debt. The payments on that debt, done through property taxes, can make a monthly mortgage payment unexpectedly unaffordable if homebuyers are not prepared. In extreme cases, the extra tax payments can force someone to sell only a year or two after moving in or even to go into foreclosure.
The debt is for infrastructure in the new neighborhood, townhome or condo building — water mains, sewer, streets, sidewalks, etc. — but there is no evidence that developers are reducing the prices of homes for sale. Part of the reason for the lack of price adjustment is that homeowners simply aren’t aware of the added costs in these areas, especially in newly formed metropolitan districts where there is no prior tax record to rely upon.
Fortunately, the first of many steps to rein in these out-of-control metropolitan districts is the easiest, and it should garner the support of developers, real estate professionals and consumer advocates. Lawmakers should pass a bill requiring disclosure of the property tax rate — also known as the mill levy — on all real estate listings, including a “check-the-box” disclosure if the home is in a special taxing district. In lot sales or new construction sales, the disclosure should include the developer or homebuilder’s anticipated metro district tax rate, something they have set themselves while controlling the district and issuing debt.
We know this could be onerous to real estate professionals, but it’s important enough for buyers to have this information upfront that it should be mandatory. The Colorado Division of Real Estate could make rules for seller disclosure that ensures transparency while not being overly burdensome to the seller or the real estate professional.
Already, most real estate listings include disclosures of homeowners association (HOA) fees, essential information when considering how much home in a neighborhood a person can afford. Adding mill levy information will simply give homebuyers more control over the most important financial decision of their life.
For example, a home in older, not-redeveloped areas of the city and county of Denver would have this disclosure:
City and County of Denver: 28.3 mills
School District #1: 48.2 mills
Urban Drainage & Flood Control District: .8 mills
Total: 77.3 mills
A home that is in the city and county of Denver but also in the Stapleton development would have this disclosure:
Westerly Creek Metro: 60.2 mills
City and County of Denver: 28.3 mills
School District #1: 48.2 mills
Urban Drainage & Flood Control District: .8 mills
Total: 137.5 mills
A homebuyer then could do an easy calculation: Take the asking price of a home — let’s say it’s $500,000 — and multiply it by the state’s assessment rate and then by the tax rate. So outside of Stapleton, the taxes would cost $2,763 a year or $230 a month for a mortgage that rolls property taxes into a monthly escrow payment. Inside Stapleton, the taxes would be $4,915, or about $409 a month. Assuming no change in down payment, that extra $180 a month in a 30-year mortgage could pay for an additional $35,000 outside of Stapleton at a 4% interest rate.
Some homebuyers save for years to have just enough to cover a down payment and closing costs. If these additional costs are being disclosed at closing or a few days before, it’s too late for a buyer who has already invested hundreds of dollars into an inspection and appraisal. The time for disclosure is at the very beginning of the process when someone is picking houses in their price range to tour.
To send a letter to the editor about this article, submit online or check out our guidelines for how to submit by email or mail.