El Paso County Title 32 Special District Issues

NEPCO Meeting

January 12, 2008

Carl F. Schueler, AICP

Long Range Planning Division Manager

El Paso County Development Services Department

(719) 520-6316

Carlschueler@elpasoco.com

I am used to being taken seriously on issues I supposedly know about

First Caveat

I know little and can say little about Tri-View Metropolitan District

A Few County-wide Numbers

El Paso County Population- 585,000 Tax Parcels in County- 255,000 Active Taxing Entities- 251* Unique Geographic Tax

Combinations- 1,000

The last 2 numbers are growing faster than the first 2

*40 more added just this year

Why Have Title 32 Special Districts in the Unincorporated County?

1) Here to Stay/ We have had some for about 50 years

2) Governmental entity for essential services including fire protection; water and sewer

3) Regional Financing Tool

4) Provide tax exempt financing vehicle for public infrastructure-also shifts costs to end users of facilities and services

Fire Districts- 2006

merger

New oneMetro- dist

service

Water and Sanitation Districts- 2006

County Metropolitan Districts- 2006

About 25 more created or in process

Total Numbers in El Paso County Unincorporated About 110 Total Title 32 Districts

75 primary districts; rest are sub-districts

About 60 Municipal Primary and sub- or related-districts

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24 new or amended unincorporated districts in 2006 Plus a bunch in cities

Financial Information

Total Outstanding Debt:

$145 Million +

Total Authorized G.O. Debt:

$1.27 Billion +

Based on partial information tabulations

Trends

Metropolitan districts Activity in cities and in un-incorporated County Financing versus service function “Master” or multiple districts Higher mill levies and caps Including “the kitchen sink” Smaller districts (little guys don’t want to be left out) Increasing interactions Districts have become big business The next Service Plan almost always presents

something new

Policy Areas

Mill Levy Caps Tax Overlap/ Authorized

Debt Market Studies Master Districts Proliferation Developer Districts Local Versus Regional

Improvements

IGAs Material Modifications Amendments Private Placements Purchase of Assets Disclosure Developer Funding

Agreements HOA Replacement

Developer Districts

Vote is pre-ordained Property owners move in to the project with

many of the financing obligations in place. Later they may take over the Board

Multiple or Sequential Districts

Conventional representative districts than are sequenced to the developer can control the financing decisions for a phase of the project before relinquishing control of the phase. There is a legitimate rationale for this in the

sense that the developer often makes his/her money on the last phases of the project

Master Districts

Maintains developer control over the Board through the life of the project by using a combination of service/control districts and financing districts

IGAs done at the front end Financing districts have limited control over

financing decisions The major concern (besides complexity) is

one of ultimate representation

Special Citizen’s Advisory Councils

Board of County Commissioners-appointed Substitute for the lack of formal controlling

representation by citizen’s in master districts. May not really be needed in many master-

district situations Current EPC proposal is to possibly reserve

the BOCC option for CACs, but not implement unless there are complaints

Disclosure

Standard Forms required with Service Plans, plats and annually

Recorded, and will be posted on web What is disclosed

Mill levies (actual and potential) Attempt to distinguish from County taxes Limited representation (in case of master

districts) Contact information (push questions back to

districts

Sample Contact Information

Mill Levy Caps- Full Service District

50 Mills for Debt Service 10 More for Operations Maybe 15 More for Fire Service- limited

geography Maybe 10 More for HOA Functions

Proliferation

Statute and County Policy recommend against

))))) But this is a bit like pushing a rope

For at least 3 reasons: Financing Districts are inherently development

specific Districts are sometimes purpose specific Trend toward master and multiple districts

Tax Overlap Argument

Premise is that maybe it is unfair that developer districts can de-TABOR any amount of debt while existing local governments have to fight the good fight to get any debt at all approved.

And, the further premise is that once these homeowners are saddled with combined triple-digit mill levies, they will be disinclined to vote in bond issues for the governments still under TABOR (cities, town, counties, school districts, fire district etc.)

Experience does not always bear this out In El Paso County the areas with the highest

Metropolitan District tax burden seem to vote in school increases

At least so far…

Market Studies and Financing Plans

El Paso County is probably moving away from these Financing Plans tend to be a best-guess

snapshot- are helpful in evaluating the feasibility of the Service Plan

Unrealistic to make binding Market studies are a lot like appraisals

Tough to do in a dynamic environment Pretty highly disclaimed anyway County is focusing more on limits in Service

Plans and in statute- and on disclosure

Local versus Regional Improvements

In the old days (not that long ago) Districts financed water, sewer and the big

facilities Developers privately financed the local roads,

curb gutter and sidewalks etc. as part of subdivision process

Now the trend is toward district financing of the local improvements

And, under Gallagher there is less residential bonding capacity

Kitchen Sink - continued

Shift from private to public financing may reduce sale tax income from building materials Maybe not that big a deal

Also, should we worry about the priority of what gets funded?

HOA Function

New statutory authority Enforcement and common area maintenance

There is current overlap on common area maintenance

Creates incentive to increase mill levies and caps

Potential concern with representation if no HOA boards (with master districts)

Potential concern with tax equity across larger districts

Shift from HOA Assessments to District Financing Equates to Much Higher Property Taxes

Assume $150/ month in HOA assessments = $1,800 per year

This is well in excess of what most homes in El Paso County pay in total property taxes now- even those in Metropolitan Districts

Developer Funding Agreements

These typically are loans (advances) from developer to district in advance of bonding or sufficient tax or fee revenue.

Agreement (limited) of the district to issue debt once it has bonding capacity

Some reliance is par for the course with developer districts Costs typically accrue prior to revenues and/ or

prudent bonding County concern is the early “piling on” of these future

debt obligations could outstrip the capacity of the district

EPC Approach to Developer Funding Agreements Allow for up to 20 years

This creates the potential for a 50-year debt No compound interest, or interest greater

than 2% more than prime rate. Describe in Service Plan Disclose in Annual Report and Disclosure

Statement

Abstruse Issue

Effect of all these districts on credit ratings of general purpose local governments, and other established taxing entities

Relationships Among and With Districts Developer Agreements IGA’s

Cooperative or “Dueling” Districts Districts as active or passive applicants

Approval of location Eminent domain District as land use applicant Cost recovery applicant Site Plan approval

Carl’s house in City of Colorado Springs (2005 taxes) EL PASO COUNTY     6.142   EPC ROAD and BRIDGE SHARE    0.784   CITY OF COLORADO SPRINGS     4.944   EPC-COLORADO SPGS ROAD & BRIDGE SHARE

    0.784   COLO. SPGS. SCHOOL NO. 11     44.045   PIKES PEAK LIBRARY     3.515  SOUTHEASTERN COLO WTR CONSERVANCY    

0.941 

    Total    61.155 

Similar house in Meridian Ranch

EL PASO COUNTY     6.142   EPC ROAD and BRIDGE SHARE    1.568   Falcon Fire District 5.712    FALCON SCHOOL NO. 49     45.547   PIKES PEAK LIBRARY     3.515  Upper Black Squirrel District 0.706 Woodmen Road Metro District 10.800* Meridian Ranch Metro District 25.000**

    Total    98.990*can go to 25.0 **Can go to 50

Home in Jackson Creek

Difference

62 % (Unlikely) Potential to go to 119% higher with

mill levy caps Focus of BOCC is disclosure

El Paso County Approach

Update and Maintain Data Increase Disclosure

Standardized Annual Report and Disclosure Form Create Assessor’s Web interface

Update Polices Revise Procedures Model Service Plans

Single Multiple Master