Temporary moratorium enacted
With a pair of 7-2 votes, the Loveland City Council on Tuesday imposed temporary moratoriums on new applications for fossil-fuel drilling and on the creation of residential metropolitan taxing districts.
The freeze on new applications for oil and gas extraction within the city limits will extend until June 1 to give city staff time to tighten the city’s regulations to match or exceed those recently passed by Larimer County.
Meanwhile, the six-month freeze on new metro districts is designed to give the city time to ensure that developers provide more transparency for homeowners about what they’ll be paying and for how long.
Metro districts
A metro district is a type of special district similar to a school, fire or water district. Developers
establish them to finance the infrastructure — such as roads, water and sewers — necessary to support a new subdivision by collecting taxes from property owners to pay for things other local entities don’t.
New Councilor Laura Lightkovacs, who introduced the sixmonth moratorium, acknowledged that “metro districts are a very common practice in Colorado, and can be a very useful tool for developers, especially for developments that need help getting started on the infrastructure. The cost of building homes, putting in that infrastructure, has gone up so much, and with TABOR limitations came the birth of the metro tax district. The idea was that the developer would get the metro tax district, they would be able to get that funding for the infrastructure, they’d build the house, and then the homeowner would help pay back those infrastructure costs over the course of 20, 25, 30, 40 years, depending on whatever the length of the metro tax district was.
“Unfortunately,” she added, “what we’re seeing here in Loveland and across the state is that there aren’t additional guardrails in place for these metro tax districts, and damage is being done to our residents. There’s a lack of transparency for prospective buyers. So when you’re going to buy a home, you’ve put
in an offer, they’ve accepted it, metro tax districts don’t have to be revealed to the buyer until closing. And even then, no one needs to tell them, ‘Oh, you need to check this out. There could be an additional tax burden for you. It’s part of that mountain of paperwork you sign at closing.
“And so a lot of the residents I’ve heard from in these tax districts, they didn’t realize what they were getting into. A lot of people don’t realize the developers can refinance the life of the loan and extend out the payoff date, which means that resident is on the hook for longer than they originally thought for paying off those metro tax fees.
“Homeowners will be on the hook and they don’t have a lot of say.”
Light-kovacs said she would like Loveland’s city staff to look into ways to make the process more transparent for homebuyers, and would like the majority of metro district board members to be homeowners in those districts. “When you buy a home, you know what your mortgage is going to be,” she said. “You know your mortgage rate. You know your proposed payoff date unless you refinance. The same should be true if you’re buying in a metro tax district. They need to know what is the debt when I’m buying in, how much has already been paid off, how much am I on the hook for, and is there a possibility this will be extended.
“And that needs to be presented to them in an easy-to-find, digestible format,” she said. “It shouldn’t be something that you need to be a financial planner or a lawyer to understand.”
Councilor Steve Olson suggested that the city’s staff could be instructed to look into alternatives to metro districts such as special improvement districts, and present some findings at a study session within three months, and an amendment to that effect was passed.
“My only concern,” Light-kovacs responded, “is, in the meantime, that metro districts are formed that are predatory in nature, and we didn’t catch it, and we could have.”
Mayor Jacki Marsh said “offers on a home or residence in a metro district should come with something similar to the warning on a cigarette package. It should be outlined in red: ‘You are buying in a metro district.’ And it needs to disclose the amount of debt: What will the amount of debt be at buildout, and how much will that particular household owe toward that debt.”
The motion for the sixmonth moratorium on new metro districts, with the provision for a study session within three months, was passed 7-2, with councilors Patrick Mcfall and Dana Foley dissenting.