State lawmakers call for audit of metro districts as Colorado House weighs oversight bill
A bill in front of the Colorado House of Representatives could create an avenue for Coloradans to file ethics complaints about elected leaders of special districts, including metro districts and school boards.
CBS Colorado has been investigating the debt of one Castle Rock neighborhood's metro district. It revealed how $70 million in metro district bond debt from the 1980s -- intended to pay off infrastructure for The Meadows neighborhood -- has now ballooned sixfold, despite homeowners paying property taxes to their metro district for decades.
After that report, dozens of homeowners decided to run for the metro district board.
As Meadows residents seek to take over metro district board control in Castle Rock, lawmakers at the Colorado State Capitol are taking a closer look at metro districts.
For state Sen. Lisa Frizell, the issue hits close to home.
"I live in The Meadows," said Frizell, a Republican who represents District 2.
Frizell was not surprised to learn her community was nearly $450 million in debt.
"I've really seen a lot of kind of shady dealings by metro districts over the years," said Frizell, who is a former Douglas County assessor. "My neighbors in The Meadows are really, really concerned because they didn't have any idea of the extent of the debt."
But the debt structure in The Meadows is not unique among Colorado's 2,500 metro districts.
"That's how virtually every subdivision that's been built in the last 30 years was developed," Frizell said. "It's completely legal in Title 32 of the Colorado Revised Statutes. My concern is the lack of transparency that's available to citizens."
"It has become a growing and expanding issue in Colorado and is making it much harder on residents to be able to invest and stay in their homes," said state Rep. Tammy Story, a Democrat who represents District 25.
Story has been advocating for metro district oversight for years.
"Basically, there is no authoritative body over metro districts, not county government, not state government," Story said. "It does allow for a lot of abuses for the residents that live there in terms of the amount of taxes that they pay."
Right now, she's trying to pass a bill, HB 25-1079, that would expand the jurisdiction of the Independent Ethics Commission to include special districts. That commission currently monitors state elected officials
"You're talking about the elected school boards and their direct hires, which would be superintendents, and then the same with special districts, their elected boards and their direct hires," Story explained.
Members of the public can make complaints to the Ethics Commission, which can then investigate and issue penalties for ethics violations, including fines or legal action.
This is Story's third attempt to pass the legislation, which is currently in the House Appropriations Committee. The next step is for the bill to have its second reading on the House floor.
"I'm hoping that it's going to move through because there is no fiscal note on it for the coming fiscal year, and there's no reason to hold it there," Story said. "I'm fully anticipating it moving out, so we can move it through the process, and we ask that the jurisdiction be expanded using existing appropriations. Because we know this is a tight budget year, but the issues at hand are of significance and need to be heard."
In previous years, Story said the bill never made it out of the Senate Appropriations Committee, or it was pulled from the Senate calendar after some lawmakers threatened a filibuster.
The bill is opposed by lobbyists representing Denver Public Schools, the Colorado Association of School Boards and the Special District Association of Colorado.
Frizell is not yet familiar with the bill but supports her Meadows neighbors in their efforts to represent themselves on their metro district boards.
"Any metropolitan district, no matter where you are, it's important that you gain control of the metropolitan district board," Frizell said. "That's really what the folks in The Meadows are trying to do right now. They're actively working, and I encourage them and cheer them on."
Next week, Democratic state Sen. Michael Weissman will request a performance audit of the Department of Local Affairs' oversight of metro districts in Colorado. Frizell and Republican state Rep. Max Brooks, a fellow state representative from Castle Rock, support the audit, as does Story.
"Representative Brooks and I are actively working through the legislative audit process, and we both sit on the Legislative Audit Committee, and we are supporting an audit request that will dig deep into what's going on with metro districts in the state of Colorado," Frizell said.
Brooks and Frizell will hold a town hall 1 to 3 p.m. Saturday in Castle Rock at the Philip and Jerry Miller Library along with Republican state Rep. Anthony Hartsook. They plan to hold discussion that will include property taxes, public safety, illegal immigration and state funding issues.
Weissman has co-sponsored many of Story's efforts to increase special district oversight, including HB 1079. He said in a statement, "There are nearly 2,500 metro districts in our state with about another 100 being allowed to come into being every year. Metro districts are governments with taxing power -- a lot of taxing power. According to public reports, authorized but unissued debt by metro districts exceeds $1 trillion. Metro district residents should demand transparency from their boards and should demand that their city and county governments place careful limits on metro district debt when metro district 'service plans' are approved in the first place."
The Metro District Education Coalition shared the following statement, "While MDEC is neutral on this particular bill, we have been proud to champion several pieces of legislation in the past few sessions that offer greater resident protections, including HB21-262, HB23-110, and HB24-1267. These three bills mandate more transparency in metro district elections, audit and budget requirements, mandatory mill levy caps and debt caps in the service plan filed with cities and counties, and more clarity around how metro districts enforce covenants, and more. In addition, MDEC worked with Rep. Jodeh to prohibit metro districts from foreclosing on properties related to covenant enforcement."
MDEC is an educational nonprofit backed by several law firms, including Spencer Fane, the law firm that represents The Meadows metro districts.
John Henderson with Coloradans for Metro District Reform calls HB23-110 a "Trojan horse" with superficial transparency provisions. Henderson said in a statement, "If the industry was honest about transparency, they would tell the residents how much debt the developer authorized themselves to impose on the residents, tell the residents that the developers 'voted' to eliminate the right of residents to vote on taxes and issuing bond debt for 20 years, tell the residents how much debt will be imposed by the developers on the residents over the next 10 years, tell the residents how much more they will pay in taxes to pay developer profits, tell the residents what happened to the money that residents paid for the developed lot when they bought their homes -- money paid to developers for the cost of the land, infrastructure and developer profits before metro district financing kicked in."
Spencer Fane and The Meadows developer, the Castle Rock Development Company, did not respond to requests for comment on this story.
