1. Presented by: Deborah Early Icenogle Seaver Pogue, P.C.
Digging up Dirt.   Real Estate Due Diligence in Metropolitan District Projects
Presented by:
Deborah Early
Icenogle Seaver Pogue, P.C.
Pinnacle Consulting Group, Inc.

2. What is a Metropolitan District?
Title 32 Special District
Local Government
An independent unit of government formed under the Special District Act (§§ et seq., C.R.S.)
Districts are quasi-municipal corporations and political subdivisions of the State
Over 1400 Metropolitan Districts in Colorado
Metropolitan District
Providing two or more specific services, including but not limited to:
Domestic Water, Sanitary Sewer, Roadways, Irrigation Water, Park and Recreation, Transportation, Traffic and Safety Controls
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3. Metropolian Districts
Powers include, but not limited to, the ability to:
Enter in contracts affecting the affairs of the District
Borrow money and incur indebtedness
Levy and collect ad valorem taxes
Impose fees, rates, penalties or charges for services, programs, facilities furnished by the district
Acquire, construct operate and maintain public improvements
Provide covenant enforcement and design review services
Pinnacle Consulting Group, Inc.

4. Why Metropolitan Districts Are Typically Created
Public infrastructure can be financed over time
Public infrastructure can be financed at tax- exempt interest rates
Property owners can deduct taxes paid to the district on their federal income tax returns
New infrastructure is funded by those who will benefit (Constituents within the District) and not all City residents
Permanent operation and maintenance of certain public improvements that are not dedicated to the City

5. Construction of Capital Improvements
Constructed by the District
Public Project subject to State regulations
Public Bidding format, etc.
Funding advanced by the Developer
The District will review the improvements and project documentation.
Future reimbursement to the Developer for the funding advances.
Conveyed to the appropriate municipality, district or retained by the Metropolitan District.
Constructed by the Developer
Private competitive bidding process
Funding paid directly by the Developer
Future acquisition or dedication of the improvements from the developer to the District.
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6. District Operations Administration
Daily Operations
State and Local Compliance
Contract Administration
Board Meetings
Construction of Public Infrastructure and Facilities
Facility Operations
Facilities retained by the District
Most common improvements operated
Parks
Street landscaping
Open space
Irrigation systems
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7. Formation and Organization of the Metropolitan District
Step 1: Service plan submitted to the Municipality or County, who may approve, deny, or approve with conditions
The City may require specific provisions
The service plan limits the district’s authority and sets parameters within which the district can operate
Step 2: Petition for district organization submitted to district court
Following Municipality or County approval of the service plan, Court holds a hearing and orders a formation election be held
Step 3: Election
Organize district/authorize taxes and debt (TABOR)
Elect initial district board of directors
Step 4: Court orders organization of district if the election is successful
Step 5: District organization is effective upon recording of Court order
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8. Governance of the District
Districts are independent governmental entities separate and distinct from the Municipality or County
Districts are governed by an elected board of directors
Regular elections are held in May of even-numbered years
Eligible electors of a district participate in election
Municipality or County is not liable for debt or other obligations of a district
Not a government of general jurisdiction
No police power
No land use regulatory authority
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9. Laws Governing District Actions
District actions are subject to the following:
Local Government Budget Law, §§ et seq.
Local Government Audit Law, §§ et seq.
Open Meetings Law, §§ et seq.
Local Government Election Code, §§ et seq.
Open Records Act, §§ et seq.
Public Bidding Requirements for Construction Contracts, § (1)(d)(I), C.R.S.
Colorado State Constitution
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10. Due Diligence for Purchasing Property Located Within a Metropolitan District
I. Review Title Commitment to Determine if Property is within Metropolitan District - Order Organizing District - Public Disclosure Statement - Fee Resolutions - Resolution Approving the Service Plan II. Review Division of Local Government Website (

11. Due Diligence for Purchasing Property Located Within a Metropolitan District
III. Open Records Act Request - Service Plan - Fee Resolutions - Bond Transcripts - Mill Levy Certifications - Budgets - Developer Reimbursement Agreements - Unpaid contractors - Annual Reports - Intergovernmental Agreements - Bills of Sales/Conveyance Documents

12. Due Diligence for Purchasing Property Located Within a Metropolitan District
Evaluating District Impact On Property
A. No development – Can district assist your client in developing the property?
Review Service Plan for powers and authority – Amendment needed?
Is the election authorization sufficient?
Is there any outstanding debt?
Mill levy caps?
Debt Caps?
Ability to impose fees, rates, tolls, charges
©Copyright 2006 – Pinnacle Consulting Group, Inc.

13. Due Diligence for Purchasing Property Located Within a Metropolitan District
B. Existing Development - Public improvements constructed to serve the Property – Completed? - Outstanding debt/Revenue sources pledged for payment (mill levy, fees) - Debt service payments timely? - Reimbursement owed to Developers or other entities - Maximum Debt Cap - Maximum Mill Levy for Debt - Maximum Mill Levy for O&M - Capacity to levy an O&M levy? - Fees Imposed - Who controls the Board of Directors? - For multiple district structures, how much revenue is the District contractually obligated to transfer to other districts?