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http://www.imakenews.com/ortenhindman/e_article000064152.cfm
May 2, 2001
Special Districts and Metropolitan Districts
What are they, What do they do and How do they impact Associations?
Introduction
A Special District is a quasi-municipal corporation and political subdivision that provides 1) improvements and/or 2) operates public facilities for residents within the District. Special Districts were first authorized in 1949 to provide services in rural and unincorporated areas. Now, however, they are used in urban areas as well. There are currently over 1000 Special Districts in Colorado. Special Districts may provide a range of services including fire protection, parks and recreation facilities, development of infrastructure, mosquito control, safety protection, sanitation, solid waste disposal or collection and transportation, street improvement, television relay and translation, transportation and water. A Metropolitan District is a type of Special District that provides two or more of the above services.
Special Districts are often created by community developers as a means of financing the infrastructure of the development. If Special Districts are not utilized, developers finance the infrastructure through conventional financing for which the developer is liable. These expenses are passed on as an increase in the per unit cost of each new home within the development. Additionally, if a Special District, instead of a community association provides services, the assessments of the association will be lower and thus the properties will arguably be easier to sell and more attractive to purchasers.
Creation
Special Districts are created pursuant to Title 32 of the Colorado Revised Statutes. Formation of a Special District involves payment of a processing fee and filing a service plan with the Board of County Commissioners in each county where the proposed District will be located. A public hearing is then held in each county where the service plan has been filed. At the hearing, all affected municipalities and property owners within the District are allowed to speak.
If approval is not received, an appeal may be submitted to the District Court. If, on the other hand, approval is received, a petition for organization, a bond and a resolution approving the plan must be filed with the District Court. A hearing is then conducted by the Court.
Upon completion of the hearing, an election is held where residents of the effected municipality or county vote for or against creation of the District. Assuming residents approve creation of the District, an Order is entered by the Court. No one may challenge the organization of the Special District, after Court approval, except the state attorney general.
Operation
Districts are managed by a board of directors, either 5 or 7, which are elected by persons registered to vote and who reside within the District (ownership is NOT required to vote for nor serve on the board). Initial board members are elected to staggered terms and then for four year terms and may receive compensation of up to $1,200 per year not to exceed $75 per meeting.
A Special District is operated by a board of directors that has broad powers to manage the District. Pursuant to the statute, regular board meetings must be held with notices of the meetings posted in at least three public places within the District, and in the office of the county clerk and recorder. Additionally, the meetings are open to the public with limited exceptions applying to municipalities. Additionally, the District is subject to the Open Records Act, which requires the District to make its records available for review to the public.
Finance
Special Districts are, in most instances, financed by taxation. However, a Special District may also obtain financing by imposing fees, rates, tolls, and charges for the use of any improvement or service constructed or provided by that District. A proposed budget, setting out the amount of money necessary to be raised by taxation, is submitted to the board of directors by December 15 of every year. The board must then conduct a public hearing and adopt the budget, with or without changes. A copy is then filed with the Colorado Division of Local Government in the Department of Local Affairs.
After adoption of the budget, each property in the District is assessed a mill levy (tax) which is calculated based on the total funds needed by the District. If the mill levy is not sufficient to pay for all indebtedness of the District, it may assess such additional taxes as necessary.
Termination
Special Districts have a perpetual existence. However, a Special District may terminate when a majority of the District’s board of directors decide it is in the best interests of the District that it be dissolved, or on the termination date provided in the District’s plan.
The procedure for dissolving a Special District involves filing a petition for dissolution with the court and holding a hearing on the issue. If the District lies wholly within the city limits of a municipality and has no financial obligations and the board and governing body of the municipality consent to the dissolution, the court shall enter an order dissolving the District. However, if the lesser of 10% or 100 voters within the District, request an election, the court shall order an election to be held on this issue. If an election is ordered, a majority of voters within the District must vote to dissolve the District. If this happens, the court will issue an order dissolving the District.
The Court may also order an election if the District has outstanding financial obligations, and the plan for dissolution does adequately provide for settlement of the outstanding debt. Again, if an election is ordered, a majority of voters within the District must vote to dissolve the District. If this happens, the court will issue an order dissolving the District.
Additional Information
Additional information regarding Special Districts may be obtained from: 1) Special District Association of Colorado at www.sdaco.org or (303) 863-1733; 2) Colorado Statutes (C.R.S. §32-1-101 et seq.), or 3) If information is sought about a particular District, that District may be contacted directly. Copies of a District’s documents, such as the plan, bylaws, petition and budget, may be obtained from the District itself, which is subject to the Open Records Act. The service plan may also be obtained from the County Commissioners’ office and the petition may be obtained from the District Court where the District is located.
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