What Are Metro Districts and How Do They Work?
If you have been searching for a real estate property in Colorado, the chances are that you may have noticed the term ‘Metro District.’ These districts are very popular now than they were in the 80s.
Initially, the metro districts can seem quite intimidating and confusing. However, once you understand a few critical ideas around them, it will be easier for you or any home buyer to become comfortable.
So, What is a Metro District in CO, and how exactly does it work?
What Are Metro Districts?
To answer your question on What is a Metro District in CO?– in simple words, metropolitan districts or metro districts in Colorado are government entities operating similar to a town council. There are now more than 1800 metropolitan districts in Colorado. This is a whopping 70% increase from the last decade.
Residing in these districts might offer you some advantages. Here are a few potential benefits of metropolitan districts:
- Homes or properties in these districts are more affordable for home buyers
- There are constant public improvements that benefit the homeowners
- Development risks are on bond-owners instead of homeowners
- HOA fees might sometimes be lower because amenities are covered through taxation
- Property taxes, including the metro tax, might also be tax-deductible
Metro districts come with their own perks. So, if you have a solid understanding of what you are looking for, you will find them convenient. A good realtor can help you make a good choice for your home.
In relatively new communities that do not have a metropolitan district, the developer will usually regain infrastructure expenditure after selling the lots or finished homes. This means that the rate or prices of homes are generally higher in such areas than in the metro districts.
In a metro district, a home mortgage covers the infrastructure costs, and development costs can be paid off over time through long debts of up to 30 years. The development costs in metro districts need to be certified by a third-party engineer. This ensures fair bidding, verification, and costs of installation.
Now, these districts can be in the place of or in addition to a homeowner’s association. The operations costs are achieved through property taxes along with the taxes for debt. Debts or expenses like snow removal, landscaping maintenance, management, legal, accounting, and utilities are included in the cost of the operations.
How Do Metro Districts Work?
The above section answered the first question, ‘What is a Metro District in CO?’. This section will answer your second question by providing you with a clear understanding of how the metro districts operate.
Funding projects related to housing
Bonds pay the infrastructure costs, and the repaying is done by additional homeowner property taxes over a period of time.
Fund essential infrastructure
An essential requirement from metro districts is to fund at least two infrastructure essentials like sewer, roads, recreational facilities, water, and access to open space.
Less expensive down payments
Homes in metro districts are generally more affordable for buyers since the municipality pays for the initial infrastructure costs. This allows the buyers the opportunity to go for lower down payments.
Annual tax increase
The property tax in metro districts is increased by 2% over 30 years. More importantly, apart from the higher property tax in the long term, there is an annual increase of 10% in the same during the first four years of owning a home in these districts.
Bottom Line
If you are interested in purchasing a home in metro districts, you need to read up or learn more about the districts and invest after considering all aspects. List down the pros and cons and how they benefit your plan.
To sum it up, you can get in touch with a realtor who can help you with all the essential information.
