In Colorado, much of the public infrastructure installed in connection with development projects is financed by metropolitan districts. Metropolitan districts are governmental entities, authorized by Colorado statute, and controlled by an elected board of directors. They have taxing authority and can impose a mill levy on property within the boundaries of the district. Among other potential sources of revenue, this mill levy revenue can support the issuance of bonds to fund things like streets, curbs, gutters, drainage facilities, and other public improvements.
Only human beings, not corporate entities, can be eligible “electors” for purposes of serving on metropolitan district boards and voting in district elections. Qualification as an elector requires that an individual have an interest in property within the district. Metropolitan districts are typically established at the very early stages of a development project, at a point at which the developer is often the only property owner. Accordingly, there are statutory processes that enable entity property owners to qualify individuals as eligible electors to serve as board members and vote in metropolitan district elections, such as TABOR elections to authorize debt.
Until this year, one very common way for metropolitan district electors to be qualified was for the developer property owner to enter into option agreements with individuals, granting the individuals the right to purchase an interest in land, and obligating the option purchaser to pay taxes on the land pending closing. Literally hundreds, if not thousands, of electors had been qualified in this manner, and the qualified electors then proceeded to vote to authorize their districts to issue debt, and served on metropolitan district boards, approving bonds, etc.
Billions of dollars of public infrastructure has been financed in Colorado through this kind of system. Generally speaking, this kind of arrangement benefits both developers and property purchasers. Instead of including all of the costs of public improvements in the price developers charge to buyers for land, the buyers can pay for the costs of the public infrastructure over time through a portion of their property tax bill. This helps keep up front land costs lower.