Lone Tree may place debt limits on new special districts

City mulls ordinance capping debt issuance, repayment time frame

Nick Puckett
npuckett@coloradocommunitymedia.com
Posted 2/11/20

Lone Tree is lining up its policies on special districts to the standards of neighboring cities as it prepares for development on the east side and formation of new districts in the coming years. …

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Lone Tree may place debt limits on new special districts

City mulls ordinance capping debt issuance, repayment time frame

Posted

Lone Tree is lining up its policies on special districts to the standards of neighboring cities as it prepares for development on the east side and formation of new districts in the coming years.

Lone Tree City Council will review the proposed ordinance regulating special districts on first reading Feb. 18. Council could vote on the ordinance as soon as March 3.

City Attorney Linda Michow presented some details of the proposed ordinance, reiterating the draft could change by the time it gets to first reading.

“We are proposing procedures and criteria by which to evaluate those districts, which we haven't had the opportunity to do previously,” Michow said. Michow said the city wants to encourage special districts that are within Lone Tree's boundaries but not under its approval authority to petition the city to become the approval authority.

Council and staff began discussing the need for formal policies and regulations guiding the future formation of special districts in Lone Tree last year. The ordinance comes in light of news that some metro districts have abused debt issuance allowances. In December, the Denver Post published an investigation reporting that two large metro districts in Douglas County held near-insurmountable debt.

Lone Tree's proposed policy requires repayment of developer debt within 20 years, a total debt issuance limit not exceeding 25% of estimated capital improvements and a mill levy cap of 50 mills. The city would also require a contribution of a city regional improvement mill levy of less than two mills.

The city also aimed to protect new residents from certain fees, including prohibition of real estate transfer fees.

City Manager Seth Hoffman said the ordinance is meant to formalize the city's special district policies in the city's official code.

“That's what we're trying to do here. Not do anything new but lay the groundwork for new districts,” Hoffman said.

As Lone Tree eyes development of RidgeGate East, east of I-25 and south of Lincoln Avenue the city felt the need to update its policy on metro districts to create transparency between the city and new special districts. For instance, the city will require an annual auditing and budgeting report, which each district is required to report to the state already to the Department of Legal Affairs.

RidgeGate East has plans to build 10,000 residential units, an influx of 30,000 residents—twice Lone Tree's current population—through 2030. Development in the Southwestern Village has begun. The RidgeGate Parkway widening project, boosting the lane capacity from two to six, will finish by next year.

The city touted its current relationship with metro districts. Much of the city's current infrastructure was either partially or fully paid for by metro districts.

Lone Tree currently has approval authority over the two Rampart Range metro districts and the Yard Metro District, which is dormant. Lincoln Station, Heritage Hills, OmniPark and Park Meadows metro districts are under Douglas County's approval authority but either fully or partially within Lone Tree's borders. Metro districts can petition the city to be under their authority.

The city is still receiving comments and feedback from existing metro district leaders on the proposed ordinance, once again to reinforce the city's strong relationship. Metro districts, Hoffman said, is growth paying for growth, something Lone Tree will need to rely on as it is on the brink of a population surge.

“That gives the city a reliable revenue source they know they can count on and plan for long-term capital projects, which is something we recognize as a community as we age,” Mayor Jackie Millet said. “Our infrastructure is aging with us, so the ability to count on that resource and create capital reserves to fund these improvements I think is going to be important for us moving forward.”

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