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  1. 7/6/2007 THE PHENOMENAL GROWTH OF SPECIAL DISTRICTS by J. Evan Goulding
  2. Source: Special District Association of Colorado May 2007 Newsletter, reprinted with permission of J. Evan Goulding


    Special Districts date back to the early mining camps in Colorado, where as the camps grew, they sought mechanisms to join together to provide certain essential services such as fire protection and sewer service. Special districts of one form or another have been utilized since that time.

    Colorado special districts have been instrumental in providing the public infrastructure to meet the growing needs of the state’s population in the face of increasing demands on cities and counties to keep up with the ever-increasing needs for urban services

    Although special districts already existed, the legal structure was recognized by an authorizing act of the Colorado General Assembly in 1949 recognizing special districts as a form of local government created locally to provide certain municipal-type services in unincorporated or rural areas of the state. The Assembly declared that special local government service districts could be created to provide necessary and desired services within designated boundaries.

    In 1982 the General Assembly recodified all the statutory provisions relating to various types of special districts in what is referred to as The Colorado Special District Act. This Act constitutes Title 32, Article 1 of Colorado Revised Statutes, which is the general source of most of the statutory authorization, as well as limitations, upon the formation and operation of special districts.

    Growth of Special Districts:

    In 1995, there were 875 Title 32 special districts. Today there are approximately 1,470 such districts. Nearly all of this phenomenal growth in recent years s accounted for by the formation of new metropolitan (metro) districts1. As Table 1 demonstrates, between 2005 and 2006, one new fire protection district was formed, along with two new water and sanitation districts and one ambulance district, while 169 new metro districts came into existence.

    Table 1

    Active Special Districts By Type

    Type of District

    2005

    2006

    Metropolitan Districts

    673

    833

    Park and Recreation Districts

    52

    52

    Fire Protection Districts

    249

    250

    Health Services Districts (Hospitals)

    34

    34

    Sanitation Districts

    79

    79

    Water Districts

    76

    76

    Water & Sanitation Districts

    129

    131

    Ambulance Districts

    10

    11

    Total

    1302

    1466


    There have been over 100 new metropolitan districts formed in each of the past three years. In the years between 2000 and 2004, the number of metro districts in the seven-county Denver metropolitan area more than doubled, growing from 191 to 390. Statewide, the number of metro districts increased from 294 to 653 during the same time period. As of 2006 this number has grown to 833 metro districts.

    This growth mirrors the rapid growth of population and home building within the past decade.

    Special districts have proven to be increasingly popular entities in providing services to identified geographic areas. Several significant reasons for organizing a Title 32 special district are:

    (1) There may be no other viable alternative for providing and operating the necessary public facilities, due to remoteness or isolation of location;
    (2) The district is able to finance infrastructure and public facilities through the use of tax-exempt municipal bonds;
    (3) The structure of a Title 32 special district provides greater flexibility and autonomy than would a local assessment district, such as a municipal special improvement district or a county local improvement district;
    (4) A title 32 special district provides a vehicle for confining the taxes and assessments to the area which is benefited by the improvements and services provided by the district, rather than spreading the costs over an entire county or municipality.

    Broadening The Scope:

    Builders and developers have not been the only ones to discover the merits of special districts. During the past three years, special interest groups representing a variety of constituencies have brought forth legislative proposals to add new powers to special districts, including new types of special districts. These have included such things as health assurance districts, mental health districts, transportation districts forest rehabilitation and management districts. Interest has been expressed in broadening special district powers to include animal control, security services and water brokering.

    Why Now?

    Population is growing so dramatically in many areas of Colorado that city and county resources are being stretched, and cities and counties are working with special districts as a means of installing the infrastructure to support the growth. For many years cities and counties were suspicious of special districts, feeling that special districts fragmented service delivery, and allowed for uncontrolled growth beyond the reach of a city’s land use planning controls.

    Now, partially due to TABOR restrictions, and the realization that the city or county still holds the cards in land use decisions, they are becoming much more willing to work with special districts. In rapidly growing areas, many cities are forming relationships with developers and the special districts that are being formed. Cities and counties are becoming aggressive, but also more realistic in adopting development standards for special districts that mesh with the standards of the city or county.

    We Are Seeing The Wave Of The Future:

    In the E-470 Corridor of Adams and Arapahoe Counties, city and county land use approvals have already been given for developments that will total in excess of 50,000 new homes at build-out, and nearly all will be served by metro districts that have been, or are being, formed in this wave of district formation.

    Even more starling is the realization that this is just the beginning. Population forecasts provided by the Demography Office of the Division of Local Government point to staggering population growth in the next thirty years. Total population statewide in 2005 was 4,722,460 (more or less), and is projected to grow to 6,787,307 by 2025, and to 7,798,000 in 2035. This increase of over 3.1 million people represents the need for approximately 1,228,000 million additional dwelling units during that time.

    Weld County has been tabbed as the fastest growing county in the country during the past year. In 2005 the population of Weld County was 228,729. By 2025 it is projected to grow to 419,741, and to 551,288 by 2035. At a generous estimate of one dwelling unit per 2.5 people, this indicates the need for an additional 220,500 new homes in Weld County. Adams and Arapahoe Counties will see similar growth. Douglas County, which has already gone through an explosion of epic proportions, will likely double by 2035, bringing the need for an additional 108,000 new homes.

    Mesa County is projected to grow from 130,000 to nearly 250,000 by 2035, necessitating an additional 48,000 homes. This projection, however, was made before the advent of the current explosion of oil and natural gas drilling, which if sustained could dramatically increase this projection. Garfield County, which is expected to nearly triple, would need an additional 38,000 new homes, without factoring in the energy boom.

    Straining Our Resources:

    According to a 2006 report entitled Losing Ground: Colorado’s Vanishing Agricultural Landscape, by Environmental Colorado, since 1992 Colorado has lost 2.89 million acres of agricultural land, and by 2022, if current trends continue, Colorado will lose 3.1 million more acres of agricultural land. Much of this land will be taken out of crop production due to loss of its irrigation water to municipal use, and more of the valuable agricultural land will be covered over with houses, roads and shopping centers.

    Even more critical than the loss of agricultural land will be the questions of the availability of energy, and where will the water come from? The past decade has been filled with debate over reservoirs, storage, transmountain diversion, conjunctive use, conservation, “big straw” pump-back schemes, southern pipeline project, but at this moment no one is prepared to say unequivocally that the necessary pieces will come together to serve the projected population growth.

    Straining Our Support Structure?

    Much of the future development will occur within cities, either as infill, or as cities annex property and provide the service infrastructure to support the development. There may be some new incorporations, and existing cities will reap major population growth. Even so, it is likely that the metro district model, either in unincorporated areas, or as adjuncts to city facilities within cities, will be a continuing model of growth, both in number and in size.

    As a means of financing, metro districts have unique advantages, and are proving to be remarkably advantageous to developers and the savings reaped through bonding, stretching out infrastructure costs result in dramatic cost savings and benefits to home-buyers and property owners.

    The question is, however, will we see expansions of powers, or will we see limitations on powers? Have we evolved as far as we will evolve, or will innovations and trends change the landscape for special districts in the future?

    Will aggressive use of the financial mechanisms made possible by special districts lead to abuses, as happened during the savings and loan boom of the late 70’s and early 80’s, or will responsibility and restraint prevail?

    For more information on the Special District Association of Colorado please click here.

    1 A “metro” district is a special district which has service plan authorization to provide at least two, or more, of the services which special districts can provide, e.g., water plus fire protection. Most of the metro districts currently being formed provide water, sanitation, and possibly fire protection and park and recreation services to the development which they serve.