What is a Metro District?
If you're thinking about buying a home in Colorado, you may have heard the term metro district. Metro districts are special taxing districts that are created to finance the development of infrastructure in new subdivisions. This can include things like roads, water and sewer lines, schools, parks, pools and other amenities.
Homeowners in metro districts pay a special tax in addition to their regular property taxes. This tax is used to repay the bonds that were issued to finance the development of the infrastructure. The tax rate is typically set at a mill of assessed value. To determine the amount a homeowner pays to a metro district, you first need to know the particular metro district’s mill rate. Let’s use a mill rate of 50.00 and a home valued at $500,000 as an example. Next, you’ll need to find out the residential assessment rate. According to the Larimer County website, the tax rate as of 2022 is 6.95%. Using this information, you can calculate the amount a homeowner pays for metro district tax using the following formula: (50.000 mills/1000) x ($500,000 x 6.95%) = $1,737 annually.
There are several benefits to living within a metro district in Colorado. For one, residents benefit from the services and facilities provided by the district, which may not be available in other areas. These amenities can enhance the quality of life and property values within the district.
Additionally, the financing structure of metro districts can be advantageous for property owners. Instead of paying for amenities through an HOA fee, a metro tax may be tax deductible.
While there are benefits to living in a metro district, there are also drawbacks that residents should be aware of. One of the main concerns is the potential for higher property taxes within the district. These costs can vary widely depending on the district's financing structure and the services provided, and they may increase over time as the district incurs additional costs. In addition, if your property value goes up, so do your metro taxes.
If you're considering buying a home in a metro district, it's important to do your research and understand the potential costs and benefits. You should also make sure that you understand the terms of the district's service plan, which will outline the district's authority and responsibilities.
Here are some things to consider when buying a home in a metro district:
The amenities offered within the community.
The cost of the metro district tax. This can vary from district to district, so it's important to do your research and compare rates.
The length of time the district will be in effect. This is usually 30 years, but it can be shorter or longer.
The district's financial stability. Make sure the district has a good financial plan in place and that it is not in debt.
The district's service plan. This will outline the district's authority and responsibilities.
As with any major decision, it's important for property owners to carefully consider the pros and cons of living within a metro district and to consult with a professional if needed.
If you’re thinking of purchasing or selling residential property in northern Colorado, give me a call. I would love to assist you.
Kelly Renz, Associate Broker
970.820.0750 | Kelly@GreyRockRealty.com
