What should I know about Metro Districts when buying a home?
In Colorado there are nearly 2,500 metro districts. This means that you are likely to encounter at least one when you search for a home. The newer the home, the more likely it is.
Metro districts allow for the creation and maintenance of infrastructure related to new home developments.
Decades ago, I first heard of metro districts in Boulder County. They had a different name then “special taxation districts.” Our REALTOR advised against buying in one. Since that time metro districts have become ubiquitous and most REALTORs have become good at explaining them. It is important to know what a metro district is, and what the benefits and issues are as you begin to shop for a home.
What is a metro district?
A metro district is most commonly a localized taxation area created to pay for infrastructure or maintenance in a newly built subdivision. The idea behind them is that a new area needs roads, sewers, sidewalks and more. With a metro district, the taxes to create and maintain the new area are isolated to the new development, and not paid by the entire town. The indebtedness is divided between the homes in the development. Payments vary by the amount of debt for the entire development and the value of the home. These payments can increase.
This is an excerpt from an actual contract to buy a newly constructed house in Colorado.
What do I get in exchange for these metro district taxes?
These districts are the way many towns can get new development and new homes for buyers. In a metro district your metro tax pays for the usual infrastructure homes require, such as sewers, water service, roads and sidewalks. In some districts, the metro taxes provide other things homeowners enjoy, like walking trails, picnic tables, and pools.
How would metro district tax impact my homeowning budget?
These are costs that have to be taken into account when purchasing a home.
The payments for a metro district appear as one of the taxes among the property taxes on your home. For the purposes of this blog, I am including annual tax breakdowns on an actual homes in Larimer County, one with and one without metro district taxes. These excerpts are for illustration only. Every home and every homeowner is different.
This first home is NOT in a metro district.
This home DOES have a metro district.
In addition to the amenities in the town of Berthoud, the second home has two neigborhood parks, a dog park and two large outdoor pools paid for by the metro district. Only home owners within the metro district are allowed use of the pools.
These homes are within a mile of one another and of approximately the same value.
Many homes today have metro district taxes. Listings will usually tell you the amenities you get for that portion of your annual taxes. Listings for homes without a metro district, usually feature that fact.
If you are in the market for a home, talk with your REALTOR about your preferences. A good agent will ask you about everything you are looking for, and explain the various ways to find those things in your new home. It may be that a metro district tax in your monthly payment is going to give you the amenities or brand new home you desire. A home in an older more established neighborhood is often, but not always, going to come without a metro tax.
All the expenses of home ownership need to be taken into consideration as you plan to purchase. It is important to know what your real budget is. HOA dues, metro district taxes and saving for home maintenance all need to be taken into account.