MULTI-FAMILY UNIT METRO DISTRICTS


 

Background


Per CRS Title 32 of the Colorado Statutes, metropolitan districts are established to “…serve a public use” and are intended to “…promote the health, safety, prosperity, security, and general welfare…” of two groups of

people—(1) the inhabitants of the district and (2) the people of the State of Colorado. Unlike partnerships and corporations, metropolitan districts cannot be created to serve a group of private or exclusive interests. Thus, a commonly held opinion among many metro district experts is that metropolitan districts are restricted to owning, operating and maintaining assets, land and facilities that are accessible to the general public.

Land, perimeter fences, parks, bike paths, basketball courts and other facilities are reclassified from private to public assets when transferred from HOAs to metropolitan districts.  These are typically the only types of assets that would be transferred between and HOA and a metro district within a single-family home neighborhood.

Walls, interior plumbing and electrical infrastructure, roofs, foundations, windows and stairwells are typical assets that a multi-family home HOA owns and maintains.  It would be difficult to support an argument that such assets could be converted from private use among homeowners in a multi-family unit HOA to public use in a metropolitan district.  Such assets are inherently not accessible or otherwise available for general public use.  This is perhaps the greatest stumbling block that prevents multi-family home HOAs from converting into metropolitan districts.

Quasi-Public Property


Although the infrastructure assets of a multi-family HOA cannot serve an openly public use, such assets are shared among the population of homeowners.  In fact, homeowners of multi-family units have no choice but to share in the maintenance, repair and benefits of such assets.   Thus, one could argue that assets that are mandatorily shared among multi-family homeowners do serve a quasi-public purpose.

The Importance of Metro Districts to Multi-Family Neighborhoods


When a homeowner joins an HOA community, the homeowner becomes subject to the credit risks posed by all other members within the HOA.  Loss of a job, significant family medical issues, divorce, poor financial management, addictions, etc. are just a few of the many pitfalls that cause homeowners to become liabilities to an HOA community.  Under a metropolitan district model, the credit risk each homeowner poses to other homeowners is virtually eliminated because of the metropolitan district’s significant power to assess and collect property tax revenue.

For single-family home neighborhoods, the “common area” assets that are typically placed at risk due to the poor financial condition of homeowners typically include landscaping and recreational facilities such as park equipment, pools and bike paths.  For multi-family home neighborhoods, not only are recreational “common area” assets at risk of not being adequately maintained but so are such “common” assets as plumbing and electrical infrastructure, roofs, foundations and other necessary assets of the mutil-unit structures.

Although metropolitan districts can help single-family home neighborhoods better protect and maintain common area recreational assets, Colorado laws unfortunately do not specifically provide metropolitan districts the authority to help multi-family home neighborhoods protect and maintain the shared structural assets within multi-family unit structures.

We are encouraging Colorado legislators to consider evaluating the financial and social benefits that woulg be created from revising the Colorado Title 32 statutes to allow metropolitan districts to own and operate the shared structural assets within multi-family communities.