Metro district developers would be barred from purchasing their own construction bonds, a key profit center for builders of nearly every new housing development in Colorado, under a reform bill introduced in the Legislature late Thursday.
House Bill 22-1363 would end a longstanding practice in which developers purchase some of the public financing bonds they initially approved as board members for the metro districts they created. Metro districts are governmental entities independent from cities that are established to finance infrastructure for developments.
The move often allows a developer to exchange a promissory note they signed with the metro district to repay their costs of installing a development’s infrastructure, a deal in which the developer sits on both sides of the contract, with the tax-free bonds.
“In the years that I have worked on this issue, I have heard many concerns from district residents — and some from people with connections to the industry itself — about the extent and structure of indebtedness created by some metro districts, and whether the extent of indebtedness is really proportional to the expenses to be paid off,” Weissman told The Gazette. “The hope is that removing the incentive for entities very closely associated with the district issuing the debt in the first place to then profit from that debt via interest payments will help keep metro district debt at more reasonable levels.”