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Our special district conundrum 

City Sage

Why is Colorado Springs... well, Colorado Springs? Why are we a city of comfortable, even magnificent outer-ring suburbs, while the core city and inner-ring suburbs languish? Is the system rigged? Are powerful people meeting in no-longer-smoke-filled rooms to make sleazy deals?

Sorry, all you mouth-breathing conspiracy theorists, but that's not how local government actually works. Problems present themselves, solutions are crafted and things move forward. Powerful people do indeed scheme and conspire, as do less powerful ones, as do cunning bomb-throwers (see Bruce, Douglas) and the region stumbles into a forever uncertain future.

Some of us are smart enough, farsighted enough or charismatic enough to bend history's unpredictable arc (see Anschutz, Phil, or Clinton, Bill), but most of us just want to get through the day and make a decent living.

Cities are complex artifacts created by generations of worker bees, but they're not entirely chaotic systems. You don't need a degree in computer science to figure out the source code that has shaped Colorado Springs for decades.

Special districts. They're a boon and a plague. They're the least expensive and in many ways the most beneficial way to build infrastructure in new neighborhoods.

Say you have some acreage on the city's northeast periphery. The market looks great, you've lined up builders, you're ready to go — but you need money to build infrastructure. You create a special improvement district, persuade Council to approve it and then issue bonds. The bonds are secured by a mill levy on all real property in the district. In practice, that means a substantial additional property tax for every homeowner, one that may burden property in the district for 20 years or more.

You can ask why developers don't pay for infrastructure up front, but why should they? Potential homebuyers are price-sensitive, not property-tax sensitive. Long-term bonds carry lower interest rates than short- and medium-term commercial loans, and repayment is spread over a much longer period. Developers put less capital at risk and buyers pay less.

It sounds like a classic win-win, but it creates long-term problems. It makes suburban development cheap, easy and practical, but puts infill of all kinds at a disadvantage. You can't create a special district unless you own or control the ground. It's much more expensive to tear out existing infrastructure and build anew than to do "greenfield" development.

That's contributed to (but hardly caused) our two-tier city, one with wide stretches of near-core blight such as South Academy Boulevard and different property tax rates. If you live in a long-established neighborhood without a special district levy, you pay less than your suburban neighbors. The city levy, now 4.279 mills, is much lower than other major Colorado metros, and you might not mind raising it — but if you live in the 'burbs and pay a district levy, forget it.

The city mill levy is too low to fix stuff, let alone improve it. Thanks to City Council, Mayor John Suthers and the voters, we now have enough sales tax revenue to fix the streets but aging infrastructure is still a problem. It's clear that voters, particularly those plagued by special districts, won't vote to hike the city's mill levy — so here's a suggestion.

Triple the existing levy and issue bonds to pay off special district debt. Taxpayers citywide would pay the new levy but no more — we'd all be on an even footing. The city would use the remaining dough to repair, replace and build infrastructure, and we'd all be ahead.

And what about new districts? Should the city ban them, thereby driving development toward the core instead of toward Kansas?

That's where things get murky. Eliminating new special districts would make development of the Banning Lewis Ranch and other vacant ground untenable, so builders and developers would leapfrog to the county. Unless Southern Delivery System water followed development, we'd be stuck with a stranded asset — a billion-dollar delivery system with few of the suburban customers it was built to serve.

In the end, we're left with a classic governmental dilemma. We have a problem to solve, and the best solution is in some respects illogical and unfair. Our choice is to muddle along with the status quo, or take a chance and move forward.

Speaking as a former petty elected official, here's my prediction.

Status quo 14.5 over moving forward — and don't take the points!

  • Special districts — they're a boon and a plague.

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