Colorado Springs, Featured, Land Use, Local, Politics, Taxes

Hoiles: Unchecked growth of special taxing districts needs scrutiny

It’s become clear to me, after careful study, that we face a day of reckoning over the unchecked proliferation of special taxing districts across Colorado.

Local officials for years have been approving an unmanageable, crazy-quilt of these districts — quasi-governments that operate with little accountability over huge sums of money they collect and spend annually — often without fully understanding the long-term consequences for the local tax structure, economic vitality and delivery of services.

By my count, there are roughly 118 special districts of various types operating in my hometown of Colorado Springs — metropolitan, general improvement, special improvement maintenance, downtown development authority, business improvement, and urban renewal areas. These areas provide public financing for public improvements; water and sanitation; fire protection; parks and recreation; public safety; street improvement; etc. And we seem to add a new one to this hodgepodge almost every month.

Hundreds of millions of taxpayers’ dollars flow through these districts annually. Collectively, the city has granted districts billions of dollars in bonding authority — on the backs of homeowners and businesses, not the city. Each district purports to deliver a variety of public benefits, but what participants and the general public get for their expenditures and indebtedness is often hard to discern, given the lack of oversight and transparency with which these districts operate.

This situation isn’t unique to Colorado Springs. Colorado has more than 2,000 special districts of the types listed above, and they continue to proliferate across the state, with virtually no oversight and very little media scrutiny.

Yet public awareness may be rising in El Paso County, stemming from three recent controversies involving districts.

One is the Colorado Springs City Council’s bizarre decision to force South Nevada business owner Michael Roslin to remain inside the newly formed Creekwalk Marketplace Business Improvement District against his will. Roslin believes he was lured into participating in the district with false pretenses. He requested exclusion before district bonding authority was approved, lessening the impact his exclusion would have on other businesses. But a majority of members on the City Council forced him to remain in the district, with one member telling Roslin that he should sue if he didn’t like it.

On the heels of that controversy came another. A new business called Scheels All Sports (lured to the area partially with a generous “incentive” package) sought exclusion from the area’s special district, raising protests from other district businesses who objected to bearing the full cost of subsidizing a much bigger retailer. Some on council seemed unaware of the objections, embarrassingly, until they read about them in the press, forcing them to pull the item off the consent calendar, where items go to be rubber-stamped.

Finally, we have one ‘80s-era special improvement district in the city — which may well be the first of its kind in the state — that no longer can afford to fund the watering and maintenance of parks and common areas within its boundaries. Instead of simply raising district assessment on themselves, residents are looking for a way out of this box by trying to vote non-district neighborhoods in. This attempt to redraw district boundaries and forcibly impose a district fee on new neighborhoods might succeed because the number of district residents far exceeds the number of residents in the outlier neighborhoods. District residents can avoid raising their own district fees by imposing the fees on their neighbors via majority vote, in a classic example of the “tyranny of the majority.”

These episodes naturally raised questions about why there are so many districts, how these districts function, what they do, where the money goes and whether they continue to serve the long-term interests of the city. Such questions aren’t new, however. The City of Colorado Springs issued a 2009 Special District White Paper and all city and county leaders should read it. The study didn’t just document an explosion in the number of districts across Colorado Springs, it also included 15 reform recommendations designed to bring more transparency, accountability and analysis to the oversight and approval process. Those recommendations fell into a black hole, from what I can tell. Yet the challenges, problems, concerns and questions highlighted have only grown more numerous, complicated and urgent in the past ten years.

To its credit, and after hearing from concerned citizens like myself, Colorado Springs City Council in September did something extraordinary by requesting a months-long series of detailed briefings on special taxing districts from city staff. The briefings are aimed at explaining why districts are formed, how they’ve evolved over time and what public benefits they provide to residents and businesses within their boundaries. All city councils and county boards should do the same.

Where these presentations will go, and whether they’ll lead to a serious reappraisal and reform of the system in Colorado Springs, is unknown. City leaders and developers are so addicted to using districts as a vehicle for financing commercial and residential building projects that I’m frankly doubtful that they could kick the habit, even if presented with clear evidence that the overuse of these quasi-public, quasi-private, micro-governments has reached a point of diminishing returns.

But the businesses and residents will take up the battle first. Littleton residents pushed their elected officials, in a citizen-led ballot measure, to require their approval for any urban renewal plan that utilizes Tax Increment Financing.

I strongly urge other local governments across Colorado to undertake similar reviews, without waiting for the red flags to start flying. Residents and businesses within these districts have a right to know whether the districts are delivering the public benefits they promise. Residents and businesses have a right to better representation than they often have now and a right to meaningful oversight and accountability. None of those changes are possible until these entities are held up to the light and receive the heightened scrutiny they deserve.

Tim Hoiles is a Colorado Springs businessman, philanthropist and former media executive whose family once owned The Colorado Springs Gazette.

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