Boulder City Council voted unanimously Thursday to allow the creation of metropolitan districts within city limits for the first time, giving primarily commercial developers access to a financing mechanism that can unlock large-scale infrastructure projects.
Such districts have a well-documented history of burdening future property owners with debt they had no hand in creating. But the plan approved this week includes guardrails aimed at limiting conflicts of interest, debt and other risks.
By allowing metro districts, the council is permitting the creation of new governmental entities that can take on debt to pay for large-scale infrastructure projects that the city might not be able to pay for on its own. The districts are overseen by a board and subject to open meetings laws under state law.
In recent months, city officials have described metro districts as a powerful economic development tool designed to finance infrastructure without placing the burden of those costs on city taxpayers broadly. They have framed the tool as a means to create jobs, revitalize commercial areas and generate tax revenue.
City Manager Nuria Rivera-Vandermyde has said the new policy is part of a broader strategy to support businesses in Boulder. “Frankly, as we support our businesses, we support our tax base,” she said.
The ordinance includes a model service plan, a document that governs the formation and operation of a district and serves as the city council’s primary enforcement and oversight mechanism under state law.
While drafting the ordinance, city officials cited a common concern about the financial burden such districts could impose on future property owners. Several examples exist in Colorado in which developers of residential subdivisions used metro districts to take on large amounts of debt, then passed those costs on to homeowners through property taxes.
That concern centered on “developer bonds,” in which developers finance their own projects in the district’s early stages at high interest rates that are later levied on future property owners.
To address that concern, the ordinance requires developers to obtain certification from an independent financial advisor confirming that interest rates on such debt are fair and consistent with market standards. City officials also recommended prohibiting compounding interest, which can cause debt to balloon if repayment is delayed. Compounding interest was one of the mechanisms that turned a $1.8 million bond issuance into a $25.8 million obligation in the Amber Creek Metro District, according to media reports and court records.
But a majority of councilmembers indicated in a straw poll that they favored allowing compounding interest, provided an independent financial advisor certifies the structure meets current market standards. A formal vote on that change is expected at a later meeting.
“Then we have yet another tool to make the projects pencil out,” Councilmember Matt Benjamin, who advocated for the change, said.
The ordinance caps the mill levy for debt repayment at 50 mills. Each year, districts must file an annual report with the city detailing their financial health and construction progress.
Beyond the debt restrictions, metro districts under the new ordinance are largely limited to commercial projects. At least 90% of a district’s assessed value and total square footage must be non-residential.
Each district will be governed by a board made up of residents or property owners, with members elected every two years.
At least one project is already in line to take advantage of the new financing tool. Conscience Bay Company, a Boulder-based developer, is planning a four-block mixed-use project in East Boulder that includes a 2,500-seat performing arts venue and 500 units of housing ranging from studios to townhomes.
The proposal comes as Boulder prepares to host the Sundance Film Festival beginning in 2027. The project team said the development is intended to fill a gap in the city’s performance spaces by providing a venue for film screenings and events during the winter festival.
“This metropolitan district would be the first of its kind in Boulder, and we recognize the responsibility to set a high standard from the outset,” Daniel Aizenman, director of development and design for Conscience Bay, said in a statement.
He added that the city’s decision to create a commercial-only metro district, instead of one that allows more residential uses, has “created a material funding gap in the project that we are still working to close.”
