Group of people hunched over a conference table and signing paperwork

What Are Metropolitan Taxing Districts (MTDs): Part 2

In Buyers, Homeowners, Sellers by Doug Phelps

In a recent post, we covered the basics of Metropolitan Taxing Districts (MTDs) and what that means for Colorado homebuyers who purchase homes in new build communities. The future potential implications of MTDs on taxes for homeowners can be confusing and frustrating, as they often can’t vote in tax raising or elect who sits on the board.  Often, homeowners who buy in communities don’t think about the future of MTDs or how long their taxes can be impacted.  As mentioned on part 1 of this series, some MTDs are managed and operated well, but others need some work and homeowners get little say either way.  However, just a few weeks ago; as of January 1, 2022 to be exact, new legislation aims to have more communication surrounding MTDs.  

New Legislation Comes to Town

Senate Bill 262 (SB-262) is a new law in effect aimed to allow for more disclosure about MTDs.  More specifically it requires that a homeowner, who is selling a property that is located in a  Tax District, disclose and provide taxation and debt obligations to the new buyer as part of the transaction process.  Now, prior to closing and the final contract signing, new buyers must be made aware that they are buying a home that is subject to taxation authority from an MTD.  Sellers must not only disclose that the property is located in a tax district but they must also let the new buyers know the statement of purpose and recent notices from the MTD.  SB-262 is written to allow new homebuyers be made aware of any disclosures and tax obligations from the MTDs.  Other information that must be disclosed could include mill levy assessments, the maximum amount of debt and calculated property taxes.

More About SB-262

Now that it’s after the first of the year, and the legislation is active and enforceable, any homebuyers who are looking for new construction homes should likely brace themselves to learn more about MTDs via a disclosure.  More and more new build communities operate under an MTD and therefore will need to be communicated to new buyers.  There remains a question if new buyers will be scared off after hearing more about MTD disclosures and home sellers could have cause for concern.  However, it’s a possibility that with housing inventory how it is in Colorado, that even with the MTD disclosures, it may not slow the buyers or the transactions in MTDs down at all.  After all, SB-262 is designed to communicate more about the MTD and make sure that buyers know about the potential tax changes that could face in the future.  As discussed in Part 1, MTDs do offer some benefit to the community and some are actually run very well. 

Closing Thoughts

As with most things in life, communication is very key.  By requiring disclosures of MTDs and potential tax calculations it allows the new buyers to know what they are getting into and they can make an informed decision from there.  While this new legislation doesn’t necessarily shed any more light on the inner workings of the MTD itself, it is a step in the right direction to allow homebuyers to prepare for potential taxation authority that their new home is subject to.  Understanding tax obligations and estimates prepares homeowners to save and budget for tax increases instead of being completely surprised by them.  

Do you have any lingering questions about Metropolitan Taxing Districts ?  Are you in the market to buy or sell your home?  Call and text me at (720) 323-4176 or email me at [email protected]

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