Education for a Lifetime

More and more developers are choosing to establish metro districts as a way of financing their subdivisions. When a development is designated as a metro district, money for the infrastructure required to establish the subdivision is made available to the developer immediately.

Anyone who purchases a home within the metro district will repay these initial infrastructure costs via a long-term loan that is incorporated into the property tax structure. This allows developers to make the homes within their subdivisions more affordable, which benefits buyers in the long run.

Each metro district is a type of government entity, so local government officials have the final say in determining whether or not an application to establish a metro district will be accepted.

Developers must follow three basic steps to maximize their chances of being awarded metro district status for a given project.

1. Submit a Proposed Service Plan

Most city and county governments have model service plans that can act as a template for developers hoping to be awarded metro district status for their subdivisions. It's critical that the form and content of the model service plan be followed closely to streamline the review process for government officials.

The proposed service plan will provide all essential details regarding the development. A petitioner will need to provide the estimated population of the subdivision at completion, the development timeline for the project, and the anticipated tax revenue that will be generated by the district when drafting a proposed service plan.

Government officials will also want to see information regarding the intended use of tax increment funding and any district-wide plans for the improvement of the infrastructure over time.

Many developers find it helpful to partner with consultants who specialize in drafting proposed service plans to ensure compliance with the model service plan and avoid any delays in the processing of their application for metro district designation.

2. Draft a Letter of Intent

A letter of intent can be submitted alongside a proposed service plan when petitioning for metro district designation. The primary purpose of the letter of intent is to clarify the information provided in the proposed service plan.

Developers can use the letter of intent to give additional information on specific civic amenities that will be financed by the metro district, employment or retail opportunities that will exist within the district, and contributions the district will make to needed regional infrastructure.

The letter of intent should also be used to provide a full explanation of the public improvement projects that the district intends to finance, operate, and maintain over time.

Government officials will use the information contained within the letter of intent to determine the long-term impact a proposed metro district will have on the area. A good letter of intent can demonstrate that awarding metro district designation to a specific area will benefit the region as a whole.

3. Pay Applicable Fees

All applicable fees must be submitted alongside the proposed service plan. Failure to pay the requisite fees will result in the immediate denial of a petition for metro district designation.

There are two types of fees that developers are responsible for paying as they try to obtain metro district status. The first is an administrative fee that is nonrefundable. The second is a review fee.

The review fee is meant to cover any costs associated with the review and verification of a metro district petition that exceeds the administrative fee.

It's common for local government officials to require an executed reimbursement agreement between the city or county and the developer to ensure that any review fees owed are paid in a timely manner.

To learn more about what a metro district is and how you can plan one, contact a local service.