Sundown Oaks metro district approved after heated public hearing over eminent domain, water and taxes

Douglas County commissioners approved the Sundown Oaks Metropolitan District service plan on Sept. 23 by a 2–1 vote after a prolonged public hearing in which residents raised concerns over eminent domain, groundwater, fiscal transparency and long-term tax burdens.

What was proposed: The Sundown Oaks service plan would create a district covering approximately 173 acres in the Franktown rural community and authorize powers and financing commonly used by metropolitan districts under Colorado Revised Statutes Title 32. The district anticipates 37 single-family lots, an estimated population at build-out of 111 residents and an average lot/home value used in the financial model of roughly $2.2 million. The plan originally proposed a $10 million debt cap and was revised to a $6 million debt cap before reconsideration by the Planning Commission.

Key public concerns: Residents and community groups submitted letters and testified in opposition. Concerns included the district’s potential to use eminent domain, the impact on groundwater and aquifer augmentation (including the use of lower-quality aquifers), the necessity of a district for a development many neighbors said could be built without one, and the potential tax burden on homeowners if the district imposed maximum mills. Petitioners presented a signature petition exceeding 700 names opposing the district.

Applicant’s case: Developer and project representatives said the principal public improvement driving the need for a district is a required turn lane on State Highway 86 (bids for the Highway 86 turn-lane improvement were cited in presentation materials at roughly $2.2M to $3.3M), and that tax-exempt bond financing via a metro district would spread the cost over time and keep lot prices marketable. Developer and financial advisers provided a market study and a financial plan reviewed by county financial consultants (Hilltop Securities and RBC Capital Markets), who said the plan could be viable under the plan’s assumptions.

Changes and conditions: After the Planning Commission’s initial denial and then reconsideration, the Planning Commission recommended approval 5–2 with conditions. The applicant submitted a revised service plan adding provisions that limit the district’s use of eminent domain and prohibit reimbursing developer construction-management fees from district revenue. The board also received proposed language restricting exercise of eminent domain so that the district must obtain Board of County Commissioners’ written resolution approval prior to exercising eminent domain — a condition the applicant accepted during the hearing. The applicant also reduced the authorized debt limit from $10 million to $6 million and agreed that a debt-service mill levy for debt may be imposed for a maximum of 40 years from initial imposition.

Board discussion and vote: Commissioners debated the statutory Title 32 criteria, including need, service sufficiency, and financial viability. Two commissioners concluded the plan met the statutory tests and voted in favor; one commissioner voted against, citing the strong public opposition (a petition with more than 700 signatures) and reservations about whether the district is in the best interest of the area to be served.

Formal action: The Board approved the Sundown Oaks Metropolitan District service plan with the added conditions (including eminent-domain restrictions and prohibition on reimbursing developer construction management fees), an authorized debt limit of $6,000,000, a maximum initial debt-service mill levy of 50 mills (debt-service cap), and an operations and maintenance mill levy capped at 20 mills (and an anticipated operational levy of 10 mills). The motion passed by a 2–1 roll-call.

Why it matters: The decision allows the developer to use tax-exempt, district-issued financing for major infrastructure — principally the Highway 86 turn lane and other onsite and off-site improvements — rather than incorporating those costs entirely into lot prices. Opponents argued the district creates a new government entity with significant powers (including eminent domain) that could affect neighboring private property and groundwater resources; proponents argued the district is the practical vehicle to build high-cost, county-ordered safety improvements while keeping homes marketable.

Next steps: The district would proceed under the service plan’s conditions; the applicant said it intends to wait to issue bonds until public improvements are constructed and lot purchase contracts are in place, which the applicant said would increase certainty that bonds can be repaid. The board instructed staff to ensure the agreed amendments (eminent-domain limitations and fee restrictions) are memorialized in the final service plan and resolution.

Provenance: Staff introduced the service plan and the Planning Commission remand and reconsideration at about transcript timecode 3925.88. Public testimony and extended commissioner discussion occurred between timecodes roughly 4637–13446, with a final Board vote recorded at approximately 13434–13446.