4 ms·

If no one buys the houses is the state or nearby residents on the hook for the amount borrowed? If yes this is outrageous. If not, why structure this as a tax?

If no one buys the houses is the state or nearby residents on the hook for the amount borrowed? If yes this is outrageous. If not, why structure this as a tax? Why doesn't the developer just include the debt when selling the houses? In other words, the homeowner now owes the lender whatever amount was used to build the house and can chose to either pay it off immediately or continue paying interest.

someguydave 4y ago
>Why doesn't the developer just include the debt when selling the houses? Likely because many prospective homeowners do not actually know about the debt payments on the metro district when they buy the homes and so do not appropriately discount the asking price. Instead, the prospective homeowners effectively pay the developer extra for the perceived amenities that the new homeowners themselves will fund. The developer pays nearly nothing for the improvements and gets paid for all of the demand for nice amenities. Like many government activities, a private actor gets to use the government mandates as a vehicle to spread costs widely and captures a large chunk of the benefits for itself.
wolpoli 4y ago
The debt is intended to pay for water, sewer, roads, security, transportation and recreational amenities, all of which would be the responsibility of the city when it's fully built out. What the developers are doing make sense if the debt is financed for the term of the life of the infrastructure. The city will borrow again to build replacement after the original is paid off.
- landemva 4y ago
  > ... all of which would be the responsibility of the city ... I didn't read that in the article. I had thought the special district would continue to own and operate the infrastructure, while incorporating a town is a separate issue (if ever brought up).
  - wolpoli 4y ago
    That's a great point. I didn't realize that the US has these special districts that are distinct from the local government. I am only familiar with examples where the City is also responsible for the functions listed.
    - someguydave 4y ago
      Yep. To be clear in these metro districts the residents also pay full property tax to the city. So the city typically still collects taxes and provides few services to these areas, and the residents pay extra to provide their own infrastructure.

someguydave 4y ago

>Why doesn't the developer just include the debt when selling the houses? Likely because many prospective homeowners do not actually know about the debt payments on the metro district when they buy the homes and so do not appropriately discount the asking price. Instead, the prospective homeowners effectively pay the developer extra for the perceived amenities that the new homeowners themselves will fund. The developer pays nearly nothing for the improvements and gets paid for all of the demand for nice amenities. Like many government activities, a private actor gets to use the government mandates as a vehicle to spread costs widely and captures a large chunk of the benefits for itself.

wolpoli 4y ago

The debt is intended to pay for water, sewer, roads, security, transportation and recreational amenities, all of which would be the responsibility of the city when it's fully built out. What the developers are doing make sense if the debt is financed for the term of the life of the infrastructure. The city will borrow again to build replacement after the original is paid off.

landemva 4y ago
> ... all of which would be the responsibility of the city ... I didn't read that in the article. I had thought the special district would continue to own and operate the infrastructure, while incorporating a town is a separate issue (if ever brought up).
- wolpoli 4y ago
  That's a great point. I didn't realize that the US has these special districts that are distinct from the local government. I am only familiar with examples where the City is also responsible for the functions listed.
  - someguydave 4y ago
    Yep. To be clear in these metro districts the residents also pay full property tax to the city. So the city typically still collects taxes and provides few services to these areas, and the residents pay extra to provide their own infrastructure.