Have you ever driven past signs for new communities offering “homes starting in the low $400s,” with planned amenities like parks and recreation centers, and asked yourself how such opportunities are possible in this housing market? In all likelihood, the planned master communities are within a locally approved metro district.

For many Colorado families, metro districts have become one of the most important ways to lower the barriers to homeownership while not compromising on the amenities people desire and the public infrastructure they need. Although metro districts are a commonly used financing tool – there are more than 2,300 metro districts across the state – they’re not well understood, even by residents living within them. And not all metro districts are created equal.

That’s why I’m co-sponsoring SB-23-110, a bipartisan bill known as “Transparency For Metropolitan Districts.” By formally adopting the best practices of metro district boards across the state, this bill protects residents through strong local oversight, greater accountability for district directors, transparency through enhanced communication and mandated disclosures. Cities and counties will be required to both impose a debt limit and set mill levy caps for bond repayments so property taxes don’t go above a certain level. And all bonds issued by a metro district bought by a developer must be approved by a certified municipal advisor – a federally regulated fiduciary – to confirm the interest rate on the debt is near or below market rate.

These provisions put guardrails into place for homebuyers, ensuring they only pay for the required infrastructure. At the same time, the bill provides a path forward to build future metro districts, which is critical at a time when Colorado’s housing supply suffers from a 500,000-plus housing unit gap, and cities and counties are limited from raising taxes by the Taxpayer’s Bill of Rights (TABOR).

As a result of TABOR, metro districts have emerged as one of the few viable financing mechanisms to build infrastructure and homes. In many ways, they operate like a mortgage company, but at far greater economies of scale. Just as most homeowners would be unable to purchase a home outright, the same is true of these master communities due to the lack of a functioning tax base at the time of construction.

Most of the debt issued for metro districts is bought by public bond buyers while a small percentage is purchased by developers usually at the outset for necessary infrastructure when public bond buyers still view it as a potentially risky investment. Both methods finance public infrastructure in family-friendly communities that include parks, trails, safe streets and intersections, recreation centers and functioning water and sewer lines. As with a mortgage, this debt is then paid down by homeowners over time.

Without these mechanisms in place, the costs of these public improvements and amenities would be passed directly onto the homebuyer – adding upward of $30,000 per home.

Our role as legislators is to make it easier for our working families to afford housing, not harder. Improved protections and transparency without overregulation is how we responsibility address Colorado’s housing affordability crisis. That’s exactly what SB23-110 aims to achieve.

State Sen. Rachel Zenzinger, an Arvada Democrat, is Chair of the Joint Budget Committee.