This solution often comes in the form of a municipal utility district, or MUD.
The gist
To provide core services for communities, MUDs may issue bonds to reimburse a developer, repaying the debt using property tax revenues and user fees received from utility services, said Amy Giannini, district engineer for Brushy Creek MUD in the Round Rock area.
“In addition to other user fees, MUDs use these revenue and financing sources to operate, maintain and improve infrastructure services throughout the district,” Giannini said.
Services provided by MUDs include:
- Water supply
- Solid waste management
- Parks and recreation facilities
- Wastewater treatment
- Drainage systems
- Roads
A MUD is a type of special district allowed under state law that functions as an independent, limited government, Giannini said.
According to state law, developers can petition the Texas Legislature or the Texas Commission on Environmental Quality to create a MUD. If the land where developers want to establish a MUD falls within a city’s jurisdiction, the city must provide consent to create the MUD.
Developers are able to negotiate terms with a city, but if the parties can’t come to an agreement within 120 days, developers can petition the TCEQ to form a MUD. Voters who live in the proposed district must also give their approval.
MUDs are governed by a board of directors, made up of property owners who are elected. Giannini said the Brushy Creek MUD board includes five residents.
“At BCMUD, there are also several resident advisory committees that meet regularly to discuss issues pertaining to district infrastructure and operations,” Giannini said.
What else?
A variety of limited government districts can be created throughout the state.
In Texas, thousands of special-purpose districts are set up to provide a wide range of services, according to the Texas Comptroller.
These can include emergency services, library, crime control, development, fire control and health services districts. Similar to MUDS, these districts may also impose property tax, sales tax or users fees, depending on the services they provide.
In 2017, a state law was passed to improve transparency, requiring certain special districts to provide records annually regarding district finances and tax rates to the Comptroller of Public Accounts. More information about special district finance reports can be found by visiting www.comptroller.texas.gov.
