The State of Texas allows Land Developers to form Water Districts in order to help finance medium to large sized projects. The Water District repays the Developer for the cost of utilities, drainage systems, ponds and other improvements. The Water District is a taxing authority that re-pays the Developer through the issuance of bonds, similar to municipal bonds.
There is more than one type of Water District. Types that are commonly used in Land Development include the Municipal Utility District (M.U.D.) and the Water Control & Improvement District (W.C.I.D.). Both types allow the Developer to be reimbursed for many construction costs and soft costs.
When the District is formed, there is a resident on the property to be developed who will vote in a special election for the Creation of the District and for the eventual Reimbursement of the Developer. The voting resident is not just anybody, but is a person who is living on the land for the purpose taking part in the election and voting to create the District. Since the voting resident is hand selected, the outcome of the election is pre-determined and the Developer is guaranteed to be reimbursed once there are enough taxpayers in the District to support the Bonds.
A good rule of thumb for the size of development that makes creation of a Water District viable is that it should have the equivalent of at least 200 average price homes that are paying taxes to the Water District. We have helped our Clients with the Creation of Districts of over 2,000 homes, mixed with commercial property. But a high end development may provide enough of a tax base to support a District with fewer than 200 tax payers. We have assisted Clients with small Districts as well. We have a team of experts that have created Districts in the past. Call us at 512-442-0377 for more information on Water Districts as they apply to Land Development.