July 14, 2024

A Public Improvement District (“PID”) is a funding tool created by the Public Improvement District Assessment Act as found in Chapter 372 of the Texas Local Government Code. The PID allows any city to place and collect special liens on property that is located within the city or within the city’s Extraterritorial Jurisdiction (“ETJ”). A county may also form a PID, but must obtain approval from a city if the proposed PID is within the city’s ETJ. The PID establishes a mechanism to finance improvement projects through the issuance of bonds guaranteed by special appraisals that encumber all benefited properties. Because PID bonds can be used to reimburse the developer for eligible infrastructure early in the development process, often before closing on the first home.

Public Improvements Eligible for PID Financing are; Acquisition of Right of Way, Art, Creation of pedestrian plazas, Construction of foundations, Landscaping and other aesthetics, Library, Mass Transportation, Parks and Recreational or Cultural Facilities, Parking, Street and sidewalk. Supplementary security services for the improvement of the district, including public safety and security services. Complementary services related to businesses for the improvement of the district. Water, wastewater, health and sanitation or drainage.

Benefits of a PID

A PID can be established early in the development process, allowing the developer to receive funding after the public infrastructure is complete. Also, unlike a Municipal Utility District (“MUD”), Water Control and Improvement District (“WCID”), or Fresh Water District (“FWSD”), PIDs do not require TCEQ approval and they are governed by the city or county governing body, thus alleviating concerns about board turnover and board integrity. If the City elects to annex a property that is within the boundaries of a PID, the City is not required to pay the assessments and the assessments do not affect the City’s borrowing capacity or rating.

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