Special Utility Districts

The Fort Worth MUD Policy established in 2005 seeks to facilitate development within the City’s corporate boundaries and ETJ that is generally consistent with the City’s Comprehensive Plan. Greater control over the creation of special utility districts in the ETJ would help Fort Worth encourage quality development and facilitate orderly growth. The goal is to encourage the State to allow sufficient municipal control when utility districts are adjacent to large metropolitan areas to ensure that appropriate municipal land use and construction quality standards are implemented.

The Texas Water Code permits the creation of special utility districts within a municipality’s ETJ. These districts include Water Control and Improvement Districts (WCIDs), Fresh Water Supply Districts (FWSDs) and Municipal Utility Districts (MUDs). The original intent of these districts was to finance rural water control, irrigation, and water conservation efforts. However, MUDs are now commonly used to finance urban-style development that bypasses undeveloped areas within cities that are more efficiently and economically served by public facilities and services. With MUDs in their toolkit, developers are able to use them as a vehicle to develop land through an alternative funding source and often with little regulatory oversight by adjacent municipalities.

When the Texas Legislature authorized special infrastructure districts beginning in 1905, most of Texas was quite rural, even on the outskirts of its largest cities. These districts were intended to provide water and drainage service to rural residents and farmers.

MUDs are the most prevalent of these districts and, according to the Texas Water Code, are for the following purposes:

Control, storage, preservation and distribution of its storm water and floodwater, the water of its rivers and streams for irrigation, power and all other useful purposes;
The reclamation and irrigation of its arid, semi-arid, and other land needing irrigation;
The reclamation and drainage of its overflowed and other land needing drainage;
The conservation and development of its forests, water and hydroelectric power;
The navigation of its inland and coastal waters;
The control, abatement, and change of any shortage or harmful excessive water;
The protection, preservation and restoration of the purity and sanitary condition of water within the state;
The preservation of all natural resources of the state.[i]

Current Uses

In the present environment in Fort Worth’s ETJ, districts of all kinds have become financing tools for large residential development projects, exhibited by the map of existing and proposed special districts. WCIDs have been criticized for “being largely financing mechanisms for large-scale developers and focusing much less attention on the management of water resources.” 2 Likewise, MUDs create dense residential neighborhoods in otherwise rural areas outside of municipal control. “Special districts are now the trend for large master-planned communities.”3

MUDs and WCIDs allow developers to build infrastructure such as water, sewer, storm water and internal street facilities by selling bonds backed by future district taxes. This allows developers to be reimbursed for typical out-of-pocket infrastructure costs that would otherwise have to be recovered in lot prices. This frees the developers’ capital for additional land acquisition and other non-infrastructure costs such as neighborhood amenities, lower initial purchase prices for buyers or greater profit.

A city may require a MUD to build its facilities to certain City standards but cannot dictate land use standards, building standards, or water facilities that meet fire-flow requirements. All City planning authority over a district must be negotiated with individual districts on a contractual basis with City leverage often contingent upon the developer’s need for any City services.

MUDs are still relatively rare in North Texas because many cities (like Dallas) are surrounded by suburbs, whereas the counties around Austin, Houston and Fort Worth have more available land.

[i]Texas Water Code, Chapter 54.

2 Handbook of Texas Online, s.v. “Water Control and Improvement Districts.” www.tsha.utexas.edu/handook/online/Accessed 9/28/2006

3 “Growing Numbers of Master-Planned Communities Create More Special Utility Districts, Reports Dallas ULI Conference.” The Creative Investor.www.thecreativeinvestor.com. Accessed 9/28/02006.

Area Master Plans

Texas Motor Speedway

Special Utility Districts

Current Uses

Area Master Plans

Historic Preservation

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