The DFW area is home to some of the largest master planned communities and subdivisions in the country. As these areas are developed, Municipal Utility Districts (MUDs), Public Improvement Districts (PIDs) and other special districts are often set-up to finance the construction of vital public infrastructure that does not yet exist. The cost of the installation of this infrastructure is passed on to the final homeowners in the form of additional taxes that are paid after the community is developed. It is important for new home buyers in the area to understand these special districts and how they work to avoid surprises.
MUD- Municipal Utility Districts
What is it: A Municipal Utility Districts (MUD) is a governmental entity created to fund improvements, or infrastructure, or utility services to a designated area. Typically, a MUD is created in an area outside city limits or outside where a city was previously providing utility services.
Notification Requirements: Sellers of real property located in a MUD must provide a notice to buyers prior to the execution of the sales contract. The notice may be given separately or as an addendum to the contract.
How do I find out if a property is in a MUD? A MUD is created under the authority of the Texas Commission of Environmental Quality (TCEQ). To find out if an address is in a MUD, you may search the address online: https://www.tceq.texas.gov/gis/iwudview.html. As of June 18, 2023, a MUD is required to make the completed notice available online, as well as file them with the county Real Property Records.
PID- Public Improvement Districts
What is it: A Public Improvement Districts (PID) is a special district created by a city or county to pay for improvements such as landscaping, parks, lakes and fountains and other recreational and pedestrian improvements. With a PID, a specific area receives funds for the improvements, and owners of the benefited land pay back the amount. This amount may be paid upfront or over a course of time, until the full amount is paid off. Unlike HOA dues, a PID may be tax deductible.
Notification Requirements: Sellers of real property located in a PID must provide a notice to buyers prior to the execution
of the sales contract. The notice may be given separately or as an addendum to the contract. A separate copy of the notice must be signed notarized and recorded at closing.
How do I find out if a property is in a PID? PIDs may appear on the County Appraisal District’s website, on Seller’s tax bills, or on the PIDs website. The PID is also required to file a copy of the notice in the county Real Property Records.
TIF-Tax Increment Financing
What is it: Tax Increment Financing (TIF) is a tool that incentivizes economic development of a specific area called a Tax Increment Reinvestment Zones (TRIZ) or TIF Districts. Cities, alone or in partnership with other taxing units, can use a TIF to pay for improvements to a zone in an effort to attract new development.
Notification Requirements: Seller is not required to notify a buyer if a property is in a TRIZ.
How do I find out if a Property is in TRIZ? The governing body of the city or county that created the Tax Increment Reinvestment Zones TIRZ must send an annual report detailing the TIF project’s progress to the chief executive officer of each taxing unit participating in the TIRZ and to the Texas Comptroller of Public Accounts. There are currently 19 active TIRZ Dallas and 11 in Fort Worth.
WCID- Water Control and Improvement District
What is it: A Water Control and Improvement District (WCID) is a special district that provides water, wastewater and drainage services to a specified area. Both a WCID and a MUD are types of Water Districts controlled by TCEQ.
Notification Requirements: Sellers of real property located in a WCID must provide a notice to buyers prior to the execution of the sales contract. The notice may be given separately or as an addendum to the contract.
How do I find out if the property is in a WCID? Property address may be searched thru TCEQs website: https://www.tceq.texas.gov/gis/iwudview.html.
Realtor Tip: All required notices given prior to the execution of the contract should be listed in the contract or are attached to contract at the time of signing. (See paragraph 6E(11) of the TREC One to Four Family Residential Contract.)