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 impose and collect special assessments on property that is within the city or within the city’s Extraterritorial Jurisdiction (“ETJ”). A county can 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 levies 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 the first home closes.

Public improvements eligible for PID funding are; Acquisition of Right of Ways, Art, Creation of pedestrian shopping centers, Foundation assembly, Landscaping and other aesthetics, Library, Public transport, Parks and Recreational or Cultural Facilities, Parking, Street and sidewalk. Supplemental security services for the improvement of the district, including public safety services. Complementary services related to the business for the improvement of the district. Water, wastewater, sanitation and sanitation or drainage.

Benefits of a PID

A PID can be set early in the development process, allowing the developer to be reimbursed after the public infrastructure is completed. Additionally, unlike Municipal Utilities Districts (“MUDs”), Water Improvement and Control Districts (“WCID”), or Freshwater Districts (“FWSD”), PIDs do not require approval from the TCEQ and are governed by the governing body of the city or county, thus alleviating concerns regarding board rotation and board integrity. If the city chooses to annex property that is within the limits of a PID, the city is not required to pay for the assessments and the assessments do not affect the capacity or debt rating of the city.