Special purpose districts in Texas : the case for Municipal Utility Districts
MetadataShow full item record
Texas is one of the fastest growing states in the nation. As the population continues to increase, so does the demand for public utilities, especially in urban and suburban areas. Furthermore, an increasing population means additional strains on the existing urban and suburban utility infrastructure. These public utilities include water, sewer, drainage, roads, levees, and their related infrastructure. To accommodate the needs of a growing population, certain urban areas of Texas have utilized special purpose districts to finance, construct, and operate the public infrastructure in new and growing communities. The use of special purpose districts has been more heavily used in some urban areas, such as Houston, than others. This report will consider why the special district model in Texas has been generally successful with respect to issuing debt for the construction, maintenance, development, and operation of public utilities and other capital projects. Additionally, to highlight some of the potential risks this report will look at a case in which a special purpose district has defaulted on outstanding debt obligations. The research points will be addressed by discussing the history of special purpose districts in Texas, as well as their statutory and regulatory frameworks, including their powers, composition, means of and reasons for creation, and authorities. The report will also describe the various types of special purpose districts in Texas and their powers. Additionally, the report will discuss the various debt instruments available to a special purpose district in Texas, how the debt of a special purpose district can be structured and issued, and key variables of a special purpose district’s financial makeup, such as the district’s assessed valuation and the various revenue-generating and cost centers of a district. The report will then argue how and why the special district model in Texas has been largely successful. Next, the report will use a case to highlight failures in the special district model and describe changes in law and regulation that have been made to respond to these failures, as well as reactions from the capital markets.