There are many different types of utility districts, you may have seen abreviations such as PUD, MUD, FWSD, WCID, LID, RUD, UD. These abreviations stand for the following:
- Public Utility District
- Municipal Utility District
- Fresh Water Supply District
- Water Control and Improvement District
- Levee Improvement District
- Road Utility District
- Utility District
A WCID, LID, or RUD may contain one of the other types of districts within its boundaries. In this instance, both districts set individual tax rates and are governed by their own Boards of Directors. Governing all of these districts is the Texas Commission on Environmental Quality (TCEQ), which is a State of Texas agency.
A utility district is created by the TCEQ through the Office of the State Attorney General, based upon an application usually filed by a developer. The objective is to provide various services such as water, sewer and drainage to certain areas where municipal services are not available. The funds which are used to construct these facilities are obtained through the public sale of tax-exempt municipal bonds, as approved by the registered voters residing within the boundaries of the District.
Financial and operational authority is vested in an elected Board of Directors (the Board) composed of five landowners within the District. The primary and most vital responsibility of the Board is to manage the District so as to ensure continued growth and development, in order to generate through ad valorem taxes and service billings, monies sufficient to retire the District’s bonded indebtedness. The Board meets monthly and is assisted in its decisions by qualified professionals, who provide their services to the District on a fee basis.
The District employs an engineering firm to prepare a study of the feasibility of the District, to assist in its creation, and to formulate the amount of bonds required to be issued (sold) for financing the construction of the District’s facilities. The engineering firm also assists in all planning, design, and construction.
A law firm is retained to assist in the creation of the District and in the preparation of the bond application. The law firm additionally advises the Board in all legal matters relating to the District as a political entity.
A financial advisor is retained and works closely with the District’s engineering firm to assess future needs and analyze the projected debt structure in relation to the District’s taxing requirements and also to analyze the expected service revenues, in order to recommend a plan for the financing of the bonded indebtedness.
Also the District employs professional companies to provide the utility system operations, billing and collecting for water and sewer, ad valorem tax assessing and collecting, general bookkeeping and accounting, and auditing services.