What On earth Is A PID??

26 Aug 2019

A PID (Public Improvement District) is a defined geographical area established to provide specific types of improvements or maintenance which are financed by assessments against the property owners within the area. PIDs provide a development tool that allocates costs according to the benefits received. A PID can provide a means to fund supplemental services and improvements to meet community needs which could not otherwise be constructed or provided.

  • PIDs help finance area improvements & community needs
  • PIDs are funded by municipal bonds, not taxpayers
  • PIDs help new developments offer wanted infrastructure to Buyers

Chapter 372 of the Texas Local Government Code authorizes the creation of PIDs by cities. The owners of the properties in the defined area can request the City to form a PID through a petition, which may include the establishment of an Advisory Body. With the establishment of an advisory body, the property owners within the PID have control over the types of improvements, level of maintenance, and amount of assessments to be levied against the property owners.

The PID concept was established to help the developer secure necessary funding through a municipal bond to cover the costs for the infrastructure of the development.

Here are some answers about exactly what this is:

What are PID Assessments?

The purpose for these “special assessments” is to fund new infrastructure development when the standard tax base alone is insufficient. The various online Tax Appraisal Districts (links below) will reveal if MUD or PID taxes apply. Many times, communities with PID’s or MUD taxes, have slightly lower competitive home pricing to reflect the added tax burden. Some communities eliminate PID or MUD taxation by charging more for their lots.

One type is known as a fixed assessment; this is allocated to each lot located within the District to pay for improvements that provide a special benefit to the properties within the District.

Each Lot is assessed a principal assessment amount that will go away once it has been paid in full!  The principal assessment amount  is determined by (a) the size of the lot and (b) in which Development Phase the Lot sits (each successive phase may pay more than a previous phase).

In addition to the principal assessment amount, each Lot may also be assessed a small amount for (A.) contributing to the development’s long-term maintenance-fund and (B.) reimbursing the city for all administrative cost to manage and maintain the PID, each year.

What do the PID Assessments pay for?

The fixed assessments levied against properties in the public improvement districts pay for improvements to the properties that may include: Roads, Water Distribution Lines, Wastewater Collection Lines, and Drainage Improvements, Landscaping and Irrigation, Trails, Parks, Open Space, and Monuments and Entry Features. Each PID document lists the improvements to be paid for by that district’s assessment.

  • PID fees are fixed, and assessed by lot size, not by house size or value
  • PID fees may increase as newer ‘phases’ are developed, but only to the new lots
  • PIDs pay back the bondholder, not the city/county.
  • PIDs may have 2 parts: 1st the fixed assessment, and a long term maintenance fund fee.
  • PIDs can be paid in full upfront, or paid with your annual property taxes

How does the PID work?

The PID has specific boundaries with predefined percentages of how much the monies collected for the PID will contribute toward expenses. (Example – perhaps the PID covers 61% of the water bill for the largest expanse of land in the Public Improvement District for some city or another)

How are the Assessments calculated?

Fixed assessments are based on size of the lots located within the District.

Does the value of the home have any impact on the PID assessment?

No.  The PID applies only to the LOT.  For example, a 60′ Lot in Phase I is assessed equally with all other 60′ Lots.  So regardless if the Lot sits empty or has a five hundred thousand dollar home built on it, all 60′ Lot’s in Phase I are assessed equally.

Does the city benefit from the funds that are contributed to the PID?

No.  The city does not receive any funds. The funds are transferred directly to the Trustee from RCAD. This misunderstanding is based on the fact that the city receives all funds that are paid into the PID from RCAD, which is reflected in the city’s annual budget reports.  However, the bulk of those funds are then transferred to the PID account, which pays back the bondholders and the remainder is divided into (1) the PID’s long-term maintenance fund and (2) reimbursements for all administrative expenses that are associated with the PID.  Taxpayers outside of the PID are not burned with the cost and Lot owners inside the PID receive the full benefits of their investment.

How do residents pay their assessments?

New owners must sign a statement before purchasing the property acknowledging that they will pay PID assessments with their property taxes.

PID Assessments can be paid in full at any time by contacting the City that controls it, or through annual installments in conjunction with your annual property taxes.

Have your Realtor check if a home you love is in a PID, and whether that fee will be acceptable to you, if so.

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