Municipal Management Districts

Top 10 questions about Municipal Management Districts

What a municipal management district?
Municipal management districts are political subdivisions of the state created to promote, develop, encourage, and maintain employment, commerce, transportation, housing tourism, recreation, arts, entertainment, economic development, safety, and the public welfare within a defined area.

How is a district created?
The most common method is by special law. Concerned property owners ask their state representative or state senator to sponsor a bill in the legislature for its creation. Less frequently used is the general law method provided in Chapter 375 of the Texas Local Government Code which empowers property owners to petition the Texas Commission on Environmental Quality for creation of the district.

Are many municipal management districts in Texas?
Yes. As of 2007 there have been at least 57 municipal management districts created by the Legislature throughout the state of Texas – over 40 of them in the greater Houston metropolitan region alone.

Who needs a municipal management district?
Commercial property owners create management districts to enhance a defined business area by financing facilities, infrastructure, and services beyond those provided by the local municipality, county, or state.

How are municipal management districts financed?
Public improvement projects and services may be paid for by a combination of self-imposed property taxes, special assessments, or impact fees upon those properties that benefit from improvements and services. However, the district may not impose taxes, assessments, or fees for projects and services unless a written petition is filed with the board requesting such services. The petition must be signed by property owners representing a majority of property value or surface area in the district. In addition districts may be used as a financing mechanism to issue debt on a contract basis with an overlay tax increment reinvestment zone. This mechanism allows for the issuance of debt by a political subdivision of the state and it not city debt.

Who runs the district?
Management districts are administered by a board of directors consisting of area commercial property owners or their appointed agents appointed initially by the Legislature. Depending on the district’s enabling legislation, the district board may also include residential property owners. Directors serve four-year staggered terms. As the terms of the initial board members expire, subsequent board members are appointed by the municipality or county governing body based on recommendations from the remaining board.

What does this management district propose to accomplish?
While each district sets its own priorities based on community needs, all may provide supplemental services for advertising, economic development, business recruitment, promotion of health and sanitation, public safety, traffic control, recreation, and cultural enhancement. Management districts may also provide for the construction or maintenance of landscaping, lighting, signs, streets, walkways, drainage, solid waste, water, sewer, power facilities, parks, historic areas, works of art, parking facilities, transit systems, and other similar improvements. In addition, the district can facilitate the financing of infrastructure construction and reconstruction.

How does a management district relate to other government agencies?
One of the primary benefits inherent to management districts is the ability to leverage and maximize public funds through partnerships with other local, state and federal agencies. The management district exists to supplement rather than replace other government agencies.

Is it permanent?
Not necessarily. First, a municipal management district exists only during the period of its approved Service and Improvement Plan and Assessment Plan, typically seven to 10 years. When the Plans reach their conclusion, the district must go through a new petition process to institute a Service and Improvement Plan and Assessment Plan for another finite period. Essentially, there is a built-in “sunset” provision that determines whether a district may continue to operate another term. Second, a management district may be dissolved at any time by a majority vote of the board, a petition of property owners representing 75 % of the district’s property value or surface area, or a two-thirds majority vote of the municipality in which the district is located.

How can I get involved?
Attend meetings and volunteer. Management districts are subject to the Open Meetings Act, so the public is welcome to all board meetings and may request information on any action taken by the board. Many districts have working committees that welcome participation by the interested public.