The House Committee on Special Purpose Districts met to take up the following interim charge:
Interim Charge #4: Identify best practices in the creation of municipal management districts.  Study the feasibility of and make recommendations for creating standard language for the creation of municipal management districts through special law.
Invited Testimony
Trey Lary, Allen Boone Humphries Robinson

  • The 81st session in 2009, was when the MUD template was put in place and has been studied every session since
  • The template worked so well for MUDs that they decided to discuss a template for MMDs
  • In 2010, the Senate IGR committee developed MMD standard language which is kind of like the MUD template and they believe that was the reasonable approach at that time
  • Believes now they can try to do more to have a complete template with MMDs
  • There will have to be options within the template or holes that could be filled in if it’s going to work
  • Chairman Murphy – Committee staff has already started working on that template and their goal is to make the template easy to read like the MUD template is to make voting in the House easy
  • They’ve submitted to the staff what they use in house to create a template to help them out

Howard Cohen, Schwartz Page & Harding

  • The MUD template has been wildly successful and does help with a clarity in understanding of what landowners are asking for
  • One of the difficulties with the MMD template is that they tend to be lengthier and more complicated and different practitioners have different viewpoints
  • Chairman Murphy – Believes there’s strong interest in the Senate side as well, have you had any conversations with anyone on that side about this?
    • They are willing and desirous of having a template and recognize the benefit so far

Ross Martin, Winstead PC

  • Reiterates what Cohen and Leary said and also believes a template would be helpful
  • Working with MMDs, a template would clean up legislation and keep all parties (the cities) clear on the process
  • The draft that they’re looking at addresses most of the key issues
  • A lot of the oversight of these districts is in issue with the city accidentally overstepping but the template would keep everyone focused on the key issues
  • Chairman Murphy – If we had to reach out and bring someone on board from the city side is TML staffed up to something like that or should we go to a certain city?
    • TML would be a good resource to go to for the template when bringing in the cities

Timothy Green, Coats Rose Law Firm

  • One thing that needs to be looked at with the drafted legislation is the directors and their qualifications – mainly how the directors will be appointed or elected, etc. and how it interrelates with the people living within these districts
  • Chairman Murphy – Do you envision three different processes for director appointing?
    • Either 2 or 3 possibly, depending on whether the directors are within the cities or ETJs
  • On eminent domain, looking at the general provisions under Chapter 49 of the water code for reference to be able to condemn and not condemn things within the district or ETJs – Has seen this as an important issue with the developers
  • Chairman Murphy – Do MUDs have that power now?
    • Does not believe they do
  • With the flexibility needed with some of these districts, most of these districts provide tax exempt financing tools for plain vanilla real estate development, but there is the ability to get in there and do some creative things
  • Assessments are a hot button issues on this that y’all will have to tackle when you work on the template
  • One of the things in the template, with if you’re inside the city, after 10 years you’ll have to have the city’s approval to issue bonds going forward and believes it’s a disastrous, terrible idea to have in the template
  • Chairman Murphy – So why would the city have the ability to do the issuance in the first place?
    • The legislation says the district can issue the bonds, then get them approved by the city, where they can approve it up front for 10 years, and then after that he assumes you have to go back and get it approved again
    • Murphy – So how do PIDs work today?
    • The city issues the bond, and the PID is issued depending on the size of the land created
    • Murphy – So your concern about the management district’s bond issuance are reflected in the PID bond issuance system that we already have?
    • Correct
  • Is one of the few lawyers who does both MUDs and PIDs and would be happy to discuss assessment based financing versus ad valorem financing in the template
  • Chairman Murphy – Nothing in the template they’re making is trying to keep different cities’ styles out, just trying to get a basic template out that will continue to evolve through the years

Val Perkins, Gardere Law Firm

  • Stresses that the committee understands that there needs to be a lot of flexibility when it comes to the template
  • Often times, the bills that they bring the committee is not their drafting but the drafting of the city and that should be kept in mind with the template
  • Chairman Murphy – Right, there will be things that we won’t be able to anticipate for the template, but they anticipate there being exceptions every time