Management Districts FAQ
Several months ago, I wrote an article about the efforts afoot to once again address the community concerns around the condition of Cypress Creek Parkway. The article generated a fair amount of response, all of it positive. The article also generated additional inquiry about the nature of management districts, a potential solution to these concerns. This article is dedicated to help answer some of the questions about what a management district is and what it does.
What is a management district?
Paraphrased from Chapter 375 of the Texas statutes, “a municipal management district (MMD), or improvement district are necessary to promote, develop, encourage, and maintain employment, commerce, economic development and the public welfare in commercial areas…of metropolitan areas of the State.”
Is a management district the same as a MUD (municipal utility district)?
No, but similar. Management districts and MUDs are similar in they are both authorized by the State and are formed for the purpose of public benefit. However, their charters are not necessarily the same and they are financed differently. The scope of MUD services is fairly narrow, whereby a management district can take on a broader scope of activities. MUDs collect ad valorem taxes primarily for the purposes of financing and maintaining water, sewer and access infrastructure for a development. Management Districts most often are funded through a special assessment on the commercial properties within their defined boundaries and focus almost exclusively on commercial areas. Conversely MUDs are predominately formed to serve residential development. Assessments are not permitted on residential, only commercial.
How are management districts governed?
Like a MUD, management districts are governed by a board of directors, typically representative of the properties it benefits. However, the difference being, MUD directors are selected by the electorate within the district, and management district directors are appointed by the State. Both bodies are deemed subdivisions of the state, thereby subject to public records and open meetings laws.
What do management districts do?
Management districts are typically formed to benefit one of three categories: to support raw land development, support a major activity center, or support neighborhood redevelopment. For our purposes, we are interested in redevelopment. Activities could include, but are not limited to, safety & security, public right-of-way maintenance, litter and graffiti abatement, landscaping and public art, branding and way-finding signage, public nuisance and sign code violation reporting.
Do you have to have a private developer committed to a redevelopment project before a management district is formed?
No. So long as the existing commercial property can generate and sustain enough revenue through the assessment to execute the activities identified in the adopted service plan, and over 50% of the assessed valuation of the properties within in the district sign onto a petition agreeing to the assessment, then a management district can move forward.
Hopefully, these answers provided some insight about management districts. This is only a fraction of the capabilities of management districts. They have been in use in the Houston area since the 1980s, and when operated properly, have proven to be successful tools in helping communities solve more localized problems when a municipality or other governing body cannot.