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A Public Improvement District is a special district created by a City or County under the authority of Chapter 372 of the Texas Local Code. The statute allows for a city or county to levy a special assessment against properties within the District to pay for improvements to the properties within the District.
What is a PID?
"A PID is a public improvement district, and it can be created by a city or county," he states. "Essentially, it creates an organization that's an ad valorem taxing entity that taxes the property owners in those boundaries to pay for certain improvements, which might be for things like building roads.
"But it's a way to raise money to fund the construction of improvements," he says. "The PID typically sells bonds and pays for those bonds through additional ad valorem property taxes assessed against the homeowners."
That means that PIDs aren't an alternative form of an HOA, says Cagle. "A PID is typically not an HOA; homeowners don't get to vote on who serves on the board, and it will tax homeowners," he states. "It's not a private, nonprofit corporation of homeowners. It's a development tool. It's typically used by developers who are working with cities or counties to raise money for construction of improvements.
"I suppose it could be used for other things, but generally speaking PIDs are used for development," muses Cagle. "And I guess if an HOA were restricted in its ability to fund maintenance and repairs of streets and stuff like that, and they needed a way to tax property owners to pay for that, I suppose a PID could be created."
How Does a PID Affect HOAs?
A HOA would need to work closely with a PID administrator. It's important to consider who is responsible for what so working with a PID administrator is of ultra importance. In some cases PIDs are actually arranged for by a HOA to help fix a specific infrastructure problem rather than doing a special assessment. This can be advantageous to homeowners because of the tax differences. However, it can also cause a lack of control over how a problem will be fixed.
PIDs are sometimes confused with community associations, they are not the same thing and serve different but specific purposes.
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