Texas PID Bonds Successfully Issued in Midst of Financial Crisis!
The City of Horseshoe Bay successfully formed the Escondido Public Improvement District ("PID") and issued bonds successfully on September 29th, 2008. The bonds will fund approximately $5.475 million in public facilities, including streets, water and sewer facilities, storm drains, public parks, trails and landscaping facilities. The PID bonds will allow the developer to recoup eligible infrastructure costs before the first home closes, which will enhance profitability and greatly improve the internal rate of return for the project.
Some additional advantages of PID financing include:
1.No TCEQ approval required;
2.No public bidding / prevailing wage requirement;
3.Almost all types of public infrastructure are eligible for reimbursement;
4.PID bond proceeds greatly reduce the need for equity investors, which significantly reduces borrowing costs for the project;
5The PID assessment on an individual lot can be paid off in a lump sum or be paid off over 30 years.
6This flexibility allows the developer to either pass the debt service burden to the homeowner or pay off the total assessment at home closing, depending on market conditions.
What is a PID?
A PID is a financing tool created by the Public Improvement District Assessment Act as found in Chapter 372 of the Texas Local Government Code. The PID enables any city to levy and collect special assessments on property that is within the city or within the city's extraterritorial jurisdiction ("ETJ"). A county may also form a PID, but must obtain approval from a city if the proposed PID is within the city's ETJ. The PID establishes a mechanism to finance improvement projects through the issuance of bonds secured by special assessments levied on all benefitted properties. Because PIDs utilize assessments rather than taxes, PID bonds can be used to reimburse the developer for eligible infrastructure early in the development process, often before the closing of the first home.
DPFG has been involved in the formation of over 1,000 special districts throughout the country and assisted in the issuance of more than $8 billion in bonds.
Some additional advantages of PID financing include:
1.No TCEQ approval required;
2.No public bidding / prevailing wage requirement;
3.Almost all types of public infrastructure are eligible for reimbursement;
4.PID bond proceeds greatly reduce the need for equity investors, which significantly reduces borrowing costs for the project;
5The PID assessment on an individual lot can be paid off in a lump sum or be paid off over 30 years.
6This flexibility allows the developer to either pass the debt service burden to the homeowner or pay off the total assessment at home closing, depending on market conditions.
What is a PID?
A PID is a financing tool created by the Public Improvement District Assessment Act as found in Chapter 372 of the Texas Local Government Code. The PID enables any city to levy and collect special assessments on property that is within the city or within the city's extraterritorial jurisdiction ("ETJ"). A county may also form a PID, but must obtain approval from a city if the proposed PID is within the city's ETJ. The PID establishes a mechanism to finance improvement projects through the issuance of bonds secured by special assessments levied on all benefitted properties. Because PIDs utilize assessments rather than taxes, PID bonds can be used to reimburse the developer for eligible infrastructure early in the development process, often before the closing of the first home.
DPFG has been involved in the formation of over 1,000 special districts throughout the country and assisted in the issuance of more than $8 billion in bonds.
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