Management District Overview

A Municipal Management District (MMD) is very similar to a Municipal Utility District (MUD) except that the MMD has broader powers and financing capabilities. A MUD is generally limited to financing water, sewer and drainage facilities. Like a MUD a MMD can finance water, sewer and drainage facilities; however it can also finance roads, parking facilities, streetscape, security and transit facilities.

MUD bonds are generally supported by ad valorem taxes which are levied district wide. A MMD can finance with bonds that are supported by taxes levied district wide. It can also finance improvements which are secured only by special benefit taxes i. e. taxes paid only by the properties which are specially benefited by the improvements.

A MMD is a political subdivision of the State of Texas. As a political subdivision of the State a MMD generally does not pay ad valorem taxes or sales taxes. It also is immune from tort actions. It also has the ability to issue bonds the interest on which is exempt from the payment of federal income taxes by the owner or holder of the bonds. This permits the MMD to finance at a lower rate than an entity whose debt is not tax exempt.

The MMD which will be created by SB 1123 will have a board appointed in the legislation. Subsequent boards will be appointed by the Mayor and City Council of the City of Houston from nominees from the existing board.