New utility districts form as landowners leave Fort Worth oversight, posing new challenges

At least four municipal utility districts, or MUDs, now exist in Fort Worth’s extraterritorial jurisdiction near the booming Alliance area, reflecting a rising trend in response to a state law allowing landowners to petition to be released from city oversight. 

The growth has some worried about how crucial municipal services, such as emergency response and water, will be delivered to rapidly developing areas. 

Extraterritorial jurisdiction refers to land legally designated for possible future annexation that is located within a specific distance from a city’s official boundaries. In Fort Worth, that jurisdiction extends 5 miles from its boundaries, where the city is typically responsible for providing police and fire protection, garbage collection and sewer.

All four of the municipal utility districts are located in Denton and Wise counties, a fast-growing area near Fort Worth’s expanding city limits and its extraterritorial jurisdiction. Most provide water and other services to residents of housing developments.

About 3,000 acres outside the city limits have been released as Fort Worth complies with Senate Bill 2038, which went into effect Sept. 1, 2023. The law allows property owners to be immediately released from a city’s extraterritorial jurisdiction — when a city extends its legal power beyond its boundaries — simply through a valid petition signed by 50% of registered voters among landowners in a contested area.

Over the past year, portions of Tarrant, Johnson, Parker and Denton counties have been released by Fort Worth. 

Fort Worth still has more than 169,000 acres in its extraterritorial jurisdiction after 89 acres were released earlier this year, city spokesperson Natalie Foster told the Fort Worth Report.

While Tarrant County has just a few special districts, many are located in growing rural areas adjacent to cities, according to a Texas Commission on Environmental Quality map of water districts.

For instance, Denton County has more than 40 special districts, which provide water or emergency services, said Dawn Cobb, the county’s director of community relations.

Dianne Edmondson, the Precinct 4 commissioner for Denton County, said the rise in MUDs has sparked public safety concerns as the county rapidly grows.

“One of the things I’m very concerned about is fire protection,” Edmondson said, adding that the county has developed a fire protection plan to address firefighting and emergency services in unincorporated areas of the county.

“It’s a whole different category,” she said. “Our concern is public safety. In unincorporated areas, we have to take care of the roads. Even with MUDs, the sheriff takes care of police actions in those areas since he is the top police officer in the county.”

Special districts such as MUDs often issue bonds to provide services for housing developments. The district’s bonds reimburse developers by repaying the debt with revenue from property taxes and utility user fees. That money helps MUDs operate and maintain infrastructure services throughout a district.

“Homeowners pay through that,” Edmondson said. “But it could be 20 to 30 years before the debt is paid off.”

Many districts contract with cities for emergency services, an issue that can sometimes hamper response, she said.

Edmondson pointed to a 2021 incident in which a man in the Artesia community near Prosper died from a heart attack even though a fire station was a half-mile away from his house. After the man’s wife called 911, paramedics from the town of Aubrey responded to the call — taking at least 13 minutes to reach the man.

Artesia residents had formed a municipal utility district that contracted with the city of Aubrey rather than the adjacent city of Prosper.

After the man’s death, Denton County emergency service officials met with Prosper fire administrators and Artesia community representatives.

“The town recently signed an interlocal agreement … to begin providing fire and EMS services to this area, and is in full support to fast-track this process in any way possible,” Prosper officials said at the time.

The incident prompted officials to create a plan to “bring the same level of protection for everyone,” Edmondson said.

Providing drinking water is another service that MUDs offer.

Edmondson said developers are often drilling into the same aquifer to get water, an issue that could be addressed with regional water infrastructure.

“There are lots of ways for developers to tap into water supplies,” she said. “Maybe instead of five or six separate wells, they might consider building a regional station to serve those five to six developments.”

The proliferation of special districts throughout the state is capturing the attention of some elected officials.

“It’s potentially a major problem” as growth continues, state Sen. Sarah Eckhardt, D-Austin, said during a Sept. 5 meeting of the Texas Senate Committee on Local Government, which examined the effects of Senate Bill 2038.

The increase of special districts, Eckhardt said, could create more multiple local governments.

Although the four Fort Worth-area municipal utility districts are based in Denton County, residents will have to travel many miles to attend their meetings. All four districts meet in Dallas and are overseen by public finance attorneys.

For instance, the Tradition Municipal Utility District No. 2B of Denton County, created in 2015, meets at noon the third Monday of each month at a law firm on Cole Avenue in Dallas, according to its website. 

Winstead PC, a Texas-based firm with a Fort Worth office, operates special districts throughout the state, including in Parker, Johnson and Wise counties — portions of which are also in Fort Worth’s oversight. Each district maintains a website to comply with Texas Senate Bill 2 and Texas House Bill 305. The sites include basic information about the district as well as information about its board of directors.

On its website, Winstead said its public finance attorneys “serve as general counsel and bond counsel to special districts providing water, sewer, drainage, roadway and transportation infrastructure for master-planned developments, commercial developments and mixed-use developments.” Those districts include municipal utility districts, municipal management districts, freshwater supply districts, water control and improvement districts, and other improvement districts.

Winstead did not respond to an email requesting comment. 

Edmondson said local control is best for districts as well as regional cooperation as the area booms. 

The North Central Texas Council of Governments projects that the regional population will reach about 12.5 million residents by 2050 as leaders plan for increased transit infrastructure, denser housing and road expansion.

Denton County, for example, will be built out in 15 to 20 years, Edmondson said. The county population reached 1 million this year — two years sooner than expected.

“Much of the growth of MUDs is in my district,” Edmondson said. “We’ve got lots of challenges as we grow, but we’ll take them on.”

Eric E. Garcia is a senior business reporter at the Fort Worth Report. Contact him at eric.garcia@fortworthreport.org. 

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