Oklahoma ballot measure would allow bond-issuing infrastructure districts

Oklahoma would open the door to the creation of bond-issuing public infrastructure districts if voters approve a constitutional amendment on the Nov. 5 statewide ballot.

State question 833 would allow property owners to petition their municipality to create a PID as a way to finance roads, sidewalks, parks, and water and sewer services through the issuance of bonds backed by a property tax assessment applied only within the district.

It was during an August special session called by Gov. Jared Polis. The legislation, which Polis signed into law Sept. 4, expands on the enactment earlier this year of $1.3 billion in tax relief through lower assessments rates and a cap on property tax revenue growth for 2024 and 2025.

In Texas, districts that finance water-related projects and in some cases other infrastructure like roads and parks, issued nearly $4.15 billion of tax-supported and $2.3 billion of revenue-supported debt in fiscal 2023, according to the state’s Bond Review Board. Outstanding debt for municipal utility districts and other districts totaled $45.42 billion.

In an April report on Texas MUDs, Moody’s said operating fund reserves were strong, while state oversight keeps debt burdens in line with tax base growth. Its ratings for 502 MUDs range from Aa2 to Ba1. 

“Median debt service as a percentage of expenditures declined for lower-rated MUDs as newly established districts had significant tax base and revenue growth from new development,” the report said. “The positive trajectory of the sector is evidenced by the 99 upgraded districts in 2023.”

The state has had occasional eye-popping initial voter-approved bond authorizations. A single vote by a property owner in Texas in the November 2023 election authorized the Legacy Municipal Management District in Webb County to issue $2.7 billion of bonds for water, wastewater, and drainage system facilities, nearly $3.8 billion of bonds for roads, $9.7 billion of debt refunding, and the ability to levy taxes to pay off the debt.  

The bonds will finance infrastructure for 13,000 acres of land owned by a family in the Laredo area that is targeted for residential, commercial, retail, and industrial use. 

Lund Farm MUD has more than $1.1 billion of bonds on the Nov. 5 ballot to fund infrastructure for a mixed-use residential development approved by the Elgin City Council last year.

In February, Rockwall County reportedly sued a MUD for holding an “invalid” single-voter election in November 2022 that authorized about $833 million of bonds.