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5:30 pm, Dec 06
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New Law Shines Light on Hidden Costs to Homeowners

Real Estate

Couple looking at a bill by a laptop in their home. | Image by Emir Memedovski

Most homeowners in the Dallas Fort-Worth area have received their tax due notices for the year in the mail by now. Some new homeowners may have found an unhappy surprise inside their envelopes; they discovered their tax bill was much higher than expected due to a PID assessment.

PID stands for Public Improvement District. Several cities in the metroplex have these districts. The City of Grand Prairie lists 12 separate PIDs within its borders. The Grand Prairie city website defines a PID as “a defined geographical area established to provide specific types of improvements or maintenance within the area which are financed by assessments against the property owners within the area.”

Cities or counties can create PIDs to finance improvements on public land for the community’s benefit, such as:

  • Acquiring or improving parks.
  • Landscaping and irrigation.
  • Erecting fountains, lighting, and signs.
  • Constructing or improving fencing or sidewalks.
  • Art installations or decorations and other similar projects.

According to the city’s website, the benefit of these established districts is that they “allow for improvements and a higher degree of maintenance within the PID area, which presumably enhances the property values.”

PIDs can be created with a minimum of 5 years of assessments, but typically the assessments are spread out from 20 to 40 years. Unpaid PID assessments can result in interest charges and a lien on the property.

As reported by CBS DFW News, “PIDs are common in Texas. They allow a city or county to charge a builder to develop roads, water, sewage, sidewalks, etc. A builder can pass that cost on to buyers.”

Until recently, however, there was no legal requirement for builders to notify home purchasers of the PID assessment. This led to a multitude of lawsuits against some major Texas home builders by disgruntled homebuyers.

Texas House Bill 1543, which became effective September 1, 2021, requires sellers to notify buyers twice, in writing, that the property lies within a PID zone. Homebuyers will be notified first, prior to the execution of the sales contract, and second, at the time of closing.

However, the law falls short of requiring the amount of the assessment to be disclosed. Prudent home shoppers can contact the local city government to inquire about the amount of any PID assessment before making their final purchase decision.