What Is The Difference Between An HOA, MUD, FWSD, & City?
Fifth Edition
There is nothing like a classic. If you want all of the details, you can find them here. We are going to make it more concise and easier to read since this is the fifth iteration. Here are your frequently asked government and HOA related questions. I have also added some other items that tend to lead to confusion.
What is Paloma Creek and where is it?
Paloma Creek is a neighborhood primarily in unincorporated Northeast Denton County. Everyone in Paloma Creek is part of the Paloma Creek HOA (Homeowner's Association). We are located in five Fresh Water Supply Districts (FWSDs) that are 8A, 8B, 11A, 11B, and 11C and the Lakeside Estates development is in Little Elm.
What is a MUD?
It is a special type of government in Texas with limited powers that is able to bill for utilities. We get our water through Mustang which is a Municipal Utility District.
What does FWSD stand for?
It stands for Fresh Water Supply District. Legally, all of our FWSDs function the same way in Texas and have the same purpose. If you live in Paloma Creek, chances are, you live in FWSD 8-A, 8-B, 11-A, 11-B, or 11-C. We have several friends and neighbors that live in Little Elm, but I will cover that later.
Why do we need a FWSD?
They are an alternative financing method that creates an independent, limited government authorized to issue bonds and levy taxes for utility infrastructure. The sizes vary, but they generally serve communities like ours, Savannah and Lantana, that are a few hundred to several thousand households. The areas are often broken up into smaller districts within the district which is why we have five.
Do the FWSDs have anything to do with water?
You hear them referred to as Fresh Water Supply Districts because they are a political subdivision of the State of Texas operated by a publicly elected Board of Directors, which is created to provide infrastructure and services such as water, sewer, and drainage in areas where city services are not available. They will often contract with neighboring areas for police (Little Elm) and fire services (Aubrey) as well. They are essentially the equivalent of a city council for a small area. Ours handle all of our roads, major infrastructure, signage, and contracts for law enforcement, fire, and emergency medical services since everyone that lives in a Paloma Creek FWSD is outside of city limits and under the jurisdiction of Denton County (except Lakeside). They do influence water rates set by Mustang which is a MUD.
How does water factor in?
In addition to working with Mustang and setting our water prices, they actually divide up a lot of the expenses in Paloma Creek based off of the number of water meters. If the entire community needs something, it isn’t fair for them to pay equal portions because 11-A (where I live) would be rich! On the other hand, all of our friends and neighbors in 11-C would have to be taxed an inordinate amount or purchase bonds due to increased costs. That is why the water portion of our Fresh Water Supply Districts’ unique setup is important. By using the meters, things are more fair, balanced, and democratic. This is done for budgetary purposes only and has ZERO effect on our taxes or other expenses due to the way that everything is structured.
What do the Paloma Creek FSWDs look like and where are they?
The largest is 11-A which is the golden square in the center of the map below. 11-C is the smallest. It is in magenta and sits to the East of 11-A. You can find an interactive copy of the map here. 11-B is South and to the East of 11-A in green. 8-A is in royal blue and on North and South side. 8-B is on North side, North of 380 in light green.
How can I determine what FWSD I live in?
You can use Denton County CAD’s property search tool. Type in your name or address and give it several seconds to populate. After you type in your legal last name, comma, and first name, your record(s) will appear in the search results. If you have more than one property listed, click on “See All Results”, select the property record for Paloma Creek, and choose “View Details”. If you only have one record, you can directly click on it. On the left-hand side there is a section labeled “Taxing Jurisdiction”. When you click on it, the category will expand. The last line is the FWSD taxing jurisdiction you are in. For example, mine reads “DENTON CO FWSD 11-A”. If you live in Lakeside Estates, it will say “CITY OF LITTLE ELM”.
If you want the EASY way to do it, now that you have learned something new, find your water bill (you might need to scroll down a little). Where does your money go? You can see that mine goes to 11-A. If you are in Lakeside Estates, your bill go to the Town of Little Elm instead of Mustang.
Does the FSWD have Politicians?
The Directors on the FWSD are elected Politicians that live in the area they govern. Most Boards consist of three to five members - ours attempt to stay at five. We are under citizen control. They are elected on regular ballots or obtain their seats by emergency appointment, so please make sure you are registered to vote at votedenton.org.
How do I find out who represents me on my FWSD Board of Directors?
After you have determined which FWSD you live in, you can link to your FWSD. You can find a list of current leadership, meeting dates, and documents for your area here. I encourage you to attend and/or read the meeting minutes.
What are the advantages and disadvantages of living in an FWSD?
They are found in unincorporated areas that are not in the city limits. Since they are a limited type of government in Texas, they can not make ordinances, regulations, laws, etc…. This becomes problematic at times because there can be confusion since things that are illegal in Lakeside Estates are not against the law in the FWSDs. It doesn’t make them wise or correct; however, they are not enforceable. It is a source of frustration for citizens and law enforcement who is unable to assist us.
The advantage of living in a FWSD is that it is hyper local. The people on the FWSD Board are very accessible. They are our neighbors. They value your feedback and the community's opinions as well. Our money is also spent in our neighborhood instead of across a large city. Although water is usually more expensive, they do their best to lower other expenses. Tax rates are generally lower in FWSDs as well which makes them ideal for growing families and retirees. One of the awesome things about Paloma Creek is that we have a large, diverse community which also includes a lot of veterans.
FWSDs tend to be extremely confusing. For example, South Paloma Creek has a Little Elm address South of 380, but it is part of four different FWSDs (out of five). Although I live outside of city limits, I have a Little Elm address for postal purposes. The FWSD also contracts with Little Elm PD and Aubrey Fire. Then, I have the Paloma Creek HOA. Whereas, North Paloma Creek, on the North side of 380 has an Aubrey postal address. North PC attends Denton ISD and South PC is split between Denton and Little Elm ISDs.
South Paloma Creek is in Little Elm’s ETJ and North Paloma Creek is in Aubrey’s ETJ. As such, we are only extended privileges at the goodwill of the neighboring town whose extra territorial jurisdiction we reside in. For example, the residents in North PC cannot attend Little Elm’s Citizen’s Academies, thus they cannot be part of their Citizens On Patrol although LEPD polices North and South Paloma Creek.
If this is confusing for professionals and Politicians, imagine how the typical homeowner can feel during the initial adjustment process. I'll continue to walk you through who is responsible for what.
Will we ever become a city?
After the FWSDs pay off their debt, or significantly reduce it by restructuring their bonds, they often become their own villages, cities (typically defined by 2,500 - 9,999 residents), or towns (10,000+) or they are incorporated by a neighboring municipality, such as Little Elm. As of 2021, Little Elm did not want to incorporate us because we carried too much debt. Paloma Creek has enough residents to currently qualify as a town with 20,000 people in 5,600 homes. The goal is to typically be strategic and grow slowly so we can support our infrastructure and be debt free prior to becoming a large government entity or uniting with one.
What is an HOA?
An Homeowner's Association (HOA) is an organization in a subdivision or planned community that makes and enforces rules for the properties and its residents. When we purchase property within an HOA's jurisdiction, we automatically become members and are required to pay dues, known as HOA fees. If you do not pay your dues, you are subject to fees and they can lien your home.
An HOA is comprised of, and run by, the community's residents after the initial developers pull out and there is owner control. We reached that tipping point in 2021 which is what triggered the elections for the HOA Board of Directors. An HOA has a Board of Directors that are elected to enforce and oversee the HOA's rules and regulations. They are much like a steering and/or planning committee that provides general advice and oversight. There are often also other sub-committees as well. An HOA will typically describe its rules in a document called a Declaration of Covenants, Conditions, and Restrictions (CC&Rs) which is what we have.
CC&Rs set certain conditions for owners about the maintenance of our properties. These conditions typically include structural restrictions like the type of fences, landscaping, paint colors, storage buildings, outdoor decor, parking, and other minor aesthetic choices we make. They can also restrict the type of rental properties that are allowed (e.g., no short-term rentals). A CC&R may also outline the penalties for violating the guidelines set in the CC&R. The penalties range from fees to forced compliance or in some cases litigation. Homeowner Associations (HOAs) may impose fines on non-compliant homeowners. It is a legally binding document that you agree to when you purchase your home and join the HOA. Please see below for what happens when a violation occurs.
We can’t expect the HOA Board of Directors to do all of the day-to-day work, so we contract it out to a company called First Residential. You can contact them here. They are located in the building at 1501 Bluebird Drive by appointment only. I suggest signing up for their newsletter if you have not done so. It is full of excellent information!
Other Facts:
Our HOA is incorporated, and, thus, is subject to state laws.
HOA's preserve and enhance the community's property values as well. Often, the guidelines are appearance-oriented, so they deal with regulations for the cleanliness of the property, the condition of the property, and any repairs done to the property.
HOA management will usually provide additional services for its members in exchange for their HOA fees. These amenities may include landscaping, parking lots, swimming pools, tennis courts, ponds, fishing lakes, jogging trails, workout centers, movie theaters, pavilions, party spaces, etc.
One disadvantage of an HOA is the cost of the association fees, which ultimately could be a deterrent for some prospective buyers. The HOA rules and regulations can seem unreasonable, arbitrary, or too restrictive for some homeowners, who may want the freedom to customize their properties.
They aren't ideal for rental properties.
HOA's often lack proper leadership because they are volunteer driven.
HOA fees are typically between $200 to $400 per month, but they can range anywhere from less than $100 to upwards of $10,000 in luxury communities. They are typically higher in established communities where homes are no longer being built. We have a great deal here y’all!!!
Along with setting dues and assessments, the board can slap fines on homeowners who break the rules or damage the common areas.
They cannot make, adopt, or enforce laws, ordinances, or government regulations.
HOAs are another example of a hyper local investment in our neighborhood. It is easy to become involved with an HOA and they often have a lot of activities. While they are not for everyone, they are a great resource for active families and adults. We have an awesome Lifestyle Manager that is always putting together events and getting groups together!
What's the difference between a FSWD, MUD, and an HOA?
This is usually the most difficult question for people. I have seen this one stump people that are professional Politicians, Professors, Real Estate Brokers, Real Estate Investors, CPAs, and Attorneys! It is no wonder that we are all a little confused.
By legal definition, a MUD is a governmental entity that exists to provide water, sewer and drainage services to the residents. An HOA is a board of elected residents that exists to ensure that the collective rights and interests of homeowners are respected and preserved. A Homeowner’s Association provides services and amenities to residents (e.g. mowing of common areas and maintenance of recreational areas), protects property value, and meets the established expectations of homeowners. A FWSD is a local, governmental entity that provides limited services to its residents. FWSDs are government entities that build and protect infrastructure. They can levy taxes, but they cannot make laws.
Think of the FWSD as a City Council. They are over all of our emergency services, fire department, and law enforcement as well. While there are five in Paloma Creek, they all work in tandem and have a management team that handles the day-to-day operations. Everyone on the FWSD is an elected official that is an actual Politician. HOAs are Boards of residents that maintain the property and obtain office by the residents voting in an informal process. In an equivalent city environment, when the FWSD is more like your City Council, an HOA functions as Code Enforcement and Parks & Recreation. They have a mutually symbiotic relationship that best works hand-in-hand for this very reason. Our MUD is Mustang, so they would be like the city water department.
Who’s manages our services, compliance, enforcement, infrastructure, etc.?
It can be confusing with this many leaders, volunteers, and vendors. It is important to know who is responsible in order to be an informed homeowner. You will understand why I don’t think we should complain about the HOA dues when you see all that they cover - especially in comparison to what other communities pay. Here is a quick rundown of who does what and the items I am frequently asked about:
380 Highway Expansion - TXDOT
Aesthetic Concerns - HOA
Advertising Signs - HOA
Christmas Lights (But Not Christmas) - Scrooge & HOA
Clubhouse Rental - HOA
Commercial Vehicles Legally Parked On Private Property - HOA
Disabled Vehicles - LEPD
Disputes Between Neighbors - LEPD
Emergency Services - Aubrey Fire Department
Exterior Modifications - HOA ACC Committee
Fences That Need Repair (turning in) - HOA
Fences That Need Repair (your home) - HOA ACC Committee
Fire - Aubrey Fire Department
Fitness Center - HOA
Fobs - HOA
Food Trucks - HOA
Home Rental/Lease Signs - HOA
Mail Theft - Postal Inspector
Moving Mailbox - HOA ACC Committee & Postmaster
Neighbors “Breaking Rules” - HOA
Neighbors Breaking Laws - LEPD
New Trees - HOA ACC Commitee
Police Emergencies - 911
Political Sign Violations - HOA (they are allowed 90 days prior to each election)
Pools Owned By HOA - HOA
RV, Trailer, Commercial Vehicle, Boat, etc. Legally Parked & Registered In Working Order On The Street - No one (I know it is against the CC&Rs, but it is legal and unenforceable under new Texas law)
RV, Trailer, Commercial Vehicle, Boat, etc. Illegally Parked, Unregistered, OR In Non-Working Order On The Street - LEPD
Solar Panels - HOA ACC Commitee
Tall Grass - HOA
Traffic Signs - TXDOT or FWSD Management (location dependent)
Trash Violations - Rhino (EVERY TIME)
*Please note that Aubrey Fire, LEPD, and Rhino are all contracted by the FWSD’s. The HOA contracts all of their services through First Residential.
What's up with Lakeside Estates?
They are actually located within the city limits of Little Elm, so they fall under their jurisdiction. While we share an HOA, they have city services. As such, they also fall under all of Little Elm’s ordinances and laws, so they are required to register their alarm systems annually as well. They are located in South Paloma Creek on the West side. They are right off of Kitty Hawk.
What is a city?
An incorporated city is legally defined as a government entity that has powers delegated by the state and county. It can create and enforce local laws, regulations, and policies as approved by the voters and their representatives. A city provides local government services to its citizens. Whereas, a FWSD is an unincorporated limited government community. County governments typically provide services to unincorporated communities; however, the only services that we receive directly from the county that a city would not receive is our medical 911 dispatch services which are routed through the Denton County Sheriff’s Office (DCSO).
Any questions?
You can ask me and I will do my best to answer. I am here to help!!!
