July 10, 2025 by John Krukowski
'Everything Starts With The Rooftops': How Housing And Special Districts Keep The Texas Miracle Alive
The moving vans are still arriving, but the flow of people into Texas has eased somewhat in recent years, suggesting that some of the sparkle might be fading from the Texas Miracle.
The state’s in-migration, along with job-creating business relocations that contribute to its coffers, would still be the envy of other regions. Nearly 140,000 people moved to Texas in 2024, the most of any state.
But that’s down from the almost half-million who adopted Texas mailing addresses in 2023. And while most other places would be thrilled with six-digit annual growth, in Texas, any migration slowdown triggers a gut check.
“The Texas Miracle has been a function of businesses, jobs and people coming to Texas from elsewhere in the country,” said Danny Signorelli, CEO, founder and president of The Signorelli Company, a developer based in The Woodlands, Texas. “Just as critical is the housing for those people moving here and the sense of place Texas communities are known to offer. The nice shopping centers, the offices, the entertainment, the churches, none of that shows up until there are houses. Everything starts with the rooftops — everything.”
The recent slowing of in-migration could be due to multiple factors, but declines in housing availability and affordability are often at the top of people’s lists. Last year, a state comptroller’s report noted that median home prices in Texas rose 40% between 2019 and 2023 while the housing supply declined, both worrying trends.
“An adequate housing supply is critical and underpins the Texas Miracle because a growing population works hand in glove with economic growth,” said David Oliver, a partner at Texas public finance law firm Allen Boone Humphries Robinson LLP, known as ABHR.
Signorelli, whose company has developed more than 20K acres of Texas land since the 1990s, agreed.
“If you don't have plentiful housing, that eliminates one of the biggest pillars for the Texas Miracle,” he said. “A CEO considering moving their business to a new state will consider the quality of life for their employees: Can they afford nice houses? Are they in quality school districts? Do they have appealing and diverse amenities?”
Signorelli said keeping housing attainable for Texans — and Texas on the radar of out-of-state companies — depends on the continued construction of housing options such as those offered by master-planned communities.
MPCs are custom-built developments that can feature thousands of homes at prices targeting homebuyers of varying incomes. They often provide quality-of-life-enhancing amenities like hiking trails and parks, and attract complementary retail, office and other development to the area.
These developments are a big deal in Texas, which was home to nearly half of the top-selling MPCs across the country in 2024. Houston and Dallas remain the country’s top metropolitan areas for MPC sales growth. Of the 19 in Texas that RCLCO ranked in the top-50-selling U.S. MPCs, 18 were in special districts.
“If you want quality growth and quality communities, master-planned communities are a big key,” said Steve Robinson, an ABHR founding partner. “Texas is one of the leaders in the country in developing and utilizing MPCs.”
But custom development, coupled with new infrastructure and attractive amenities, is expensive. Continued MPC growth, Robinson said, requires a unique financing mechanism in Texas known as municipal utility districts.
MUDs are widely credited with enabling Texas’s stunning growth through public financing of critical infrastructure, which has led to the creation of hundreds of thousands of homes for Texans across the income spectrum.
Or, to put it simply: No MUD, no Miracle.
What Are MUDs?
Since the Texas legislature passed enabling legislation for municipal utility districts more than 50 years ago, more than 2,100 MUDs have been created to provide vital infrastructure for millions of Texans across thousands of communities. Usually formed outside of city limits in underdeveloped areas, these special districts allow developers to finance needed infrastructure to deliver water, sewer and drainage services as well as build public roads and, in some counties, community parks.
That’s a good thing for developers who are eager to put up new residential communities, but developers aren’t the only beneficiaries.
“MUDs keep the cost of housing low in Texas compared to other states,” said June Tang, vice president and general manager of Johnson Development's Veranda and Jubilee communities. “A MUD reimburses the developer for the construction and operation of vital infrastructure and services that would otherwise be difficult to finance.”
What Can A MUD Finance?
— Construction and operation of water, sewer and drainage systems
— Public roads
— Parks and recreational facilities in certain parts of the state
— Finance and facilitation of firefighting services
— Provide police protection and trash services
Source: ABHR
Governed by five-member elected boards and employing the services of professional consultants, MUDs finance public infrastructure through the sale of bonds that reimburse a developer for the actual cost of constructing necessary infrastructure in developing communities. MUDs in developed communities can sell bonds to maintain or expand existing infrastructure.
Among their state-granted authorities, MUDs can contract with private vendors, levy taxes and charge fees. As public entities, they will continue to operate even after the original developer has fully developed the MPC and is no longer affiliated with the community.
To many in Texas, MUDs represent the not-so-secret sauce that for years allowed the state to cost-effectively keep pace with its housing needs.
“The Texas Miracle doesn't happen without infrastructure, and at the end of the day, that's really what MUDs do,” Oliver said. “They are infrastructure financing, ownership and operation vehicles.”
They are also a frequent target of misinformation, particularly among some municipal authorities who can’t add new housing as easily as a MUD-enabled community can, and perhaps feel threatened by development outside their borders.
Kelsey Taylor, an ABHR attorney focused on public finance, urban development and local government regulation, says an important part of her role involves countering false narratives about MUDs that might call into question their quality or public accountability.
“It’s a matter of educating the cities on how a special district in a city's extraterritorial jurisdiction, or outside of the city limits, benefits them in the long run,” Taylor said. “It results in higher-quality infrastructure and homes in highly amenitized communities that increase the value of land that may ultimately be annexed into the city at some point.”
MUDs are subject to the same fiscal responsibility and transparency rules as any public entity in the state.
“MUDs must comply with laws concerning open meetings, audits and elections, and are subject to oversight by the Texas Commission on Environmental Quality,” Taylor said.
The districts allow residential development in locations where many people want to live: wide-open spaces with good access to transportation, jobs and amenities that appeal to growing families.
Robinson recalled a Bisnow event where attendees, including MPC developers, were asked about the importance of MUDs in enabling residential development in the state.
“In response, the developers all agreed: ‘We simply cannot make the math work without them,’” he said. “‘We cannot do an MPC with the type of amenities that are expected in the market today without a special district.’”
So how do MUDs enable the creation of MPCs, and how might they help Texas address its growing housing shortage?
MUDs Solve A Development Riddle
MPCs might seem to spring up like wildflowers in Texas, but building and financing new communities in the state, like anywhere, isn’t easy. The developer must take on an enormous amount of risk and then continuously work to keep costs in check to avoid deterring homebuyers.
After all, they’re not only building homes, they are also building the infrastructure needed to support these new developments that are often located outside the jurisdiction of cities or existing utility providers.
“The old joke is, ‘What's the most expensive lot in your development?’” said Oliver of ABHR. “A lot of people will guess it’s the last lot in the estate section. Wrong.”
As developers know, the most costly lot is actually the first.
“That’s because you must first build water and sewer plants, detention ponds, underground utilities, entry and internal roads, parks and a recreation center, and now that first lot costs $40M,” Oliver said.
That is a lot of cost and risk for a developer or homebuilder to take on before a single buyer has signed on the dotted line. Oliver said MUDs provide a vehicle to make ambitious residential projects possible.
The MUD not only gives a developer a systematic and predictable way to be reimbursed for public infrastructure, it also lowers the barrier to entry because they don't have to raise capital for the whole MPC all at once, he said. And once they have enough capital to kick off the project and enter into a MUD’s reimbursement cycle, they can begin to recoup their initial investment.
Were it not for MUDs, Johnson Development’s Tang said, the costs of all those paved roads and underground pipes would be passed along to the builders and buyers, as they are in many other communities across the country.
“One of the most beneficial aspects of the MUD mechanism is that once the developer has created taxable value in the proposed MPC, the cost of the infrastructure can be amortized through a bond of typically 25 to 30 years,” Tang said. “It’s an effective financing tool because you're not putting all that burden on that first-time homebuyer and driving up the cost of the house.”
MUDs Make The Miracle
Oliver said MUDs’ financing mechanisms also keep the prices of new homes lower. Infrastructure costs that ordinarily would be passed on to buyers up front and calculated into the cost of the home are covered by the district over time through amortization of bond repayments.
“If there's no MUD, then the developer can't spread its infrastructure costs among all of the homes in the MPC because they really don't know what the project velocity will be or what the final development is going to look like over the long life cycle of the project,” Oliver said. “But they've got to get their costs reimbursed.”
He said it boils down to two things: If there is no MUD reimbursement, then the price of the home has to be higher. And without a MUD, public infrastructure costs are included in the prices of the home, meaning it is subject to inflation and appreciation.
“MUDs only reimburse the developer at actual cost,” Oliver said.
To Signorelli, there simply is no Texas Miracle without MUDs.
“If you take the MUD out of the equation, your $50K lots have got to be sold for $100K, and your $250K house is now half-a-million bucks,” he said. “Your absorption goes way down because now you’re only catering to rich people, not the dual-income mom and dad. This Texas Miracle depends on the public finance component provided by the municipal utility districts.”
Sparking Joy and Win-Wins
Aside from providing affordability and essential public services, can MUD-enabled master-planned communities also provide happiness?
That’s the premise behind Johnson Development’s newest MPC, Jubilee, a 1,622-acre development near Houston that is planned to eventually include 4,900 homes and about 300 acres of parks, greenspaces, waterways and amenities, including resort-style pools. Tang said Jubilee, whose tagline is “The Joyful Neighborhood,” will include four categories of “wellness zones” for use by residents.
“We are bidding them as public projects and parks through the MUD,” she said. “Because of the MUD, we are able to put more of those types of amenities into our community.”
Tang said this is one example of how MUDs allow MPC developers to create attainable and attractive housing options for Texans. But developers and homeowners needn’t be the only beneficiaries.
Cities, too, can benefit from the MPCs being built near their boundaries.
Robinson said ABHR was involved in negotiations with the northern Texas city of Grand Prairie and developer Provident Realty Advisors for a new development called Goodland that is expected to provide housing for 30,000 Texans when completed. The agreement will permit the city to annex the land while the developer retains the MUD financing capacity that allows the project to be financially viable.
Robinson added that ABHR is seeing more agreements like this being negotiated, resulting in a “great win-win” for developers, municipalities and Texas homebuyers.
“I think cities that want to work cooperatively to help create more high-quality development are the ones that will end up reaping the greatest benefit if the Texas Miracle is to continue,” he said.
In-depth coverage on the issue of Texas housing affordability is brought to you by ABHR and Studio B. Bisnow news staff was not involved in the production of this content.
Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studiob@bisnow.com.
