Amarillo City Council considers use of MUDs to support growth and affordable housing

In a bid to manage regional growth and expand essential services beyond city limits, the Amarillo City Council is considering allowing the use of Municipal Utility Districts (MUDs). These government entities could play a key role in boosting infrastructure development and making housing more affordable in the fast-growing Panhandle city.

During Tuesday’s City Council meeting, officials introduced the concept of MUDs as a potential strategy to provide water, sewer, drainage, and road services to areas up to one mile outside Amarillo’s current boundaries. The move is part of a broader effort to keep pace with population growth while addressing a persistent need for affordable housing.

MUDs are special-purpose districts governed by a five-member board and regulated by the Texas Commission on Environmental Quality (TCEQ). They are commonly used across Texas to help finance and manage infrastructure for new residential developments—particularly in areas not yet served by a city’s utilities.

Developers can use MUDs to issue bonds that cover the cost of infrastructure upfront. City officials say this financing tool could reduce financial barriers for developers and lead to larger housing developments at more accessible price points. However, MUD residents typically pay higher utility rates and an additional property tax to repay those bonds over time.

“This policy is really simply the beginning of the conversation,” said Alia Vinson, special counsel to the City of Amarillo, during the meeting. “As developments come along, they will submit their petition to the city for review. It will come to the city council for the opportunity to consent, and over the course of that process it will enable landowners to consider additional development and hopefully the opportunity to build more houses at prices that would be lower than otherwise.”

Vinson also addressed several public concerns about how MUDs are created and governed. She emphasized that MUDs are not imposed unilaterally and cannot be formed without a landowner’s petition and a formal review process.

“Sometimes there are misconceptions about MUDs—that they might be created ad hoc, that you might wake up one day and you’re living in a MUD,” Vinson said. “That is not the way that they’re created. The landowner themselves has to bring forward the petition and request for it to be created.”

The process begins with the developer seeking the city’s consent. If approved by the City Council, the application is then submitted to the TCEQ, which conducts a comprehensive review to ensure compliance with state regulations.

Tuesday’s meeting also featured a public Q&A session, during which city staff fielded questions on the potential impacts of MUDs on taxes, service delivery, and long-term planning. City leaders stressed that any development within a MUD must still meet Amarillo’s planning and development standards.

The council is expected to revisit the topic in future meetings as public input continues and developers begin to show interest in the framework. For now, city officials say the goal is to be proactive in shaping growth before it arrives—and to ensure that infrastructure and affordability go hand in hand.