How do special districts work: Q&A with Simon VanDyk of Touchstone District Services

By R. Hans Miller | News Editor
Posted 5/7/21

Throughout the Katy area there are more than 80 special purpose districts that provide services to the community such as flood mitigation, water, sewer, emergency medical services and fire …

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How do special districts work: Q&A with Simon VanDyk of Touchstone District Services


Throughout the Katy area there are more than 80 special purpose districts that provide services to the community such as flood mitigation, water, sewer, emergency medical services and fire protection. In fact, most people with Katy addresses do not receive those services from the City of Katy.

Simon VanDyk, cofounder of Touchstone District Services, agreed to answer questions regarding how these special purpose districts operate and how they impact Katy Times readers.

Q: What is Touchstone District Services and who are its clients?

A: Touchstone District Services is a professional services provider and consultant to special purpose districts and municipalities throughout the state of Texas. We represent district boards for communications, resident support, community outreach, and special non-candidate elections such as tax or bond elections. Many of these districts are run by people who live in their MUD and volunteer their time to ensure their community is run well and accountable for every tax dollar collected as, in the case of resident directors, they pay those same taxes themselves. This is the most grass-roots form of government in Texas, yet most residents are not aware they live in one or more special purpose districts or the positive impact (those districts) have on their communities. Our mission is to help these district tell their stories and engage their communities in a positive way.

Q: Much of your work is focused on municipal utility and emergency services districts elections. What are the guidelines for marketing campaigns associated with items such as bond elections?

A: As governmental entities, special purpose districts are held to every rule outlined by the Texas Election Code and the Texas Ethics Commission. Therefore, they must avoid any advocacy, political advertising or leading the vote when they communicate with constituents. Our role is to assist in collecting the facts, present them in an easy-to-digest manner, and disseminate that information via a variety of avenues – digitally, in print, in-person events and virtual presentations. Although a special purpose district cannot advocate for a ballot measure, it is their responsibility to provide voters with all the facts necessary to enable them to be able to make informed decisions when they step into the ballot box.

Q: Municipal bodies often claim that they are not raising taxes, though the ballot verbiage indicates that taxes may be being increased. Can you explain how those conflicting statements can both be true?

A: Each district has a financial advisor on its team of consultants whose job it is to determine the best way to fund the district’s needs with the least impact to residents’ tax rates. The financial advisor attempts to coordinate new bonds with the retiring of old debt to fund maintenance and improvements without increasing taxes. These projections are based on estimated future tax revenue, predicted district growth and inflation.

The ballot language “without limit as to rate or amount” is legislatively required on every ballot measure, to protect the purchaser of bonds. Although this allows the district to levy an amount of property tax required to repay the district’s debt, municipal bonds are the most regulated funding option available. State regulators oversee every new debt issue to ensure that a board is not placing an undue burden on its residents.

MUDs generally seek authorizations in the tens of millions with the plan to issue bonds in $1-2 million increments over a period of 20-30 years, as needed, and with the least disruptive impact to tax rates. It is important to note that with MUDs these are authorizations only, and not an immediate bond sale. The district still must submit a bond package with detailed engineering plans to the Texas Commission on Environmental Quality for both a technical review (and) a feasibility review to confirm the district can support the sale and repayment of the bonds.

Q: After the winter storm in February, what are your MUD clients doing overall to ensure their hardware and infrastructure are ready if another storm hits the area in the future?

A: This is more of an operations question and differs from district to district. Many are upgrading or installing additional on-site generators, putting into effect winterization plans and infrastructure insulation, keeping repair parts on-site at water plants, and looking towards near-response technicians to be available during an event.

In addition to these changes, many districts are now looking at digital communications plans to tie in with their emergency action plans, to include web and text-driven communication to residents. Fortunately, many of our Katy area MUDs were not affected by Uri yet were unaware that their water system was working properly due to the focus the news media placed on the City of Katy’s boil water notice. Residents of the surrounding unincorporated areas mistakenly thought that they were affected by that notice. Moving forward, we believe many districts will start looking into options to not only communicate with their residents when something is wrong but will also consider ways to help them reassure their constituents that everything is up and running as intended.

Q: Emergency services districts often work to improve their Insurance Services Office – or ISO – rating. Can you explain what this means for residents and how MUDs affect ISO ratings?

A: Emergency services districts provide fire and emergency medical response to communities in unincorporated areas and can receive a score from 1 to 10 (One is superior fire protection). An ESD is given a public protection classification by ISO. Insurance companies then use that classification rating to set their homeowners and commercial insurance rates. In addition to emergency response times, level of training, and fire prevention efforts, the score also considers the locations, maintenance schedule, and emergency flow rates of all fire hydrants owned and maintained by local MUDs in the fire district. When ESDs work closely with their MUDs to ensure their water infrastructure is in good working order and can handle the surge demand that a major fire may cause, the fire district is able to improve its ISO rating and the entire community benefits with potentially lower property insurance costs.


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