Debt-Issuance Process

SIDs have the power to borrow money by issuing warrants and general obligation bonds.

Construction fund warrants are initially issued to cover work-in-process payments. These are short-term instruments with a statutory maturity of five years, paying interest annually. They are redeemed with the payment of special assessments and bond issuance proceeds. Special assessments are levied against parcels that are specifically benefited by certain infrastructure improvements and paid to the District when those parcels are purchased. Bonds are issued based on the assessed value of the District and the ad valorem real estate taxes that will be collected by the District. Bonds typically have a final maturity of 20 years, with either a three or five-year non-redemption provision. 

Eventually, most SIDs are annexed by the city with zoning jurisdiction. Once annexed, the SID ceases to exist.