When you buy a home in Paloma Creek, one of the first documents you sign isn't about the house. It's a notice from the seller that the property sits in a water district. Texas law says you get it before you sign a binding contract. It names the district, its current or projected tax rate, and the bonds its voters have approved. It also includes a sentence most buyers in the area have never read closely: "The district may impose an unlimited rate of tax in payment of such bonds."
In Paloma Creek, that notice tells you more about your future tax bill than the street name or the Little Elm mailing address does. The community is split among five separate districts, and their 2026 rates are far enough apart that two similar houses a short drive apart can carry noticeably different bills.
The Form That Arrives Before the Contract
Chapter 49 of the Texas Water Code sets the rules. Section 49.452 says:
"A person who proposes to sell or convey real property located in a district must give to the purchaser the written notice as provided by this section and Section 49.4521."
The statute requires the notice "prior to execution of a binding contract of sale and purchase." It can be its own document or part of the contract. The buyer signs to show they received it. If the notice is left out, the statute gives the buyer a right to terminate, subject to its closing and waiver language. A second notice with updated information is signed at closing and recorded in the county deed records.
Section 49.4521 lists what the notice includes where it applies: the district's name and the taxes or assessments it may impose, its current or projected tax rate, the bond amounts voters approved and the principal issued so far, any standby fees, its relationship to a nearby city, and its purpose. In Paloma Creek, the district named at the top of that form is one of five.
Five Boards Inside One Community
The districts' shared website explains that Paloma Creek "is made up of five independent Fresh Water Supply Districts": Denton County FWSD 8-A, 8-B, 11-A, 11-B and 11-C. Each has a five-member board elected by registered voters inside its own boundaries. Each can levy property tax to pay for water, sanitary sewer, storm drainage and paving infrastructure, along with emergency services, trash and recycling, and some recreational amenities.
So each district's board adopts its own rate, and each board answers to a different set of voters. Here's how the districts describe their footprints, alongside the Tax Year 2026 rates adopted this fall as published by Denton County's truth-in-taxation table:
| District | Footprint, per the district | 2026 adopted rate per $100 | Debt portion of that rate |
|---|---|---|---|
| FWSD 8-A | 260 acres south of US 380, an inlet of Lake Lewisville on the west; also includes the Water Reclamation Plant and Paloma Creek Elementary campus north of 380 | 0.759000 | 0.420000 |
| FWSD 8-B | 254 acres north of US 380, an inlet of Lake Lewisville on the north and west; includes community parks and playgrounds | 0.490000 | 0.177500 |
| FWSD 11-A | 424 acres south of US 380 between Flamingo Drive and Spoonbill Drive, across Navo Road and Villa Paloma; includes the Paloma Creek Dog Park | 0.645000 | 0.164200 |
| FWSD 11-B | 373 acres of Paloma Creek and Northlake Estates south of US 380; inlet to the south, Megan Creek Drive to the east, Spoonbill Drive to the north | 0.775000 | 0.442500 |
| FWSD 11-C | 108 acres south of US 380, straddling Navo Road | 0.795000 | 0.415000 |
The last column explains most of the spread. In 8-A, 11-B and 11-C, more than half of the 2026 rate goes to debt service, meaning the bonds that paid for the community's pipes, drainage and streets. In 11-A, debt is about a quarter of the rate. Districts that are carrying more bond debt charge more, and those bonds are what the "unlimited rate" sentence in the purchaser notice refers to.
What the Spread Means for One Hypothetical House
To make the rates concrete, take an illustrative home with a taxable value of $400,000. This is a round number for the math, not a market figure, and it ignores homestead and other exemptions. At that value, every 0.01 of rate per $100 equals $40 a year.
- In FWSD 8-B at 0.49, the district's share comes to about $1,960.
- In FWSD 11-A at 0.645, about $2,580.
- In FWSD 8-A at 0.759, about $3,036.
- In FWSD 11-B at 0.775, about $3,100.
- In FWSD 11-C at 0.795, about $3,180.
The difference between the lowest and highest district is about $1,220 a year on the same taxable value. Over a seven-year stay at today's rates, that's more than $8,500, and the gap is entirely about which side of a district line the lot sits on.
Why a District Bill Can Land Above or Below a Town Bill
The Little Elm address can be misleading here. Paloma Creek is unincorporated Denton County, and the Town of Little Elm's own FAQ says, "Currently, there is no plan for the Town of Little Elm to annex unincorporated parts of Paloma Creek." Paloma Creek homes therefore don't pay the Town's 2026 rate of 0.5499. Their water district rate takes its place.
For a side-by-side comparison, assume a Paloma Creek home in Denton ISD, which serves the Paloma Creek Elementary campus, and a home inside town limits in Little Elm ISD. These are the adopted 2026 rates from the county table:
| Component, 2026 adopted | Inside Town limits, Little Elm ISD | Paloma Creek, Denton ISD |
|---|---|---|
| Denton County | 0.183394 | 0.183394 |
| School district | 1.225200 | 1.152800 |
| Town of Little Elm | 0.549900 | none |
| Water district | none | 0.490000 to 0.795000 |
| Combined | 1.958494 | 1.826194 to 2.131194 |
On the illustrative $400,000 taxable value, the town-limits stack comes to about $7,834 before exemptions. A home in 8-B comes in around $7,305. A home in 11-C comes in around $8,525. Only one of the five Paloma Creek districts beats the town-limits total under these assumptions. 11-A comes within about $90 of it, and the other three are higher.
Some taxing units aren't in either column. Emergency services districts and exact school district boundaries vary by parcel. The Denton Central Appraisal District lists every taxing jurisdiction on a specific property, and that list is the one to check for a specific home.
The services work differently too. According to the Paloma Creek districts' emergency services page, the Little Elm Fire Department responds to fires and medical emergencies in Paloma Creek. 9-1-1 calls from the area go first to the City of Denton Public Safety Communications Center, which connects to the Denton County Sheriff's Office dispatch center, which then dispatches Little Elm. The districts also contract with the Little Elm Police Department for patrols. So a Paloma Creek owner gets town services through contracts their district board negotiates, paid for through the district rate rather than the Town's.
This Year, Four of Five Rates Went Up
Over a longer stretch, most of these rates have come down. In Tax Year 2022, 11-B was 0.93 and 11-A was 0.8185. For 2026, though, four of the five districts adopted higher rates than in 2025:
- 11-A went from 0.575435 to 0.645. Its debt rate fell from 0.22 to 0.1642, while its maintenance and operations rate rose from 0.355435 to 0.4808.
- 11-B went from 0.7325 to 0.775.
- 11-C went from 0.73 to 0.795.
- 8-B went from 0.4775 to 0.49.
- 8-A stayed at 0.759.
The other parts of the bill moved the other way. Denton ISD dropped from 1.2069 to 1.1528. The Town of Little Elm adopted 0.5499 for 2026, below its no-new-revenue rate of 0.573938, which state law defines as the rate that would bring in the same revenue as last year from property taxed in both years.
Each Paloma Creek district sets its rate every year, and a buyer looking at a home this fall is looking at the 2026 rates, not the ones on last year's listing sheet. Water districts can also end. Denton County's 2026 tax estimator still includes "Valencia on the Lake-Dissolved" in its list of water districts. Paloma Creek's five districts, though, are active, levying taxes and carrying debt.
Quick Answers
Does a Little Elm mailing address mean a home pays Town of Little Elm taxes? Not in unincorporated Paloma Creek. The Town says it currently has no plan to annex those areas, and those homes pay a water district rate instead of the Town rate.
How do I find out which of the five districts a specific home is in? Each district's website has an address search, and the seller's statutory notice names the district before you sign a contract.
Who elects the people setting these rates? Each district has a five-member board elected by registered voters who live inside that district's boundaries.
This post is general information, not legal, tax or financial advice. Please confirm the details for a specific property with a tax professional, real estate attorney or the appraisal district.
If you're weighing a Paloma Creek home against one inside Little Elm's town limits, we'll pull the district notice, compare the full tax stack for each address you're considering, and show you what those numbers mean for your monthly payment before you make an offer. Reach out to Lori Seale to start with the tax math, or get your home valuation if you're selling in one of Paloma Creek's five districts.
