|
What
You Need To Know About Municipal Utility Districts
What
is a MUD?
A Municipal Utility District (MUD) is a political subdivision of
the State of Texas authorized by the Texas Water Code (TWC) to provide
water, sewage, drainage and other services within the MUD boundaries.
How
is a MUD created?
A majority of property owners in the proposed district petitions
the Texas Water Commission to create a MUD. The TWC evaluates the
petition, holds a public hearing, and grants or denies the petition.
After approval, the TWC appoints five temporary members to the MUD's
Board of Directors, until an election is called to elect permanent
Board members, to confirm the MUD's creation, and to authorize bonds
and taxing authority for bond repayment.
How
does a MUD work?
The publically elected Board of Directors manages and controls all
of the affairs of the MUD subject to the continuing supervision
of the Texas Water Commission. The Board establishes policies in
the interest of its residents and utility customers. A MUD may adopt
and enforce all necessary charges, fees and taxes in order to provide
district facilities and service.
Will
my taxes be higher in a MUD?
MUD tax rates, like all property tax rates, vary according to property
values and debt requirements. MUD rates generally decline over time
as the MUD is built out and operating and debt service costs are
shared by more homeowners.
How
do MUDs provide for parks, pools and recreation faclities?
In addition to their common functions of water and wastewater service,
MUDs are legally empowered to engage in conservation, irrigation,
electrical generation, firefighting, solid waste collection and
disposal, and recreational activities (such as parks, swimming pools,
and sports courts). A MUD can provide for itself the recreational
amenities that are approved by the Board of Directors and funded
by the District.
What
is a developer's responsibility to MUDs?
Developers must petition the Texas Water Commission to create a
MUD. Developers are prohibited from serving or placing employees,
business associates, or family members on the MUD Board of Directors.
Developers must pay for or put up a letter of credit equal to 30%
of the cost of subdivision utilities. This requirement ensures against
"fly-by-night operators" who are not committed to the success of
the MUD. The "30% rule" also offers protection to MUD residents
in the event that a subdivision is not built according to schedule.
Unless they are voting residents within a MUD, developers have no
authority or control over the MUD's Board of Directors. If they
are voting members of a district, they have the same power to vote
and attend Board metings as any other resident.
|
