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Unread 07-22-2010, 05:35 AM
 
31 posts, read 57,098 times
Reputation: 29
Default MUD Tax

I've read a couple of threads about a "MUD Tax" but can't seem to find anything on this site describing exactly what what it is, what it is for or how long it will last.
Could someone please fill me in or give me a link to where I can learn about it?

Thanks
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Unread 07-22-2010, 07:18 AM
 
Location: Pearland, TX
3,322 posts, read 3,932,735 times
Reputation: 2175
Municipal Utility District Tax. To quote: "A Municipal Utility District (MUD) is a political urban subdivision of the state authorized in Chapter 55 of the water code to provide water and wastewater service to a specific region. In order to accomplish that goal, the MUD may purchase or construct and operate facilities that serve the region; it may issue bonds to finance the purchase or construction of such facilities."

In other words, it's an entity that can charge you taxes in order to provide utility services to your area.

Generally, it works like this. An area is developed and the municipality floats bonds to pay for infrastructure. The idea is that the bonds get paid by collecting "MUD taxes" from occupants within the area for which the infrastructure bonds were floated. The more people that build in that area, the lower the tax is as it is spread out over more users.

Hope that helps.

Ronnie
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Unread 07-22-2010, 08:40 AM
 
1,286 posts, read 3,138,698 times
Reputation: 668
The MUD tax is also probably the most variable property tax that you'll have. Most people's school district and county taxes are in a pretty close range, but MUD taxes can vary wildly depending on how new the MUD is and how many people live in it.

The older and more mature MUDs have lower rates than new MUDs. Its usually the difference between people that pay 2.7% property taxes and 3.4% property taxes. In my first home in a newer neighborhood, our MUD tax was something like 1.3%. In my current neighborhood, its closer to 0.6%, so about half. My parents pay close to 0.3%.
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Unread 07-22-2010, 08:48 AM
 
3,598 posts, read 2,573,158 times
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Houston Ronnie is correct. Also, a developer buys raw land, builds 4 houses, no streets,etc. He moves in 4 friends. They vote to create the district according to state law. They then become the directors. Bonds are sold and development begins.
A MUD or PUD is a great way to subsidize engineers, accountants and lawyers. Directors are paid for each meeting they attend. The lawyer, engineer and accountant, too. They also get to go to their convention every year on the taxpayer dime. They can tell the subdivisions that funding is needed for whatever and sell bonds any time they can win the election.
Some MUDs are well run, some are racketeering. They should all be watched.
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Unread 07-22-2010, 03:33 PM
 
Location: Spring, TX
460 posts, read 1,235,380 times
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If you're in a MUD (or even if you aren't), you learn a lot by attending the monthly meetings (they're public). My MUD also contracts for extra security services over and above that provided by the county sheriff, so I hear the constable's report each month and get a chance to ask questions. My MUD has maxed out it's water delivery and is considering a new well. It's very interesting to watch that process unfold.

Besides the MUD, depending on where you live, you may also be in a Drainage District. If so, you'll have their levy on your annual tax bill. While DDs don't provide billable monthly services, they do work to manage the drainage/run-off/flooding for a given area. That's as important to me as the water supply and sewer services. They also will meet monthly.
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Unread 07-22-2010, 03:42 PM
 
Location: Spring, TX
460 posts, read 1,235,380 times
Reputation: 354
Quote:
Originally Posted by crone View Post
Houston Ronnie is correct. Also, a developer buys raw land, builds 4 houses, no streets,etc. He moves in 4 friends. They vote to create the district according to state law. They then become the directors. Bonds are sold and development begins.
A MUD or PUD is a great way to subsidize engineers, accountants and lawyers. Directors are paid for each meeting they attend. The lawyer, engineer and accountant, too. They also get to go to their convention every year on the taxpayer dime. They can tell the subdivisions that funding is needed for whatever and sell bonds any time they can win the election.
Some MUDs are well run, some are racketeering. They should all be watched.
Which is why it's very, very foolish to buy any home before knowing exactly what HOA/POA, MUD and Drainage District you'll be in, and something about each. And if at any time you're unhappy with the way any of these entities are being run, stand for election to the board of directors. I attend every one of my POA/MUD/DD meetings, and it is amazing how many people do not (less than .09%). Nevertheless they're sometimes quick to complain about the way things are or aren't working.
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Unread 07-24-2010, 08:27 PM
 
Location: At the Whim of Narcissitic Americans
16 posts, read 39,013 times
Reputation: 30
"Nevertheless they're sometimes quick to complain about the way things are or aren't working. "

Isn't it so true! It's become American's favorite pastime. Complain about everything; Blame someone else; Do nothing to change it!

I think it is so popular we should come up with a new American Motto....

America, where it's All About Me!
Deal With It, Or Do Something To Change It!
BUT PLEASE STOP BLAMING & COMPLAINING ABOUT IT!

It's sad really.
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